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Crest Commercial, Inc. v. Union-hall

DECEMBER 27, 1968.




Appeal from the Circuit Court of Winnebago County, Seventeenth Judicial Circuit; the Hon. ALBERT S. O'SULLIVAN, Judge, presiding. Judgment affirmed.


The plaintiff, Crest Commercial, Inc., brought a declaratory judgment action against the defendant, Union-Hall, Inc., et al., for the interpretation of a shopping center lease covering realty located in Rockford, Illinois. The plaintiff is the owner and developer of the center and the defendant is a tenant of plaintiff and retailer of a wide variety of merchandise.

In November, 1960, plaintiff's predecessor in title entered into a written long-term lease with the defendant. The terms of the lease required the plaintiff to erect a building upon Parcel A for the use of the defendant and further provided "that Parcel A, Parcel B and Parcel C in total constitute and are to be considered for the purpose of this lease `the shopping center.'" At this same time, one Bonavia, who later became a Vice-President of the plaintiff, owned an undivided one-half interest in certain land, referred to herein as Parcel D, which was east and adjacent to Parcel B but not included in the original tract covered by the lease. The other one-half interest of Parcel D was owned by one of plaintiff's predecessors in title. Parcel D was transferred to the present plaintiff about one year after the lease was executed. At the time of acquisition it consisted of a deep pit which plaintiff began to fill in 1962 and completed in 1966.

The original lease between the parties contained a covenant describing the type of merchandise sold by defendant in great detail and prohibiting plaintiff from leasing "any of the shopping center area to a business that substantially competes with" defendant's business. The lease also provided that defendant would have an easement in certain described parking areas (as shown by plot plan "A" attached thereto; however, the plot plan did not show parking within Parcel B) and that such areas would not be used "except by tenants of said shopping center and their agents, employees, customers and invitees."

In 1962 the parties entered into a supplemental lease and an addition was built to defendant's building. The supplemental lease included parking within Parcel B, and provided that the "Lessee and its sub-tenants shall have the right to use in common with all of Lessor's other tenants for off-street parking, drive and walkway purposes all of those portions of Lessor's premises contained within Exhibit `A' and not built upon and which are anywhere within Exhibit `A' or adjacent thereto available for such purposes." It should be noted that Exhibit "A" in the 1960 lease was not the same as Exhibit "A" in the 1962 lease.

The supplemental lease provided that plaintiff could build on certain other property it was attempting to acquire if it complied with the restrictive covenant as to competition but this did not include Parcel D nor was Parcel D mentioned in either lease.

From 1960 to the beginning of this dispute the shopping center developed and a number of stores were added including a restaurant, a cleaner, an office building and "Appliance City" which, we assume, is a store selling appliances. By 1967 the pit on Parcel D was filled and the plaintiff commenced negotiation with the Walgreen Company to lease this property for the construction of a typical Walgreen Drugstore. In addition, the proposed lease would entitle Walgreen's the right to use, in common with other tenants, the parking area located in Parcel B.

It is conceded that Walgreen's line of merchandise is competitive with the line of goods sold by defendant and, therefore, if the restrictive covenant contained in defendant's lease applies to Parcel D, proposed to be leased to Walgreen's, a violation of the covenant would occur.

When the parties were unable to agree that no violation would occur, plaintiff brought this action seeking a declaratory judgment authorizing the lease with Walgreen. The defendant moved to dismiss on the grounds that there was no actual controversy between the parties and that the failure to join Walgreen's as a party was fatal to the cause. After denial of the motion, the trial court decided that an actual controversy did exist, that the restrictive covenant did not apply to Parcel D and that the Walgreen Company would have the right to use portions of the parking areas of Parcel B in common with the other tenants.

The defendant contends (1) that the complaint does not state a cause of action; (2) that the evidence failed to disclose the existence of an actual controversy (3) that failure to join Walgreen's as a party made it unlikely that the subject matter of the litigation would be terminated which is necessary under the Declaratory Judgment Act (Ill Rev Stats 1965, c 110, § 57.1(1)); (4) that the court erred when it concluded that the noncompetitive clause did not apply to Parcel D and (5) that the court's conclusion that Parcel D is not part of the shopping center for purposes of the restrictive covenant is inconsistent with the court's conclusion that Walgreen's may park in a portion of Parcel B, which is the shopping center.

We are of the opinion that the complaint filed herein stated a cause of action, that an actual controversy existed and that the failure to join Walgreen as a party was not fatal to the action.

[1-3] The Declaratory Judgment Act was adopted to provide a means of resolving actual controversies. The courts are not open to those seeking advisory opinions on imaginary disputes. However, the courts will consider a controversy if it actually exists. The statute itself provides that the court may, in cases of actual controversy, make binding declarations of rights if these declarations will terminate the controversy, or some part thereof. The Supreme Court in A.S. & W. Club of Waukegan v. Drobnick, 26 Ill.2d 521, 524, 187 N.E.2d 247 (1962) said:

"In limiting the remedy to `cases of actual controversy' the statute was meant merely to distinguish justiciable cases from disputes of a hypothetical or abstract character. It was not intended to exclude concrete disputes admitting of an immediate and definitive determination of the legal rights of the parties."

The Declaratory Judgment Act should be liberally construed to carry out its good purpose. In Trossman v. Trossman, 24 Ill. App.2d 521, 525, 165 N.E.2d 368, the Court ...

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