Sanni, Inc. v. Fiocchi

• Decision Date: 21 December 1982
• Docket Number: No. 82-49,82-49
• Citation: 443 N.E.2d 1108,111 Ill.App.3d 234,66 Ill.Dec. 945
• Parties: , 66 Ill.Dec. 945 SANNI, INC., an Illinois corporation, Plaintiff-Appellee, v. Olga FIOCCHI, Defendant-Appellant.
• Court: United States Appellate Court of Illinois

Page 1108

443 N.E.2d 1108

111 Ill.App.3d 234, 66 Ill.Dec. 945

SANNI, INC., an Illinois corporation, Plaintiff-Appellee, v. Olga FIOCCHI, Defendant-Appellant.

No. 82-49.

Appellate Court of Illinois,

Second District.

Dec. 21, 1982.

Rehearing Denied Jan. 25, 1983.

Wasneski, Kuseski & Flanigan, Waukegan, for defendant-appellant.

Semmelman & Lombardi, Lake Forrest, for plaintiff-appellee.

LINDBERG, Justice.

This appeal by defendant Olga Fiocchi from the circuit court of Lake County focuses on the construction of a lease executed by the parties in August 1976. Defendant contends that she should not be held personally liable under the provisions of a certain restrictive covenant contained in said lease and the trial court erred in denying her motion for involuntary dismissal in light of plaintiff's failure to comply with the requirements of the lease renewal clause.

The facts are not substantially in dispute. On August 19, 1976, plaintiff, Sanni, Inc., entered into a five-year lease with defendant, Olga Fiocchi, as executrix of the estate of Frank Fiocchi, for the purpose of operating a beauty shop in a small shopping center owned by the estate of Frank Fiocchi and known as the "Old Elm Shops." The lease terminated on August 31, 1981, subject to a renewal option extending the lease until August 31, 1986.

The lease contained the following pertinent paragraphs:

"21. (c) All covenants, promises, representations and agreements herein contained shall be binding upon, apply and inure to the benefit of lessor and lessee and their respective heirs, legal representatives, successors and assigns.

27. Lessee shall have the option in its discretion, provided it expresses its option by notice to the lessor (or its assigns) in writing on or before ninety (90) days prior to the expiration of the first five (5) year term, to renew the lease for additional five (5) years term at or for the sum of Four Hundred ($400.00) Dollars per month with all other terms and conditions of the lease remaining the same."

Of particular importance is Clause 28, which provides:

"28. Lessor agrees not to lease any other stores in Old Elm Shops Shopping Center for the purpose of a beauty salon."

In 1978, the Old Elm Shops were distributed to the heirs of Frank Fiocchi in accordance with the provisions of his will. The subject leased premises and three other stores were distributed to Nancy Majzel, the daughter of Frank Fiocchi, and the remaining three stores were distributed to defendant, Olga Fiocchi.

On or about June 1981, the defendant, acting through her son, Leonard Favella, entered into a month-to-month oral lease with certain parties for the purpose of operating a beauty salon in one of the three stores owned by defendant in the Old Elm Shops. Thereafter, plaintiff filed the instant action in which it sought to enjoin the operation of a competing beauty salon at the shopping center in accordance with the restrictive provisions contained in Clause 28 of the subject lease.

In response to the complaint, defendant filed a motion for involuntary dismissal, alleging that plaintiff failed to comply with the notification provisions of Clause 27. Said clause provided that plaintiff might renew the lease for an additional five-year term upon written notification to lessor or its assigns on or before 90 days prior to the expiration of the term. Defendant asserted that the lease would not extend beyond August 31, 1981, by virtue of plaintiff's failure to provide formal notification of renewal and, as such, plaintiff would only suffer two months of damage resulting from the competing beauty shop.

Plaintiff's answer to the motion alleged that the notification provisions of Clause 27 had been waived by the current lessor, Nancy Majzel. Additionally, plaintiff filed an amended complaint which included a document entitled "Extension of Lease", dated July 29, 1981, in which Nancy Majzel formally accepted plaintiff's request to renew the lease and waived the notification provisions of Clause 27. Following arguments of counsel, the motion was denied.

The case proceeded to trial on January 5, 1982. After the close of the evidence and arguments of counsel, the court entered judgment for injunctive relief in favor of plaintiff. The court's order enjoined defendant, her successors and assigns from leasing any store in the property commonly known as the "Old Elm Shops" for the purpose of operating therein a beauty salon until August 31, 1986. Defendant was further ordered and directed to terminate the month-to-month lease which she had orally executed in June 1981.

Defendant contends that she is not personally bound by the restrictions contained in Clause 28 of the subject lease by virtue of the fact that she executed the lease in a representative capacity, to wit, as executrix of the estate of Frank Fiocchi. Plaintiff responds that defendant was granted no authority to execute said lease agreement, either through Frank Fiocchi's will or by order of court and, as such, defendant must be held personally liable on the covenants contained in said lease.

