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Intaglio Service Corp. v. J.l. Williams & Co.

OPINION FILED APRIL 23, 1981.

INTAGLIO SERVICE CORPORATION, PLAINTIFF-APPELLANT,

v.

J.L. WILLIAMS & CO., INC., DEFENDANT AND THIRD-PARTY PLAINTIFF-APPELLEE AND CROSS-APPELLANT. — (MCCARTY BROTHERS, INC., THIRD-PARTY DEFENDANT-APPELLEE.)



APPEAL from the Circuit Court of Cook County; the Hon. BRIAN B. DUFF, Judge, presiding.

MR. PRESIDING JUSTICE ROMITI DELIVERED THE OPINION OF THE COURT:

• 1 The issue in this case is whether a person who agreed to build and lease a building can be held liable for damages suffered by the lessee, even after the promisor-lessor had sold the building to another, when the building did not meet the guarantees laid down in the specifications. The trial court held that promisor-lessor could not be held liable as a matter of law. We disagree and reverse.

The plaintiff, Intaglio Service Corporation, filed suit on June 14, 1974, alleging that on or about July 15, 1967, it had accepted a proposal submitted by the defendant, J.L. Williams & Co., Inc., whereby defendant would design, build and lease to plaintiff a plant and offices for gravure engraving; that the parties thereafter entered into a leasing agreement, and the defendant thereafter in furtherance of the agreement prepared or caused to be prepared plans and specifications for the building and in its capacity as designer engineer, general contractor and landlord proceeded with the construction of the building; that the plans and specifications contained certain guarantees; that in addition the defendant as engineer-designer impliedly warranted the adequacy and sufficiency of its plans and specifications to accomplish and produce the essential requirements of plaintiff's business operation; that completion of the building was delayed to the extent that plaintiff was not able to obtain occupancy until late October 1968; and the building was not substantially completed until January 31, 1969, and punch list and corrective work occurred well into 1970; that unless temperature and humidity are maintained within the tight tolerance described in the specifications, severe prejudice to plaintiff's machinery and chemical processes results and its product becomes unmerchantable; that the environmental control system furnished by defendant chronically overheats, undercools and severely malfunctions from a humidity control standpoint. The defendant in its answer denied most of the allegations but did admit it had served as general contractor in the construction of the building.

The contract of August 21, 1967, between the two parties reads in relevant part as follows:

"ARTICLE I

PREMISES AND TERM

Lessor * * * leases to the lessee * * *:

TO HAVE AND TO HOLD the above described premises, together with the buildings and improvements situated thereon * * * for and during a term of twenty (20) years commencing on the first day of the month following the substantial completion of the building and improvements which are to be constructed pursuant to the provisions of Article II hereof, * * *. The leased premises shall be deemed ready for occupancy and substantially completed when the Lessor procures and delivers to Lessee a certificate of occupancy and other permits, if any, required by local authorities for use and occupancy of the premises by Lessee under the terms of this lease and when the architect, hereinafter named, shall so certify in writing directed to the respective parties; or when after the receipt of such certificate of occupancy and permits the Lessee shall have entered said premises, taken possession, and commenced business therein, whichever shall first occur. Upon issuance of architect's certificate aforesaid or on the date of entry by Lessee for commencement of its business Lessee shall issue and deliver its letter accepting the premises as completed in accordance with the plans and specifications provided for in Section 1 of Article II of this lease. The obligation of the Lessee to pay rent and to perform all of the covenants, conditions and agreements of this lease on the part of the Lessee to be performed shall not commence until said premises shall be deemed ready for occupancy and substantially completed as herein defined. The fact that the Lessee takes possession upon substantial completion and the term of the lease has commenced shall not, however, excuse Lessor from the prompt completion of all work required to be done by Lessor pursuant to the terms of this lease. * * *

ARTICLE II

IMPROVEMENTS TO BE ERECTED

Section 1. Prior to the commencement of the term of this lease, Lessor shall erect and complete, at Lessor's expense, a one-story office and brick manufacturing building containing approximately 60,000 square feet, including approximately 52,000 square feet of air conditioned space. All work will be done in accordance with plans and specifications prepared by Thomas A. Rambert, Architect, and approved and initialed by Lessor and Lessee.

Section 2. [Provides for liquidated damages for each day completion delayed beyond July 1, 1978.]

Section 3. Lessor warrants that the building and improvements shall be free from defects of workmanship and materials. Lessor will promptly repair, remedy or replace any such defects which may appear ...


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