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J.b. Stein & Co. v. Sandberg

OPINION FILED APRIL 7, 1981.

J.B. STEIN & COMPANY, D/B/A HONEY GIRL, INC., PLAINTIFF-APPELLEE,

v.

ROBERT SANDBERG ET AL., DEFENDANTS-APPELLANTS.



APPEAL from the Circuit Court of Du Page County; the Hon. JOHN J. BOWMAN, Judge, presiding.

MR. JUSTICE LINDBERG DELIVERED THE OPINION OF THE COURT:

This is an interlocutory appeal from the Circuit Court of Du Page County presenting the questions of whether the language of an exculpatory clause in a commercial lease was ambiguous in failing to specify the negligence of the lessor, whether the clause survives the enactment of a statute prohibiting such clauses, and whether there is an implied warranty of habitability upon which an action for negligence resulting in property damage can be maintained. The trial court denied the defendants' motions to dismiss and certified those questions.

The appeal focuses on the complaint instituted by the plaintiff, J.B. Stein & Company, Inc., to recover damages for the destruction of property resulting from a fire which occurred in a building owned by the defendants. On May 6, 1964, plaintiff leased space in the subject building from the then owners for a term of 10 years. The lease provided that the premises were "to be occupied and used by lessee for the sale at retail of womens apparel and accessories." Paragraph 22 of said lease, which was included in a rider incorporated into the lease, provided the lessee with two separate options to "renew or extend" the terms of the lease for successive periods of five years each. Plaintiff was required to submit written notice of its desire to exercise the options to the lessor a year prior to the expiration of the respective preceeding terms. The renewal terms would be based upon the same terms, covenants, and conditions included in the original lease with the exception of a deduction from percentage rentals for improvements clause and the option clauses themselves.

On April 30, 1973, the defendants purchased the subject building and received an assignment of the lease in question. Thereafter, on May 4, 1973, plaintiff exercised its option to renew the term of the lease for five years beginning September 1, 1974. On September 4, 1974, a fire occurred in the subject building resulting in extensive damage to plaintiff's property. Plaintiff's complaint alleged that the electrical wiring system in the subject building overloaded and caused the fire. Three causes of action were alleged: negligence, res ipsa loquitur, and breach of implied "warranty of habitation."

Defendants filed a motion to dismiss contending that an exculpatory clause contained within the lease absolved them of any liability for the damage in question. Additionally, they argued that no implied warranty of habitability exists with respect to commercial leases in Illinois. This motion was denied. Defendants renewed said motion immediately prior to trial. Although the court again denied the motion, it certified that the motion raised questions of law as to which there is substantial ground for difference of opinion, thereby placing the matter within the purview of Supreme Court Rule 308 (Ill. Rev. Stat. 1979, ch. 110A, par. 308). Pursuant to Rule 308, the court identified the following questions: (1) whether under Illinois law, the exculpatory clause contained in the commercial lease in question should relieve the lessor of his own liability, based upon negligence, breach of warranties, or otherwise; (2) whether "An Act making void and unenforceable certain agreements exempting lessors from liability * * *" (Ill. Rev. Stat. 1973, ch. 80, par. 91) rendered void an exculpatory clause in the subject lease originally executed in 1964 before the effective date of the statute, where said lease was renewed by an exercise of lessee's option in 1973, after the effective date of the statute; and (3) whether a commercial tenant has a cause of action in Illinois for breach of implied warranties of habitability and/or fitness, when the leased premises burned due to purportedly unsafe conditions in the multiunit commercial building.

