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05/17/88 Jon S. Gerardi, v. Joseph J. Vaal Et Al.

May 17, 1988

JON S. GERARDI, PLAINTIFF-APPELLANT

v.

JOSEPH J. VAAL ET AL., DEFENDANTS-APPELLEES



APPELLATE COURT OF ILLINOIS, THIRD DISTRICT

523 N.E.2d 1327, 169 Ill. App. 3d 818, 120 Ill. Dec. 416 1988.IL.764

Appeal from the Circuit Court of Hancock County; the Hon. Richard C. Ripple, Judge, presiding.

APPELLATE Judges:

JUSTICE SCOTT delivered the opinion of the court. BARRY, J., concurs. JUSTICE HEIPLE, specially Concurring.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE SCOTT

This action comes on appeal from an order granting summary judgment in favor of defendants pursuant to a declaratory judgment action brought by plaintiff. Plaintiff was seeking a determination by the trial court that defendants breached a lease provision by failing to continue to use and occupy certain leased premises from plaintiff as a retail store for the sale of goods, wares and merchandise. The issue on appeal is whether the lease contains a covenant requiring defendants to continue to do business.

The material facts, admitted by the defendants, are as follows. On January 23, 1948, plaintiff's predecessors in interest leased certain premises in Carthage, Illinois, to Butler Brothers for the operation of a "Ben Franklin" store franchise. Through a series of assignments, defendant Vaal (Vaal) became the tenant under the lease and subsequently assigned his interest, without release, to defendant Smith (Smith). All tenants prior to Smith operated a Ben Franklin store franchise on the premises.

Throughout the years the lease had been amended seven times, the last being April 8, 1980, which extended the lease term to September 20, 1991. At all times the lease had provided for payment of a fixed monthly rent plus a percentage of gross sales in excess of a specified amount. By the terms of a supplemental agreement dated October 10, 1979, still in effect, the minimum rent to be paid was fixed at $7,200 per year, payable in equal monthly installments. Additionally, the tenant was to pay each lease year, beginning October 1, a sum of money equal to 4 1/2% of annual gross sales in excess of $193,333.33. The lease also allows the landlord to examine, at any reasonable time or times, the books and records of the tenant to disclose the amount of gross sales.

Article I(b) of the lease states that the tenant covenants and agrees "to use and occupy the said premises as a retail store for the sale of goods, wares and merchandise, and not to use the same for any illegal purposes." Article I(d) is entitled "Abandonment," and provides in part:

"That, if the premises shall be abandoned by the tenant during said term, the landlord or his representatives may re-enter the same, . . . and let the premises as the agent of the tenant and receive the rent therefore, applying the same . . . to the payment of rent due by these presents, and the balance, if any, to be paid over to the tenant, who shall remain liable for any deficiency."

Article II(n) of the lease gives the tenant the unqualified right to sublet the premises subject to the terms of the lease, and Article III requires the landlord to complete certain improvements to the property subject to the tenant's approval. The improvements include installation of a new typical Ben Franklin store front and painting the inside of the premises in Ben Franklin store colors.

In September 1986, Smith ceased doing business on the leased premises and commenced doing business on other property in Carthage, Illinois, the first time since 1948 the property had not been used as a Ben Franklin store. Smith tendered a check for 4 1/2% of gross sales on the leased premises for the period of January 2, 1986, to October 11, 1986, but has since paid only the monthly base rent due under the lease.

Plaintiff further argues that the lease contains an express covenant requiring defendants to continue to do business at the leased premises. Plaintiff cites as authority the cases of Fox v. Fox Valley Trotting Club (1956), 8 Ill. 2d 571, 134 N.E.2d 806, and Simhawk Corp. v. Egler (1964), 52 Ill. App. 2d 449, 202 N.E.2d 49.

The trial Judge distinguished both Fox and Simhawk from the present case on the basis that "the use provisions in the leases in Fox and Simhawk were substantially more restrictive than the ...


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