Bolingbrook Equity I Ltd. Partnership v. Zayre of Illinois, Inc.

• Decision Date: 27 August 1993
• Docket Number: Nos. 1-91-1312,1-92-0432,s. 1-91-1312
• Citation: 252 Ill.App.3d 753,624 N.E.2d 1287,191 Ill.Dec. 909
• Parties: , 191 Ill.Dec. 909 BOLINGBROOK EQUITY I LIMITED PARTNERSHIP, Plaintiff-Appellant v. ZAYRE OF ILLINOIS, INC.; Zayre Illinois Corporation; Ames Department Stores, Inc.; Zayre Corporation; Defendants (Century Supply Company, Defendant-Appellee).
• Court: United States Appellate Court of Illinois

Page 1287

624 N.E.2d 1287

252 Ill.App.3d 753, 191 Ill.Dec. 909

BOLINGBROOK EQUITY I LIMITED PARTNERSHIP, Plaintiff-Appellant v. ZAYRE OF ILLINOIS, INC.; Zayre Illinois Corporation; Ames Department Stores, Inc.; Zayre Corporation Defendants (Century Supply Company Defendant-Appellee).

Nos. 1-91-1312, 1-92-0432.

Appellate Court of Illinois,

First District, Fifth Division.

Aug. 27, 1993.

Rehearing Denied Oct. 15, 1993.

James K. Lennon, Kathryn E. Korn, Di Leonardi & Broihier, Des Plaines, for plaintiff-appellant.

Rosenthal and Schanfield, Chicago (James M. Dash, Stephen P. Kikoler, of Counsel), Gorham Metge, Bowman & Hourigan Chicago (Maureen A. McGuire, Marvin F. Metge, of counsel, for defendant-appellee, Century Supply Co.

Justice MURRAY delivered the opinion of the court:

Plaintiff, Bolingbrook Equity I Limited Partnership (the Partnership) seeks possession of 81,500 square feet of store space in a shopping center which it owns in Bolingbrook, Illinois. Defendant, Century Supply Company (Century), occupies this space as the claimed assignee of Zayre Illinois Corporation (ZIC). The Partnership is the successor-in-interest to the original lessor under a lease to Zayre of Illinois, Inc. (ZII) as lessee, dated August 18, 1971.

Initially, there were two separate actions in the trial court. First, the Partnership brought an action in the chancery division of the circuit court of Cook County challenging the Lease assignment. Second, the Partnership brought an eviction action in the municipal division of Will County, the location of the shopping center. However, upon Century's motion, Judge Curry, the trial judge in the chancery action, required that the claim be filed in Cook County. Subsequently the two matters were consolidated in the chancery division of the trial court. The Partnership filed two separate appeals in this case; the first appeal is from the finding of summary judgment in favor of Century in the chancery action (appeal No. 1-91-1312) and the second appeal is from the finding of summary judgment in the municipal action (1-92-0432). The two appeals have been consolidated by this court, however, since the issues tendered by the two appeals involve different legal concepts, we address the two appeals separately.

Appeal 1-91-1312

The first appeal concerns the following facts. On December 31, 1986, the Partnership acquired a shopping center then known as "Bolingbrook Commons." The largest store in this shopping center had been leased, by the predecessor owner, to defendant ZII under a written lease dated August 1, 1971, (the Lease). The Lease granted ZII the right to occupy 81,500 square feet of store space and also certain collateral rights in the shopping center as a whole, including a restrictive covenant limiting the businesses that other tenants could conduct. The store had been constructed by the original landlord according to ZII's specifications. The term of the Lease was for 25 years, after which the tenant, at its option, could renew for as many as four additional five-year extensions. Until early 1989, the leased premises were primarily occupied by a Zayre store. There is however, a dispute as to the succession of the various Zayre entities.

Century maintains the following represents the succession of interests in the Lease: (1) on August 18, 1971, ZII entered a lease as tenant to rent the property at issue; (2) prior to June 1977, ZII assigned the tenant's interest in the Lease to Zayre Corporation (ZC); (3) on October 25, 1988, ZC assigned its interest to ZIC; (4) on August 11, 1989, ZIC executed an assignment to Century; (5) Century took possession of the premises and remains in possession as of this date. The Partnership disputes the validity of the purported assignment from ZC to ZIC as well as the validity of the purported assignment from ZIC to Century.

On June 3, 1977, the original landlord and ZC executed "Amendment B" to the Lease, which identifies ZC as "Tenant," and which recites that "Tenant is the successor to and present holder of the tenant's interest in and to the Lease." The substance of Amendment B permits the tenant to erect and maintain an outdoor sales area within the shopping center. This document is the only indication of an assignment from ZII to ZC. In their answer to the amended complaint, ZII, ZIC and Ames Department Stores, Inc. (Ames) alleged that ZII was "merged into Zayre [ZC] in 1977."

