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02/16/96 FRANCIS W. MEADE AND MARJORIE E. MEADE v.

February 16, 1996

FRANCIS W. MEADE AND MARJORIE E. MEADE, PLAINTIFFS/COUNTER-DEFENDANTS/APPELLANTS,
v.
GERRY KUBINSKI AND PEGGY KUBINSKI, DEFENDANTS/COUNTER-PLAINTIFFS/APPELLEES AND HERITAGE MATERIAL, INC., INTERVENOR/APPELLEE.



Appeal from the Circuit Court of the 12th Judicial Circuit, Will County, Illinois. 91-CH-10085. Honorable Edwin B. Grabiec, Judge Presiding.

Released for Publication March 20, 1996.

Present - Honorable Peg Breslin, Presiding Justice, Honorable William E. Holdridge, Presiding Justice, Honorable Tom M. Lytton, Justice. Presiding Justice Holdridge delivered the opinion of the court: Breslin, P.j., and Lytton, J. concurring.

The opinion of the court was delivered by: Holdridge

PRESIDING JUSTICE HOLDRIDGE delivered the opinion of the court:

This matter involves a dispute over a written lease between the plaintiffs/counter-defendants, Francis and Marjorie Meade (the Meades) as lessors, and the defendants/counter-plaintiffs, Gerry and Peggy Kubinski (the Kubinskis) as lessees of a seven acre tract of farm land for use in the Kubinskis' gravel crushing operation.

In their complaint, the Meades alleged that the Kubinskis breached the lease in failing to pay royalties on certain materials processed on the leased property, and in failing to return the property in as good a condition as it was before the Kubinskis took possession. The Kubinskis filed a counter-complaint alleging that the Meades had improperly terminated the lease. Heritage Materials, Inc. (Heritage Materials), a corporation owned by the Kubinskis, intervened as an interested party in the counter-complaint.

Following a bench trial, the trial court found that the Kubinskis had breached the lease and assessed damages of $43,980 for unpaid royalties and $30,000 for the failure to restore the property to the condition it was in prior to taking possession. The trial court also entered judgment against the Kubinskis on their counter-complaint. The Meades appeal the measure of damages awarded by the trial court on each count; the Kubinskis and Heritage Materials appeal the denial of their counter-claim. We affirm in part, reverse in part, and remand this cause to the trial court.

FACTS

The Meades owned a 160 acre farm in Channahon Township in Will county, which they had farmed since 1954. The Meade farm consisted overall of highly productive Brenton, Warsaw, and Lorenzo silt loam soil of a thickness of two to three feet. For more than 30 years the farm had produced crops of corn, wheat, soybeans, and tomatoes. In the ten years immediately prior to the Kubinski lease, however, the land had been used only to grow cattle feed and to pasture cattle.

The Kubinskis owned a 160 acre tract immediately south of the Meade farm, which they purchased with the intention of developing as a residential lake community. Prior to purchasing their property, the Kubinskis initiated discussions about leasing a small tract of property from the Meades where they would process and sell the gravel removed in digging the lake on their own property.

Several meetings between the parties took place over approximately a year. At one meeting, the parties apparently reached a verbal agreement for the Kubinskis to remove material from their property, transport the material to the seven acre tract leased from the Meades, and process the material into gravel. It was also agreed at this meeting that the Meades would receive 50 cents for each ton of gravel processed and sold from the leasehold. Other terms of the agreement were still unresolved. Subsequent to this oral agreement, the Kubinskis submitted a written lease agreement to the Meades. The lease contained a "yield up" clause calling for the property to be returned "in as good condition as when the same were entered upon *** loss of fire or inevitable accident and ordinary wear excepted." The Meades submitted a revised written lease, and negotiations continued.

After additional discussions and consultations with their attorneys, a written lease, drafted by the Meades' attorney, was executed on November 6, 1989. The lease provided that the Kubinskis would use the seven acre plot for a gravel crushing operation in return for which they would pay the 50 cents per ton royalty for all gravel processed and sold on the Meade leasehold. In addition, the lease contained a yield up clause in substantially similar form to the one submitted originally by the Kubinskis.

Shortly thereafter, the Kubinskis incorporated Heritage Materials and began the gravel crushing operation. It soon became apparent to the Kubinskis that the gravel they were crushing on the Meade property was not of sufficient quality to be commercially viable. At some point in 1991, the Kubinskis changed their method of processing material into gravel by starting a washing operation, a process by which dirty stone is cleaned by pumping water under pressure through the material. The Kubinskis claim that they informed the Meades of this change in operations. The Meades, however, deny being so informed.

The washing operation created a residue by-product known as "slimes," a talcum-powder like substance with very poor draining properties. The Kubinskis initially stored the slimes in silt ponds on the leased property; however, due to the large amounts of slimes the silt ponds quickly became filled, and slimes then began to run off onto the Meades' adjacent pasture land, causing some of his cattle to become ill. Additional silt canals were then built in an attempt to handle the run-off. The ...


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