Leonard v. Autocar Sales & Serv. Co.

• Decision Date: 17 January 1946
• Docket Number: No. 28988.,28988.
• Citation: 392 Ill. 182,64 N.E.2d 477
• Parties: LEONARD et al. v. AUTOCAR SALES & SERVICE CO.
• Court: Illinois Supreme Court

392 Ill. 182

64 N.E.2d 477

LEONARD et al.

v.AUTOCAR SALES & SERVICE CO.

No. 28988.

Supreme Court of Illinois.

Nov. 21, 1945.

Rehearing Denied Jan. 17, 1946.

Appeal from Third Division Appellate Court, First District, on Appeal from Superior Court, Cook County; John C. Lewe, Judge.

Action by A. G. Leonard and others, trustees of Central Manufacturing District, against the Autocar Sales & Service Company to recover rentals under a lease. From a judgment of the Appellate Court, 325 Ill.App. 375, 60 N.E.2d 457, affirming a judgment for plaintiffs, defendant appeals by virtue of a certificate of importance granted by the Appellate Court.

Affirmed.

Hayes, Shehee & Quigley, of Chicago (Raymond F. Hayes and J. Glenn Shehee, both of Chicago, of counsel), for appellant.

Winston, Strawn & Shaw, of Chicago (Harold A. Smith and Edward J. Wendrow, both of Chicago, of counsel), for appellees.

THOMPSON, Chief Justice.

Appellees, A. G. Leonard, F. H. Prince, and D. H. Reimers, as trustees of the Central Manufacturing District, recovered a judgment in the superior court of Cook county against the Autocar Sales and Service Company, a corporation, in the sum of $9536.10. The Appellate Court affirmed the judgment, and the cause is now before us for review upon a certificate of importance granted by the Appellate Court.

On September 1, 1926, appellees and appellant entered into a written lease whereby appellees demised to appellant certain property at the intersection of Pershing road and South Hermitage avenue in the city of Chicago for a term of years from December 1, 1926, to and including November 30, 1946. Shortly prior to March 11, 1943, the Secretary of War requested the Attorney General of the United States to institute proceedings to acquire by condemnation the temporary use of the entire property for a term ending June 30, 1943, with the right to extend the term for additional yearly periods thereafter at the election of the Secretary of War. Pursuant to the request, the Attorney General, on March 11, 1943, filed in the District Court of the United States a petition for an order condemning the property for such temporary use and granting the government the right of immediate possession for military and other war purposes. On the same day, March 11, 1943, the District Court entered an order declaring the temporary use of the property condemned for a term ending June 30, 1943, with the right to extend the term for additional yearly periods thereafter at the election of the Secretary of War, and granting the United States the right of immediate possession. About March 25, 1943, appellant removed its place of business from the premises described in the lease, and thereafter refused to pay further rent under its lease of said premises. On May 1, 1943, the Secretary of War served notice of his election to extend the term of such temporary use for an additional yearly period beginning July 1, 1943, to and including June 30, 1944.

January 7, 1944, appellees brought this action to recover the stipulated rental provided in the lease for the period from April 1, 1943, to and including January 1, 1944. Defendant answered, setting up the above facts as to the appropriation of the leased premises by the Federal Government for military and war purposes, and alleging that by reason thereof it was evicted by paramount right from the entire premises and the relation of landlord and tenant terminated by law; that the premises were rendered incapable of occupation for any purpose consistent with the lease and all liability of the defendant to pay rent under the lease ceased on March 11, 1943, the date of the order of condemnation. A motion to strike the answer was sustained. Appellant stood by its answer. A hearing was had assessing appellees' damages and judgment entered for the amount asked in the complaint.

The question in this case is whether appellant is liable under the lease to pay rent during the time that the exclusive possession and temporary use of the demised premises has been taken by the government and appropriated to military and war purposes. The judges of the Appellate Court certified that in their opinion the questions of law involved in this case were of such importance that they should be passed upon by this court. These questions are (1) whether the taking and appropriation by the government, under the power of eminent domain, of the temporary and exclusive use of demised premises for an indefinite period, which may fall short of or exceed the remaining term of the lease, by operation of law terminates the lease and abrogates the relation of landlord and tenant; (2) whether the doctrine known as ‘frustration of purpose’ or ‘commercial frustration’ is applicable to a lease; and (3) whether such appropriation of the demised premises to public use, in the event the same should not be considered as dissolving the contract of leasing, would nevertheless operate to abate the rent pro tanto, and to discharge the lessee from liability to the lessor for rent accruing during the period of such appropriation by the government of the use of the demised premises.

