Case Name: Hindu Incense Manufacturing Company, Appellee, v. John MacKenzie, Appellant
Court: Illinois Appellate Court
Jurisdiction: Illinois
Decision Date: 1948-11-01
Citations: 335 Ill. App. 423
Docket Number: Gen. No. 44,392
Parties: Hindu Incense Manufacturing Company, Appellee, v. John MacKenzie, Appellant.
Judges: 
Reporter: Illinois Appellate Court Reports
Volume: 335
Pages: 423–435

Head Matter:
Hindu Incense Manufacturing Company, Appellee, v. John MacKenzie, Appellant.
Gen. No. 44,392.
Niemeyer, J., dissenting.
Opinion filed November 1, 1948.
Released for publication November 16, 1948.
James B. McKeon, of Chicago, for appellant.
Arvey, Hodes, & Mantynband, of Chicago, for appellee ; J. Herzl Segal, of Chicago, of counsel.

Opinion:
Mr. Presiding Justice Feinberg
delivered the opinion of the court.
Plaintiff filed a complaint in two counts; one for a declaratory judgment, the other for an injunction. An answer was filed to both counts. Plaintiff made its' motion to strike the answer to count 1. Upon a hearing limited to count 1, the answer thereto, and the motion to strike the answer, the court entered a declaratory judgment. No proceedings were had under count 2. Defendant's motion to vacate the declaratory judgment, to withdraw its answer and to strike plaintiff's complaint was denied. The appeal is by defendant from the declaratory judgment and the order denying the motion to vacate. No factual question is presented by this appeal.
The controversy between the parties, and the relief sought by the complaint fór a declaratory judgment, arise out of a lease executed by defendant to Royal Manufacturing Company and by it assigned to plaintiff. The validity of the assignment is not involved. The lease is dated May 14,1943, for a term beginning June 1, 1943, ending May 31, 1946, for the premises described in said lease, at a rental of $250 per month, payable in advance. It contained two options. The first: "To have and to hold the same unto the lessee from the 1st day of June, 1943, until the 31st day of May, 1946, with mutual option to renew for an additional term of two years under same terms and conditions." Second: "An optión is hereby given to the lessee to purchase the said premises for the sum of Twenty-four Thousand ($24,000.00) Dollars at any time during the term of this lease, free and clear of encumbrances. ' '
On March 11, 1946, plaintiff gave defendant notice in writing that it "does hereby exercise the option to renew for a period of two years from June 1, 1946, the lease executed May 14, 1943, . Said renewal is to be in. accordance with the same terms and conditions as those contained in' the lease now in effect." On March 16, 1946, defendant wrote to plain tiff that he had elected to terminate said lease at the expiration date, May 31,1946, "As provided in Mutual Option to Renew, which requires the election of both parties. However if you want to continue on monthly basis the rent will be the same monthly until further notice." Plaintiff continued to occupy the premises after the expiration date, May 31, 1946, but refused to pay the increased rental demanded by defendant. On April 6, 1947, plaintiff notified defendant, when it received the written demand for increased rental, dated March 31, 1947, that it would decline to pay the rent as increased, because the lease did not expire until May 31, 1948. On December 21, 1946, plaintiff wrote to defendant it was advised that defendant was about to effect a sale of the property, and claimed that it had an option to purchase which "expires May 31,1948."
The declaratory judgment construed the first option io mean that either party had the right to renew the lease for the additional period, and it construed the second option to mean that the right to purchase, granted by the option, was effective up to the end of the renewed term.
Defendant contends that the option for renewal, because of the word "mutual" in the option, means that there could be no renewal without further express agreement of the lessor; that in any event the renewal option required an affirmative act on the part of the lessee to effectuate it; that the option to purchase must be limited to the original term, and could not be exercised during the renewed term.
We pannot agree with the first contention. The word "mutual," employed in the option to renew, gave either party the right to renew the lease for the additional period. Otherwise, the provision would be rendered meaningless. Stoddard v. Illinois Improvement & Ballast Co., 275 Ill. 199, 203. We agree with defendant that the option to renew required an affirmative act on the part of plaintiff, but this was accom plished.by its written notice dated March 11,1946. The notice given was a sufficient exercise of the option to , renew, and plaintiff was not legally bound to pay the increased rent demanded, since the renewal term was for two years under the same terms and conditions contained in the lease.
The primary question upon this record is whether the option to purchase extended into the renewed term. Defendant earnestly argues that the option for renewal was not an option that created a present demise of the additional term, but the present demise was limited to the original term and, therefore, the option to purchase must be exercised, if at all, during the original term.
