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02/03/87 Associated Investment v. Laidlaw Waste Systems

February 3, 1987





503 N.E.2d 1153, 152 Ill. App. 3d 279, 105 Ill. Dec. 147 1987.IL.117

Appeal from the Circuit Court of Winnebago County; the Hon. John C. Layng, Judge, presiding.


JUSTICE WOODWARD delivered the opinion of the court. LINDBERG, P.J., and INGLIS, J., concur.


Plaintiff, Associated Investment Corporation, brought an action against defendant, Laidlaw Waste Systems, Inc., alleging that defendant had breached a lease agreement by vacating the premises prior to the expiration of the lease without good cause and that defendant owed plaintiff certain monies that were due under the lease for insurance premiums, prorated real estate taxes and cost-of-living expenses. Plaintiff also sought a money judgment against defendant for damages to the leasehold and for defendant's failure to insure plaintiff's equipment and personal property which had remained on a portion of the leased premises. Following a bench trial, the trial court entered judgment for plaintiff and against defendant in the amounts of $47,228.50 as and for rent due under the lease, $6,045 as and for damages to the leasehold, and the sums of $10,605 and $5,953 for insurance premiums paid by plaintiff due to defendant's failure to provide proof of insurance, for a total of $69,831.50, together with 9% interest since June 1, 1984, the date as of which the trial court found the defendant had vacated the premises. Plaintiff appeals, contending that the award of damages was inadequate.

On December 1, 1975, Theta Systems, Inc., a predecessor company of defendant, entered into an agreement with Ernest Tice to lease the premises at 1208 Milford Avenue, Rockford. Sometime thereafter, plaintiff acquired the property following a foreclosure action and became defendant's landlord.

On or about December 14, 1981, plaintiff and defendant entered into a three-year extension of the lease, referred to as option II. Option II contained the following terms:

"The Current lease will be extended for three years, with the option for two additional years, including six additional bays. The initial monthly rental rate will be Fifty-five Hundred Dollars ($5,500.00) payable in advance. Annual increases to be effective January 1st of each year, based on the increased percentage of the Consumer Price Index. The Lessee's Real Estate Tax obligation to be that amount of tax over the base year. The Base Year to be changed to 1979 taxes paid in 1980. All other terms and conditions to remain the same [ sic ] This letter shall be attached to, and become a part of the above mentioned lease.

Lessee has the option to purchase said property effective September 1, 1983 and extending for the term of the lease. Purchase price of the front building for $350,000.00 and all the property, including both buildings for $500,000.00 Owner will finance at 17.5%. Monthly payments not to exceed $7,500.00 with principle [ sic ] payments every other year.

Lessee to provide insurance coverage on said premises-naming lessor and any other parties of interest in the following amounts: Public Liability $1,000,000., Property Damage $500,000., Building and Content $500,000."

Sometime in May 1984, defendant vacated the premises without notice to plaintiff.

In a one-count complaint, filed July 2, 1984, plaintiff alleged that defendant had failed to pay the rent due for June 1984 and plaintiff was of the opinion that defendant would not make the rest of the rental payments due for the balance of 1984, payable at the rate of $6,045 per month; that defendant, in violation of the lease and State law had left the premises in a total state of disrepair and damaged in excess of $15,000; that defendant had taken, or allowed to be taken while it was in possession of the premises, certain equipment and personal property belonging to the plaintiff and its associated companies worth in excess of $15,000; that defendant had failed to return the premises to its original condition; and that as a result of the damage and missing property, plaintiff suffered a loss in excess of $15,000. The complaint also sought statutory interest on the rental payments, plus attorney fees and costs.

The bench trial commenced on September 9, 1985. The first witness was John Dunker, president of plaintiff as well as of JFD Corporation, a leasing company that handles business equipment and supplies leasing to other companies, and D & B Contractors, Inc., a construction company. He testified that he acquired the property at 1208 Milford from Thorp Finance and that they had told him what was included in the property addition to the building. He personally observed an air conditioner, some tanks, and an overhead crane.

Dunker testified that he negotiated the three-year extension of the lease, as well as the option II provisions with Bernie Kiley, chairman of defendant. The lease provided for insurance for the contents, because according to plaintiff's insurance company, plaintiff could not carry insurance on the contents since plaintiff did not have control of the building. Plaintiff did carry liability and casualty insurance because it was required by its lender. Although defendant was to carry the liability insurance, plaintiff never removed its liability insurance, plaintiff never removed its liability coverage since defendant never provided plaintiff with a copy of the insurance policy. The first indication that defendant had moved out occurred when the June 1984 rent was not paid. Kiley was contacted, and he indicated that they were vacating the premises. Dunker described the premises as full of debris, the place was unlocked, and doors and windows were missing. Much of the place had been ransacked, and much equipment was missing. Pictures were taken of the premises. Dunker compiled a list over several days of what equipment and property was missing. The list was marked plaintiff's exhibit 19 and admitted into evidence later on. The list consisted of the type and quantity of equipment, the unit price, and the total. The unit price was based upon Dunker's prior experience in the construction business and represented the best price for which the item could be acquired. The total for all of the missing equipment was $740,601.40. According to Dunker, the equipment was worth more used than new. He estimated the fair market value of the equipment to be between 50% and 70% of the total stated above.

On cross-examination, Dunker testified that he did not recall what, if any, documents he used to complete the equipment list; that he had just recalled what equipment had been there and what was there after defendant vacated the premises. He did not recall which of his companies owned the various pieces of equipment. He obtained the unit cost figures by talking to various vendors from whom he would obtain similar equipment and from trade journals.

Thomas Stulte testified for plaintiff. He had been employed by Theta Systems, Inc., and later, defendant, from January 1976 to December 1981 at the Milford Avenue plant. During the period of his employment, he observed some construction equipment in the back building. He testified that there was damage done to the buildings and that a crane with an electric hoist had disappeared. On cross-examination, he stated that at the time the hoist disappeared, Tice still owned the property.

Harold Bauling testified for the plaintiff. He had been in the construction business since October 1958 and had been self-employed since 1979. He conducts appraisals, as well as doing repair work. He had done half a dozen appraisals and repaired more buildings. He was contacted in June 1984 to do an appraisal of 1208 Milford Avenue. He did the appraisal by making six to eight visits to the property and by contacting other contractors. He prepared a written appraisal, ...

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