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First Nat'l Bk v. Mid-central Food Sales

OPINION FILED DECEMBER 18, 1984.

FIRST NATIONAL BANK OF HIGHLAND PARK, TRUSTEE, ET AL., PLAINTIFFS-APPELLANTS,

v.

MID-CENTRAL FOOD SALES, INC., DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County; the Hon. Myron T. Gomberg, Judge, presiding.

JUSTICE STAMOS DELIVERED THE OPINION OF THE COURT:

Rehearing denied January 22, 1985.

Plaintiffs First National Bank of Highland Park (First National) and W.V.W. Inc. (W.V.W.) brought suit for payment of real estate taxes due after termination of plaintiffs' lease with defendant Mid-Central Food Sales, Inc. (Mid-Central), attorney fees and interest, pursuant to provisions of the lease. The basic facts were not disputed, and both sides filed motions for summary judgment, the central question being the proper interpretation of paragraph 17 of the lease. The trial court denied plaintiffs' motion and granted defendant's motion for summary judgment.

The argument in this court focuses on the proper interpretation to be given to the disputed provision of the lease agreement entered into between plaintiffs and defendant Mid-Central. On June 27, 1979, Mid-Central became the sole beneficiary of trust No. 2844, held by First National. Oral argument disclosed that Mid-Central owned the property during 1978 as well. The trust res consisted solely of improved real estate in Northfield. On July 2, 1979, Mid-Central assigned all of its beneficial interest in trust No. 2844 to W.V.W. On the same date, First National, acting on behalf of and at the direction of W.V.W., executed with Mid-Central a written lease of the property for a term beginning July 2, 1979, and ending July 1, 1982.

Paragraph 17 of the lease, the interpretation of which forms the basis of this suit, is a provision which shifts the burden of paying the real estate taxes to the lessee for the duration of the lease. Paragraph 16 requires lessee to pay all reasonable costs and attorney fees expended by the lessor in enforcing the lease.

Neither the terms of the assignment nor the lease provided for payment of 1978 taxes or taxes for the first half of 1979. While Mid-Central was in possession of the property as lessee, both sides apparently agree that Mid-Central paid the second installment of 1978 taxes and the first installment of 1979 taxes. Plaintiffs argue that Mid-Central paid the taxes based upon its status as prior beneficial owner, not lessee. Mid-Central asserts that there is no competent evidence supporting plaintiffs' allegation and that such a conclusion should be stricken or ignored.

Mid-Central vacated the premises at the conclusion of the lease term on July 1, 1982. During the three-year term of the lease, Mid-Central paid all the real estate taxes except for the second installment of the 1981 taxes and its pro rata share of the 1982 taxes. Plaintiffs sent Mid-Central notice that plaintiffs believed Mid-Central was liable for the 1981 taxes and, at the time the amended verified complaint was filed, for the pro rata share of the 1982 taxes. When Mid-Central refused to pay the taxes, plaintiffs paid the amounts owed to avoid allowing the taxes to become delinquent. Plaintiffs then commenced this action and, upon cross-motions for summary judgment, an order was entered denying plaintiffs' motion, granting Mid-Central's motion and entering judgment for Mid-Central. Plaintiffs appeal that order contending that the trial court's interpretation of paragraph 17 of the lease was incorrect as a matter of law. Plaintiffs are also requesting attorney fees pursuant to paragraph 16 and prejudgment interest.

Upon review of a trial court's entry of summary judgment, the appellate court uses a two-prong analysis. First, the court determines whether the lower court was correct in ruling that no genuine issue of material fact was raised and, second, if none was raised, whether entry of the judgment was correct as a matter of law. Fuller v. Justice (1983), 117 Ill. App.3d 933, 453 N.E.2d 1133.

• 1 In the present case, the central question concerns the proper interpretation of paragraph 17 of the lease. The interpretation of a lease is purely a question of law when the terms are plain and unambiguous. (Advertising Checking Bureau, Inc. v. Canal-Randolph Associates (1981), 101 Ill. App.3d 140, 143, 427 N.E.2d 1039.) Whether an ambiguity exists is also a question of law. (Pioneer Trust & Savings Bank v. Lucky Stores, Inc. (1980), 91 Ill. App.3d 573, 575, 414 N.E.2d 1152.) Ambiguity refers to an obscurity in meaning "through indefiniteness of expression, or having a double meaning." (91 Ill. App.3d 573, 575.) The paragraph in question reads as follows:

"17. Throughout the term of this Lease, Lessee shall pay when due all taxes, * * * together with any interest and penalties thereon, which are imposed or levied upon or assessed against the premises or any part thereof."

The above-quoted language, though not drafted as artfully as it could have been, is clearly not ambiguous; therefore, there is no genuine issue of material fact present. Paragraph 17 unambiguously shifts the tax burden to the lessee throughout the term of the lease. Since no ambiguity exists, it was appropriate for the trial court to interpret the lease as a matter of law.

Under the second prong of the analysis, we will review the propriety of the trial court's interpretation which resulted in entry of judgment against plaintiffs. The trial court interpreted paragraph 17 of the lease to mean that the lessee was only liable for taxes imposed during the term of the lease that also became due and owing during the term of the lease. Plaintiffs argue that such an interpretation is incorrect as a matter of law. Plaintiffs argue that paragraph 17 requires Mid-Central to pay those taxes which are imposed or assessed on the property during the term of the lease and that Mid-Central's liability for those taxes is not contingent upon Mid-Central's actually being in possession of the premises when the taxes became due.

The law in Illinois is settled that the owner of real property on January 1 in any year shall be liable for the taxes of that year. (Ill. Rev. Stat. 1981, ch. 120, par. 508a.) Also, the taxes are a first lien on such real property from and including the first of January in the year the taxes are levied. (Ill. Rev. Stat. 1981, ch. 120, par. 697.) In Metropolitan Airport Authority v. Farliza Corp. (1977), 50 Ill. App.3d 994, 336 N.E.2d 112, the court held that the lessor as owner was liable for real estate taxes in the absence of a clear and unambiguous provision shifting the burden of such taxes to the lessee. (50 Ill. App.3d 994, 997-98.) As stated above, the language of this lease provision is not ambiguous and clearly shifts the tax burden to the lessee, defendant herein.

Concerning the proper interpretation of paragraph 17, Mid-Central urges an interpretation that would require, as the trial court found, the taxes to be imposed and become due and payable during the term of the lease before Mid-Central would be liable for said taxes. Plaintiffs maintain, however, that as long as the taxes are imposed during the term of the lease, Mid-Central is liable for those taxes even though the actual tax bill is not due and payable until after the lease term has expired. There is sparse case law on this subject in Illinois. A case cited by both parties ...


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