On October 25, 1988, ZC and ZIC executed an "Assignment and Assumption Agreement" which purports to assign ZC's interest in leases for 47 separate Zayre store locations (including the store in Bolingbrook) to ZIC. Thereafter, the Partnership received a letter dated October 25, 1988, written on ZC stationary and signed by ZIC, which refers to the Lease and states "we hereby assume to and agree with you that we will perform and observe all of the terms and conditions in said Lease contained to be performed and observed by Tenant."

Throughout 1988, both before and after October 25, 1988, the Partnership continued to receive rent checks drawn on accounts of " *Zayre Framingham, MA 01701." After November 22, 1988, the Zayre rent checks were drawn on a different bank, the words "Stores Division" appeared in small print beneath the word "Zayre," and a different corporate officer signed the checks. Through July 1989 the Partnership continued to receive similar "Zayre" checks for payment of rent.

The Partnership (through its general partner and managing agent, the Hinman Company), received a letter dated January 26, 1989, from defendant, Ames, concerning the Lease. The letter states that "Ames * * * has acquired the Zayre Discount Store chain and has assumed the tenant responsibility under the Zayre leases," that Ames planned to close the Bolingbrook store, and that Ames was "negotiating with prominent local, regional and national retailers to occupy some or all of our vacated store space." The letter concludes by stating that "[the Partnership] may want to participate in the purchase of our leasehold interest. In that event, we will be pleased to consider a written proposal from you to buy our lease interest, if promptly received."

By letter dated January 27, 1989, Century suggested to Ames that it would be interested in acquiring the lease to the Bolingbrook Zayre store space. Century proposed an acquisition price of $167,000 if Ames could satisfy several conditions and contingencies, including Century's need to have the right to make numerous physical alterations to the premises and the availability of rezoning or a special use from the Village of Bolingbrook "to allow Century to use a majority of the premises for warehouse purposes." Century indicated its proposal would probably require approval or consent of the owner as well as the issuance of permits to perform the work by required governmental authority. Century's initial proposal was also subject to satisfactory results of a test of the load bearing capacity of the ground floor of the store, to meet Century's needs. The proposal was conditioned upon the approval of Century's attorney of the Lease itself, which Century had not yet seen. Century wrote: "In this regard we look forward to receiving a true and correct copy of the lease as soon as possible." The letter concluded by stating that "[u]nless accepted, the offer contained in this proposal will automatically terminate without notice on March 14, 1989." The Partnership was not shown this letter, and was not advised of its specific terms, until after this suit was filed.

The first response Century received regarding its proposal to Ames came in a telephone call from Ames on February 24, 1989.

The Ames representative said that the Century offer was generally acceptable. Ames had not yet provided a copy of the Lease to Century, in fact, Century did not obtain a copy of the lease to review, until March 15 or 16, (after the date when Century's proposal, by its terms automatically terminated). Century's vice-president, Paul Spiewak, Jr., testified that "it seemed illogical that he [Robert Masson of Ames] wouldn't show me the Lease. But he didn't." On April 4, 1989, Ames sent its first written "acceptance" of Century's "offer." The acceptance was subject to Century's "execution of a Leasehold Purchase Agreement", the terms of which were eventually rejected by Century.

By letter dated February 13 Ames wrote to the Partnership on Ames letterhead (hereinafter referred to as "the Ames letter,") stating: "In accordance with Section 17.2 of [the] lease, you are hereby advised that we intend to assign our interest under this lease for use as a home improvement sales and stockroom, especially tile products." Section 17.2 of the Lease provides:

"During the term of this lease Tenant shall not assign its interest in this lease or sublet more than fifty per cent (50%) of the floor area of the main building without first giving the Landlord notice of the intended assignment or intended subletting and the nature of the business organization and the effective date of the intended assignment or subletting. If within twenty (20) days after the giving of such notice by Tenant to Landlord, Landlord shall give notice to Tenant that it elects to terminate the term of this lease as of the intended date of said assignment or subletting, then the term of this lease shall terminate as if said intended date was the date originally fixed for the termination hereof. In the event that landlord shall elect to terminate the term of this lease pursuant to this Section 17.2, then landlord shall, upon the date the term of this lease shall so terminate, pay to Tenant an amount equal to the product of (i) the invoiced cost to Tenant of fixtures initially installed in the Demised Premises at or about the commencement of the term of this lease plus the cost of leasehold improvements to the Demised Premises at or about the commencement of the term of this lease plus the cost to Tenant at...