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Jakovljevich v. Alvarez

JULY 30, 1969.




Appeal from the Circuit Court of Cook County; the Hon. DANIEL J. WHITE, Judge, presiding. Affirmed. MR. JUSTICE ENGLISH DELIVERED THE OPINION OF THE COURT.

This is an appeal from a judgment that dismissed the cause of action after finding the fourth amended complaint insufficient for the reason that plaintiffs, as beneficiaries of a land trust, had no right to maintain an action for unpaid rent. The undisputed facts are set out below, along with specific references to provisions contained in relevant written instruments.

By trust agreement in 1955, a land trust was created with Cosmopolitan National Bank of Chicago as trustee and Stanley and Veda Jakovljevich as beneficiaries. The real estate concerned in this appeal was conveyed to Cosmopolitan by the same instrument.

On August 23, 1963, plaintiff Veda Jakovljevich executed with defendant a lease of the property which contained the following clause describing the parties thereto:

THIS INDENTURE, made this 23rd day of August, A.D. One Thousand Nine Hundred and Sixty-Three between Cosmopolitan National Bank as Trustee U/T No. 4450 hereinafter called Lessor, and Riccardo Alvarez, hereinafter called Lessee.

It was signed for the lessor by "Veda Jakovljevich, Agent and Beneficiary of Trust No. 4450." This original lease commenced on September 1, 1963, and was to expire August 31, 1964, with a yearly rental of $2,400, payable in advance in equal monthly installments of $200. It was also stated in the lease that "Lessee shall pay to Lessor, at the office of Stanley Jakovljevich" the monthly rent, and, in practice, it resulted that defendant did pay rent directly to the plaintiffs.

Executed simultaneously with the lease was a rider granting defendant an option to renew the lease for an additional three years commencing September 1, 1964, at the same rental provided defendant made certain repairs, and, if defendant was unable to make the repairs, then at a monthly rental of $325. Defendant, who conducted a retail shoe business on the premises, on May 26, 1964, exercised his option under the rider by directing a letter to Stanley Jakovljevich notifying him that he would extend the lease and make the necessary repairs.

On April 16, 1965, Veda and Stanley Jakovljevich, by their attorney, directed a letter to defendant proposing a modification of the lease and rider "between yourself and the Cosmopolitan National Bank, as Trustee under Trust No. 4450, the beneficiaries of which are Stanley and Veda Jakovljevich," to the extent that defendant would be relieved of his obligation to make repairs but would pay, instead, a monthly sum of $300 commencing January 1, 1965, for the remainder of the term. This lease modification letter (which was agreed to by defendant) was signed by the Jakovljeviches without description of their capacity in signing, other than the language in the letter itself (quoted above in this paragraph), referring to the trustee bank as the lessor.

Defendant paid the $300 monthly sum directly to the Jakovljeviches from January to December, 1965. During the latter month, defendant abandoned the premises and moved his business to a new location. Since that time, no rent has been paid by defendant.

Plaintiffs, as beneficiaries of the trust, *fn1 have attempted to sue defendant, as tenant, for the unpaid rent, and defendant questions their authority to bring the action in that capacity since the trustee was designated as lessor in the lease. So far as we know, this specific issue has not previously been presented for review in this state, although Illinois courts have decided many cases relating to the rights of beneficiaries under a land trust. Thus, it was held in Chicago Title & Trust Co. v. Mercantile Trust & Savings Bank, 300 Ill. App. 329, 20 N.E.2d 992, that a judgment against a land trust beneficiary did not constitute a lien against the real estate, since the interest of such a beneficiary is a personal property interest. In Schneider v. Pioneer Trust & Savings Bank, 26 Ill. App.2d 463, 168 N.E.2d 808, the court held that a beneficiary did not have the authority to accept an offer to purchase the real estate, since only the trustee had power to deal with the title. It has been stated that the trustee under a land trust, and not the beneficiary, is the proper party to bring a forcible detainer action. Liberty Nat. Bank of Chicago v. Kosterlitz, 329 Ill. App. 244, 67 N.E.2d 876. It has been recognized that the trustee has full title to the real estate, both legal and equitable, and that a federal tax lien against a beneficiary did not attach to the real estate of a land trust. Chicago Federal Savings & Loan Ass'n v. Cacciatore, 33 Ill. App.2d 131, 178 N.E.2d 888, affirmed 25 Ill.2d 535, 185 N.E.2d 670. See, also, Seno v. Franke, 20 Ill.2d 70, 169 N.E.2d 335; Chicago Title & Trust Co. v. Mercantile Trust & Savings Bank, 300 Ill. App. 329, 20 N.E.2d 992; and Robinson v. Chicago Nat. Bank, 32 Ill. App.2d 55, 176 N.E.2d 659.

