2									FOURTH DIVISION

									mMarchARCH 21, 2002

1-01-1309

NEBEL, INC., an Illinois corporation,	)	Appeal from the

								)	Circuit Court of

		Plaintiff-Appellant,		)	Cook County.

								)

	v.							)	

								)

THE MID-CITY NATIONAL BANK OF CHICAGO,	)

a National Banking Association,		)	Honorable

								)	Lester D. Foreman,

		Defendant-Appellee. 		)	Judge Presiding.

	JUSTICE HARTMAN delivered the opinion of the court:

	Plaintiff, Nebel, Inc., and defendant, The Mid-City National

Bank of Chicago, are the lessor and lessee under a 99-year real-

estate lease (Lease), containing a rent payable in gold clause,

originally executed in 1906.  Plaintiff demanded rental payments to

be made with gold coins, pursuant to the Lease, which defendant

refused.  In a three-count complaint, plaintiff charged defendant

with a breach of the lease (count I); sought a declaration of

rights (count II); and subsequently voluntarily dismissed count

III.  Plaintiff claimed that a 1988 amendment to the Lease (Lease

Amendment) constituted a new obligation which revived the gold

clause, as authorized by a 1977 federal statute and, alternatively,

asserted that if the Lease Amendment was not a new obligation, a

novation occurred which revived the enforceability of the gold

clause.  Defendant's answer denied both theories.

	Plaintiff's motion for partial summary judgment was denied by

the circuit court.  Thereafter, the parties cross-moved for summary

judgment on counts I and II of plaintiff's complaint.  The court granted defendant's summary judgment motion with respect to counts

I and II and denied plaintiff's motion on the same counts. 

Plaintiff appeals.  

	The legal issues presented in this appeal include whether the circuit court erred by granting defendant's summary judgment motion

based on a finding that (1) the Lease Amendment did not create a

new obligation, thereby making the gold clause in the Lease

unenforceable; and (2) no novation between the parties, to be

construed as a new obligation, occurred.

	On May 1, 1906, Hiram B. Peabody, as lessor, and Alexander W. Hannah, as lessee, entered into the subject Lease for land and

improvements located at 801 West Madison Street in Chicago (subject

premises).  The Lease term commenced on May 1, 1906, and terminates

on April 30, 2005.  Monthly rent for the subject premises during

the first five years was $1,090 and, thereafter, $1,333.33 and 1/3

cents, until expiration of the Lease term.  

	As previously noted, the Lease includes a gold clause,

requiring the lessee to pay the rent "in standard gold coin of the

United States, of not less than the present weight and fineness,

which is at the present time measured by the standard of weight and

fineness observed by the mint and fixed by the laws of the United

States of America, twenty three and twenty-two hundredths (23-

22/100) grains Troy weight for each dollar."  The Lease covenants

that "no acceptance by the said lessor of any currency or legal

tender *** shall be construed to be a waiver on the part of the said lessor of the right to demand payment of any other unpaid

installment or installments of such rent in standard gold coin ***

or its equivalent in value."  

	On June 5, 1933, the United States Congress adopted a joint

resolution that made unenforceable all obligations requiring

payment in gold;1 however, in 1977, the 1933 Congressional resolution was amended making obligations requiring payment in gold

enforceable if issued after October 27, 1977.2 

	The Lease also requires that the lessee pay for all real estate taxes, insurance and repairs, and expressly grants the

lessee the right to assign his or her interest in the Lease without

the lessor's consent.  No language contained in the Lease

discharges a lessee from his or her obligations under the Lease

subsequent to an assignment; rather, upon assignment, the assignee

agrees to comply with all terms, covenants and agreements provided

for in the Lease. 

	During the Lease term, the lessee's interest had been assigned

four times.  First, on December 31, 1909, Hannah assigned his

interest in the Lease to Charles E. Davis.  Next, on March 1, 1911,

Davis assigned his interest to Jacob Mayer.  Then, on October 26,

1926, Mayer assigned his interest to Chicago Mid-City Building

Corporation (Building Corporation).3  Thereafter, on December 30, 1976, Building Corporation assigned its interest to defendant.  

