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Chef's No. 4, Inc. v. City of Chicago





Appeal from the Circuit Court of Cook County; the Hon. James C. Murray, Judge, presiding.


Plaintiff, Chef's No. 4, Inc., an Illinois corporation doing business as Beef N' Burger, filed a complaint in inverse condemnation seeking a declaratory judgment, and an injunction against defendants, the City of Chicago (the City), and Chicago Title & Trust Company (CT&T), as trustee. Plaintiff sought, inter alia, just compensation for the taking of its trade fixtures located on property formerly owned by CT&T as trustee and acquired by the City by eminent domain. The trial court granted defendants' motions to dismiss the complaint and plaintiff appealed.

The sole issue presented for review is whether the trial court erred in granting defendants' motion to dismiss plaintiff's complaint for failure to state a cause of action.

The following facts are pertinent to our decision.

CT&T, as trustee, owned property located at the southwest corner of State and Van Buren Streets in Chicago, Illinois, which consisted of a parking garage and four street-level stores. In 1966, the subject property was leased to Erwin Horwitz, who in turn assigned his leasehold interest to State-Van Buren Garage Corporation (State-Van Buren) in 1968.

Article XII of the original lease between CT&T and Erwin Horwitz provided that the lessee could sell, convey, or assign its interest in the lease upon satisfaction of five preconditions: (1) the assignee would pay all real estate taxes; (2) the assignment would be delivered to CT (3) the assignment would be recorded with the recorder of deeds of Cook County, Illinois; (4) the assignee would expressly agree to assume and be bound by the original lease, and (5) the assignment required prior written approval from CT&T. Article XII further provided that: "nothing herein contained shall be construed to impair the right of Lessee to sublet the leased premises * * * provided only that all such sublease agreements shall be made subject to the terms and provisions of this lease. Lessor agrees that should the Lessee default in any of the covenants and agreements herein contained to be kept, observed, and performed by Lessee, Lessor will recognize and honor any and all subleases theretofore made by Lessee with the prior written approval of Lessor."

In October 1972, State-Van Buren, as sublessor, leased one of the four stores to plaintiff, the sublessee, without the prior written consent of CT&T, the lessor.

On December 27, 1977, a rider was attached to the sublease which provided, inter alia, for a 10-year extension of the sublease from January 1, 1982, until December 31, 1991. A condemnation clause contained therein further provided that "the lease term shall cease as of the day possession shall be taken by such public authority * * *. Lessee shall be entitled and shall have the right to pursue its remedies against such public authority for loss of revenues and/or its leasehold interest."

Thereafter, plaintiff spent over $50,000 on leasehold improvements including ovens, counters, refrigerators, air conditioning units and duct work, lighting fixtures and signs. On the valuation date of the subsequent condemnation suit these leasehold improvements had a market value of approximately $35,000. Plaintiff continued to pay rent to State-Van Buren until June 1981.

On November 22, 1976, the city of Chicago filed a petition to condemn the subject property, naming CT&T and plaintiff among the party defendants. Plaintiff, however, was not served with summons, did not participate in the ensuing condemnation litigation, and initially learned of the condemnation in June of 1981 when the City demanded possession of the subject property.

Over three years after the institution of this condemnation suit, CT&T, as lessor, filed a forcible entry and detainer action on January 11, 1980, against State-Van Buren, as lessee, for nonpayment of rent. Plaintiff was not served in this action.

By an agreed order entered on December 19, 1980, the trial court held that State-Van Buren was in default and no longer entitled to the possession of the property. The order further recited that, by stipulation of the parties, "State-Van Buren Garage Corp., its successors and assigns, [agree to] completely waive and release any rights or interest it may have, if any, in the condemnation award in the City of Chicago v. Chicago Title & Trust Co., etc., et al. * * *."

On May 1, 1981, an order was entered in the condemnation suit setting the sum of $1,050,000 as full compensation to the owner or owners of and party or parties interested in the subject property. This award was deposited with the Treasurer of Cook County on May 17, 1981.

Thereafter, CT&T filed a petition for withdrawal of the entire award. On June 2, 1981, the trial court, finding that CT&T, as trustee, was owner of the subject property, and that no one else had any rights to the award, ...

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