Opinion ID: 450621
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Heading Rank: 1

Heading: Whether Goodyear Wrongfully Terminated the Lease.

Text: 13 Both parties agree that the law of Illinois governs the interpretation of the lease. When there is no dispute as to the facts and the only duty imposed on the trial court is to interpret a lease, the lease may be construed and its legal effect determined by an appellate court. See Staker v. Commercial Discount Corp., 19 Ill.App.2d 573, 154 N.E.2d 855 (1958); Fichter v. Milk Wagon Drivers' Union, Local 753, 382 Ill. 91, 46 N.E.2d 921 (1943). In construing a lease, a court is to give effect to the intention of the parties as expressed in the language of the document when read as a whole. Schek v. Chicago Transit Authority, 42 Ill.2d 362, 247 N.E.2d 886 (1969). Where the language of the lease is unambiguous, the intention of the parties must be ascertained from the language of the lease alone. The Great Atlantic and Pacific Tea Co., Inc. v. LaSalle National Bank, 77 Ill.App.3d 478, 32 Ill.Dec. 812, 395 N.E.2d 1193 (1979). See also Sunstream Jet Exp. v. International Air Service Co., 734 F.2d 1258, 1267 (7th Cir.1984). In Illinois, a written lease is construed in the same manner as all other written contracts. Hoffman v. Clark Street Roadhouse, Ltd., 79 Ill.App.3d 41, 34 Ill.Dec. 563, 398 N.E.2d 238 (1979). Our initial inquiry is whether the district court correctly interpreted the lease between the parties. The lease expressly provides that Goodyear could use the warehouse for three purposes: (1) as a wholesale tire center; (2) for any other lawful purposes; (3) to sublet. The district court, however, found that Western Assets leased the premises to Goodyear for the specific purpose of operating a wholesale truck tire center ... and other lawful purposes related to the conduct of such an operation by Goodyear. The specific issue, therefore, is whether the district court is correct in holding that the paragraph authorizing a specific use as a wholesale tire center restricted Goodyear's use of the warehouse to the specific use as a tire center. In Chicago Title & Trust Co. v. Southland Corp., 111 Ill.App.3d 67, 66 Ill.Dec. 611, 443 N.E.2d 294 (1982), the Illinois Appellate Court interpreted a lease providing Lessee is hereby given the privilege of using the leased premises as a grocery store ... or for any other lawful purpose. The court rejected the lessor's contention that the use provision created an implied covenant to continue operating a grocery store holding that the language, any other lawful purpose, permits the lessee to use the premises for uses other than a grocery store so long as the use was lawful. Id. 66 Ill.Dec. at 613-14, 443 N.E.2d at 296-97. Because the lease clause allowed Goodyear to use the warehouse as a wholesale tire center and for any lawful purpose, we hold that under Illinois law, Goodyear's use of the building was not limited to the operation of a tire center but could also be used for any lawful purpose. Furthermore, the lease expressly granted Goodyear the right to sublet as long as it was for a lawful purpose. Because Goodyear could use the premises for any lawful purpose and was allowed to sublet the premises, the district court erred as a matter of law when it only recognized one use by Goodyear--as a wholesale truck tire center. 14 We now turn to the question of whether the lessor breached the lease when it failed to install the sprinkler system on or before June 6, 1980. The parties expressly agreed that, [t]his lease shall not become binding on Lessee until Lessor shall obtain a certificate of occupancy, permits, waiver and consent as may be required as authority for the use of the premises.... Additionally, the lease imposed upon Western Assets the duty to make all ... building changes or installations required to conform with all applicable laws and ordinances respecting the use of occupancy thereof.... Western Assets chose to perform its obligations to conform the building to Village ordinances and to obtain a certificate of occupancy by negotiating with the Village for a 36-month grace period in which to install the sprinkler system. The Village issued an occupancy permit to Goodyear and suspended the sprinkler system requirement for 36 months conditioned upon Western Assets' promise to install the sprinkler system within the 36 month period. However, Western Assets failed to fulfill its agreement with the Village regarding the installation of the sprinkler system within 36 months, the promise upon which the Village conditioned issuing the occupancy permit to Goodyear and suspending the sprinkler system requirement. When Goodyear's real estate representative, George McCormick, met with Lt. Lewis on September 24, 1980, Lt. Lewis informed McCormick that no one would be allowed to occupy the warehouse until a sprinkler system was installed. The two men thereafter consulted the Mayor of Melrose Park and the Building Commissioner, two of the three officials authorized to review and revise Lt. Lewis' decisions, and neither the Mayor nor the Building Commissioner overruled Lt. Lewis' decision to refuse to issue