	Defendant, Building Corporation's sole shareholder, voted to

dissolve Building Corporation on the same date defendant assumed

liability as lessee of the Lease.4  The 1976 assignment provided that defendant agreed to comply with all Lease terms, covenants and

agreements, but did not articulate language regarding Building Corporation's liability under the Lease.5  Defendant is the current lessee of the subject premises. 

	On July 5, 1984, plaintiff purchased the subject premises and

became the lessor.  By deposition, Peter Anagnost, an attorney and

managing agent for plaintiff, testified that he personally

negotiated the purchase price of $300,000 for the property,

believing the rent payments were $16,000 per year.  The gold clause

in the Lease was not discussed during negotiations. 

	Upon effectuating the purchase of the subject premises,

Anagnost believed that Building Corporation was the lessee.  He

received a "lease synopsis" from The Northern Trust Company

(Northern Trust), successor trustee of the Howard B. Peabody Trust,

which stated that Building Corporation was the current assignee of

the tenant's interest in the Lease.6  Anagnost had no knowledge of the 1976 Lease assignment to defendant nor Building Corporation's dissolution at the time of purchase.7

	By deposition, Kenneth A. Skopec, defendant's vice-chairman

and chief executive officer, testified that Anagnost did not

inquire as to whether Building Corporation was the actual tenant

for the subject premises.  Skopec stated that defendant did not

notify plaintiff about the 1976 Lease Assignment nor Building

Corporation's dissolution.  Upon plaintiff's purchase of the

subject premises, defendant, not Building Corporation, paid rent to

plaintiff. 

	In 1988, defendant undertook a plan to construct a parking lot

and data processing/drive-thru banking facility on property west of

the subject premises.  Defendant also sought to construct a

pedestrian walkway to connect the bank building on the subject

premises with the new data processing/drive-thru facility. 

Plaintiff, however, objected to the construction of the walkway

without its consent.

	Plaintiff's former counsel, George C. Pontikes, testified that

he drafted a Lease Amendment that would permit defendant to

construct the walkway.  The Lease Amendment authorized:  (1)

construction of the walkway; (2) inclusion of defendant as a party

to the Lease Amendment; and (3) reaffirmance of all provisions of the 1906 Lease.  The parties negotiated the following provisions,

which eventually were included in the final draft of the Lease

Amendment: (1) waiver of objection to construction; (2)

construction and removal of the walkway; (3) maintenance of the

walkway and insurance; (4) liens, taxes and assessments on the

walkway; (5) reimbursement for the lessor's expenses and costs

incurred in the negotiation of the Lease Amendment; (6) the

lessee's indemnification of the lessor in case of default or other

liability which the lessor may suffer; and (7) default by the

lessee under the terms of the Lease Amendment, which would be

considered a default by the lessee under the Lease. 

	Pontikes sent drafts of the Lease Amendment to D. Albert

Daspin, an attorney representing defendant.  Daspin reviewed the

drafts and sent back revisions to Pontikes.  Compared to other

provisions in the Lease Amendment, Pontikes spent a short amount of

time negotiating the language of the integration clause, although

he changed the language Daspin drafted to include use of the word,

"reaffirmed," instead of "shall continue," with regard to the

effect of Lease provisions, as shown in the following paragraphs. 

The record shows no objection by defendant to inclusion of language

reaffirming the terms of the Lease in the Lease Amendment.  The

parties did not discuss the gold clause during negotiations.  

	Plaintiff and defendant signed the Lease Amendment, entitled,

"First Amendment To Lease," on February 24, 1989, with an effective

date of November 30, 1988.  Pertinent to this appeal, the Lease Amendment stated, "[e]xcept as otherwise expressly modified by this

first Amendment, all the terms and provisions of the Lease are

reaffirmed and are not modified by this First Amendment." 

	Thereafter, on September 16, 1998, plaintiff made a written

demand to defendant that, commencing October 1, 1998, defendant had

to pay the monthly rent "in gold coin, as provided in the lease." 

Defendant's refusal to pay rent in gold triggered plaintiff's

complaint for declaratory judgment and other relief. 

	In its January 30, 2001 order, the circuit court found that no

new obligation was undertaken by defendant after October 27, 1977. 

