Ceres Illinois, Inc. v. Illinois Scrap Processing, Inc.

• Decision Date: 17 September 1986
• Docket Number: No. 61744,61744
• Citation: 114 Ill.2d 133,102 Ill.Dec. 379,500 N.E.2d 1
• Parties: , 102 Ill.Dec. 379 CERES ILLINOIS, INC., Appellee, v. ILLINOIS SCRAP PROCESSING, INC., Appellant.
• Court: Illinois Supreme Court

Page 1

500 N.E.2d 1

114 Ill.2d 133, 102 Ill.Dec. 379

CERES ILLINOIS, INC., Appellee, v. ILLINOIS SCRAP PROCESSING, INC., Appellant.

No. 61744 Supreme Court of Illinois.

Sept. 17, 1986.

Rehearing Denied Dec. 1, 1986.

Edward R. Vrdolyak, Ltd., Michael P. Casey, William J. Harte, Ltd., Chicago, for Illinois Scrap Processing, Inc.; William J. Harte, of counsel.

Lord, Bissell & Brook, Chicago, for Ceres Illinois, Inc.; Robert J. Pugliese, Hugh C. Griffin, of counsel.

Justice RYAN delivered the opinion of the court:

Defendant, Illinois Scrap Processing, Inc., refused to vacate property it had occupied pursuant to an oral agreement, and plaintiff, Ceres Illinois, Inc., sought permanent injunctive relief and money damages. The circuit court of Cook County concluded that the defendant had an oral agreement for a 15-year lease with plaintiff's predecessor, and that the plaintiff was equitably estopped from asserting the Statute of Frauds as a bar to the agreement. The relief sought by the plaintiff was therefore denied. The appellate court reversed and remanded the cause. (130 Ill.App.3d 798, 86 Ill.Dec. 48, 474 N.E.2d 1245.) We granted defendant's petition for leave to appeal.

The Chicago Regional Port District (the Port District) owns property located at the mouth of the Calumet River known as the Iroquois Landing Lakefront Terminus (Iroquois Landing). In 1982, plaintiff's predecessor, International Great Lakes Shipping Company (Great Lakes), occupied the western half of the property under a written license from the Port District. The license gave Great Lakes the exclusive right to use the property for marine terminal services including the loading, unloading and warehousing of various cargoes. Ceres Terminals, Inc. (Ceres Terminals), plaintiff's parent company, operated the eastern half of Iroquois Landing. Defendant, Illinois Scrap Processing, Inc., operated a scrap-processing and storage facility immediately west and adjacent to plaintiff's premises.

Early in 1982, defendant's president, Seymour Pielet, began discussions with Great Lakes' general manager, Robert Palaima, regarding the possibility of using approximately seven acres of Great Lakes' Iroquois Landing property for his company's operation. An area of 6.7 acres on the western edge of Great Lakes' premises was agreed to, and a survey of the parcel was ordered. Pielet (defendant's president) eventually agreed that defendant would pay the Port District $29,000 per year for its use of the property and would pay Great Lakes $32,000 per year in rent and dock-license fees. Pielet suggested an initial term of five years, with two options of five years each. He testified that Palaima (Great Lakes' general manager) responded by suggesting a straight term of 15 years.

Following these preliminary negotiations, the matter was referred to the parties' attorneys. Palaima testified that he expected a written agreement to be executed by the end of July 1982 and that he did not consider the oral agreement binding. Pielet testified that he anticipated the execution of a written consent document, but that he had no feeling one way or the other as to whether one was needed to bind the parties. In late June 1982, defendant's attorney prepared a draft letter and suggested to Palaima (Great Lakes) that it be used to inform the Port District of Great Lakes' intent to lease the 6.7 acres to defendant. The letter referred to the oral agreement as a "tentative sub-lease." (Emphasis added.)

Palaima testified that while negotiations for a final written agreement continued, Pielet asked for permission to move scrap onto the premises because of an overflow problem at defendant's facility. After consulting with his superiors, Palaima informed Pielet that defendant could move onto the premises even though a final written agreement had not been executed. In a letter to Pielet dated June 30, 1982, Palaima stated:

"As per our recent discussions and as per agreement, the following will apply to the storage of your material on approximately six acres on the western end of our Iroquois Terminal.

Commencing July 1, 1982, we offer 30 days free storage. Thereafter the fee will be $2,666.67 per 30 day period or fraction thereof.

