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Stone v. La Salle National Bank





Appeal from the Circuit Court of Cook County; the Hon. George A. Higgins, Judge, presiding.


Plaintiffs, who are tenant-owners of cooperative apartment buildings located at 860-880 North Lake Shore Drive in Chicago, Illinois, appeal a trial court decision in favor of defendants who are managing trustees of the cooperative. They raise the following issues for review: (1) whether allegations that the managing trustees had no authority to adopt a new lease with a new assessment schedule stated a cause of action; (2) whether lack of personal notice to the tenant-owners of a new lease and increased assessments, and of a special assessment, barred imposition of such lease and assessments as a matter of law; and (3) whether allegations that the special assessment had been subject to collection without proper notice or authority stated a cause of action.

We affirm.

On November 3, 1981, plaintiffs filed an amended complaint as a class action, the class being holders of certificates of beneficial interest in the 860 Lake Shore Drive trust. Defendant La Salle National Bank is trustee of the trust in which the trust assets are held, and the individual defendants are managing trustees.

In count I of their complaint, plaintiffs alleged that the trust was created by an agreement dated April 1, 1949. Article 2.01 of the agreement provides for the issuance of certificates of beneficial interest which incorporate by reference all of the terms and provisions of the trust agreement. The certificates provide for issuance of a standard form lease. Paragraph 3 of the lease provides for payment of an annual assessment for maintenance and improvement of the buildings. The amount of the assessment is dependent on the size of the apartment as specified in the lease.

In April 1980, the managing trustees changed the lease so as to authorize increased assessments after a certain date and the imposition of special assessments at any time. Plaintiffs allege that this was a change within the provisions of the trust agreement.

On April 28, 1981, the managing trustees passed a resolution imposing substantial increases in assessments, effective July 1, 1981. On August 1, 1981, the trustees caused letters to be left in hallways informing tenants that a new lease had been adopted in April 1980. Tenants were advised to surrender the old lease and execute a new one. The new lease allowed trustees to impose changes in assessments at any time and to impose special assessments. The letter served as notice to the tenants and threatened legal action against tenants who failed to pay the increased assessment.

Plaintiffs argue that since the managing trustees did not submit the amendment to the lease to certificate holders as required by the trust agreement, the change in the lease and the imposition of an increased assessment were illegal and improper.

Plaintiffs asked for a temporary restraining order restraining defendants from collection of assessment, from filing of forcible entry and detainer actions, from other legal action against tenants to enforce the assessments, and from enacting amendments without approval by certificate holders. Plaintiffs asked for a declaratory judgment and for the return of assessments improperly collected.

In count II, plaintiffs alleged that the lease provided for service of notices by the lessor personally or by mail. Plaintiffs claim that defendants failed to serve notice of the increased assessment in accordance with the lease.

In count III, plaintiffs alleged that the August 1, 1981, letter threatened a special assessment. This was illegal because the assessment was selectively imposed on tenants who resisted payment of the increased assessment and was not proportioned to the schedule of assessment attached to the standard form lease.

In count IV, plaintiffs alleged that they were notified of a new special assessment for real estate taxes on October 9, 1981. Plaintiffs argued that since an amendment authorizing a special assessment was not submitted to certificate owners for a vote as required by the trust agreement, imposition of the assessment was illegal.

On November 10, 1981, defendants answered plaintiffs' complaint and affirmatively pleaded the following. On April 10, 1980, the managing trustees decided to adopt a new lease. Minutes of the meeting were posted on bulletin boards in the buildings. On April 16, 1980, the new lease was formally adopted. Minutes of the meeting and the new lease were posted. In June 1981, a newsletter was distributed to tenants reminding them of the new lease.

On November 12, 1981, the managing trustees counter complained against Walter Baehrend, alleging that from October 1, 1980, to June 16, 1981, he was a managing trustee. They asked that if any judgment is entered against them it should be apportioned among them and Baehrend. Baehrend answered the countercomplaint by alleging that he objected to actions taken by the ...

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