According to the court, "[d]espite the use of the term reaffirm [in

the Lease Amendment], nothing really changed except the fact that

the bank was given permission to build a pedestrian walkway."  The

court also held that no novation occurred.   The circuit court's February 2,

2001 order denied plaintiff's summary judgment motion and granteding

defendant's motion as to counts I and II of the complaint. 

Plaintiff appeals from the orders entered on March 21, 2000, and

February 2, 2001. 

	A reviewing court exercises de novo review when determining whether the circuit court properly granted a motion for summary

judgment.  Zoeller v. Augustine, 271 Ill. App. 3d 370, 374, 648 N.E.2d 939 (1995) (Zoeller).  Summary judgment "shall be rendered without delay if the pleadings, depositions, and admissions on

file, together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law."  735 ILCS 5/2-1005 (West

2000).  Summary judgment is a "drastic means of disposing of

litigation and therefore should be allowed only when the right of

the moving party is clear and free from doubt."  Purtill v. Hess,  111 Ill. 2d 229, 240, 489 N.E.2d 867 (1986).  The court must award summary judgment with caution to avoid preempting a litigant's

right to trial by jury or his right to fully present the factual

basis of a case where a material dispute may exist.  Lamkin v. Towner, 246 Ill. App. 3d 201, 204, 615 N.E.2d 1208 (1993).  In determining a summary judgment motion, the court must construe the

pleadings, affidavits, depositions and admissions on file strictly

against the moving party and liberally in favor of the opponent.  In re Estate of Hoover, 155 Ill. 2d 402, 410-11, 615 N.E.2d 736 (1993).  Reversal of a summary judgment motion is warranted if, on

review of the case, a material issue of fact or an inaccurate

interpretation of the law exists.  Zoeller, 271 Ill. App. 3d at 374.

	Plaintiff initially asserts that the circuit court erred by granting defendant's summary judgment motion because the Lease

Amendment created a new obligation to pay rent in gold.  Plaintiff

argues, as a matter of law, that the Lease Amendment created a new

contract and that defendant, as lessee, reaffirmed all the terms

and provisions of the Lease without any exception for or exclusion

of the gold clause and, therefore, because the new obligation was

undertaken after October 27, 1977, the gold clause once again was enforceable under the federal legislative amendment.

	Defendant responds that no case law holds that an amendment to

a lease can revive a gold clause or that an affirmation of a pre-

existing gold clause revives that clause.  Defendant contends that

parties may modify or amend provisions of a contract without

affecting their liabilities under other terms of the agreement. 

Defendant further argues that its obligation under the Lease arose

in 1976, upon the assignment, and that the Lease Amendment was a

reaffirmance of its pre-October 1977 obligations.  According to

defendant, a lease which expressly states that "all terms and

provisions are reaffirmed and not modified by an amendment," is the

complete opposite of a new obligation; rather, it is the mere

continuance of an existing obligation.

	First to be determined is whether the Lease Amendment was a

new obligation "entered into" after October 27, 1977, thereby

reviving the enforceability of the Lease's gold clause.  Although

a limited number of cases have held that a post-October 27, 1977

novation of a lease created a new contract rendering the gold

clause revived and enforceable8, the instant case is the first to involve consideration of a lease amendment and its effect on reviving the enforceability of a gold clause.

	Traditionally, Illinois courts, when interpreting contracts,

have required that "[a]n agreement, when reduced to writing, must

be presumed to speak the intention of the parties who signed it." 

Western Illinois Oil Co. v. Thompson, 26 Ill. 2d 287, 291, 186 N.E.2d 285 (1962).  A lease is a type of contract generally

governed by the rules of contract law.  Midland Management Co. v. Helgason, 158 Ill. 2d 98, 103, 630 N.E.2d 836 (1994) (Midland).  In construing a lease, courts give effect to the intentions of the

parties as expressed in the language of the document when read as

a whole.  Midland, 158 Ill. 2d at 104.  If contract language is unambiguous, the intention of the parties must be ascertained by

the language used, not by constructions urged by the parties.  MXL Industries, Inc. v. Mulder, 252 Ill. App. 3d 18, 29, 623 N.E.2d 369 (1993).