The law is well settled in Illinois that an executory contract of an executor or administrator, if made on a new and independent consideration moving between the promisee and the representative, is his personal contract upon which he becomes personally liable, and does not bind the estate. (Bauerle v. Long (1900), 187 Ill. 475, 58 N.E. 458; In re Estate of Way (1926), 242 Ill.App. 459; Marsh v. Steiniger (1922), 225 Ill.App. 114; Coutsogeorge et al. v. Monaghan (1921), 221 Ill.App. 539; see also Thomas v. Gouwens (1975), 25 Ill.App.3d 663, 323 N.E.2d 829.) This rule is applicable even though the debt incurred was for the benefit of the estate and the representative described himself in the contract as an "executor" or an "administrator." (Bauerle v. Long; Marsh v. Steiniger.) An executor will only be absolved of personal liability where he is granted authority to execute said contract by order of court or by the will of the decedent. Bauerle v. Long; In re Estate of Way; Ill.Rev.Stat.1979, ch. 110 1/2, par. 20-2; see also Annot., 95 A.L.R.2d 258-303 (1964).

There is no evidence in the record which would indicate whether or not a court order was issued which authorized the lease or whether decedent's will authorized defendant to execute the lease. This court cannot consider facts which are not in the record (Collosseo v. Lynn (1980), 88 Ill.App.3d 344, 43 Ill.Dec. 577, 410 N.E.2d 577), and although an appellee may defend a judgment on review by raising an issue not previously ruled upon by the trial court, the necessary factual basis for the determination of such point must be contained in the record. (Kravis v. Smith Marine, Inc. (1975), 60 Ill.2d 141, 324 N.E.2d 417.) Consequently, the general rule applies, and we conclude defendant was personally bound by the restrictive covenant during the term of the lease. In reaching this conclusion, we note that both parties agree that Nancy Majzel, the specific devisee of the subject property leased to plaintiff, assented to the terms of the lease. Likewise, we find Olga Fiocchi, although signing the lease as executrix, must be held to have assented to--and, thus, had notice of--the terms of the restrictive covenant insofar as it related to the property of which she was the residuary devisee. See generally, Baird & Warner, Inc. v. Stuparits (1977), 53 Ill.App.3d 338, 342, 11 Ill.Dec. 197, 368 N.E.2d 748; Farm Food Stores, Inc. v. Gianeschi (1943), 320 Ill.App. 582, 586-87, 51 N.E.2d 792.

Empire Fire Proofing Co. v. Comstock (1905), 121 Ill.App. 518, cited by defendant, is inapposite. Although the continued vitality of Empire is questionable, the case is readily distinguishable. There, the court refused to impose personal liability on the trustees of an estate who had executed a construction contract on behalf of the estate. The court pointed to, inter alia, the fact that the main parties to the contract were the contractor and the estate itself. Additionally, all of the clauses in the contract referred directly to the estate rather than the trustees. The court concluded that there is a clear and marked distinction between the agreement of an agent who describes himself as contracting for a principal and the covenant of a principal who contracts by and through an agent. The former is regarded as the personal contract of the agent, while the latter is held to be the undertaking of the principal. (121 Ill.App. 518, 525.) In the instant case, the contract is framed in terms of an agent contracting for a principal. As such, under Empire, defendant would be personally liable.

Further, plaintiff's citation of Baird & Warner, Inc. v. Stuparits (1977), 53 Ill.App.3d 338, 11 Ill.Dec. 197, 368 N.E.2d 748, is not of particular assistance. In Baird decedent's will explicitly granted the executors authority to enter into the contract at issue. No facts have been established which would indicate the existence of such authority here.

Defendant also contends that she cannot be held liable under the subject restrictive covenant as a successor in interest to the estate of her deceased husband. She asserts that since the covenant encompassed property other than that which was demised under the terms of the lease, it was personal to the estate and did not run with the land so as to bind her as the grantee of the lessor.

Restrictive covenants are valid in Illinois if they are reasonable. (House of Vision, Inc. v. Hiyane (1967), 37 Ill.2d 32, 225 N.E.2d 21; Goldblatt Brothers, Inc. v. Addison Green Meadows, Inc. (1972), 8 Ill.App.3d 490, 290 N.E.2d 715; Crest Commercial, Inc. v. Union-Hall, Inc. (1968), 104 Ill.App.2d 110, 243 N.E.2d 652.) Additionally, restrictive covenants in leases which encumber land other than that demised have also been upheld. (Farm Food Stores, Inc. v. Gianeschi (1943), 320 Ill.App. 582, 51 N.E.2d 792; Skelers v. Meyer (1927), 246 Ill.App. 18; ...