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Kokenes v. Cities Service Oil Company

NOVEMBER 27, 1974.

JOHN KOKENES ET AL., PLAINTIFFS-APPELLEES,

v.

CITIES SERVICE OIL COMPANY, DEFENDANT AND THIRD-PARTY PLAINTIFF-APPELLANT. — (ANTHONY OIL COMPANY, THIRD-PARTY DEFENDANT-APPELLEE.)



APPEAL from the Circuit Court of Cook County; the Hon. FRANCIS X. CONNELL, Judge, presiding.

MR. JUSTICE HALLETT DELIVERED THE OPINION OF THE COURT:

The plaintiffs, lessors of a gasoline service station and car wash to the defendant Cites Service Oil Company, after a jury trial, recovered a judgment for $25,000 against said lessee, which, in turn, recovered a third-party judgment for $8,025 against its sublessee, the Anthony Oil Company. The defendant and the third-party defendant appeal. We conclude that the said lessee is not liable to the lessors and therefore reverse both judgments, without remandment.

On January 10, 1956, the plaintiffs, John and Sophie Kokenes (hereinafter lessors), entered into a written lease with the Cities Service Oil Company (hereinafter Cities Service) of the premises at 5036 West 26th Street, in Cicero, Illinois, consisting of a gasoline service station and a car-wash facility. The lease ran for an initial period of 10 years (June 1, 1956-May 31, 1966) with an option to renew for another 5 years. The lease recognized that subleases and assignments could be made but did not require the lessor's approval of such subleases or assignments. Said lease also expressly provided (in paragraph 8) that,

"Lessor agrees to place and keep all improvements leased hereunder in good operating condition and to paint, replace and reconstruct any improvements which without the fault of Lessee may be destroyed or injured by fire or other casualty or become worn or otherwise no longer properly useful and efficient; * * *"

and (in paragraph 11) that,

"* * * Upon the termination hereof Lessee shall surrender the demised premises in as good condition as when received, reasonable wear and tear and loss by fire, casualty or by causes not the fault of Lessee, excepted. * * *" (Emphasis ours.)

The first subtenant was the lessor, John Kokenes, who operated the station and car wash for 1 year. Other subtenant operators followed, but he continued to visit the premises several times a week, purchasing gas and a car wash and was always familiar with its operation.

When the 10-year period expired the lease was extended for another 5 years and Cities Service then entered into a written sublease to the Anthony Oil Company (hereinafter Anthony), which lease ran from June 1, 1966, until May 31, 1971, and included a "yield-back" provision providing for the return of the premises to Cities Service at the expiration of the lease "in good order and condition, reasonable wear, tear and use excepted."

From that time on, Anthony sublet the premises to various individuals who operated the station and car wash under oral leases.

In late April and early May of 1971, the premises were being operated by Ken Brown and Larry Brown, his father, under an oral arrangement with Anthony and all employees were hired by them, not by Cities Service or Anthony.

About May 1, 1971, a number of young men entered the premises while they were not in operation and vandalized them by tearing up the roof, breaking windows and hauling pipes, chains and motors away in a truck and trailer. Only one of these persons was specifically identified as being "Jim," an employee of Ken Brown, one of the operators put in possession by Anthony. The others were generally identified as boys who worked or had worked at the car wash. Neither Cities Service nor Anthony ever attempted to repair the premises, and they remained vacant to the end of the term.

The lessors then sued Cities Service for damages for failure "to surrender the premises in as good condition as when received." Cities Service, in turn, brought in its sublessee, Anthony, on a third-party indemnity action.

The case was tried before a jury and, after motions by Cities Service and Anthony for directed verdicts had been made and denied, a verdict for $25,000 was returned in favor of the lessors against Cities Service. A verdict was also returned in favor of Cities Service against Anthony for $10,000. Judgments were entered on said verdicts and the usual post-trial motions, including motions by Cities Service and Anthony for judgments notwithstanding the verdicts or for a new trial, were filed. Cities Service's third-party judgment against Anthony was cut from $10,000 to $8,025 but all other motions were denied and these appeals followed.

Many extremely complex and ingenious arguments are made by the various parties but, in our considered opinion, only one relatively simple issue is determinative, i.e.: Under the specific "yield-back" covenant here involved, is Cities Service liable to ...


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