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64 E. Walton, Inc. v. Chicago Title & T.





APPEAL from the Circuit Court of Cook County; the Hon. ROBERT E. McAULIFFE, Judge, presiding.


Rehearing denied March 19, 1979.

Defendant-lessor, Frances Wallace, appeals from an order entering judgment in the amount of $99,855.24 in favor of plaintiff-lessee for breach of the covenant of quiet enjoyment and entering a finding against her in a counterclaim for breach of certain lease provisions. The issues presented are (1) whether the damage award is contrary to the law and the evidence; and (2) whether the finding against defendant on her counterclaim is against the manifest weight of the evidence.

From the relevant testimony, it appears that on July 16, 1971, plaintiff entered into a written lease of the premises at 64 East Walton Street, in Chicago, with defendant land trustee Chicago Title and Trust Company *fn1 at the direction of the sole beneficiary, defendant Frances Wallace. The 10-year lease provided for monthly rental payments of $1,500 for the first five years and $1,750 for each of the remaining years. Although the lease term was not to commence until December 1, 1971, plaintiff was granted immediate possession of the first and third floors in consideration of a $6,025 premium paid pursuant to the written agreement. The lease also provided that plaintiff was to have possession of the basement and second floor on October 1, 1971, and if they were not available on that date, plaintiff's rental obligation would be abated by $15 for each day possession thereof was denied.

Concerning other pertinent provisions, paragraph 15 of the lease required plaintiff to keep the interior and exterior of the building in good condition and allowed defendant to make repairs and charge plaintiff therefor in the event plaintiff failed to properly maintain the premises. However, neither paragraph 15 nor any other portion of the lease required plaintiff to occupy the premises. Paragraph 5 permitted plaintiff to use the premises for a restaurant, and paragraph 20 allowed plaintiff to remodel or alter the building, including structural alterations, but prohibited plaintiff from materially changing the front exterior without defendant's written consent. Paragraph "H" of a rider to the lease required plaintiff to deliver to defendant any plans or specifications for proposed remodeling, but did not require approval of the plans by defendant unless the plans contemplated material alterations to the facade. Finally, paragraph 22 provided that the successful party in any suit to enforce the lease or to recover damages in the event of default may recover costs, expenses and reasonable attorneys' fees.

By October 1, plaintiff had access to all floors of the building; but, on about October 8, defendant had all of the locks changed, preventing plaintiff from entering the building. Plaintiff's requests for keys to the new locks went unsatisfied, and on October 20 it filed a complaint for injunctive relief. On October 29, the trial court ordered defendant to provide proper keys, and defendant's counsel tendered them that same day.

In the meantime, George Makris, president and principal shareholder of the plaintiff corporation, had hired Harlan Pratt, an architect, to develop plans for the proposed remodeling of the building for use as a restaurant. In November of 1971, Pratt completed a set of plans, and at least one contractor submitted a bid thereon. These plans were forwarded to defendant's attorney, as required by the lease, but it appears that they met with the disfavor of Mrs. Wallace. At any rate, the plans could not be utilized because they contemplated the use of an open center staircase, which violated fire codes. A second set of plans, intended to resolve the staircase problem, was completed in February of 1972 and a third set, aimed at reducing costs, was developed in March. Sometime in the beginning of April, plaintiff commenced exploratory work, which involved boring holes in the walls at strategic locations to determine the structural feasibility of various remodeling designs.

While the record is not entirely clear, it appears that defendant was not pleased with the lease and that problems developed between the parties with the result that on April 18, 1972, plaintiff filed a petition for supplemental injunctive relief, essentially alleging that defendant had engaged in a course of harassing and obstructious conduct, interfering with the remodeling project. Defendant countered on April 25 with a petition for injunction, alleging that plaintiff's proposed plans for remodeling would materially change the front exterior of the building and that, although defendant did not approve of such plans as required by the lease, plaintiff had commenced work and destroyed a portion of the subject premises. On April 28, an order was entered reciting that plaintiff had agreed to file an indemnity agreement with defendant covering possible damage occurring in the process of the exploratory work and requiring that, upon delivery of such agreement, defendant was to cease interfering with plaintiff's exploratory work.

Plaintiff then continued with its exploratory work and completed a fourth and final plan for remodeling on June 27, 1972. This represented a major change from the previous plans and allegedly was again aimed at cutting costs. According to Makris, it also satisfied defendant's objections. On July 14, under the final set of plans, plaintiff applied for a building permit which was issued on September 26. *fn2

On September 28, defendant filed a second petition against plaintiff, alleging that it failed to reimburse her for the prorated amount of property taxes due as required by the lease; that plaintiff left the premises unoccupied and, as a result, the building had deteriorated and attracted vandals; that defendant incurred expenses in order to protect and maintain the building, including expenditures for repairing the heating unit; and that plaintiff, by these actions, had breached the lease agreement. No order was ever entered resolving any of these allegations.

