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04/12/89 Nassau Terrace Condominium v. S. Saul Silverstein Et Al.

April 12, 1989

NASSAU TERRACE CONDOMINIUM ASSOCIATION, INC., PLAINTIFF-APPELLANT

v.

S. SAUL SILVERSTEIN ET AL., D/B/A COMMERCIAL COIN LAUNDRY SYSTEMS, DEFENDANT-APPELLEE



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, THIRD DIVISION

537 N.E.2d 998, 182 Ill. App. 3d 221, 130 Ill. Dec. 669 1989.IL.511

Appeal from the Circuit Court of Cook County; the Hon. Loretta C. Douglas, Judge, presiding.

APPELLATE Judges:

JUSTICE WHITE delivered the opinion of the court. FREEMAN, P.J., and McNAMARA,* J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE WHITE

Plaintiff, Nassau Terrace Condominium Association, Incorporated, filed an action in two counts, seeking a declaration that two leases it has with defendant Commercial Coin Laundry Systems (hereinafter Commercial), a partnership, are null and void and that it is entitled to possession of the demised premises. In count I of the complaint, plaintiff alleged that the leases were never assigned from the original lessor, Gregory Prena, to succeeding owners of the property or to plaintiff and, consequently, plaintiff is not bound by the terms of the leases. In count II of the complaint, plaintiff alleged that the leases were executed by Larry Talman as agent of defendant Commercial. Plaintiff further alleged that defendants S. Saul Silverstein, Enoch Silverstein and Commercial have "not supported agent's authority to enter into such two leases in writing," and the leases are null and void under the Statute of Frauds (Ill. Rev. Stat. 1987, ch. 59, pars. 1, 2).

The evidence adduced at trial follows.

On November 10, 1975, Gregory Prena, as lessor, and defendants, as lessees, entered into two leases. Under the terms of the leases, Mr. Prena leased to the defendants the laundry rooms or laundry areas in the buildings commonly known as 12542-48 and 12550-58 Fairview Avenue, Blue Island, Illinois (hereinafter the Premises). Defendant agreed to equip the Premises with washing and drying equipment and to operate the equipment for use of the tenants in the buildings. Defendants also agreed to pay $4,000 to Mr. Prena to reimburse him for improvements made to the Premises and to pay 15% of the receipts from the washing and drying equipment as rent for the Premises. Mr. Prena warranted in the leases that he was the owner of the buildings and that the leases would be binding upon all future owners of the buildings, and upon his heirs, executors, and assigns. Thus, the leases provide that "[it] is the intention of the parties hereto that this Lease run with the land and buildings hereinabove described."

Larry Talman, a salesman for Commercial, and Ernest Zurkowski, a former sales manager for Commercial, signed the leases on behalf of Commercial. Defendant S. Saul Silverstein, one of the two partners operating Commercial, testified that Mr. Talman and Mr. Zurkowski were authorized to enter into leases on behalf of Commercial. However, on cross-examination, Mr. Silverstein testified that he did not have anything in writing to show the authority of Mr. Talman and Mr. Zurkowski to execute the leases.

Mr. Silverstein testified that Commercial paid $4,000 to Mr. Prena in 1975, as required by the leases. Up to the date of trial, Commercial has tendered rentals to plaintiff which have been accepted. Mr. Silverstein also testified that the parties to the leases intended that the covenants in the leases run with the land and bind future owners of the property.

On August 20, 1979, Gregory Prena sold the property to the Exchange National Bank as trustee under trust No. 35651 (hereinafter the Exchange National Bank). *fn1 The Exchange National Bank then converted the property to condominiums and, on March 25, 1980, registered a declaration of condominium ownership. Also on March 25, 1980, the Heritage County Bank and Trust Company (hereinafter the Heritage Bank) registered a mortgage on 18 of the condominium units. That mortgage was foreclosed by the Heritage Bank, and on May 17, 1983, the Heritage Bank purchased the units at a sale held by the sheriff of Cook County.

At the Conclusion of the trial, the court entered judgment in favor of defendants and against plaintiff on both counts of the complaint. The court determined that the covenants in the leases run with the land and are binding upon plaintiff. The court also determined that, to the extent plaintiff had any right to terminate the leases, plaintiff waived its right when it accepted rentals from defendants. Consequently, the court found that defendants are entitled to possession of the demised premises. The court also found that plaintiff failed to offer any evidence to support count II of the complaint. We will consider the court's holding on each count in turn.

In order for a covenant to run with the land, three criteria must be met: (1) the covenantor and the covenantee must have intended the covenant to run with the land; (2) the covenant must touch and concern the land; and (3) there must be privity of estate between the party claiming the benefit of the covenant and the party resting under the burden of the covenant. Streams Sports Club, Ltd. v. Richmond (1983), 99 Ill. 2d 182, 188, 457 N.E.2d 1226; St. Paul Federal Bank for Savings v. Wesby (1986), 149 Ill. App. 3d 1059, 1063, 501 N.E.2d 707.

In Streams Sports Club, the Illinois Supreme Court observed that covenants should be interpreted to give effect to the actual intent of the parties at the time the covenant was made. (Streams Sports Club, 99 Ill. 2d at 188.) The intent of the parties can best be determined by express contractual provisions. (Streams Sports Club, 99 Ill. 2d at 188.) In the present case, it is clear that Commercial and Mr. Prena, the parties to the leases, intended that the covenants run with the land. Each lease provides that "[it] will be binding upon all future owners, and the heirs, executors, and assigns of the Lessor." Each lease also provides that "[it] is the intention of the parties hereto that this Lease run with the land and buildings hereinabove described." In addition, defendant S. Saul Silverstein testified that the ...


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