	A modification of a contract is a change in one or more

respects that introduces new elements into the details of the

contract and cancels others, but leaves the general purpose and

effect undisturbed.  Hartwig Transit, Inc. v. Menolascino, 113 Ill. App. 3d 165, 170, 446 N.E.2d 1193 (1983).  A valid modification

must satisfy all criteria essential for a valid contract, including

offer, acceptance and consideration.  Bass v. Prime Cable of Chicago, Inc., 284 Ill. App. 3d 116, 126, 674 N.E.2d 43 (1996).  

	In Barrett v. Lawrence, 110 Ill. App. 3d 587, 590, 442 N.E.2d 599 (1982) (Barrett), a case relied upon by plaintiff, the court found that "[a]n agreement when changed by the mutual consent of

the parties becomes a new agreement which takes place of the old."9  There, plaintiff entered into a contract with defendant to purchase

a condominium with final payment due on December 1, 1981.  On

December 7, 1981, the contract was amended to extend the final date

for payment and conveyance of title to January 1, 1982.  Plaintiff

filed suit to force defendants to put payments she had made on the

property into an escrow account as required by statute.  Defendants

contended that the amendment to the contract did not create a new

agreement but simply extended the time of the old agreement.

	In support of its finding that defendants were required to put

payments into an escrow account, the Barrett court cited Mahaffey v. Wisconsin Central Ry. Co., 147 Ill. App. 43, 46 (1909), which stated, "[a]n agreement changed is not the old or prior agreement

but a new one.  When there is a change the minds of the parties

have met again and by the fact of the change, a new agreement

arises.  The minds of the parties may thus meet upon the terms of

the old agreement with but the slightest change, yet the agreement

then made is a new one." 

	Two Illinois cases cited by the instant defendant, Deien Chevrolet, Inc. v. Reynolds & Reynolds Co., 265 Ill. App. 3d 842, 846, 639 N.E.2d 949 (1994) (Deien Chevrolet) and Nagle v. General Merchandising Corp., 58 Ill. App. 3d 344, 347, 374 N.E.2d 1137 (1978) (Nagle), both held that parties to a contract may modify its provisions without affecting the liability of the parties under the

other terms.  Both Deien Chevrolet and Nagle, however, involved  analyses of the parties' conduct with regard to an intent to modify

the original agreement, not a written modification mutually

consented to by both parties, as in the present case.

	In McKay Nissan, Ltd. v. Nissan Motor Corp. in U.S.A., 764 F. Supp. 1318 (N.D. Ill. 1991) (McKay Nissan), plaintiff, an automotive dealership, alleged that defendant, a distributor,

violated section 6 of the Illinois Motor Vehicle Franchise Act

(Act) (1989 Ill. Rev. Stat. ch. 121 1⁄2, par. 756) by failing to

provide full compensation for certain warranty services provided by

plaintiff.  Defendant moved to dismiss plaintiff's complaint,

contending that plaintiff did not have a remedy under the Act because it was not in effect at the time the parties entered into

their franchise agreement.  Plaintiff argued that the agreement was

amended several times after the effective date of the Act and that

the amendments essentially created a new agreement governed by the

Act's provisions.  The four amendments to the original agreement

included changes to reflect relocations of plaintiff's franchise,

the corporate name and the residential address of plaintiff's

executive manager.

	Considering the modifications to the agreement as "routine,"

the McKay Nissan court found that an amendment does not necessarily create a new agreement because the original contract was changed to

some extent.  764 F. Supp. at 1319.  The issue was not whether any

changes were made to the contract, but whether existing rights were

significantly altered.  According to the court, "[t]he

modifications must effect a material alteration of the parties

rights and obligations before it can be said that the parties

intended a new contract or agreement."  McKay Nissan, 764 F. Supp. at 1319; see also Bitronics Sales Co. v. Microsemiconductor Corp., 610 F. Supp. 550, 557 (D. Minn. 1985); Easterby-Thackston, Inc. v. Chrysler Corp., 477 F. Supp. 954, 956 (D. S.C. 1979); In re Kerry Ford, Inc., 106 Ohio App. 3d 643, 651, 666 N.E.2d 1157 (1995); 17A C.J.S. § 408 (1999).  The McKay Nissan court noted that the parties did not renegotiate the terms of the original agreement.  The

amendments at issue neither changed the parties' contractual rights

nor varied the responsibilities and duties of either party.  The court held that the contractual modifications were too

insubstantial to have established a new contract that replaced the

original agreement.  McKay Nissan, 764 F. Supp. at 1320.

