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Nat'l Tea Co. v. Amer. Nat'l Bk. & T. Co.





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


Rehearing denied November 9, 1981.

The trial court granted National Tea Company (plaintiff) a summary judgment upholding its right of possession to leased premises. American National Bank and Trust Company of Chicago and Jerome R. Rosenberg (defendants) appeal.

On July 15, 1964, Nicholas P. Cholis leased 611 Dundee Road in Elgin, Illinois, to plaintiff. The term was from October 1, 1965, through September 30, 1980. The lease provided for an annual rent of $29,000 in monthly installments of $2416.67. The lease contained an automatic extension clause, after completion of the original term, for four periods of five years each, at the same terms and conditions as the original lease period. The plaintiff as lessee, however, had the privilege of canceling the lease "at the end of the original term or at the end of any extended period upon Lessee's giving to Lessor at least 180 days notice of such cancellation prior thereto * * *." The lease further provided the plaintiff as lessee could sublet or assign all or any part of the premises but would remain liable for any payments not tendered by the sublessee or assignee.

On April 11, 1974, plaintiff sublet the entire premises to Value Rug Mart Inc. and Piper's Carpeting Inc. These companies are owned and controlled by defendant Jerome R. Rosenberg. The sublease provided for a monthly rent of $2250 and for a stipulated percentage rental. The sublease commenced on May 1, 1974, and ran through September 29, 1980. Subsequently, defendant American National Bank and Trust Company of Chicago, as trustee, became the owner of record of the leased property and lessor in the original lease. Also, defendant Rosenberg became owner of the entire beneficial interest in the trust, including power of direction.

This sublease also provided:

"3. The Prime Lease grants to Sublessor upon certain conditions four (4) extensions or options of renewals for periods of five (5) years each after the expiration of the original term on September 30, 1980. The Tenant is not granted the privilege and is hereby denied the privilege or option of renewing or extending this Sublease under and as provided in the Prime Lease."

On December 1, 1977, plaintiff and Value Rug and Piper's Carpeting (former sublessees) terminated their previous sublease and entered into an agreement referred to as an "assignment." Plaintiff assigned to Value Rug and Piper's Carpeting "all of Assignor's [plaintiff's] leasehold estate and right, title and interest for all of the remainder of the current term ending September 30, 1980 * * *." The "assignment" further provided:

"The automatic extension periods granted in the Assigned Lease are expressly excluded from this assignment. Assignor [plaintiff] reserves the right of re-entry in the event of a default by Assignee."

Under this "assignment," assignees Value Rug and Piper's Carpeting agreed to pay the entire monthly rent of $2416.67 plus a stipulated percentage rental.

Subsequently, assignees (Value Rug and Piper's Carpeting) notified defendant trustee, which at this time was the lessor in fact, that they wished to terminate the assigned lease at the end of the original lease term, September 30, 1980. The notification complied with the 180-day period of the end of the lease term as prescribed by the original lease. Defendant trustee then leased the premises to a third party. On May 21, 1980, plaintiff brought this action seeking a declaratory judgment establishing its rights to possession of the leased property as of October 1, 1980, at expiration of the original lease term. Both plaintiff and defendants filed motions for summary judgment.

Plaintiff argues the "assignment" contract only incorporates the original term of the prime lease. Furthermore, because the "automatic extension periods * * * are expressly excluded from [the] assignment" plaintiff thereby reserved the right either to continue to lease the property after September 30, or to terminate the lease upon proper notice. Under plaintiff's theory, the rights of Value Rug and Piper's Carpeting, assignees, to possession of the leased property ended on September 30, and they had no legal authority to terminate the prime lease.

Defendants urge the lease "assignment" and related documents did not clearly and unambiguously reserve to the plaintiff the right to regain possession as of October 1, 1980; the lease "assignment" did not state the right to send the termination notice was reserved to plaintiff so that such right passed to the assignees; since plaintiff drafted the "assignment" any ambiguity must be construed against plaintiff; and plaintiff's assertion as to the intent of the parties has been refuted by the language of the "assignment" and by an affidavit filed in the trial court by Jerome R. Rosenberg.

Whether or not a contract is ambiguous is a question of law. (Touhy v. Twentieth Century-Fox Film Corp. (1979), 69 Ill. App.3d 508, 513, 387 N.E.2d 862, citing Stevenson v. ITT Harper, Inc. (1977), 51 Ill. App.3d 568, 573, 366 N.E.2d 561, appeal denied (1977), 66 Ill.2d 642.) A contract will be considered to be ambiguous if it is "`one capable of being understood in more senses than one.'" Standard Steel & Wire Corp. v. Chicago Capital Corp. (1975), 26 Ill. App.3d 915, 919, 326 ...

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