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Lasalle National Bank v. Helry Corp.

OPINION FILED SEPTEMBER 17, 1985.

LA SALLE NATIONAL BANK, TRUSTEE, ET AL., PLAINTIFFS-APPELLEES,

v.

HELRY CORPORATION, DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Cook County; the Hon. Francis J. Reilly, Judge, presiding.

JUSTICE BILANDIC DELIVERED THE OPINION OF THE COURT:

This is a landlord-tenant dispute in which defendant Helry Corporation was found to have violated two provisions of its lease with plaintiffs La Salle National Bank, as trustee (hereinafter LNB), and its agent U.S.C.C. Management Company (hereinafter USCC). Defendant, before it was sued in this action, filed a declaratory judgment action that sought a declaration of its rights under the lease. Three weeks later, defendant was sued by plaintiffs in a forcible entry and detainer action. Defendant moved to consolidate the actions, but the motion was denied by the assignment judge. Defendant then moved to dismiss the second action, and that motion was denied by the trial judge. both sides then filed cross-motions for summary judgment. Plaintiffs' motion was granted, and defendant's was denied. After defendant's motion for a rehearing was denied, it appealed.

Defendant raises three points on review, whether: (1) the trial court's findings were against the manifest weight of the evidence; (2) the assignment judge erred when he refused to consolidate the declaratory judgment and forcible entry and detainer action; and (3) the trial court erred in refusing to dismiss plaintiffs' action under section 2-619(a)(3) of the Code of Civil Procedure (Ill. Rev. Stat. 1983, ch. 110, par. 2-619(a)(3)).

The facts are not in dispute. Defendant operates a restaurant and bar known as Harry's Bar & Restaurant at 180 West Quincy Street in Chicago. Plaintiff La Salle National Bank, as trustee under a land trust agreement, is the legal title holder, and the property is managed by plaintiff U.S.C.C. Management Company.

Helry first took possession of the premises on April 1, 1976, under a five-year lease signed by Helry, LNB, and Miller Management Co. (hereinafter Miller), which was the managing agent at the time. Under the lease, defendant was to pay a specified sum plus 6% of gross sales over $30,000 as monthly rent. Defendant was also to provide, under section (b-5), a yearly certified statement of its sales. The lease also provided that defendant had the right to use a 7 1/2 foot deep area at the back of the premises, designated as Area A, until March 31, 1978.

Because defendant had to perform extensive remodeling, it wanted to extend the lease another five years. On June 3, 1976, Miller sent defendant a letter that defendant relies upon to assert that the lease was extended; however, the parties later signed another five-year lease, which the trial court found to be controlling. Defendant also assumed that the alleged extension included its right to occupy Area A, which defendant continued to occupy past the March 31 deadline. Neither LNB nor Miller demanded that defendant vacate the area.

In addition, neither LNB nor Miller forced Helry to comply strictly with section (b-5) during the period of the first lease. The section states, in part:

"(b-5) Annual Statements. On or before the fifteenth day of May 1978 and on or before the same day of each May during the remainder of the term, and also on or before the same day of May 1981 Lessee shall deliver to Lessor at the place last fixed for payment of rent a statement prepared and certified by an accountant licensed under the laws of the State of Illinois, showing Gross Sales during the year of the term ended on the last day of the last previous month. The accountant's certificate to the statement shall certify that he made a complete examination of the books, Federal income tax return or returns and cash register tapes of Lessee; that he compared the Gross Sales shown in the statement to the Illinois Retailer's Occupation tax and Use tax returns and that the statement is prepared in accordance with accepted accounting principles."

Defendant admits that its accountant, James Grieco, did not strictly comply with the requirements of section (b-5). Rather, Grieco submitted summaries of defendant's gross and net sales for the previous year. Helry did not keep its cash register tapes.

In early April 1981, Miller allegedly asked defendant to "waive" its right to the continued use of Area A. Bernard Miller, the president of Miller Management, denies that he ever made such a request. Nevertheless, defendant signed the "waiver," allegedly because it had been assured that it would never be used and was solely for Miller's protection.

On April 20, 1981, the new lease was signed. The base rent was increased but the percentage rent decreased. The lease's Rider D also provided that Area A would be part of the leased premises until April 30, 1982, when it would be excluded from the premises. Again, when the date arrived, defendant did not vacate Area A, and neither LNB nor Miller demanded that defendant vacate. The lease again provided that defendant furnish a certified financial statement.

Section 15(b) provides that any default of the tender of rent must be cured within five days after notice is given, and a default in the performance of any other provision must be cured within 20 days. Section 16 provides that a notice "shall be signed by or on behalf of Lessor."

In February 1982, the building that houses the restaurant was sold, and USCC became the managing agent. On June 28, USCC sent defendant a notice that it would be excluded from Area A as of September 1, 1982; however, the notice continued, "In the event you intend to continue using this space then we can arrange a month-to-month lease of the excluded space at a rental of $300 monthly."

Helry continued to use Area A; it did not pay an additional $300 for September or October, although it paid for November through April. Defendant argues that the payments were "inadvertent" and that it did not intend to recognize plaintiffs' right to exclude Area A from the premises. Plaintiffs allege that defendant stopped payment of the additional $300 after January 1983.

Defendant alleges that it tried to negotiate a new lease but that negotiations broke down over disputes about utility bills. Thus, on March 31, 1983, USCC sent defendant a notice of default. USCC claimed that defendant was in default because: (1) it failed to surrender Area A; (2) it failed to provide a certified financial ...


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