Plaintiffs, as beneficiaries, ask this court to allow them to sue defendant for rents due under a lease agreement signed by one of them as "Agent and Beneficiary of Trust No. 4450." They advance the arguments that they had leased the property to defendant in their own behalf; and, further, that the specific designation (in the lease agreement) of the trustee bank as lessor, and the execution by one of the plaintiffs as agent, should not be controlling. Both contentions must be rejected.

There is nothing of substance to support plaintiffs' theory that Veda Jakovljevich executed the lease agreement on behalf of the beneficiaries. Plaintiffs contend that when she signed the lease, "Agent and Beneficiary of Trust No. 4450," she was acting as agent of the other beneficiary, Stanley Jakovljevich, and in her own behalf as beneficiary, and not as agent of the trustee, Cosmopolitan. Such a construction becomes unacceptable when the lease agreement is read in its entirety, as it must be. The introductory clause of the indenture states that the parties to the lease are Cosmopolitan, as lessor, and defendant, as lessee. Therefore, we are persuaded that the agency recited in Veda Jakovljevich's execution of the lease must be considered as that relationship which she thereby claimed existed between her as beneficiary and the lessor under the lease, the latter being very carefully described as the bank "as Trustee U/T No. 4450." Furthermore, the lease agreement does not mention the beneficiaries by name nor refer to them as beneficiaries of the trust, except in two instances. One such instance is in the execution clause to which we have just made reference. The other is in regard to the payment of rent, providing that it should be paid "to Lessor at the office of Stanley Jakovljevich." (Emphasis supplied.) Thus, plaintiffs' contention that their capacity as lessors was evidenced by the fact that defendant attorned to them through his payment of rent, is without merit since they were expressly designated in the lease as agents for the collection of rent on behalf of the lessor. We conclude that this lease agreement is a contract between two parties, the lessor, Cosmopolitan, and the lessee, defendant.

The basic issue whether a beneficiary can maintain an action for rent is therefore limited in the instant case to the situation where the beneficiary is not a party to the lease. It may well be that when a landlord-tenant relationship is established between a beneficiary as landlord and a tenant, the beneficiary may then sue for unpaid rent, since this result would be "more in line with the principles of land trusts as established by the decisions of the Illinois Courts and, by implication, contrary to the OPA cases (Liberty Nat. Bank, supra). . . ." Land Trusts, ed Henry W. Kenoe, Chicago Bar Association, 1967. *fn2 Since, however, we have found that that situation does not exist in the case before us, we do not consider ourselves bound by the Illinois cases which have upheld the right of a beneficiary-lessor to maintain an action for rent. E.G., Bellows v. Ziv, 38 Ill. App.2d 342, 187 N.E.2d 265.

We conclude that the trustee bank, as lessor, is the only party entitled to bring an action for unpaid rent in this case.

Plaintiffs maintain that the letter dated April 16, 1965, written by plaintiffs' attorney and accepted by plaintiffs in their own behalf and also by defendant, constituted a valid contract establishing the plaintiffs' right to sue defendant for rent. This document, however, was not intended to supplant the lease agreement, but merely to modify one of its terms. *fn3 In so doing, it specifically referred to the trustee bank as a party to the lease, and said nothing from which it could reasonably be understood that the letter constituted a novation, which, in any event, would have required the consent of the original lessor. Becker v. Dvorson, 28 Ill. App.2d 174, 171 N.E.2d 86; Karraker v. Eddleman, 101 Ill. App. 23. Nor has it been established that defendant, in accepting the modification, ...

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