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Deerpath Investment, Inc. v. Barack





Appeal from the Circuit Court of Lake County; the Hon. Robert Smart, Judge, presiding.


Defendant Alan J. Barack appeals from an order of the circuit court of Lake County, Illinois, that found him personally liable for rent due for breach of a lease. Defendant contends that because he signed the lease in a representative capacity on behalf of his corporation he was not personally liable on the lease. After a bench trial, the trial court entered judgment for rent as to defendant's corporation and reserved ruling on whether or not defendant would be liable individually. Later, after the filing of briefs and oral arguments, the trial court entered judgment against defendant individually. Defendant appeals.

The lease in issue identified the parties as follows:

LESSEE LESSOR Alan J. Barack, President Westlake Medical Center Westlake Optical, Inc. By William C Dam, M.D.

By the terms of the lease defendant rented one-half of an office suite for a period of five years. Both the lease and a four-page rider were signed by defendant Barack with "Pres." after his name.

The plaintiffs purchased the subject premises from the original lessors. Paul Morlock, a representative of Deerpath Investment, Inc., testified that he represented the owners of the lease, who had purchased the premises on October 1, 1981. Morlock testified that soon after the purchase defendant told him that he would be unable to pay the rent, but he did not mention that the defendant's corporation would be unable to pay the rent. Morlock testified that the defendant at no time said someone other than the corporation would pay the rent, that the question had never come up. Further evidence disclosed that all but one of the rent checks were issued by the corporation.

Defendant testified that he was the president of an Illinois corporation known as Westlake Optical, Inc., which operated a business on the premises from August 1980 until November 5, 1981. He abandoned the premises because he was unable to pay the bills the business had incurred. He admitted he had paid no rent for four months.

Defendant testified that he was the promoter of the corporation known as Westlake Optical, Inc. He had discussed the formation of the corporation with his attorney prior to the execution of the lease on June 20, 1980, but the corporation had not been formed at that time. The corporation was issued a charter by the Secretary of State on August 29, 1980, and he indicated that he was the president of that corporation, Westlake Optical, Inc. He indicated that when he met with Dr. Dam and signed the lease he told Dr. Dam that an optical business would be on the premises, that the corporation was to be the party responsible on the lease and that he was not to be individually responsible. Defendant testified that he paid the first month's rent in August of 1980 with a check drawn on an account of a corporation known as Fox Lake Optical, Inc. He took possession of the premises and all subsequent checks were drawn on the account of his new corporation, Westlake Optical, Inc. On cross-examination defendant indicated that he did not resign the lease after the corporation was formed on August 29, 1980.

Dr. Dam, who signed the lease on behalf of the Westlake Medical Center, which was the assignor of the plaintiff in this cause of action, did not testify.

The corporate minutes of Westlake Optical, Inc., reflect that the corporation ratified and adopted the subject lease on September 10, 1980.

After arguments the court indicated that it would enter judgment for $4,400 against defendant Westlake Optical, Inc., and that it would reserve rulings on whether judgment should be entered against defendant individually. After subsequent briefs and a hearing, judgment was entered against defendant individually.

Defendant first contends that the trial court erred in finding that he had signed the lease in his individual as well as his corporate or representative capacity. Because we reverse, other issues raised will not be reached.

• 1 Defendant Westlake Optical, Inc., conceded in its answer to plaintiff's complaint that it was liable on the lease. Defendant contends that the trial court was correct in its finding that the language of the lease was ambiguous. While the record does not clearly indicate that the trial court made a finding in this regard, it did allow parol evidence of the conversations between defendant and the original lessor into evidence. Therefore we assume that the trial court considered the contract terms in issue to be ambiguous. As defendant contends, contracts can be considered ambiguous when the words used by the parties are susceptible to being understood in more than one sense. Coney v. Rockford Life Insurance Co. (1966), 67 Ill. App.2d 395, 399, 214 N.E.2d 1, 3.

• 2, 3 Defendant contends that the trial court either misconstrued or disregarded his testimony. He contends he did not intend to become individually liable on the lease. It is clear that the intention of the parties controls and such intention must be gathered from the facts and circumstances shown by the evidence. (Cedar Park Cemetery Association, Inc. v. Village of Calumet Park (1947), 398 Ill. 324, 75 N.E.2d 874.) Here, the trial court allowed parol evidence in order to ascertain what the intent of the parties was. After a hearing the defendant was found personally liable. The court was faced with the question of the credibility of the witnesses, and such questions are for the trier of fact and the determination of credibility will not be set aside unless it is against the manifest weight of the ...

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