	In determining materiality, "[a] change in the language of a

document, whether by interlineation or otherwise, which if enforced

would have a legal effect different from the original language, is

a material change."  In re Busse, 124 Ill. App. 3d 433, 442, 464 N.E.2d 651 (1984).  Here, the changes to the Lease Amendment,

unlike the amended agreement in McKay Nissan, cannot be considered "routine modifications" because they were material to the parties'

contractual rights, responsibilities and duties due to the nature

of the agreement to construct, maintain and insure the new walkway,

and the parties' agreement to reaffirm the terms of the Lease. 

	Other courts considering the enforceability of gold clauses in

leases determined whether a novation which the parties entered into

after October 27, 1977, amounted to a new obligation.  See Trostel I, 92 F.3d at 742;  Wells Fargo, 32 Cal. App. 4th at 437; Fay Corp., 646 F. Supp. at 949.

	In Trostel I, a 1917 commercial property lease contained a gold clause.  On August 15, 1990, the lessee of the property, The

Statesman Group, Inc., transferred its leasehold interest to

defendant, American Life & Casualty Insurance Company, by a

recorded warranty assignment and assumption.  The 1990 warranty

agreement provided that defendant, as grantee, "accepts, assumes

and agrees to be bound by all of the terms and conditions to be kept, observed and performed by the lessee in said lease ***."  The

district court granted defendant's summary judgment motion, finding

that even if a new obligation had been created in 1990, the gold

clause could not have been incorporated in it by reference to terms

in the 1917 lease because the 1933 Congressional resolution

rendered the clause void.  The Trostel I court of appeals found nothing in the terms of the 1933 Congressional resolution that

suggested gold clauses were to be eliminated or severed from

existing contracts; rather, Congress merely declared that they were

unenforceable.  92 F.3d at 741-42.  The court of appeals concluded

that the 1990 warranty agreement was a novation and, consequently,

the gold clause was enforceable because, under Iowa law, the

novation amounted to a new obligation.  Trostel I, 92 F.3d at 740- 41.  

	The court in Wells Fargo provided an analysis of Congressional intent in enacting the 1977 amendment, noting that the amendment

"stands neutral in that pre-1933 contracts with gold clauses remain

subject to the traditional laws of contract, as judicially

interpreted, which include[s] the concept of novation. ***  If

Congress had intended to restrict the 1977 amendment only to an

original contract involving the original parties and not to a

novation amounting to a new obligation *** such narrowing language

could have been used in the amendment."  32 Cal. App. 4th at 435-

36.  Both courts in Wells Fargo and Fay Corp. found that a novation was a new obligation within the meaning of the 1977 amendment.  646 F. Supp. at 950-51; 32 Cal. App. 4th at 437.  According to the Fay Corp. court, "[a] novation is a new obligation unto itself as of the date the substitution of parties is complete."  646 F. Supp. at

949, n. 7.  

	Likewise, in the case sub judice, the Lease Amendment created a new obligation within the meaning of the 1977 federal amendment. 

As above-noted, Illinois law does not hold that every time a

contract is somehow altered or amended, a new contract is formed. 

Instead, courts observe whether the contractual modifications were

significant enough to change the parties' obligations under the

particular contract.  Here, the Lease Amendment increased

defendant's obligations to plaintiff under the Lease because

defendant undertook new construction on the subject premises and,

after completion of the constructed walkway, defendant agreed,

among other things, to maintain, repair and insure the walkway. 

These changes significantly and materially altered the existing

rights and obligations of both parties.

	Further, the gold clause was valid at the time the Lease was

executed originally and, although it was rendered unenforceable

after 1933, it remained as a term within the Lease.  Nothing in the

Lease Amendment indicated that defendant accepted only those

obligations that had been legally enforceable against all previous

lessees; rather, defendant specifically agreed to "reaffirm" all

terms and provisions in the Lease.   

