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Chicago Title & Trust Co. v. Southland Corp.





Appeal from the Circuit Court of Cook County; the Hon. Arthur L. Dunne, Judge, presiding.

JUSTICE DOWNING DELIVERED THE OPINION OF THE COURT: In this declaratory judgment action, plaintiff-lessor sought a judicial determination of whether defendant, a percentage rent tenant, was bound by an implied covenant in a 20-year lease to continue conducting its grocery store business for the remainder of the rental period. The trial court denied the prayer for declaratory relief, entered judgment in favor of defendant and plaintiff now appeals.

A written lease was entered into between Chicago Title & Trust Company, as Trustee under Trust Agreement dated September 19, 1967, and known as Trust No. 51172, as lessor, and Northern Illinois Open Pantry Food Marts, Inc. (Open Pantry), for a period covering July 1, 1968, to June 30, 1988. On June 4, 1971, Open Pantry assigned its rights and obligations under the lease to defendant, The Southland Corporation, who thereafter operated a 7-11 Food Store at the premises until January 20, 1982.

Article 2 of the lease provided for a fixed sum rent which started at $500 per month for the first 24 months, thereafter increased at intervals, ending with a rent of $575 for the last 120 months. Rider No. 2 of the lease required the lessee to pay additional rent equal to the sum of 2% of the lessee's annual gross sales in excess of $345,000. This provision became operative with the fiscal year ending in 1976. For the fiscal year ending on November 30, 1980, defendant paid a base rental of $6,900 ($575 a month) and a percentage rental of $6,165.88.

In January of 1981, plaintiff became aware that defendant had plans to vacate the rented premises and move across the street. Plaintiff filed this lawsuit seeking both a preliminary and a permanent injunction to restrain defendant from opening the new store, attorney fees and a declaratory judgment that the lease constituted a binding agreement that defendant continue to operate its business in the leased premises until the expiration of the lease. Plaintiff withdrew its request for a preliminary injunction, and the trial court denied plaintiff's prayer for attorney fees, injunctive relief and declaratory relief. On appeal, plaintiff only addresses the propriety of the trial court's denial of declaratory relief.



Plaintiff contends that the trial court erred in not declaring that an implied covenant to continue operating a grocery store existed in the lease. Plaintiff strenuously argues that the implied covenant must be recognized in order to carry out the intention of the parties. Plaintiff points to six paragraphs *fn1 within the lease which make reference to the use of the premises as a grocery store. At trial, plaintiff attempted to offer the testimony of one of the lessors, a beneficiary of the land trust, in order to establish the objectives of the original parties to the lease. As defendant was not a party to those negotiations, the trial court did not allow this testimony. Plaintiff contends that this refusal to allow the testimony was error.

• 1 The language of the lease in question was clear and unambiguous. Therefore there was no need to admit extrinsic evidence of the circumstances existing at the time the lease was executed. (Kurek v. State Oil Co. (1981), 98 Ill. App.3d 6, 8, 424 N.E.2d 56.) Further, the testimony which plaintiff offered at trial concerned negotiations between plaintiff and Open Pantry, the corporation which assigned its interests in the lease to defendant. Evidence at trial indicated that defendant only acquired interest in Open Pantry's operation in 1970, so that defendant had no relationship with the parties originally negotiating in 1967. The trial court correctly disallowed the proffered testimony.


In support of its position that an implied covenant to continue operation of defendant's grocery store existed in the lease, plaintiff cites several cases which, upon examination, are inapposite. Two provisions contained in the instant lease are important in its interpretation. Article 18, captioned "Assignment and Subletting," provides:

"Lessee may, without the consent of Lessor, assign or encumber this lease or its rights hereunder. * * * Lessee shall have the right to sublet the leased premises at any time and from to time during the term of this lease."

Article 26, captioned "Use," provides:

"Lessee is hereby given the privilege of using the leased premises as a grocery store for the sale of food, packaged beverages (alcoholic and non-alcoholic) and hard and soft goods or for any other lawful purpose. Lessor hereby covenants that during the term of this lease or any extension or extensions hereof, it will not lease any other portion of the building of which the leased premises are a part or any other property in which Lessor now or hereafter has an interest within a radius of one-quarter (1/4) of a mile for use as a grocery store of any type, or as a location therefor. * * *"

Plaintiff's reliance on the following cases is misplaced: Simhawk Corp. v. Egler (1964), 52 Ill. App.2d 449, 202 N.E.2d 49, appeal denied (1965), 31 Ill.2d 630, involved a lease which contained an express use restriction in which the tenant agreed to use the premises "only for the purpose of a shoe store" (52 Ill. App.2d 449, 450); both Stoddard v. Illinois Improvement & Ballast Co. (1916), 275 Ill. 199, 113 N.E. 913, and Fox v. Fox Valley Trotting Club (1956), 8 Ill.2d 571, 134 N.E.2d 806, contain similar express use restrictions and do not include the language in the instant use clause allowing for "any other lawful purpose" to be made of the premises. In Slidell Investment Co. v. City Products Corp. (La. App. 1967), 202 ...

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