THE EXCULPATORY CLAUSE

The exculpatory clause in the subject lease provides in pertinent part:

"6. Waiver of Claims

Lessor and lessor's agents and servants shall not be liable, and lessee waives all claims, for damage to person or property sustained by lessee or any occupant of the building or premises resulting from the building or premises or any part of either or any equipment or appurtenance becoming out of repair, or resulting from any accident in or about the building, or resulting directly or indirectly from any act or negligence of any tenant or occupant of the building or of any other person, including lessors, agents, and servants. This section 6 shall apply especially, but not exclusively, * * * to damage caused by refrigerators, sprinkling devices, air-conditioning apparatus, water, snow, frost, steam, * * * and shall apply equally whether any such damage results from the act or neglect of the lessor or of other tenants, occupants, or servants in the building or of any other person, and whether such damage because or results from anything or circumstance above mentioned or referred to, or circumstance whether of a like nature or of a wholly different nature * * *."

In denying defendants' motion to dismiss, the trial court concluded that the exculpatory clause contained an ambiguity with respect to lessors' negligence and should, therefore, be strictly construed against the lessor. The court determined that the first sentence of the clause relieved the lessor of liability for damage to person or property resulting from (1) the building or premises or any part of either or any equipment or appurtenance becoming out of repair or, (2) any act or neglect of any tenant or occupant of the building or of any other person, including lessors' agents and servants. The court did not believe that this portion of the clause exculpated the lessor from his own acts of negligence.

• 1-3 We conclude the exculpatory clause in the instant case exempted the landlord from liability for any part of the building equipment or appurtenance which became out of repair or for any acts of the lessors' servants or other persons. Damage resulting from a faulty electrical system clearly would be included within this language. Furthermore, any possible ambiguity existing in the first sentence of the clause with respect to negligent acts of the lessor was resolved in the second sentence of the clause which specifically included damage resulting from the act or neglect of the lessor when it used the words "or of any other person." It is well established that where there is any doubt or uncertainty as to the meaning of the language used in a lease it should be construed most strongly against the lessor and in favor of the lessee. (South Parkway Building Corp. v. South Center Department Store, Inc. (1958), 19 Ill. App.2d 14, 153 N.E.2d 291; Moss v. Hunding (1960), 27 Ill. App.2d 189, 169 N.E.2d 396.) Exculpatory clauses are to be strictly construed against the party they benefit. (In re Estate of Corbin (1969), 105 Ill. App.2d 120, 245 N.E.2d 117.) It is equally true, however, that this rule does not apply where the language used is plain and certain and contains no ambiguities. Book Production Industries, Inc. v. Blue Star Auto Stores, Inc. (1961), 33 Ill. App.2d 22, 178 N.E.2d 881.

• 4 In Book Production this court construed an exculpatory clause remarkably similar to the one in the case at bar as containing no ambiguities with respect to the inclusion of the negligent actions of the lessor. Although the exculpatory clause in the case did not anywhere include the phrase "act or neglect of the lessor," the court specifically construed the entire clause so as to include that conduct. Moreover, while the water damage in Book Production was specifically included in the exculpatory clause, it does not appear that such specificity is required. (See, e.g., Strauch v. Charles Apartments Co. (1971), 1 Ill. App.3d 57, 273 N.E.2d 19.) We conclude that the exculpatory clause in the instant case was not ambiguous and, if in force, would exculpatory the lessor for his negligence as well as that of his agents and servants for any equipment becoming out of repair.

VALIDITY OF THE EXCULPATORY CLAUSE

Prior to the enactment of section 1 of "An Act making void and unenforceable certain agreements exempting lessors from liability * * *" (Ill. Rev. Stat. 1973, ch. 80, par. 91), Illinois courts> had consistently determined that an exculpatory clause which specifically or generally provided that the lessor shall not be liable for damages or injuries to the lessee or his property from all or certain causes shall not be against public policy but would be valid and enforceable. (Jackson v. First National Bank (1953), 415 Ill. 453, 114 N.E.2d 721; O'Callahan v. Waller & Beckwith Realty Co. (1959), 15 Ill.2d 436, 155 N.E.2d 545.) The exculpatory clause at issue in Jackson was contained in a business lease. The court concluded that there is nothing in the lessor-lessee relationship which, in and of itself, ...


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