Court Opinion

ID: 8873953
Source: CourtListenerOpinion
Date Created: 2022-11-26 18:44:21.302839+00
Date Added: 2024-06-11T17:06:16.547568
License: Public Domain

Niemeyer, J., dissents. Plaintiffs are attempting to recover rent for April and May 1949, under a lease from plaintiffs to defendants for a term expiring October 31, 1951, unless sooner terminated by the purchaser in the event of a sale of the premises. Defend - ants surrendered possession April 30, 1949. The trial court credited the balance of $312.50, on deposit under the lease, in full payment of the April rent. The court held that the lease was terminated by the City of Chicago, purchaser of the property, and the defendants, and denied plaintiff’s claim to the May rent. The right of the parties must be determined by the evidence. The sole contention of plaintiffs on the trial was the insufficiency of a letter from the City October 25, 1948 as notice of cancellation. No question was raised as to the right of the City to cancel. September 30, 1948, plaintiffs conveyed the property to the City of Chicago by regular warranty deed. This deed conveyed the lease and the right to receive unaccrued rentals. People ex rel. Hargrave v. Phillips, 394 Ill. 119, 123. The City became lessor and all rights of plaintiffs under the lease and to future rentals were terminated. The provision of the lease for 60 days’ notice in writing of cancellation of the lease by the purchaser of the property, was for the sole benefit of lessees and could be waived by them. Neil v. Kennedy, 319 Ill. 75, 80; Seaver v. Thompson, 189 Ill. 158; Wolf v. Ladd, 220 Ill. App. 312; Fuchs v. Peterson, 232 Ill. App. 287; 32 Am. Jur., Landlord and Tenant, sec. 837. Waiver of the notice is not a modification or change in the terms of the original lease. Becker v. Becker, 250 Ill. 117; Neil v. Kennedy, supra; Welsh v. Jakstas, 401 Ill. 288, 299. It is elementary law, requiring no citation of authority, that prior rights are superior to rights subsequently acquired with notice. Plaintiffs as original lessors in defendants ’ lease had actual notice of defendants ’ rights under the lease. Defendants being in possession, plaintiffs had constructive notice of defendants’ rights. When plaintiffs procured their short-term lease from the City on October 27,1948 and April 1,1949, they took the leases with actual and constructive notice of defendants’ right to waive the 60 days’ notice in writing and surrender the premises in cancellation of their lease in compliance with the suggestion of the City, hereafter referred to. Whatever rights plaintiffs acquired under the leases from the City were subject and subordinate to the right of the defendants to waive notice. On October 25, 1948, the City advised defendants in writing to relocate as soon as possible because the City’s program of construction would require removal of the building early in 1949. This was an informal notice of cancellation of the lease as soon as defendant relocated, and was accepted and acted upon by defendants. The first lease from the City to plaintiffs was executed two days after this letter. Whatever rights, if any, to future rents from defendants were acquired by plaintiffs under this lease, are immaterial, because the deposit under defendants’ lease was applied to the payment of the April rent without objection by either party. April was the last month covered by the first lease to plaintiffs. On March 31,1949, defendants replied to the October 25th letter from the City, stating that they had relocated and would vacate the premises on or before May 1, 1949. This meant that defendants had acted on the advice of the City and had secured and obligated themselves for other quarters commencing May 1, 1949. The City was then estopped to deny the defendants’ right to surrender the premises. Becker v. Morstadt, 381 Ill. 422, 427; Moses v. Loomis, 156 Ill. 392, 396; Doerr v. Maher, 337 Ill. App. 245. It did not attempt to do so. April 4, 1949, the City acknowledged defendants’ letter, accepted the offer to surrender possession and gave directions as to the delivery of the keys. By the letter of March 31st defendants’ lease was effectively canceled as of April 30, 1949, when defendants were to, and did, vacate the premises. On March 31st, plaintiffs had no rights to the premises or rentals beyond April 30th, and claimed none. It was not until the next day, April 1st, that plaintiffs secured the second lease, for a period from May 1st to October 31, 1949. Having actual and constructive notice of the City’s right to cancel and defendants’ right to waive the 60 days’ notice, it was plaintiffs’ duty, before executing and accepting the second lease from the City, to ascertain by inquiry of the City and of defendants, if by no other means, what, if anything, had been done toward cancellation of the lease. No inquiry was made. That plaintiffs obtained no rights superior to those of the City is conclusively established by Seaver v. Thompson, supra. In that case Netcher, the owner of a four-story building, rented the store floor and basement to Thompson for one year, expiring April 30, 1899; the lease contained a provision that if the lessor ‘ ‘ shall, during the months of March and April, 1899, decide, by notice given to said second party in writing,” not to'commence to rebuild, then the lessee may elect, by written notice to lessor in March or April 1899, to renew the lease for an additional year, ending April 30, 1900; Netcher did not give written notice to Thompson of his decision