Case Name: F. W. WOOLWORTH CO., Plaintiff-Appellant, v. Henri A. MEIS, Trustee under Agreement dated December 26, 1945, known as the Blanche Meis Trust, Defendant-Appellee
Court: United States Court of Appeals for the Seventh Circuit
Jurisdiction: United States
Decision Date: 1962-10-22
Citations: 310 F.2d 350
Docket Number: No. 13670
Parties: F. W. WOOLWORTH CO., Plaintiff-Appellant, v. Henri A. MEIS, Trustee under Agreement dated December 26, 1945, known as the Blanche Meis Trust, Defendant-Appellee.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 310
Pages: 350–355

Head Matter:
F. W. WOOLWORTH CO., Plaintiff-Appellant, v. Henri A. MEIS, Trustee under Agreement dated December 26, 1945, known as the Blanche Meis Trust, Defendant-Appellee.
No. 13670.
United States Court of Appeals Seventh Circuit.
Oct. 22, 1962.
Rehearing Denied Nov. 20, 1962.
Swygert, Circuit Judge, dissented.
Ploward E. Kane, Chicago, Ill., Clyde Meaehum, Danville, Ill., Anan Raymond, Thomas W. McNamara, Chicago, Ill., Thompson, Raymond, Mayer & Jenner, Chicago, Ill., Foreman, Meaehum & Clapper, Danville, Ill., of counsel, for appellant.
Robert Z. Hickman, Danville, Ill., Horace E. Gunn and Gunn, Hickman and Kesler, Danville, Ill., of counsel, for appellee.
Before HASTINGS, Chief Judge, and KILEY and SWYGERT, Circuit Judges.

Opinion:
KILEY, Circuit Judge.
This is a diversity declaratory judgment suit by the tenant, Woolworth, for a declaration that defendant landlord was bound under a lease to pay the cost of installation of a heating unit made necessary by discontinuance of the previous heating system. The court, without a jury, decided against Woolworth and it has appealed.
For many years prior to 1953, Woolworth rented from the landlord the first floor of the Daniels building and connected basement space of the adjoining Milner Hotel in Danville, Illinois. The Illinois Power Company furnished steam heat to both buildings. Woolworth paid for its share of the steam, measured by a meter installed by the landlord. In March, 1953, the hotel building was partially destroyed by fire, and the Daniels building suffered minor damage.
The lease in question was made July 1, 1953, for a term of twenty-five years, covering the first floor of the Daniels building and the first floor of the hotel.
Woolworth, under Article 15 of the lease, substantially rebuilt the leased premises. The Power Company continued to furnish steam heat and Woolworth continued paying its share of the cost. In 1957, the Power Company notified Woolworth that, with permission of the Illinois Commerce Commission, distribution of steam would be discontinued effective June 1, 1980. Shortly thereafter, Woolworth installed a heating unit at a cost of $14,565.58. Its suit is for a declaration that the landlord has the burden of the cost of that unit.
The District Court decided that the landlord had no obligation to install and pay for the heating plant. Woolworth claims the court erred in finding that the parties intended that the landlord should not have that duty; and in refusing to apply Illinois law in its favor.
It is agreed that the principle of decision in this ease is the intention of the parties. Although Woolworth seeks to confine the basis for determining that intent to the lease itself, it introduced testimony of the negotiations between the parties, and the testimony was relied on by the District Court in determining the question of intention.
The evidence submitted by both parties is that twice in Woolworth's preliminary drafts of the lease, its "superintendent of real estate" submitted a proposal that the landlord furnish, at landlord's expense, seventy-two degree heat from September 15 to May 15 each year, and that twice the landlord refused to accept the provision. The result was Article 18 of the lease which provided for continuation of the preexisting arrangement under which the Power Company furnished the heat, paid for by Woolworth, and the landlord installed and connected the meter. Testimony for the landlord was that this change in the preliminary drafts was to avoid the heating obligation. There was also testimony that Woolworth's preliminary draft sought to put on the landlord the obligation "to make and pay for all necessary repairs to the heating plant." That provision was "unacceptable" to the landlord and was not in the final draft of the lease. There is-testimony too that Woolworth's superintendent of real estate and his predecessor, in memoranda, construed the lease as imposing no greater burden of heating than the landlord previously had, and' that Woolworth had the burden of maintaining "the heating plant."