During the summer of 1972, Makris began contemplating the feasibility of opening another restaurant, and in late 1972 construction began on a new restaurant called "Rascals" in the suburb of Naperville. The total cost of this restaurant exceeded $1 million, approximately $100,000 of which was paid in cash by Makris and the rest financed. Rascals opened for business in May 1973.

On June 14, 1973, defendant filed yet a third petition against plaintiff, alleging basically that plaintiff had failed to maintain the premises in a clean and orderly condition or adequate state of repair; that defendant would therefore be forced to assume the financial responsibility for maintenance; that plaintiff failed to proceed with renovations as previously represented to defendant; and that plaintiff has, by its acts, breached the lease agreement. Defendant requested an order terminating the lease and compensating her for expenses incurred. Again, no order was entered with respect to this petition, but on June 21, plaintiff's attorney sent a letter to defendant's attorney stating its intent to develop revised plans for renovation of the premises and solicit bids within 60 days. On September 5, however, plaintiff informed defendant by letter that it had decided to cancel its renovation plans because of "the present mortgage market and the cost of financing the proposed construction and remodeling of the building."

Further significant events occurred the next month. On October 16, Makris stopped by the building and noticed that a window was missing, broken glass was lying on the sidewalk, and the facade of the building had been painted. He later ascertained that the painting had been authorized by defendant, without his consent or knowledge. In order to prevent further interference by her, Makris changed all the locks in the building on October 19. On October 21, defendant telephoned plaintiff's employee, Roger Mobeck, and informed him that she intended to again change the locks — which she did the next day. Makris, however, changed the locks back immediately.

On November 7, 1973, plaintiff filed a petition for injunction, alleging that defendant had used vile and abusive language toward plaintiff and had asserted that plaintiff would never operate a restaurant under the lease in question; that defendant caused the facade of the building to be painted without plaintiff's knowledge or permission, and that in the course thereof certain windows were broken; that defendant changed the locks on October 22, shortly after plaintiff had changed the locks to deter defendant from further interfering; and that defendant had engaged in other unreasonable harassing conduct. Plaintiff requested an injunction prohibiting defendant from interfering with its occupancy of the premises. On December 10, plaintiff amended its complaint to add count II for damages, alleging that since the inception of the lease, it had expended $86,000 including rent, as well as $10,000 in attorneys' fees, but had been continuously denied the use and benefit of the lease and incurred expenses because of defendant's harassing conduct. Plaintiff requested damages in the amount of $100,000.

On December 23, defendant in turn filed a counterclaim for damages, alleging that plaintiff removed certain items from the premises, including three air-conditioners, 12 light fixtures, one fireplace, all hardware from doors and closets, certain mahogany paneling, kitchen cabinets, and a 100-year-old tree located in the back yard; that plaintiff's exploratory work caused substantial damage to the premises; that plaintiff failed to initiate its remodeling pursuant to paragraph 20 of the lease; and that plaintiff failed to maintain the premises in a satisfactory state of repair, thus necessitating expenditures on defendant's part for maintenance, for which she asked damages of $14,954 as well as costs and fees.

Plaintiff's count I for injunctive relief went to trial and, on January 17, 1974, in an order reciting a stipulation of the parties that defendant had on "at least one occasion asserted dominion over the premises by causing the property or a portion thereof to be painted without the consent of lessee [plaintiff]," defendant was restrained from interfering with plaintiff's use, occupancy and enjoyment of the premises. Plaintiff's damage count and defendant's counterclaim were then transferred to the Law Division, where a trial eventually commenced on February 14, 1977, during which plaintiff specified its claim for damages as follows:

"Rent ............................................. $45,025.00 Rent Deposit ..................................... 9,000.00 Wages — S. Hershman ........................ 5,500.00 Security Service ................................. 1,681.65 Lock changes ...................................... 127.50 Auto leasing ..................................... 1,445.41 Trademark & Logo .................................. 30.00 Employee payroll tax .............................. 407.03 Architectural service ............................ 11,871.54 Engineering ...................................... 288.00 Heat, Electricity, Water ......................... 2,523.86 Real Estate Tax .................................. 2,477.91 Insurance ........................................ 2,137.00 Electricity & Gas Deposits ........................ 325.00 Legal Fees ....................................... 10,679.80 Maintenance ...................................... 2,974.31 Interest on Security ...

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