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Bartsch v. Gordon N. Plumb

OPINION FILED SEPTEMBER 24, 1985.

RICHARD A. BARTSCH, PLAINTIFF-APPELLEE,

v.

GORDON N. PLUMB, INC., DEFENDANT-APPELLANT (GORDON N. PLUMB ET AL., INTERVENING PLAINTIFFS-APPELLANTS AND CROSS-APPELLEES,

v.

JAMES M. ROGAN ET AL., INTERVENING DEFENDANTS-APPELLEES AND CROSS-APPELLANTS.



Appeal from the Circuit Court of Cook County; the Hon. Walter B. Bieschke, Judge, presiding.

JUSTICE HARTMAN DELIVERED THE OPINION OF THE COURT:

The circuit court entered a declaratory judgment, finding that: the lease involving lessor plaintiff Richard A. Bartsch and lessee defendant Gordon N. Plumb, Inc. (Plumb, Inc.), had terminated; Bartsch was entitled to possession of the premises, damages for Plumb, Inc.'s wrongful possession thereof, and reimbursement for attorney fees, costs and expenses; and intervening plaintiffs Gordon and Ann Plumb (Plumbs) were entitled to reimbursement from intervening defendants James M. Rogan and Jack A. Nickol, to the extent of the judgment ordered against Plumb, Inc., and in favor of Bartsch, occasioned by the Plumbs' detrimental reliance on certain misrepresentations made by Rogan and Nickol. The Plumbs and Plumb, Inc., appeal from this judgment. In a subsequent order, the circuit court modified the judgment by ordering Rogan and Nickol to reimburse the Plumbs for their attorney fees, costs, and expenses incurred in their defense of the declaratory action. Rogan and Nickol cross-appeal from this order.

On August 6, 1982, Bartsch filed a verified complaint, among other things seeking a declaration that a lease for certain restaurant-bar premises entered into between Bartsch and Niro Development Corporation (Niro), the former name of Plumb, Inc., be terminated as of September 12, 1981, the end of its initial five-year term, and that Plumb, Inc., vacate the premises and be assessed damages as well as attorney fees and costs for its wrongful possession thereof.

The Plumbs intervened as plaintiffs on March 3, 1983, their complaint naming Rogan and Nickol as intervening defendants, essentially alleging that the Plumbs purchased the stock of Niro in 1979 from Rogan and Nickol, who had warranted in the purchase agreement that they knew of no facts which would involve the Plumbs in an action, suit, or other proceeding, and who represented to the Plumbs that the lease was valid and that the rental for the initial five-year lease period, as well as the two five-year renewal periods, was $600; and, that as the Plumbs relied upon these representations in purchasing Niro, Rogan and Nickol be required to "protect and indemnify" them to the extent of any order entered against Plumb, Inc., in Bartsch's underlying declaratory action.

The bench trial began on November 28, 1983, at which Bartsch testified that he had owned and operated the predecessor business on the premises in Palatine for five years prior to March 1976, when Rogan and Nickol offered him $100,000 for the business, exclusive of the real property. Subsequently, Rogan, an attorney, prepared a lease for the tavern premises. Three copies of the lease existed, one each for Bartsch, Rogan and Nickol. The lease did not contain a rent term, but referred to the rent "set forth in exhibit `B' which is attached hereto and by this reference incorporated herein and made a part hereof." According to Bartsch, exhibit B was not attached to the lease at the time it was signed on September 13, 1976, nor was exhibit B ever provided to Bartsch, who became aware of it only in the last six months, after his attorney obtained what purported to be exhibit B from Rogan. The exhibit B so obtained provided that "[t]he rent for the demise[d] premises herein shall be $7,200 per year payable in equal monthly installments of $600 which shall be due on the 13th day of each month." Bartsch recounted that during negotiations with Rogan and Nickol prior to the closing, the rent agreed upon was $600 for the initial five-year term, and, for the two subsequent five-year renewal periods, would "be adjusted by the cost of living."

Bartsch asserted that he was given a copy of the lease in early September 1976, which he took to his attorney, George McCord. In McCord's office on the morning of the closing, September 13, 1976, McCord assured Bartsch that exhibit B "would be forthcoming in a few days." McCord was present at the closing, which took place at the tavern. In 1981, Bartsch received notice from Plumb, Inc., that it intended to exercise its option to renew the lease. Bartsch advised Plumb, Inc., that the rent would be increased to $1,200 per month, an amount unrelated to any cost of living increase indicia.

George McCord testified Bartsch came to his office during the first week of September 1976, with a copy of the lease and purchase agreement, but neither exhibits A (a legal description of the property) nor B were attached to the lease. Bartsch told him that the rent was fixed for the initial term, with an escalation tied to the cost of living for the option terms. McCord called Bartsch's attention to the fact that exhibit B was missing, which McCord did not see prior to closing. McCord never requested exhibit B either before or after the closing. He first saw exhibit B in July 1983.

Helen Bartsch, plaintiff's wife, testified that she owned the subject property in joint tenancy with her husband. During negotiations with Rogan and Nickol about two weeks before the lease was signed, she asked about rent increases for the renewal terms, and Rogan told her that the $600 per month rent would be increased for each of these terms based on government cost of living figures. She first saw a rent schedule while on the witness stand.