The cases cited by defendant, which state the doctrine that the effect of the option to renew is not to create a present demise of the additional term, have no bearing upon the question as to the proper construction to be given an option to purchase contained in such a lease. They refer to options for renewal and options for extension of the term, and hold that where there is an option for renewal, there must be an affirmative act on the part of the lessee to give effect to the option. It is clear to us that the compelling reason for the doctrine stated is, that a covenant for renewal is not self-executing, and that it, unlike an option to purchase, is not continued into the extended or renewed term, because the parties obviously do not contemplate a perpetual lease, as so clearly stated in United States Brewing Co. v. Wolf, 181 Ill. App. 509, cited by defendant.
Defendant relies upon Fuchs v. Peterson, 315 Ill. 370, and United States Brewing Co. v. Wolf. The Fuchs case is readily distinguishable from the instant case because it there called for the execution of a "new lease," and the required notice was not given. In Vincent v. Laurent, 165 Ill. App. 397, the court held that an affirmative act was necessary to exercise the •*- option to renew, but once,the affirmative act is per formed, it is not necessary that a new lease be executed. It is stated in Underhill on Landlord & Tenant, Yol. 2, § 803:
"In the absence of an express provision that a new lease is intended to be executed, the presumption is that no new lease is intended. ' '
The Wolf case turned entirely upon another question. It did not involve an option to purchase. There, the lessor tendered a new lease for the additional term provided for in the option but omitted any further option provision for renewal. The lessee insisted that the option to renew upon the same terms and conditions contained in the old lease required the new lease contain the same renewal option. The court there held that the particular option to renew did not contemplate a perpetual lease by requiring each new lease contain another renewal option. Fredman v. Sutliff & Case Co., Inc., 330 Ill. App. 119, cited by defendant, is also not in point, since the court there determined the renewal option inoperative because of the contradictory provisions contained in the option.
Defendant relies heavily upon Pettit v. Tourison, 283 Pa. 529, 129 Atl. 587, which seems to support defendant's contention. The weight of authority is to the contrary. In Urbanski v. Szelasskiewicz, 15 Ohio App. 4, the court held that the renewal of the lease at its expiration implies an intent to renew the option to purchase. Lewis v. Ludlam, 115 Misc. 347, 189 N. Y. S. 636, affirmed in 204 App. Div. 889, 197 N. Y. S. 926, held the option to purchase extended into the renewed term. Other cases to like effect are Thomas v. Gottlieb, Bauernschmidt, Straus Brewing Co., 102 Md. 417; Masset v. Ruh, 235 N. Y. 462; Waters v. Wambach, 140 Md. 253, and Pflum v. Spencer, 123 App. Div. 742, 108 N. Y. S. 344.
It will be observed from a careful reading of the Pettit case, that the court did not regard the option to purchase an integral part of the lease. This is not in accord with the holding of our Supreme Court in Garlick v. Imgruet, 340 Ill. 136, at p. 146, where it said:
"It is common for leases to contain a provision conferring an option upon the tenant to purchase the demised premises. Such a provision is an integral part of the lease, . . . ."
It is again suggested in the Pettit case, that the parties had it in their power to employ language which would plainly indicate the intention of the parties to continue the option to purchase beyond the present term of the lease, and into the renewed term. This is not in accord with Launtz v. Kinloch Tel. Co., 239 Ill. App. 204, at p. 208, and cases there cited, wherein it is said:
"As a general rule in construing the provisions of a lease relating to renewals, where there is any ambiguity, the tenant is favored and not the landlord, because the latter, having the power of stipulating in his own favor, has neglected to do so, and also upon the principle that every man's grant is to be taken most strongly against himself. ' '
Treating the option to purchase as an integral part of the lease, and since no new lease was required to be executed, the language, "during the term of this lease, ' ' should be construed to mean that during the life of the lease, including the renewed term, the option to purchase remains in force. . Had the parties intended otherwise, it would have bqen comparatively simple for the lessor to have avoided any question as to what .the parties meant, by having the provision read during the present term of this lease, or any similar language to indicate clearly that the option to purchase was limited to the original term and not included in any renewed term. The record discloses the parties admitted before the court, upon the hearing, that the lease was drawn by the lessor. Under these circumstances the rule is well settled that the provisions of a lease should be most strongly construed against the lessor. Goldberg v. Pearl, 306 Ill. 436, 440; Liberty Nat. Bank v. Zimmerman, 333 Ill. App. 94.
We regard the judgment of the circuit court correct, and it is accordingly affirmed.
Judgment affirmed.
Tuohy, J., concurs.