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Montgomery Ward & Co. v. Wetzel

OPINION FILED JUNE 24, 1981.

MONTGOMERY WARD & CO., INCORPORATED, PLAINTIFF-APPELLEE,

v.

JAMES D. WETZEL ET AL., DEFENDANTS-APPELLANTS. — (JAMES D. WETZEL ET AL., COUNTERPLAINTIFFS-APPELLEES,

v.

BENSENVILLE ASSOCIATES, A/K/A BENSENVILLE INVESTMENTS, ET AL., COUNTERDEFENDANTS-APPELLANTS.)



APPEAL from the Circuit Court of Cook County; the Hon. PAUL F. ELWARD, Judge, presiding.

MR. JUSTICE MCNAMARA DELIVERED THE OPINION OF THE COURT:

This consolidated appeal arises out of an action by plaintiff, Montgomery Ward & Co., Incorporated, a lessee, against James D. Wetzel, George Cibula, Pain & Sutherlin, Inc., P.E.F., Inc., and Bensenville Associates, a/k/a Bensenville Investments, a partnership, and Michael Birnkrant, James Loewenberg and Scott Hodes, d/b/a Bensenville Associates and Bensenville Investments (hereinafter Bensenville), to recover real estate tax overpayments and other sums allegedly due under the terms of a lease. The trial court granted Montgomery Ward's motion for summary judgment on count I of the complaint against Wetzel, Cibula, Pain & Sutherlin, and P.E.F., jointly and severally, for the principal amount and prejudgment interest. (The remaining counts seeking recovery from Bensenville are still pending and are not involved in this appeal.) These defendants appeal from the entry of summary judgment; additionally P.E.F. and Cibula appeal from the award of prejudgment interest. Simultaneously, Wetzel and Pain & Sutherlin had filed a counterclaim against Bensenville seeking indemnification and attorneys' fees pursuant to an indemnity provision in the parties' real estate contract. The trial court granted summary judgment in favor of Wetzel and Pain & Sutherlin, and Bensenville appeals from that order.

On November 21, 1973, Montgomery Ward, as lessee, and Pain & Sutherlin, agent for the beneficiaries of a certain land trust, as lessor, executed a five-year lease of a warehouse located in Bensenville, Illinois. The beneficiaries were not named or otherwise disclosed in the lease. Montgomery Ward was required to remit to the lessor, as additional rent, certain monthly payments which constituted an estimated prepayment of its proportionate share of the general real estate taxes. The lessor agreed to furnish Montgomery Ward with a written statement of its actual tax obligation each year. If Montgomery Ward's prepayments exceeded its actual tax obligation, the lessor was to refund the excess sums. At the time the lease was executed, Wetzel and Pain & Sutherlin were the beneficiaries of the subject land trust. P.E.F. and Cibula acquired their beneficial interests in the land trust in December 1976, and August 1977, respectively.

On June 30, 1978, Pain & Sutherlin, P.E.F. and Cibula assigned their beneficial interests to Bensenville pursuant to a real estate sales contract, which provided, in relevant part, as follows:

"Purchaser [Bensenville] acknowledges that [Montgomery Ward] as Sub-Lessee, has paid real estate taxes in excess of the amount owed by Wards under its Sub-lease. Purchaser hereby assumes all obligations of Seller to Wards as a result of such overpayment of taxes as aforesaid and indemnifies Seller from and against all costs and expenses Seller may incur, including reasonable attorneys fees, arising out of such overpayment."

Following this transaction, Bensenville contacted Montgomery Ward and offered to reimburse it for the overpayment of real estate taxes for the period May 6, 1974, through December 31, 1977, in several installments, to commence in October 1978. Bensenville suggested that Montgomery Ward should continue to pay the monthly rent and Bensenville would issue the refunds by separate checks. In a letter dated October 10, 1978, Montgomery Ward agreed to accept payment on the terms proposed by Bensenville. Meanwhile, on September 21, 1978, the warehouse was destroyed by fire. Montgomery Ward never received payment from Bensenville.

On June 8, 1979, Montgomery Ward brought the present action. Count I was directed against Wetzel, Pain & Sutherlin, Cibula and P.E.F. Defendants filed an answer denying that they owed any sums to Montgomery Ward. Cibula and P.E.F. also denied that they were beneficiaries and that Pain & Sutherlin acted on their behalf in executing the lease.