The court inferred from the foregoing substantial evidence that the landlord had refused to be obligated for the heating ; that the landlord's state of mind' was known to Woolworth; that it drew the lease in the light of that knowledge; and that the provisions of the final draft reflected the landlord's state of mind. We think the inferences are not clearly erroneous.
Based on those inferences, the District Court concluded that the parties did not intend that landlord should have the duty of installing or paying for the heating plant. We see no error in this conclusion. It was unnecessary for the court to find, as argued by Woolworth, that the parties "formulated" a mutual intention with respect to future heating. It was enough if there was substantial evidence that the landlord expressed the intention not to be bound and that Woolworth's conduct implied the intention that the landlord was not to be bound.
We see no merit to the argument that the court should have found that even if the landlord had no obligation to furnish heat "as long as the utility was supplying it" the obligation arose when the Power Company's services ceased. The evidence was "we didn't want to have any obligation to furnish heat." (Emphasis added.) And the landlord's agreement to install the meter is another indication of the intention of the landlord not to assume an obligation for heating that did not exist under the prior lease. Finally we see no merit in the contention that the District Court erred in refusing to find that the installation of the heating unit came within Article 22 of the lease so as to impose on the landlord the cost of complying with the order permitting a discontinuance of the steam service. The District Court properly found that there was no order directing either party here to install the unit.
Since we think the conclusion of law based on the inferences from the undisputed facts is not erroneous, we are of the opinion that the court did not err in refusing to apply the decision in Kaufman v. Shoe Corporation of America, 24 Ill.App.2d 431, 164 N.E.2d 617 (1960), a '"first impression" case, in favor of Woolworth in the case at bar. Woolworth's principal reliance is upon that case.
In view of the District Court's inferences and conclusions, there is little essential similarity between that case and this. There a landlord sought to impose on tenant the cost of installation of a heating unit made necessary by the permissive order of the Illinois Commerce Commission that the Illinois Power Company could discontinue service. The Illinois Appellate Court reversed a judgment for the landlord, on the ground that installation of the heating equipment, under a proper construction of the lease, was not the tenant's obligation. The rule applied in Kaufman was that a tenant's lease obligation to repair does not cover structural or substantial alterations or additions made necessary by extraordinary or unforeseen events not in contemplation of the parties at the time of leasing; and that the landlord is ordinarily liable for those substantial alterations or additions.
It is important to note that the Kaufman rule was established where there was no expressed or implied intention of the parties on the heating subject in question. The court there was restricted to the confines of the lease itself and there was no testimony of preliminary negotiations. There was no evidence of intention and no basis for inferring that the parties had ever contemplated that the question would arise. The essential distinction between Kaufman and the case at bar is that here we have evidence and findings of the intention of the parties. The testimony here shows that the landlord contemplated having no obligation for future heating and stated that an obligation to repair the heating plant was "unacceptable." This embraced any future event, and Woolworth knew it, or should have known it at the time the lease was made. We cannot read the Kaufman case as making it incumbent upon the landlord to expressly exempt himself in the lease from such a liability where there is substantial evidence of intention. This substantial evidence renders the rule of ordinary liability of the landlord in that case inapplicable.
We have considered all points and arguments necessary for our decision. We hold that the District Court was correct in deciding that the landlord had no obligation to pay for the heating plant.
For the reasons given, the judgment is affirmed.
. Woolworth agreed to make, at its expense, "such alterations, additions and changes as it deems necessary or convenient to fit the same for its occupancy The agreement covered extensive structural alterations, virtual reconstruction of the hotel building, and included among other specific things "year around air conditioning and ventilation."
. Said installation was pursuant to a stipulation between the parties that it would be without prejudice to the present litigation.
. He had charge of Woolworth's leases of over two hundred locations in three states.
. Article 22 provides in part: "The Landlord agrees that if any federal, state or municipal government or any department or division thereof has ordered or required or shall hereafter order or require any rebuilding, alteration or repair thereof or installation therein, the Landlord 'will immediately at Landlord's own cost and expense rebuild or make such alterations, installations and repairs as may be necessary to comply with such laws, orders or requirements. "