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National Aircraft Leasing v. American Airlines

OPINION FILED AUGUST 3, 1979.

NATIONAL AIRCRAFT LEASING, LTD., PLAINTIFF-APPELLANT,

v.

AMERICAN AIRLINES, INC., DEFENDANT-APPELLEE.



APPEAL from the Circuit Court of Cook County; the Hon. HERBERT J. FRIEDLUND, Judge, presiding.

MR. JUSTICE MEJDA DELIVERED THE OPINION OF THE COURT:

This action is based upon a contract between National Aircraft Leasing, Ltd. (National), and American Airlines, Inc. (American), in which National was given various rights to 18 airplanes owned by American. National originally brought the action to enjoin American's sale of two of the aircraft but, upon American's completion of the sale, National was allowed to amend its complaint and seek damages. Judgment was entered for American at the close of National's case and National has appealed, contending that (1) the trial court erred in refusing to apply New York law as provided by the contract, and (2) the trial court erred in entering judgment in favor of American at the close of National's case. We affirm. The pertinent facts follow.

On December 29, 1972, American and National entered into a written agreement whereby National was given various rights to lease and purchase a total of 18 aircraft from American's fleet. The planes and the rights thereto were divided into three categories.

First, American agreed to lease two specific planes to National for 24 months and gave National the option to purchase the two planes at the end of the lease term. (Planes in this category will hereinafter be referred to as "Purchase" planes.)

The second category was defined in paragraph 20 of the contract whereby National was granted the option to lease eight additional aircraft (hereinafter "Option" planes) on the same terms and conditions as the Purchase planes. In a letter dated January 19, 1973, National further agreed that, upon its exercise of any of its options to lease an Option plane, it would simultaneously exercise its option to purchase the plane at the end of the lease term. National was to pay $10,000 per option, and was to exercise its options by June 30, 1974.

The third category of planes was created by paragraph 21 of the contract, which granted National a right of first refusal with respect to eight additional aircraft in American's inventory. Under paragraph 21, American agreed to notify National of any bona fide offer to sell or lease any of the eight aircraft (hereinafter "Rights" planes) to a third party. National in turn agreed that it would within 15 days notify American of its agreement to buy or lease such Rights plane under the same terms and conditions. If America were not so notified it would then be free to sell or lease the Rights plane to a third party on terms no more favorable than those offered to National in the notice. If the plane referred to in the notice were not sold to the third party within 60 days thereafter, National's right of first refusal with respect to that airplane would be reinstated. There was no additional consideration paid by National for the right of first refusal. Paragraph 21 also provided that, in the event that National exercised its option on one of its Option planes under paragraph 20, one of the Rights airplanes would become an Option plane, thus maintaining a pool of eight Option planes and reducing the number of Rights planes accordingly.

On July 18, 1973, American notified National of an offer to sell two of the Rights aircraft and invited National to exercise its right of first refusal by notifying American within 15 days that it agreed to acquire the two planes under the same terms and conditions set out in the offer to the third party. As of the date of American's notice, National had exercised its option on three Option planes. Consequently, as of that date, there were five planes in the Purchase category and three Rights planes had shifted to the Option plane pool, leaving a total of eight Option planes and five Rights planes.

On July 26, 1973, National informed American that it was exercising its paragraph 20 option on the five remaining original Option planes, that the five remaining Rights planes therefore became Option planes, and that thus there were no longer any Rights planes which could be sold to a third party as stated in American's letter of July 18. National made no other response to American's notice of the offer to sell.

On August 1, 1973, National brought this action to enjoin the sale of the two Rights planes. It also sought a temporary injunction, which apparently was not pursued further, and American proceeded to sell the two aircraft. National later amended the complaint to seek $4,000,000 in damages. Judgment was entered for American pursuant to its motion at the end of National's case, after which National moved to file briefs and memoranda on New York law. National's motion was denied and National has appealed.

OPINION

I.

National first contends that the trial court erred in refusing to apply New York law, maintaining that the contract provides that New York law will govern any matters arising under the contract and that the court must take judicial notice of the laws of that State.

• 1 While the parties agreed that New York law would apply and the courts> will usually follow such an expression of intent (Hofeld v. Nationwide Life Insurance Co. (1975), 59 Ill.2d 522, 529, 322 N.E.2d 454, 458), the provision is not necessarily self-activating. National attached a copy of the contract, with its choice of law provision, to its complaint, but at no time before judgment did either party otherwise bring the matter to the court's attention.

The conduct of the parties notwithstanding, National maintains that the court should have nonetheless applied New York law because it is required by statute to take judicial notice of the statutory and common law of other States. (Ill. Rev. Stat. 1977, ch. 51, par. 48g.) The statute cited by National is part of the Uniform Judicial Notice of Foreign Law Act (Ill. Rev. Stat. 1977, ch. 51, pars. 48g through 48n), which also provides:

"The court may inform itself of such laws in such manner as it may deem proper, and the court may call upon counsel to aid it in obtaining such information.

Any party may also present to the trial court any admissible evidence of such laws, but, to enable a party to offer evidence of the law in another jurisdiction or to ask that judicial notice be taken thereof, reasonable notice shall be given to the adverse parties in the ...


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