On November 28, 1979, Montgomery Ward filed its motion for summary judgment on count I. An affidavit revealed that Montgomery Ward's overpayments totaled $117,360. Wetzel's attached deposition disclosed that he was aware prior to the sale to Bensenville that Montgomery Ward's prepayments exceeded its tax obligation and that the lessor had an obligation under the lease to refund any overpayments. In a memorandum in opposition to the motion for summary judgment, Wetzel and Pain & Sutherlin maintained that Montgomery Ward was not entitled to summary judgment against them because Montgomery Ward, by entering into a written contract with Bensenville concerning the overpayments, had elected to look to Bensenville for repayment.

Meanwhile, Wetzel and Pain & Sutherlin filed their counterclaim against Bensenville seeking indemnification in accordance with their contract. In a verified answer, Bensenville admitted that it owed a duty of indemnification but denied that any demand for defense or indemnification had been made. On November 28, 1979, Wetzel and Pain & Sutherlin sought summary judgment on their counterclaim, later filing supporting memoranda; Bensenville filed a memorandum in opposition. Correspondence between October and December 1979 reveals that Wetzel and Pain & Sutherlin declined Bensenville's offer of defense in the Montgomery Ward litigation. On February 6, 1980, the trial court denied Bensenville's motion for leave to file an amended answer to the counterclaim. The proposed answer sought to deny that Bensenville owed a duty of indemnification, and to add, as an affirmative defense, that Wetzel and Pain & Sutherlin's refusal to permit Bensenville to assume their defense constituted a breach of the real estate sales contract rendering the indemnification provision void.

On April 10, 1980, the trial court entered summary judgment on count I of the complaint in favor of Montgomery Ward and against Wetzel and Pain & Sutherlin, P.E.F. and Cibula, jointly and severally, in the sum of $117,360; entered summary judgment on the counterclaim in favor of Wetzel and Pain & Sutherlin against Bensenville and its individual partners, jointly and severally, in the amount of $117,360 plus $2882.95 in attorney's fees; found no just reason to delay enforcement or appeal of these judgments; gave Wetzel and Pain & Sutherlin leave to seek additional attorney's fees; and continued the matter for a hearing on the issue of prejudgment interest. On April 22, 1980, a notice of appeal was filed.

On June 2, 1980, the trial court allowed prejudgment interest on count I of the complaint in favor of Montgomery Ward in the amount of $10,432, finding that the lease was an "instrument of writing" within the meaning of the Interest Act. (Ill. Rev. Stat. 1979, ch. 74, par. 2.) The court awarded Wetzel and Pain & Sutherlin $3,120 as additional attorney's fees, and subsequently awarded them prejudgment interest on their counterclaim in the sum of $10,432.

We initially consider the contention of Wetzel and Pain & Sutherlin that the trial court improperly granted summary judgment on count I of the complaint because a genuine issue of material fact existed. A motion for summary judgment is properly granted if the pleadings, depositions, and admissions on file, together with any affidavits or exhibits, demonstrate that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Ill. Rev. Stat. 1979, ch. 110, par. 57; Hernandez v. Trimarc Corp. (1976), 38 Ill. App.3d 1004, 350 N.E.2d 202.

Wetzel and Pain & Sutherlin urge that there is a genuine issue of material fact as to whether Montgomery Ward waived its right to recover the alleged tax overpayments from them. They acknowledge that in September 1978, Montgomery Ward could have sought to recover the accrued tax overpayments from them pursuant to the terms of the lease. They suggest, however, that Montgomery Ward's conduct manifests an intention to release them from this tax overpayment obligation. Wetzel and Pain & Sutherlin maintain that, by contracting with Bensenville for repayment without requesting Wetzel and Pain & Sutherlin to participate in the negotiations and settlement, Montgomery Ward elected to look exclusively to Bensenville and intended to relinquish its rights against Wetzel and Pain & Sutherlin.

• 1 We believe the facts set forth in the pleadings and accompanying exhibits are insufficient to raise a genuine issue of fact as to waiver. The record reveals that Bensenville contacted Montgomery Ward and proposed to repay the tax overpayments on an installment basis. Montgomery Ward simply agreed to accept payment on those proposed terms. No payment was ever received from Bensenville. We do not view Montgomery Ward's course of conduct as a clear or unequivocal act evincing an intention to look exclusively to Bensenville for payment or to release Wetzel and Pain & ...


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