Court Opinion

ID: 9448918
Source: CourtListenerOpinion
Date Created: 2023-08-03 23:49:47.653623+00
Date Added: 2024-06-11T17:31:36.804105
License: Public Domain

SWYGERT, Circuit Judge
(dissenting).
In Kaufman v. Shoe Corp. of America, 24 Ill.App.2d 431,164 N.E.2d 617 (1960), as in the present case, the leased premises had been heated by steam purchased by the tenant from the Illinois Power Company. After the utility notified the parties that it was going to discontinue steam heat service, the parties installed a heating unit subject to judicial determination whether it was the obligation of the landlord or the tenant to pay for the installation. There was no lease-provision as to heat. The lease did provide that the tenant was to keep the premises in good repair; however, it specifically exempted the tenant from making any structural repairs. The court ruled that where a tenant agrees merely to repair, he does not bind himself to make future additions of a structural nature made necessary by unforeseen future events not within the contemplation of the parties when the lease was made. The burden of these unforeseen expenses falls ordinarily on the landlord.
In holding the landlord in Kaufman liable for the cost of the heating plant made necessary by the Power Company’s action, the court went on to say:
“A general covenant of the tenant to repair, or to keep the premises in repair, merely binds him to make the ordinary repairs reasonably required to keep the premises in proper condition; it does not require him to make repairs involving structural changes. In order to shift on the tenant a burden which would naturally fall on the landlord, the warrant for the change should be plainly discoverable in the lease.” (Emphasis supplied.)
Since we are bound under Erie Ry. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), to follow Illinois decisional law, the pertinent question is whether the facts in the present case are legally distinguishable from Kaufman.
Before discussing the facts, however, a further observation seems appropriate. It is my view that the rule laid down in Kaufman should not be given the narrow interpretation which the Court here seems to give it. I see the rule as having a much broader application and would hold that the requirement of the rule that “the warrant for the change should be plainly discoverable” applies with equal force to any evidence admitted at trial relating to the intention of the parties.
Although there is a clause in the lease involved in the present case that obligates Woolworth to purchase and pay for the steam it uses for heating and which required the landlord to install a meter, there is no express provision that indicates who has the obligation to install a heating unit. It is evident from the record that in the negotiations of the parties prior to the execution of the lease the real bone of contention was whether the landlord or the tenant should purchase the steam from the Power Company. Woolworth wanted the landlord to purchase the steam from the utility and supply heat to Woolworth at Woolworth’s expense. The landlord objected. Woolworth acceded to the landlord’s view and agreed to contract directly with the Power Company.
The fact that the provision in the original draft of the lease requiring the landlord to make repairs to the heating plant was deleted from the final draft at the insistence of the landlord does not, in my opinion, justify an inference that the parties intended that Woolworth was to install a heating plant. Kaufman recognizes that an obligation to repair, strictly speaking, has nothing to do with the installation of a new structural addition. This requirement in the printed original draft was obviously superfluous and inappropriate since there was no heating plant in the building at the time the lease was made.
*354Similarly, the printed provision in the original draft of the lease requiring the landlord to furnish heat at a fixed temperature during seven months of each year was superfluous and inappropriate since the landlord had no control over the supply of steam being used. Naturally the landlord did not want to guarantee heat when he had no control over its supply. But this does not mean that it was understood by the parties that, should the Power Company discontinue service, the landlord would have no obligation to furnish another source of heat as distinguished from furnishing the heat itself. Therefore, the deletion of this provision does not give rise to an inference that Woolworth was to install a heating plant should unforeseen circumstances require this structural addition to the premises.
The District Court buttressed its finding of the requisite intent by referring to Article 15 of the lease in which Woolworth was authorized to make such alterations, additions, and changes to the premises as it deemed necessary. Reference to pertinent parts of this article shed light on how it should be interpreted so as to ascertain the true intention of the parties.
The first portion of Article 15 reads:
“Within thirty (30) days from the delivery of this lease, the Tenant agrees to proceed with reasonable diligence at its cost and expense, to make such alterations, additions and changes to the demised premises as it deems necessary or convenient to fit the same for its occupancy, included but not limited to the following, remove second, third, and fourth floors of that portion of the premises at 11-13 W. Main Street, formerly known as the Milner Hotel property, converting the same to a one-story and basement building; remove partitions on the ground floor converting the entire demised premises into a single enlarged salesroom, extending the ground floor and basement into the present light court areaway; furnish and install year-round air conditioning and ventilation; furnish and install new store fronts across the front of the ground floor of the demised premises with stainless steel entrance doors, all in accordance with Tenant’s plans and specifications * * (Emphasis supplied.)
The lease was signed on July 1, 1953. The Illinois Power Company did not notify Woolworth until June 17,1957 that it had been granted permission by the Illinois Commerce Commission to discontinue heating service in Danville effective June 1, 1960. In order to operate its business, Woolworth had to make structural changes to the bumed-out portions of the building and also had to fit the same for occupancy. It is evident that the only intention expressed in this article is that the construction work necessary to permit Woolworth to occupy the premises as a store was to be performed at Woolworth’s expense and for this the landlord was to reimburse Woolworth. This work had to be carried out before the store was suitably fit for occupancy. Woolworth was to proceed with “reasonable diligence” to complete the work and:
“Upon completion of such alterations, additions and changes and the opening of Tenant’s store for business in the entire demised premises, the Landlord agrees within fifteen (15) days after demand therefore, to reimburse the Tenant in the amount of One Hundred Forty Thousand ($140,000.) Dollars, toward the cost of such work.” (Art. 15.) (Emphasis supplied.)
Clearly, this article anticipated only such structural changes as were necessary to fit the premises for occupancy. It is uncontradicted that for many years after occupancy a furnace was not needed since a public utility was supplying the heat. I fail to see how this article, limit*355ed as it is as to time, can show intention as to who was to have the burden of installing a furnace should future events make such installation necessary.
It is admitted that neither party during the course of the negotiations referred to the possible cessation of service by the Illinois Power Company. It is also admitted that Woolworth never stated that it would install a heating unit if one became necessary. Furthermore, it is noteworthy that Woolworth made no provision in its design specifications for future installation of a furnace in the renovated building. Finally, there is no evidence that Woolworth was aware of the rumor that the Illinois Power Company was going out of business. If this rumor was in the mind of the landlord, it was never the subject of the negotiations which the parties had prior to the execution of the lease.
The District Court relied solely on inferences gleaned from the nuances of language in the lease provisions and the prior negotiations of the parties in finding a mutual intention that Woolworth is obligated to install the heating plant. These inferences, in my opinion, are far too tenuous to warrant a determination, implicit in the finding, that the shift of the landlord’s burden to the tenant is “plainly discoverable” either in the lease itself or in the prior negotiations of the parties.
In applying the rule of Kaufman, which I think is necessary, I fail to see how the defendant in the instant case carried its burden of showing that the parties intended plaintiff to assume the normal obligation of the landlord to make a major structural addition to the leased premises. Accordingly, I believe the District Court’s finding as to the intention of the parties is clearly erroneous.
For these reasons I respectfully dis- • sent. I would reverse.