Dasenbrock v. Interstate Restaurant Corp.

• Decision Date: 01 September 1972
• Docket Number: No. 70--130,70--130
• Parties: Anton DASENBROCK and Lillian Dasenbrock, husband and wife, and Clarence Dasenbrock, Plaintiffs-Appellees, v. INTERSTATE RESTAURANT CORPORATION, Defendant-Appellant.
• Court: United States Appellate Court of Illinois

Page 151

287 N.E.2d 151

7 Ill.App.3d 295

Anton DASENBROCK and Lillian Dasenbrock, husband and wife and Clarence Dasenbrock, Plaintiffs-Appellees, v. INTERSTATE RESTAURANT CORPORATION, Defendant-Appellant.

No. 70--130.

Appellate Court of Illinois, Fifth District.

Sept. 1, 1972.

Harold J. Taylor, Taylor & Taylor, Effingham, for defendant-appellant.

Frank H. Schniederjon, Effingham, for plaintiffs-appellees.

EBERSPACHER, Justice:

This is an appeal from an order granting summary judgment in favor of the plaintiffs, Anton and Lillian Dasenbrock, and their son, Clarence Dasenbrock.

Anton and Lillian Dasenbrock were the owners of real estate in Effingham County, Illinois. On February 20, 1966, they executed a written lease with the defendant, Interstate Restaurant Corporation. On April 8, 1967, the Dasenbrocks conveyed the land by quitclaim deed to Clarence Dasenbrock, their son.

On July 19, 1968, Anton and Lillian Dasenbrock filed a notice of default with Interstate. The original complaint and the first amended complaint, which joined Clarence Dasenbrock as a plaintiff, were dismissed on motion. The second amended complaint was filed on December 31, 1969. The complaint was in two counts. Count I alleged that the lessee had defaulted on the lease and owed past due rent to Anton and Lillie Dasenbrock from May 1, 1966 to the date of conveyance. Count II alleged the lessee had defaulted on the same lease and owed past due rent to Clarence Dasenbrock from the date of the conveyance to July 19, 1968.

Plaintiffs and defendant agreed upon a stipulation of facts, which included:

1. That the plaintiffs, Anton and Lillian Dasenbrock were on February 20, 1966, owners of real estate described in paragraph 1 of the second amended complaint, and later, on April 8, 1967, Anton and Lillian Dasenbrock conveyed the real estate to Clarence Dasenbrock, who is presently the owner thereof.

2. That the lease which was executed by the parties in interest in this suit was executed and delivered on February 20, 1966 * * *.

3. That no payments of rent have ever been made by the Lessee to the original lessors or to the present owner, Clarence Dasenbrock, since the date of the execution of the lease up to and including the present time.

4. That notice of default was received by the defendant from Anton and Lillian Dasenbrock on or about July 19, 1968.

5. That no application for any licenses, consents or permits have been made by the lessee to either the City of Effingham building official or to the District Engineer in charge in the area of the location of said real estate, nor has the lessor made any application to either of these two individuals for any licenses, consents or permits. (A, 73--74)

On May 28, 1970, defendant moved for judgment on the pleadings as to Count I. (A, 77) On June 1, 1970, plaintiffs filed a motion for summary judgment as to both Count I and Count II. (A, 83, 89) The court denied defendant's motion and on June 8, 1970, entered a summary judgment on plaintiffs' motion in favor of the plaintiffs in both counts, cancelling the lease and awarding a money judgment for rent from May 1, 1966 to April 8, 1967 to plaintiffs in Count I and a money judgment for rent from April 8, 1967 to July 19, 1968 to plaintiff in Count II.

The first issue is whether Any rent was due under the terms of the lease. In the instant case, lessee is relying upon an interpretation of a single paragraph in the leasehold agreement to exempt himself from liability for rent. However, every paragraph must be read in the light of the entire contract.

'It is generally said that the purpose of interpretation is to become aware of the 'intention of the parties". 3 Corbin, Contracts 55, § 538 (1960). 'The cardinal rule in the interpretation of a lease is that the court should ascertain and give effect to the intention of the parties, and that in so doing the court may take into consideration the position of the parties, the surrounding circumstances which existed at the time of the execution of the lease, as well as the purpose or object the parties had in mind in entering into the lease * * *'. South Parkway Building Corp. v. South Center Dept. Store, 19 Ill.App.2d 14, 153 N.E.2d 291, 296 (1958); O'Fallon Development Co. v. Reinbold, 69 Ill.App.2d 169, 216 N.E.2d 9 (1966).