Accepting for discussion the theory that in ascertaining the rights of the parties the lease should be treated solely as a contract and its aspects as a conveyance entirely disregarded, we will first refer to some general principles governing the construction and enforcement of contracts. They are well established and the general rule is that where parties, by their own contract and positive undertaking, create a duty or charge upon themselves, they must abide by the contract and make the promise good, and subsequent contingencies, not provided against in the contract, which render performance impossible, do not bring the contract to an end. This doctrine has been often announced by this court. Deibler v. Bernhard Bros., Inc., 385 Ill. 610, 53 N.E.2d 450;Phelps v. School District No. 109, 302 Ill. 193, 134 N.E. 312, 21 A.L.R. 737;Summers v. Hibbard, Spencer, Bartlett & Co., 153 Ill. 102, 38 N.E. 899,46 Am.St.Rep. 872;Steele v. Buck, 61 Ill. 343, 14 Am.Rep. 60;Bunn v. Prather, 21 Ill. 217. To this general rule there are certain exceptions. In Steele v. Buck, 61 Ill. 343, 14 Am.Rep. 60, performance was not excused although rendered impossible by act of God, nevertheless we find in the earlier case of Dehler v. Held, 50 Ill. 491, the statement, recently quoted with approval in Deibler v. Bernhard Bros., Inc., 385 Ill. 610, 53 N.E.2d 450, 453: ‘As a general rule, where a party binds himself to perform an act, he is held to its performance, except where it is rendered impossible by the act of God or the public enemy.’ No authority is cited or reason given for recognizing these exceptions. A further exception has been recognized that in contracts to whose performance the continued existence of a particular person or thing is necessary, a condition is always implied that the death or destruction of that person or thing shall excuse performance. Martin Emerich Outfitting Co. v. Siegel, Cooper & Co., 237 Ill. 610, 86 N.E. 1104, 20 L.R.A.,N.S., 1114. The reason given for this exception, which is itself a rule, is that without any express stipulation that the destruction of the person or thing shall excuse the performance, that excuse is by law implied, because from the nature of the contract it is apparent that the parties contracted on the basis of the continued existence of the particular person or thing. Ellis v. Atlantic Mutual Ins. Co., 108 U.S. 342, 2 S.Ct. 746, 27 L.Ed. 747; 12 Am.Jur. 945, sec. 372. The doctrine of frus trationis an extension of this exception to cases where the cessation or nonexistence of some particular condition or state of things has rendered performance impossible and the object of the contract frustrated. It rests on the view that where from the nature of the contract and the surrounding circumstances the parties when entering into the contract must have known that it could not be preformed unless some particular condition or state of things would continue to exist, the parties must be deemed, when entering into the contract, to have made their bargain on the footing that such particular condition or state of things would continue to exist, and the contract therefore must be construed as subject to an implied condition that the parties shall be excused in case performance becomes impossible from such condition or state of things ceasing to exist. Greek Catholic Congregation of Borough of Olyphant v. Plummer, 338 Pa. 373, 12 A.2d 435, 127 A.L.R. 1008; 12 Am.Jur. 953, sec. 377. While not new, this doctrine of frustration or ‘commercial frustration,’ as it is so termed, first came into prominence following the first World War when contracts for the sale of specified materials or for the shipment on specific vessels or to specific ports were made impossible of performance by war restrictions, embargoes, or seizure of the vessel, and relief was sought on the theory that the parties had contracted on the footing that peace would continue to exist.

The exceptions to the rule that performance of a contract is not excused because of subsequent events rendering performance impossible grow out of the mode of construing the contract; and it is for the purpose of fulfilling the intention of those who entered into the contract that a condition excusing performance is implied. The contracting parties are, in each instance where an exception to the general rule is applicable, absolved from their obligations, not because subsequent contingencies have rendered performance impossible, but because the contract was not in reality an absolute contract, binding them to perform under such changed conditions. It may readily be conceded that one may absolutely bind himself to perform a certain act; but the question in all cases is whether it was the intention of the parties that he should be so bound. A construction that the parties to the contract did so...