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Third Establishment v. 1931 North Park Apts.





APPEAL from the Circuit Court of Cook County; the Hon. ARTHUR L. DUNNE, Judge, presiding.


The issue in this case is whether the lessor or its lessee has the right to insurance proceeds on contents owned by the tenant after a fire damaged or destroyed the contents. The trial court granted summary judgment for the lessee holding that the lessor had no claim to the proceeds. It also denied the lessee's claim for attorney's fees. Both parties appealed.

We affirm.

The pleadings and other items introduced into evidence disclose the following:

The defendant, 1931 North Park Apartments (hereinafter called North Park), through its predecessor in interest leased certain real property located at 1944 North Clark Street in Chicago to Prestige Restaurant. Prestige assigned its interest in the leasehold to Le Pub, Inc., with the consent of North Park. AM Foods, Inc. (hereinafter AM), the nominal defendant, is the successor in interest to Le Pub, Inc. Le Pub, Inc., then subleased the property to the plaintiff, Third Establishment, Inc. (hereinafter called Third Establishment). Third Establishment alleged in its complaint that at no time prior or subsequent to the execution of the lease between North Park and Prestige (hereinafter called the top lease) did North Park ever lease, transfer, own or place any tangible property in the demised premises, but that all of the tangible personal property therein was owned by Third Establishment or AM. North Park admitted this allegation. Third Establishment further alleged that the trade fixtures were placed upon the premises by Third Establishment and AM and that North Park did not pay or contribute for said improvements or betterments and had no ownership or other interest therein. North Park denied this claim in that it claimed a right to the insurance proceeds on the fixtures. It did not at any time, in a verified or unverified pleading, allege or suggest that it owned the fixtures prior to their destruction. In his affidavit Daniel E. Reilly, president of Third Establishment, reiterated the statement that North Park placed no personal property on the premises. He also stated that Third Establishment paid personal property taxes on the property contained within the premises and claimed depreciation expense on its corporate income tax return for that property owned by it. Anthony DeRosa, an officer of AM, in his affidavit also stated that North Park at no time placed personal property in the premises but that all the property contained therein was the property of AM and/or Third Establishment.

The top lease consisted of two portions, a form lease, parts of which had been stricken out, and a 14-page rider. A typed proviso in the form lease stated that in case of any inconsistency or ambiguity between the provisions of the rider and the provisions of the printed lease, the provisions of the rider would control. Among the provisions of the form lease were the following:

"9. CONDITION OF THE PREMISES: Lessee has examined the premises before signing this lease and is satisfied with the condition thereof, excepting only such alteration, improvements, repairs, decorating and cleaning, if any, which are specifically provided for herein. Lessee's taking possession shall be conclusive evidence as against Lessee that the premises were in good order and satisfactory condition when Lessee took possession hereunder. No promise of Lessor to alter, remodel, improve, repair, decorate or clean the premises or any part thereof, and no representation respecting the condition of the premises or the Building, has been made by Lessor to Lessee, unless the same is contained herein or made a part hereof. At the termination of this lease by lapse of time or otherwise, Lessee shall return the premises and all equipment and fixtures therein in as good condition as when Lessee took possession, ordinary wear and tear excepted, failing which Lessor may restore the premises, equipment and fixtures to such condition and Lessee shall pay the cost thereof upon request.

10. ALTERATIONS: * * *

All additions, hardware, non-trade fixtures and all improvements, temporary or permanent, in or upon the premises, whether placed there by Lessee or by Lessor, shall, unless Lessor requests their removal, become Lessor's property and shall remain upon the premises at the termination of this lease by lapse of time or otherwise without compensation or allowance or credit to Lessee. If, upon Lessor's request, Lessee does not remove said additions, hardware, non-trade fixtures and improvements, Lessor may remove the same and the Lessee shall pay the cost of such removal to Lessor upon demand. If Lessee does not remove Lessee's furniture, floor coverings, trade fixtures and other personal property of all kinds from the premises prior to the end of the term, however ended, Lessee shall be conclusively presumed to have conveyed the same to Lessor under this lease as a bill of sale without further payment or credit by Lessor to Lessee."

The rider contained the following relevant provisions:


Lessee shall furnish to Lessor and keep in full force and effect at all times during the term of this Lease, one or more policies of insurance issued by responsible insurance companies insuring the Lessor and the Premises against claims, damages and liens by reason of the sale or giving away on or from the Premises of any fermented alcoholic or other spirituous beverages, * * *.

(a) Bodily injury: * * *

(b) Injury to means of support: * * *

(c) Injury to property: * * *

LESSEE shall also keep the Lessor insured in responsible insurance companies ...

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