not to commence building; on April 17, 1899 he gave a lease to Seaver for one year, beginning May 1, 1899; April 21, 1899 Thompson gave notice in writing of his election to renew the lease and refused to surrender possession; Seaver brought a forcible detainer action before a justice of the peace; on appeal to the circuit court judgment was entered in favor of Seaver; the Appellate Court reversed this judgment and the Supreme Court affirmed the action of the Appellate Court. The Supreme Court said (p. 163): “The provision in this clause of the lease . . . was for the benefit of the lessee, in order he might have the requisite information to enable him to exercise the option secured to him by the contract between them,” and that (p. 164): “It was competent for the lessee to waive this character of notice and to act on knowledge otherwise obtained of the existence of the fact to which he was entitled to be informed in writing. The fact upon which rested his right to exercise the option existed; he elected to exercise the option and complied with all that was required of him to be done in order to make the option effective as between him and the lessor, Netcher. The appellant, Seaver, did not by his lease obtain any rights superior to those of his lessor.” (Emphasis added.) Seaver, the second lessee, was bound by the waiver of notice by the first lessee. So plaintiffs, as second lessees, are bound by the waiver of notice by defendants, the first lessees. It is significant that no reference is made to the leases from the City to plaintiffs in any of the correspondence in evidence. On July 8, 1949, pursuant to an order of court, plaintiffs filed a sworn list of documents but did not list the leases. The only reference to them in the trial court is their introduction in evidence by consent. The record shows no claim under them. These leases were ineffective as to the portion of the premises occupied by defendants. The plaintiffs as original lessors, and the City as successor lessor, were divested of possession of the portion of the premises demised to defendants. Miller v. Gordon, 296 Ill. 346, 350. The landlord’s interest during the lease is called a reversion. 32 Am. Jur., Landlord and Tenant, sec. 76. This is defined by Blackstone (2 Com. 175) to be “the residue of an estate left in the grantor, to commence in possession after the termination of some particular estate granted out by him.” Keogh v. Peck, 316 Ill. 318, 325, 326; Brown v. Brown, 247 Ill. 528, 534. Right to possession during the term of a lease is not part of the landowner’s reversion. It is the less, or particular, estate which the owner as lessor has granted out of his fee or interest in the land. Carter v. Lewis, 364 Ill. 434, 441. When the short-term leases to plaintiffs were executed the City of Chicago had no right of possession of the premises occupied by defendants prior to November 1, 1951 to demise. Plaintiffs knew this. The majority opinion, however, holds that the leases to plaintiffs were tantamount to a formal assignment of rents under the lease to defendants. No authority or precedent is cited to support this statement. Diligent search by the writer of this dissent fails to disclose any. If the lessor makes an unqualified grant of the land, the rent passes to the grantee as an incident of the reversion. Crosby v. Loop, 13 Ill. 625; People ex rel. Hargrave v. Phillips, 394 Ill. 119. Similarly, it is held that where the owner has leased premises for a definite period and during the pendency of the lease executes a second lease, to commence in praesenti and extending beyond the first lease, the second lessee is a grantee of the reversion — a portion of the lessor’s estate after the termination of the first lease — and, as such grantee of the reversion, is entitled to the rents accruing under the first lease. Bernstein v. Marinocus, 218 Ill. App. 461; 32 Am. Jur., Landlord and Tenant, sec. 446; 52 C. J. S., Landlord and Tenant, sec. 517. In England, “where the second lease does not extend beyond the term of the first lease, it would be wholly void as regards the premises held under the first lease.” 32 Am. Jur., Landlord and Tenant, sec. 93, p. 102, citing 15 Eng. Rul. Cas. 359 — Ex. Ch. Research has disclosed no Illinois or American cases in point. On reason the English rule is well founded. A second lease, expiring concurrently with or prior to the first lease, cannot be distinguished from a second warranty deed to the same premises. Bach purports to demise or convey that which the lessor or grantor has parted with. Neither can convey anything affecting the rights of the first lessee or grantee. The leases from the City to plaintiffs are the usual printed industrial leases, demising the entire building without any reference to existing leases on a portion of the building. The execution of these leases was a denial, not a recognition, of defendants’ lease. They cannot be construed as an assignment of any right under defendants’ lease. The right to cancel defendants’ lease and the manner of doing it was a matter solely between the City as purchaser and successor lessor, and the defendants as lessees. The trial court said: “It seems to me that when we look at the sum total of what was said and done by the parties, the intent of the parties is clear, and ... it was the intent of the city, in conformance with section 12 of that lease between the plaintiffs and defendants, to terminate this tenancy, and I think they did terminate it. ’ ’ The evidence supports the court’s conclusion.