	Illinois courts follow the four corners doctrine when interpreting contracts, looking primarily to the language of the

contract to determine whether it is susceptible to more than one

meaning.  Air Safety, Inc. v. Teachers Realty Corp., 185 Ill. 2d 457, 462, 706 N.E.2d 882 (1999) (Air Safety).  Contract language that is facially unambiguous is interpreted without the use of

parol evidence, as a matter of law.  Air Safety, 185 Ill. 2d at 462.  In addition, contractual agreements are construed against the

drafter.  Metropolitan Life Insurance Co. v. American National Bank & Trust Co., 288 Ill. App. 3d 760, 769, 682 N.E.2d 72 (1997).  

	The Lease Amendment's integration clause, including its use of

the word "reaffirmed," was unambiguous and demonstrated that the

defendant obligated itself anew to pay rent in gold.10  The Lease Amendment was negotiated and drafted by both parties' attorneys

over a period of six months.  Defendant, initially responsible for

drafting a version of the Lease Amendment's integration clause,

cannot now argue that it did not intend to sign an agreement

incorporating the terms of the original Lease or that the clause

has no legal force and effect.  As a matter of law, when the

parties entered into an agreement for the Lease Amendment, they

reaffirmed the terms of the Lease, including the requirement that

rent be paid in gold.  	

	In sum, the Lease Amendment effected a material alteration of the parties' rights and obligations under the Lease and, therefore,

the Lease Amendment was a new obligation effectuated after October

27, 1977, thereby reviving the enforceability of the gold clause in

the Lease.

	The gold clause's enforceability raises an issue as to how

much plaintiff should be paid with respect to gold coin "of not

less than the present weight and fineness, which is at the present

time measured by the standard of weight and fineness" equaling

"twenty three and twenty-two hundredths (23-22/100) grains Troy

weight for each dollar."  In other words, whether defendant must

pay rent in gold using current value or 1906 value in Troy weight

must be determined.

	The Eighth Circuit in Trostel v. American Life & Casualty Insurance Co., 168 F.3d 1105, 1108 (8th Cir. 1999) (Trostel III), found that although no direct evidence of the parties' intent

existed when entering into the original 1917 lease, the language

and purpose of the gold clause supported using the 1917 value of

gold to calculate the lease payments at issue.  The court reasoned

that the 1990 novation did not create a new gold clause, rather, it

incorporated the gold clause from the 1917 lease.  The word

"present," as used in the 1917 lease implied an existing standard

and drafters of the lease did not use other language to intend a

"shifting standard (such as 'the then applicable standard')." 

Trostel III, 168 F.3d at 1109.

	Further, the Trostel III court noted public policy in its decision, stating that the purpose of gold clauses is to protect

lessors against inflation.  168 F.3d at 1109.  According to the

court, "[t]his protection would be meaningless if the baseline

value of gold were revised anytime the lessee transferred the

leasehold interest to a new obligor.  The only way for the gold

clause to serve its function to protect the lessors against

inflation is to use the 1917 value of gold."  Trostel III, 168 F.3d at 1109.  

	The instant Lease Amendment did not create a new gold clause;

rather, it incorporated the gold clause from the Lease.  Although

no direct evidence of the parties' intent existed when entering

into the Lease in 1906, the language and purpose of the gold clause

supports using the 1906 value of gold to calculate the lease

payments at issue.  Similar to the 1917 lease language in Trostel III, the Lease requires payments in gold under a "present" standard.  Defendant should be ordered to pay plaintiff rent in the

1906 value of gold.  In light of these findings, the issue of

novation need not be considered.

	The decision of the circuit court of Cook County granting

defendant's summary judgment motion is reversed and the cause is

remanded with instructions as noted above.  The court further is

instructed to enter summary judgment in favor of plaintiff on

counts I and II of its complaint.

	Reversed and remanded with instructions.

	HOFFMAN, P.J., and THEIS, J., concur.

An October 31, 1988 revision included an insertion of the following

language: "Except as otherwise expressly modified by this First

Amendment, all the terms and provisions of the Lease shall continue

in full force and effect and are not modified by this First

Amendment."  

	On June 23, 1998, Anagnost read an article in the Chicago

Tribune regarding the potential for enforceability of gold clauses

and realized that the value of the $1,333.33 in monthly rent, if

paid in gold, would be worth about $20,000, because gold, at that

time, had a value of about $300 an ounce.