It is a basic rule of contract law that a contract must be read as a whole.

The terms of a contract are to be interpreted and their legal effects determined as a whole. It is by words and other symbols that are grouped in phrases and sentences and paragraphs and chapters and volumes that meanings are expressed and conveyed to others, not by separate words in a disconnected row. It is true that single words have meanings, often a great many of them * * *. It is quite impossible to determine with which one of those many meanings a word is being used except by considering it in its context. 3 Corbin, Contracts 185--186, § 549 (1960).

'A writing is interpreted as a whole and all writings forming part of the same transaction are interpreted together.' Restatement of Contracts, § 235(c).

The section entitled 'PERIOD' establishes a minimum leasehold of twenty years commencing on May 1, 1966. (A, 15) Paragraph (1), 'RENTALS', provides that 'Lessee shall pay the following rent: $125.00 per month from May 1, 1966 to April 30, 1971'. (A, 15) It provides for a rent that increases at five year intervals. These provisions only specify a term of years and a schedule of rents; they do not specify When payments are to begin. Nor do they create any duty on the part of the lessee to pay rent.

Paragraph (4), entitled 'PERMITS & ORDINANCES', specifies that:

Lessee agrees to secure from the proper authorities in Lessor's name, with right of assignment, or in the name of Lessee or Lessee's nominee, the necessary licenses, consents and permits, satisfactory to Lessee, for the construction and operation on the premises or any part thereof of a commercial development * * * and for any and all business usually conducted in connection with such a commercial development and Lessor agrees to use his best efforts to secure such licenses, consents and permits as promptly as possible. * * *

No rent shall accrue or be payable hereunder until all the necessary licenses, consents and permits for the construction and operation of said commercial development have been duly obtained, and in case they are not obtained within three (3) months after the date of commencement of the term of this lease, or if obtained, shall thereafter be revoked without fault of Lessee, or if the use of the premises herein demised for any of the purposes enumerated shall be in any manner restricted or prohibited by reason of any law, ordinance, injunction, regulation or order of any properly constituted authority, then Lessee shall have the right at its option to terminate this lease by giving ten (10) days' written notice of its intention so to do and shall thereupon be relieved from all liability hereunder. (A, 17--19)

The record does not reflect that the defendant-lessee ever gave ten days' written notice of termination and we assume that it did not.

Relying primarily upon the second part of Paragraph (4), lessee contends that he is not liable for any rent because no licenses were obtained. We disagree.

Once it has been established that a contract has been made, the court 'will compel performance in accordance with what it believes to be required by good faith and fair dealing'. 3 Corbin, Contracts 95, § 541 (1960). Even though the express words are absent, performance in good faith will be implied by the court. In Martindell v. Lake Shore National Bank, 15 Ill.2d 272, 154 N.E.2d 683 (1958), an action brought for specific performance by the holder of an option to purchase stock of a new corporation, our Supreme Court held, at pages 690--691, that Illinois law implies the obligations of good faith and fair dealing from all parties to a contract.

When the instrument is construed in light of all its provisions and with a view to the intent to be gathered from the extrinsic evidence, we cannot agree that the limiting sentence in the option provision was intended by the parties to reduce the agreement to a security arrangement or to shrink the rights expressly granted plaintiff to the status of an offer revocable at the pleasure of the new corporation. Every contract implies good faith and fair dealing between the parties to it, and where an instrument is susceptible of two conflicting constructions, one which imputes bad faith to one of the parties and the other does not, the latter construction should be adopted.

Reading the contract as a whole, it appears that the beginning of paragraph (4) limits the condition that no rents would accrue until the permits were obtained. This section of the lease implies a promise on the part of the lessee to perform in good faith an obligation to use reasonable efforts to obtain the necessary licenses within a reasonable time. Since the lessee failed to act in good faith and make any effort to secure the licenses, his obligation to pay rent did arise. Since the lessee agreed to secure the licenses, the lessor's promise to use 'best efforts'...