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Toushin v. Gonsky

OPINION FILED OCTOBER 5, 1979.

STEVEN TOUSHIN, PLAINTIFF-APPELLEE,

v.

SHARON GONSKY ET AL., DEFENDANTS-APPELLEES. — (JOHN ROSSEN ET AL., INTERVENING PLAINTIFFS-APPELLANTS,

v.

FESTIVAL THEATER, INC., ET AL., APPELLEES.)



APPEAL from the Circuit Court of Cook County; the Hon. JOSEPH M. WOSIK, Judge, presiding.

MR. JUSTICE MEJDA DELIVERED THE OPINION OF THE COURT:

Appellants challenge orders of the circuit court which denied them leave to intervene and which denied their claims for rent against the receiver. They raise the following issues for review: (1) whether the trial court erred in denying their petition to intervene; and (2) whether the trial court erred in denying appellants' claims for rent and other charges. In addition, appellees Toushin and Festival Theater, Inc. (Festival), have filed a cross-appeal and raise the additional issue of whether the trial court's order denying the return of a security deposit and a request for a surcharge was against the manifest weight of the evidence. We reverse and remand. The pertinent facts follow.

The instant appeal is an outgrowth of an action for an accounting and the dissolution of Festival brought by Steven Toushin against Paul Gonsky, Jeffery Begun, and Festival on April 16, 1975. Paul Gonsky died during these proceedings and his executrix was substituted as a party. Those three were the sole shareholders of Festival, a corporation which operated eight theaters, two of which are involved in this appeal. Begun and Gonsky counterclaimed against Toushin in their own behalf and for Festival. Toushin answered this counterclaim and brought his own further counterclaim against Begun and Gonsky, seeking the appointment of a receiver for Festival to conduct its dissolution. On July 28, 1977, an order was entered by agreement appointing James M. Flanagan receiver for Festival, effective August 2, 1977.

Appellants had previously leased two theaters to Festival, the Festival Theater and the Three Penny Cinema. It is necessary to set forth the terms of the various leases to understand the parties' contentions and liabilities.

Three Penny Cinema

On July 25, 1971, Cine La Joya Corporation, as sublessor, and Festival Theater, Inc., as sublessee, entered into a sublease for the theater premises at 2424-26 North Lincoln Avenue, Chicago, Illinois. The sublease provided for a monthly rental of $850 for the first year, $950 per month thereafter, and an additional rent of 10 percent of the weekly gross box office receipts in excess of $4750. The term of the sublease expired on June 14, 1975. Other provisions in the sublease obligated the lessee to provide at its expense satisfactory boiler insurance, and at the termination of the lease, to return the theater fixtures and equipment in good condition, reasonable wear and tear excepted.

On November 29, 1972, the parties entered into a rider to the sublease which increased the fixed monthly rental to $1000 and which cancelled the provisions for additional rent based on the percentage of gross receipts. The rider also granted the lessee an option to renew the lease for five years if Festival gave notice of its intention to do so prior to May 15, 1974; the rider provided that, in the event the option was exercised, the fixed monthly rental would be $1100 for the period June 15, 1975, to June 14, 1977, and $1175 per month thereafter, through June 14, 1980. On April 11, 1974, Festival gave written notice of its election to exercise the renewal option.

On February 9, 1977, Begun and Rossen entered into a further agreement with respect to the Three Penny Cinema, extending the lease term by 2 years 8 1/2 months to February 1983, increasing the monthly rental commencing with the March 1, 1977, installment to $1400, and giving Festival an option to extend the lease to 1986.

Festival Theater

On April 21, 1971, Puerto Rico Theater Corporation, as lessor, and Festival, as lessee, entered into a 3-year lease for the theater premises at 3912 North Sheridan Road, Chicago. Subsequently, Puerto Rico Theater Corporation assigned its interest in the lease to John and Louise Rossen.

On November 29, 1972, Festival and John Rossen entered into a rider to the Festival Theater lease, which extended its term to April 30, 1976, prescribed a monthly rental of $950 plus 10 percent of the weekly gross box office receipts in excess of $4750, and granted the lessee two renewal options. Festival was given an option to renew the lease for two years commencing May 1, 1976, provided it gave written notice of its intent to do so at least 90 days prior to expiration of the lease. It was given an additional 2-year renewal option commencing May 1, 1978, subject to the same 90-day proviso.

Festival gave no written notice of its intent to renew the Festival Theater lease. On January 10, 1977, Begun and John and Louise Rossen entered into a new 4-year lease for the Festival Theater. The term of the lease was May 1, 1976, to May 31, 1980, and the prescribed rental was $2000 per month plus 10 percent of the weekly gross box office receipts in excess of $5000. The lease gave Festival an option to renew through May 1984, at a set increased rental for the renewal period. Other provisions in the lease contained a commitment by the lessee that it would return the fixtures and equipment in good condition, that it would provide boiler insurance at its expense, and that it would pay its pro-rata share of the water bills assessed against the building of which the theater was a part.

Festival stopped paying rent for the Festival Theater around April 1977 and for the Three Penny around August 1977. On August 8, 1977, appellants sent a letter to the receiver informing him that there were rent delinquencies, at the time his appointment became effective, of about $13,200 and requesting payment to avoid repossession. The receiver did not respond to the letter. Later in August 1977, appellants instituted forcible entry and detainer actions against Festival to recover possession of the two theaters. Ex parte judgments for possession were entered on August 23, 1977, for the Festival and on September 7, 1977, for the Three Penny. On August 29, 1977, the receiver filed a petition for a status quo order seeking to consolidate the forcible entry cases with the instant case and to enjoin appellants from attempting to sue for money or to regain the theaters except by way of this action. On September 6 the trial court ordered that appellants not interfere with the receiver's operation of the two theaters without leave of court.

Appellants answered the petition for status quo by setting forth the rent and other delinquencies which were allegedly due them and requesting that the receiver turn over possession of the theaters. The receiver requested that appellants prove that the later leases were valid and plaintiff Toushin claimed that Begun entered the later leases without authority. Appellants sought an immediate hearing on their claims which was delayed for some time. On October 31, 1977, the court did order the receiver to pay appellants $2400 as ...


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