It is anticipated that prior to the end of July, the legal arrangements for your use of the above mentioned property will have been worked out among our Companies and the Chicago Regional Port District. It is understood that those arrangements and agreements, when mutually approved, will take precedence over this one." (Emphasis added.)

Pielet (defendant's president) testified that the terms of the oral-lease agreement and this arrangement, under which defendant entered the property, were to be one and the same. He further stated that Palaima's (Great Lakes') letter accurately reflected the parties' oral-lease agreement. Pielet explained that Palaima limited the terms of his letter to the storage of scrap in order to prevent the Port District from asking for a greater share of the agreed rental payments and that Palaima was aware that defendant would do more than store scrap on the premises. He noted that defendant conducted a full scrap-processing operation on the premises from the date of entry and Great Lakes did not object. Pielet also testified that he and Palaima never discussed whether a written document was to take precedence over their oral agreement.

Defendant moved onto the premises in late June or early July 1982, and began paying Great Lakes' monthly invoices for rent in August of that year. Pielet (defendant's president) testified that all the essential terms for a binding agreement, including the time period, had been reached before defendant moved onto the property. However, in July 1982, defendant's attorney informed Great Lakes' counsel that the agreement was not yet binding. He also indicated that he would not let defendant sign the agreement until certain specific questions were resolved.

On August 6, 1982, representatives of both Great Lakes and defendant sought the Port District's approval of the lease proposal. At some point after this date, it was determined that defendant's use of the Iroquois Landing property would be under a license from the Port District, which would be consented to by Great Lakes. The license from the Port District to defendant was reduced to writing and executed by both the Port District and defendant. A proposed consent to the license was prepared but was never executed by Great Lakes. After the August 6, 1982, meeting, the negotiations appear to be in terms of a license from the Port District and consent by Great Lakes, rather than a lease from Great Lakes.

Around September 1982, defendant asked for and received permission from Great Lakes to install a 70-ton scrap press on the premises. A 30-foot-long, 6-foot-deep concrete foundation was constructed for the press on the property. After the foundation was completed, the press was assembled and welded to steel beams implanted in the concrete. Great Lakes' personnel and equipment assisted in both the construction of the foundation and the installation of the press. Defendant was charged separately for these services.

In February of 1983, the Port District and defendant signed a license agreement for the use of the 6.7 acres. Since Great Lakes had previously been granted the exclusive use of the property, defendant's license was made subject to Great Lakes' consent. However, as noted above, this license consent was never finalized and executed. Pielet (defendant's president) testified that as a result, a fence on the property, which defendant had agreed to build and which was required to be built by the license, was never completed.

In late April of 1983, Ceres Terminals purchased all of the stock of Great Lakes and changed the company's name to Ceres Illinois, Inc., plaintiff in this action. After the purchase, plaintiff sent defendant monthly invoices for the use of the 6.7 acres for May and June 1983. In July of that year, plaintiff informed defendant that its use of the property was inconsistent with and detrimental to plaintiff's operation. Plaintiff wrote two letters requesting that defendant discontinue its activities and remove all scrap from the Iroquois Landing property. When defendant failed to comply, plaintiff initiated this action.

The circuit court of Cook County found that all of the essential terms for a valid contract were present in the parties' oral agreement. The court also concluded that the parties' conduct demonstrated that they had contemplated a long term contract. Finally, the court held it would be unjust to allow plaintiff to assert the Statute of Frauds (Ill.Rev.Stat.1983, ch. 59, par. 1 et seq.) as a bar to the oral contract. The court denied plaintiff the relief it sought, and plaintiff appealed.

As previously noted, the appellate court reversed the judgment of the circuit court and remanded the cause for further proceedings. The court held that the trial court's finding that a valid 15-year oral agreement existed between plaintiff's predecessor and defendant was contrary to the manifest weight of the evidence. The court found that since a 15-year agreement did not exist, defendant moved onto the premises under the terms of the agreement referred to in Palaima's letter of June 30, 1982, which was terminable at will.

The appellate court further noted that even if a 15-year agreement existed between the parties, it was unenforceable under the Statute of Frauds (Ill.Rev.Stat.1983, ch. 59, par. 1 et seq.). The court also found that there was no basis for the trial court's conclusion that plaintiff was estopped from asserting the Statute of Frauds as a bar to the oral agreement, and that any action defendant had taken in regard to the premises was at its own risk.

Defendant maintains that the trial court implicitly determined that the parties did not intend that the execution of a written license consent be a...