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01/13/87 Bill Anest Et Al., v. Frank Bellino

January 13, 1987





503 N.E.2d 576, 151 Ill. App. 3d 818, 104 Ill. Dec. 861 1987.IL.20

Appeal from the Circuit Court of Lake County; the Hon. William F. Homer, Judge, presiding.


JUSTICE UNVERZAGT delivered the opinion of the court. DUNN and REINHARD, JJ., concur.


Defendant Duane Starmach appeals from a judgment entered in the circuit court of Lake County in favor of plaintiffs, Bill Anest, Peter Anest, and Zion State Bank as trustee, on defendant Starmach's counterclaim for declaratory judgment. The trial court determined that the phrase "gross sales" used in the parties' restaurant lease to determine the amount of additional percentage rent included the sales of lottery tickets. We reverse and remand.

Plaintiffs brought a complaint for accounting of gross sales on November 9, 1984, under a lease agreement for a 24-hour truck-stop restaurant entered into by plaintiffs as lessors and defendants' assignors as lessees on January 7, 1976. Paragraphs 4 and 5 of the rider to the lease of the same date provide in part:

"4. That in addition to the rental heretofore provided herein, Lessee will pay to Lessor an additional rental equal to five (5%) percent of all gross sales in excess of $35,000.00, in each calendar month. . . .

5. That to determine said rental, Lessee agrees to install a cash register system providing a continuous tape showing gross sales, which system shall be of a type agreed upon between Lessor and Lessee."

Defendant Duane Starmach brought a counterclaim for declaratory judgment. He alleged that (1) he sells lottery tickets for which he receives a 5% "agency fee"; (2) counterdefendants claim that under paragraph 4 of the rider to the lease, "gross sales" include the total amount of the lottery tickets sold; and (3) he has included his 5% agency fee from the State in computing the additional rental of 5% of gross sales over $35,000 per month. He stated his position that counterdefendants are entitled to only the gross agency fees which have been paid to counterdefendants. He prayed for a declaratory judgment that the words "gross sales" do not include the total amount paid for the lottery tickets but only the agency fee. In Starmach's memorandum of law, he argued that the question presented was whether gross sales included the commission or the gross receipts.

Section 1670.140 of the lottery rules states that a lottery agent is entitled to a commission and to bonuses for winning tickets of prizes of at least $1,000. (11 Illinois Administrative Code 1670.140(d), (e) (1974).) The application of the restaurant, accepted by the Division of State Lottery, provided for a 5% commission, less a $5-per-week service charge. A lottery agent is to deposit to the credit of a State lottery fund account, or pay to a lottery representative, all monies received from the sale of tickets, less the amount of commissions, fees, and money retained as compensation and paid out to winners. 11 Illinois Administrative Code 1670(g) (1974); Ill. Rev. Stat. 1985, ch. 120, par. 1171.

The trial court found that sales of lottery tickets are sales within the lease. Judgment was entered in favor of plaintiffs for $36,799.24.

Defendant Starmach argues that the sales of lottery tickets could not have been within the contemplation of the parties at the time of the lease because such sales were not made at that time. It is also argued that the provisions of the Revenue Act concerning the lottery demonstrate an intent to have the lottery system exercise complete control and proprietary interest in the funds produced by the sale of lottery tickets. Starmach analogizes the system to a consignment because the lottery agent holds the funds for the lottery system, except for the commissions. Plaintiffs argue that the entire amounts taken for the sale of lottery tickets should be included as "all gross sales" because the phrase is broad.

As plaintiffs argue, defendant Starmach has taken a new position on appeal that the entire sales of the lottery tickets are outside the terms of the lease. Below he argued only that his 5% commission should be subject to the 5% additional rent. As defendant never adopted this theory in the trial court, he cannot argue it in the appellate court. (O'Hare International Bank v. Feddeler (1973), 16 Ill. App. 3d 35, 38.) We ...

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