Michael Bayard testified as an expert on Bartsch's behalf, after his qualifications were tested on voir dire. His analysis of the instant lease and exhibit B conducted in July 1983, comparing the "crackle" patterns on the surface of the film-type ink used on the documents, led him to conclude that exhibit B was more recently written than the lease. Bayard also performed microchemical solubility tests on ink fragments. The ink from exhibit B dissolved twice as fast as ink from the lease, indicating that the ink on exhibit B had been exposed to atmospheric oxygen for less time. In his opinion, exhibit B was at least six months to a year of more recent origin than the lease.

Rogan testified that he was a shareholder in Niro, which he represented when Bartsch's tavern was purchased in September 1976. A flat rental was discussed during negotiations with Bartsch in March or April 1976. Bartsch said he was in financial straits and suggested $600 per month as rent, which would remain in effect for the option periods, when Rogan and Nickol could "make it up." No promise was made to condition the option rent on any cost of living index. When Bartsch failed to prepare the lease, Rogan obtained a form lease from a fellow attorney and put it on a "Mag Card," a master form which could be reused as needed, with changes only in names and exhibits. The lease was typed on a Mag Card typewriter. He dictated exhibit B and it was prepared by his secretary on an IBM typewriter. Rogan gave exhibit B to Nickol, who worked as Bartsch's bartender, to deliver to Bartsch, in late August or early September 1976.

Rogan testified that after the closing, exhibit B was put in his office file by his secretary, where it became "misplaced" from September 1976 until early 1983. When Bartsch sued Plumb, Inc., for forcible entry and detainer in early 1981, Rogan had his secretary look for exhibit B, but she could not find it. Upon receiving Bartsch's notice to produce in the instant action, he went through his files "page by page" and found it. Rogan and Nickol made certain voluntary improvements to the premises: they refinished the bar, and installed a new ceiling, floor, wall bricking and kitchen counters. Rogan and Nickol sold the tavern business to the Plumbs on May 1, 1979. Rogan told the Plumbs that the rent was $600 for all periods.

Jack Nickol, called by the Plumbs as an adverse witness, testified that Rogan gave him exhibit B to deliver to Bartsch, which he did, in August 1976, telling Bartsch what it was when he gave it to him. At all lease negotiations, the rent was $600 per month, and no increase for the option terms was discussed. He received his own copy of exhibit B at closing, which he then put in the basement of the tavern.

Gordon Plumb testified that he purchased Niro for $185,000 and changed its named to Plumb, Inc., taking possession on July 1, 1979. A copy of the lease was delivered to him at closing, which he and his attorney examined. His attorney said that everything seemed in order. Plumb could not recall whether exhibit B was attached. He paid rent of $600 per month until the end of the initial term. He notified Bartsch of his intention to exercise the option to renew the lease, who refused his September 1981 $600 rent check and demanded $1,200. Plumb's attorney asked Rogan to find exhibit B, but he could not do so.

James Hayes, examiner of questioned documents, testifying as an expert on behalf of the Plumbs, compared the lease and exhibit B. Based on the watermarks, the paper used for each document was in existence on the date the lease was prepared. He also examined Bayard's written report, concluding that, according to a recognized treatise in the field, the solubility method of analysis was intended to determine the ages of writings on the same document; however, an examination of "crackling" was not a valid means of determining age. He could not determine the date either document was created or refute the date of the lease. He could not say whether exhibit B or the lease was the older document.

The parties rested. On January 6, 1984, the circuit court announced its findings of fact and conclusions of law in some detail, finding, among other things, that exhibit B was not in existence at the time the lease was executed, and was not presented until after the instant suit had been filed; and to the extent that it may have existed after the lease was signed but before the suit was filed, it did not reflect the intention of the parties.

On February 14, 1984, judgment was entered which found: that the lease terminated on September 12, 1981, and could not be renewed; Plumb, Inc.'s retention of the premises was unlawful, as Bartsch was entitled to possession after September 13, 1981; and Bartsch was damaged by the unlawful possession to the extent of $1,200 per month. The judgment ordered Plumb, Inc., to vacate the premises within 30 days; Plumb, Inc., to pay Bartsch damages through February 1984 in the amount of $36,000; and to pay attorney fees, costs, and expenses in the amount of $15,598.97.

As to the intervening action, the judgment found: that Rogan and Nickol had made material misrepresentations to the Plumbs which were relied upon in their purchase of Niro; the Plumbs were damages by Rogan's and Nickol's breach of warranties regarding the lease terms, to the extent of the judgment entered against Plumb, Inc., and in Bartsch's favor; Rogan and Nickol were ordered to pay the Plumbs $600 per month from September 13, 1981, until the premises were vacated, as well as all attorney fees, costs, and expenses which Plumb, Inc., must pay to Bartsch under the order; and judgment was entered in favor of the Plumbs and against Rogan and Nickol in the amount of $18,000, plus $15,598.98 for fees, costs and expenses.

After Plumb, Inc., the Plumbs, and Rogan and Nickol filed post-trial motions, the circuit court entered an order on April 18, 1984, modifying the judgment to order Rogan and Nickol to reimburse the Plumbs for the attorney fees, costs, and expenses incurred in their defense of the declaratory judgment action brought by Bartsch against Plumb, Inc. Rogan filed a second post-trial motion on May 9, 1984.

On July 11, 1984, a final judgment was entered which: denied Rogan's and Nickol's and Plumbs' post-trial motions; awarded the Plumbs, as against Rogan and Nickol, their fees, costs and expenses in the amount of $8,487.75; ordered Plumb, Inc., to vacate by August 10, 1984; ordered judgment consistent with the judgment order of February 14, 1984, as modified; and granted Plumb, Inc.'s motion for a stay of enforcement, pending deposit ...


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