an occupancy permit. The Building Commissioner, Stamatakos, and Lt. Lewis wrote Goodyear on September 26, 1980 confirming their decision that the building cannot be occupied until all Building Code Violations have been corrected including the installation of an automatic sprinkler system, which was supposed to be installed as of June 1980. Lt. Lewis informed the court that under Section 94 of the Village ordinances he had authority to reject a permit for using a building without a properly operating sprinkler system. Lt. Lewis' decision to reject a permit could only be overturned by the decision of an Appeals Board consisting of the Mayor, the Fire Chief, and the Building Commissioner. On September 24, 1980, Lewis' refusal to issue an occupancy permit for any use of the warehouse was sustained by two members of the Appeals Board, the Mayor and the Building Commissioner. At that point, Goodyear was barred from reopening or subletting the warehouse. 15 Western Assets' agreement with the Village did not fully satisfy its obligation to conform the building to Village ordinances; to the contrary it merely postponed its obligation to install the sprinkler system until June 6, 1980. When Western Assets failed to install the sprinkler system by June 6, 1980, it breached its agreement with the Village, violated section 94.14 of the Village ordinances, and failed to fulfill its obligation with Goodyear to make all ... building changes or installations required to conform with applicable laws and ordinances. Furthermore, in not performing its obligation to modify the building, Western Assets prevented Goodyear from reoccupying the building and from subleasing the warehouse to Atlas Pallet as the Village officials properly refused to allow anyone to occupy the building until the sprinkler system was installed in compliance with the City Code. We hold that Western Assets breached the lease when it failed to install the sprinkler system before June 6, 1980 and deprived Goodyear of its rights to reoccupy or to sublet the warehouse. 16 Our next inquiry is whether Goodyear was entitled to vacate the premises after Western Assets breached its obligation to modify the building to conform with the building code. In Hollywood Bldg. Corp. v. Greenview Amusement Co., 315 Ill.App. 658, 43 N.E.2d 566 (1940), the Illinois Appellate Court interpreted a lease in which the tenant was required to comply with all health and police regulations to the extent of changes, structural or otherwise.... After the tenant signed the lease and occupied the leased premises, a theatre, the city widened the street in front of the theatre causing a canopy and sign attached to the building to extend into the street in violation of a city ordinance. The parties disagreed over which party was responsible for remodeling the canopy and sign to conform with the city ordinance. The court held that because the lease required the tenant to comply with all health and police regulations to the extent of changes, structural or otherwise, the tenant's refusal to remodel the canopy and sign was a default under the lease giving rise to the landlord's right to repossess the premises. Id. 43 N.E.2d at 567-68. Cf. John Munic Meat Co. v. H. Gartenberg & Co., 51 Ill.App.3d 413, 9 Ill.Dec. 360, 366 N.E.2d 617 (1977) (landlord's failure to comply with lease provision obligating it to meet the requirements for retaining a government license necessary for tenant's business was a breach of the covenant of quiet enjoyment justifying the tenant's abandoning the premises); American National Bank & Trust Co. of Chicago v. K-Mart Corp., 717 F.2d 394 (7th Cir.1983) (a tenant may abandon the leased premises if they become untenantable by reason of the landlord's breach of the covenant to repair. Id. at 398). Furthermore, paragraph 16(a) of the lease provides: 17 If ... by reason of any law or ordinance, or by court decree, whether by consent or otherwise, the use of premises by Lessee for any of the specific purposes hereinbefore referred to shall be prohibited, Lessee shall have the right to terminate this lease upon written notice to Lessor.... 18 (Emphasis added). Since paragraph 16(a) uses the plural form of purpose, it is evident that the parties intended that this termination provision apply to more than one purpose or use and not be limited to Goodyear's single use of the leased premises as a tire center; rather, paragraph 16(a) grants Goodyear the right to terminate the lease if the various uses provided for in the lease were prohibited by law. On September 26, 1980, the Village informed Goodyear that the building could not be occupied until all Building Code Violations had been corrected, including the installation of the automatic sprinkler system. We hold that as a matter of law, Goodyear was entitled to abandon and vacate the premises because they could no longer legally occupy the premises. Thus, Goodyear was deprived of all beneficial use of the leased premises by Western Assets' failure to honor its obligation to modify the building to conform with building ordinances by installing the sprinkler system and was legally justified in terminating its occupancy. 19