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Steffen v. Paulus





Appeal from the Circuit Court of Livingston County; the Hon. William T. Caisley, Judge, presiding.


Respondents, Frank and Viola Paulus, appeal from an order granting summary judgment in favor of petitioners, Ray Steffen, executor of the estate of Donald Karnes, and Illinois Wesleyan University. The issue involved in this appeal is the sufficiency of a notice to terminate a lease. We affirm.

On September 30, 1971, Karnes and Frank Paulus executed a 50-50 crop share lease, which required Paulus to farm 160 acres of Karnes' land. The lease term began March 1, 1972, and was to run for 99 years. The parties, however, contemporaneously executed a cancellation clause. It provided:

"This lease may be cancelled annually by the tenant giving to the landowner written notice by November 1st of any year covering the succeeding crop year of his intention to discontinue farming operations and yield possession to the landowner. No payment of any sum of money will be due and payable in case of Tenant's termination of lease.

This lease may be cancelled at the end of each five (5) crop year period, counted from the first effective crop year of the lease, by Donald Karnes, DURING HIS LIFETIME, giving written notice to the tenant by the November 1st of such year preceding the 6th, 11th, 16th, etc., crop years. That is, the first termination date, under these provisions, would be November 1, 1976, and thereafter at periodic five year intervals. The Landowner shall pay the Tenant $4.00 per acre for all farmland leased at the time of such cancellation to reimburse the Tenant for costs incurred and for the privilege of such cancellation.

Following the death of the Landowner, the privilege of his cancellation is terminated and this lease is to run to its stated expiration. This nontermination provision is hereby made binding on the heirs, executors, administrators, trustees or assigns of the Landowner and such individuals and/or legal entities are hereby ordered, instructed and requested to honor all terms of this lease unless amended or revised by mutual agreement between the same and the then Tenant."

On October 19, 1973, the parties added another 85 acres to their lease. In addition, Paulus assigned his rights to himself and his wife, Viola. Another addendum was executed on January 6, 1976. It stated that defendants were to be designated farm managers and would receive a 70% share of the crop upon Karnes' death.

On October 16, 1978, Karnes executed a notice of cancellation "effective as of November 1, 1981." The notice stated, in part:

"You are hereby required to surrender possession of said premises to the undersigned on November 1, 1981.

This Notice of Termination is given during my lifetime and said Lease shall terminate on November 1, 1981, regardless of whether I am then living."

Respondents signed for receipt of the notice along with a $1,000 check covering the costs of cancellation on October 17, 1978.

Respondents did not surrender possession on November 1, 1981, and Karnes filed a declaratory judgment complaint seeking to have the lease declared terminated by the October 16, 1978, notice. On April 23, 1982, Karnes died. Steffen, executor of Karnes' estate, was substituted as petitioner. Illinois Wesleyan University, a devisee of an interest in the land under Karnes' will, also joined in the action as a petitioner. Petitioners moved for summary judgment, and on July 29, 1983, the trial court granted their motion declaring the notice of termination canceled the lease on February 28, 1982.

Although the lease term ran for 99 years, the cancellation clause in effect established a periodic tenancy for the parties. Respondents had a year-to-year lease, which renewed each year unless they had canceled before November 1 of the previous year, until the 99 years expired or Karnes canceled. Karnes, on the other hand, was bound to a series of five-year leases. After the expiration of each five-year period, the lease was renewed for another five years unless Karnes had given notice of termination by November 1 of the fifth year. Respondents concede the notice of October 16, 1978, was timely. Instead, they maintain the notice was improper because it specified the wrong termination date. They conclude the notice was insufficient to terminate the lease.

Respondents contend the proper termination date was February 28, 1982, and not November 1, 1981, as Karnes stated in his notice. The cancellation clause itself states the first termination date was November 1, 1976. Adding five years, the second termination date would have been November 1, 1981. Defendants assert these dates are inconsistent with the remainder of the cancellation clause. The clause allowed Karnes to cancel the lease only at the end of each five-year crop period. They maintain a crop year in Illinois customarily runs from March 1 to the last day of February. They also point out that the lease began on March 1, and presumably, this was the start of the first crop year. The end of a five-year crop period, therefore, must end on the last day in February. Under respondents' interpretation, the cancellation clause is ...

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