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O'BYRNE v. CHEKER OIL CO

May 7, 1982

JAMES C. O'BYRNE, ET AL., PLAINTIFFS,
v.
CHEKER OIL COMPANY, ET AL., DEFENDANTS



The opinion of the court was delivered by: Shadur, District Judge.

MEMORANDUM OPINION AND ORDER

This action was brought by one present and four former lessees of gasoline service stations from Cheker Oil Company ("Cheker"). Summary judgment has already been granted to Cheker*fn1 and to Marathon Oil Company ("Marathon"),*fn2 50% owner of outstanding Cheker stock, on plaintiffs' antitrust and related claims.

Cheker has now moved for summary judgment on its counterclaims against plaintiffs James O'Byrne ("O'Byrne") and William A. Erwin ("Erwin") for lease rentals and against O'Byrne for gasoline sold to him. For the reasons stated in this memorandum opinion and order, summary judgment is granted on Cheker's rental claims but not as to the gasoline sales.

Facts

Both the O'Byrne lease (on a Mount Prospect, Illinois station) and the Erwin lease (on an Addison, Illinois station) were dated January 17, 1976. They contained identical terms, including a monthly rental of $2,200 payable in advance. In the interest of simplicity this opinion will focus on the history of the O'Byrne-Cheker relationship (for though the specific time periods and the numbers involved differ as to Erwin, the legal principles they bring into play are identical).

O'Byrne used the Mount Prospect premises in February 1976 and then continuously from May 1, 1976 to January 31, 1977 and from September 1, 1978 through February 12, 1979, paying no rent to Cheker for those periods. Cheker claims back rent of $31,994.38. Its like claim against Erwin (covering different periods) aggregates $17,489.62.

Cheker also sues O'Byrne for $6,330.52 for gasoline sold and delivered to O'Byrne for resale to his customers. No comparable claim is asserted against Erwin.

O'Byrne and Erwin rest their opposition to the rental claims primarily on the argument that the lease terms violated regulations promulgated by the Federal Energy Administration ("FEA") pursuant to the Emergency Petroleum Allocation Act of 1973 (the "Act"), 15 U.S.C. § 751-56. That violation is said to render the leases void as against public policy and thus unenforceable under Illinois law.*fn3

Analysis of that contention requires some pre-lease factual background. O'Byrne was a Cheker dealer from May 1972 to January 25, 1979. In 1973 (the critical date for purposes of the Act) O'Byrne's lease called for a rent equal to the greater of:

    (1) $.02 per gallon of gasoline sold during the
  month (payable on a daily basis); and
    (2) $3,000 (payable, to the extent it exceeded
  the gallonage figure, on the first day of the
  following month).

Despite the lease terms requiring payment of at least the "minimum monthly rental" ($3,000 as to O'Byrne and $2,400 as to Erwin), the dealers claim that Cheker did not enforce that provision until March 1974. Because this is a motion for summary judgment and O'Byrne and Erwin are the parties moved against, this opinion assumes Cheker did not in fact enforce the minimum monthly rentals during 1973.*fn4

Two aspects of the 1976 lease rental provisions differ from those just outlined:

    (1) Instead of the dual rental provision, each
  1976 lease called for a flat $2,200 per month
  (less in each instance than the ...

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