# Petition for Writ of Certiorari — General Electric Co. v. Kirkpatrick > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385601_0801%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1963 - **Citation:** 372 U.S. 943 ## Text , iLRARY * 3 7 , } | SuPRiN COURT. U. By a Tick S | No. 811 | FEB 11 1963 , | JonW F. DAVIS, CLERK | mmm , Supreme Court of the United States Ocroser Term, 1962, con ‘ . F. W. WOOLWORTH CO., Petitioner, vs. HENRI A. MEIS, Trustee Under Agreement Dated Decomber 26, 1945, and Known as the Blanche Meis Trust, : Respondent. PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS _ FOR THE SEVENTH CIRCUIT A a 7 ® ee : ANAN RAYMOND HOWARD E. KANE: -: : THOMAS W. McNAMARA 135 South LaSalle Street Chicago 3, Illinois RAndolph 6-0220 Attorneys for Petitioner - Of counsel: - THOMPSON, RAYMOND, MAYER & JENNER 135 South LaSalle Street @ : Chicago 3, Illinois RAndolph 6-0220 i . UNITED STATES LAW PRINTING CO., CHICAGO 18, ILL. LA keview 5-6581 . are te PAGE Opinions Below eseilhtnest ieee SS SY oo 2 Jurisdictional Statement _ ........... sialic AR, OT Questions Presented... iad Madionnlale ne Statement of the Case ...........:cccccccseeeeeeeee scanioiaees a ‘Illinois Law Relating to the — ‘to Provide a Source of Heat ne siieesnionnbapubetbaes 4 Proceedings DIONE - scpiinscncipiaiivetceamenniintectaence i : 6 Reasons for Granting the Wit -............-.....-----..---.e0-s-ee0+ 7 Conclusion ; man | a? Appendix A, Opinion of United States Court of Appeals. .... . App. 1» .Appendix B, Opinion of the United States District Court , . ..App.11_. : Appendix C, Opinion of the lllinois Appellate Court in Kaufman v. Shoe Corporation of America ..........App. 21 TABLE OF AUTHORITIES Erie Railroad Co. v. Tompkins, 304° U.S. 64, 58 S. Cts — 817, 82 L. Ed. 1188 (1938) ....... 3 > a Guaranty TrustCo. v. York, 326 U.S. 99, 65 S. Ct. 1464, 89 L. Ed. 2079 (1945) | saeniaminaniaminneeienian 7 3 Kaufman v. Shoe Corporation of America, 24 Ill. App. 2d 431, 164‘N.E. 2d 617 (3d Dist. 1960) ......--cccc0c------ 4 Yoder v. Nu-Enamel Corporation, 117 F. 2d 488 (8th - Cir. 1941) ..... Sane dnateniCincieent none 9 1960 Annual Survey of’ American Law, $6 N.Y.U. L.” Rev. 394 « _— ee. ? - . . 2 e > - at ‘ S *. ‘ a = “+ ° , é- ° 3 - ° 2. - ek WF A * ° . es - o es \ . > = . 7 ® - is os ° ‘ & = , ¢ ae ‘ * @ 7 - g a J “ry . 3 7 i . \ : : > m - \ * e Sang: cs ‘- a c :e : pe - @ , a ed - . . oJ 2 . © . nh - 4 : > . : . 4 . a“ . a , zi 2 * i = , a . ee ° rest : es " : e ee - . * 5 2 te c ¢e a °: - oor ‘ 5 é ; +* : 7 ~ © say, @ \ “ey : Seen >. ; a. .\ . s i . . ° hos . pe & * ~ . Go 2 ° s 2 s a N. THE ‘Supreme Court of the United States a OcToBER aiite —. oo . F. W. WOOLWORTH ob. ee eh Petitioner, .- 7 5 ‘ _ In Kaufman, the Appellate Court noted that heating equipment under the terms of the lease, was with- out precedent in Illinois. The Kaufman landlord argued that. the tenant’s ab- ligation to install the heating equipment was covered by the tenant’s covenant to keep the premises in good repair. The Appellate’Court held that the word ‘‘repair,”’ strictly construed, did not include alterations or additions and hence, the installation of new heating equipment could not be classified as either a ‘‘repair’’ or “‘structural repair.’’ The Appellate Court said (App. 24): | ‘“‘A general covenant of the tenant to repair, or to basic. question whether the. tenant was obligated. to install the | 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 ike change should be plainly discqverable -in the lease. 51 C.J.S., Land- lord and“Tenant, Sec. 368. Ne 7 Where a tenant covenants merely to repair and the ' alterations or additions to the premises are of a sfruc- tural or substantial nature and are made necessary by’: extraordinary or unforeseen future events not within the contemplation of the parties at the time the lease was executed, the landlord is ordinarily held-liable for __ such alterations or additions.’’ 7 , 8 \ > “: ; The Appellate Court hetd that the landlord-should install all heating equipment. : Pec tge MA ¢ No petition for leave to’ appeal to the Supreme Court of Illinois was-filed.. When the case at bar was heard and. decided in both the District Court and Court of Appeals, the Kaufman case was, and now remains the last word of 4 hy) Lee 8 ne spe oe 6 , the Illinois courts on the subject. No tibiae decisions ° * have cited or ent to ‘construe it, except the. case at bar. - In the 1960 yates Survey of American Law, 36 N.Y.U.L: Rev. 394, the Kaufman decision received favorable com- Proceedings Below. On January 93, 1961 Woolworth filed a ‘hidlasiions inl. ment action against Meis in the United States District Court for the Eastern District of Illinois seeking a deter- iination that Meis had the obligation to provide a source * of heat in the pretnises and seeking réimbursement for the $14,565.58 expenditure. The jurisdiction of the ‘federal. . court was invoked on the basis of ” diversity of citizen- ship of the parties. » The District Court, sitting without a jury, heard sates and entered a judgment in favor of the defendant. The United States-Court of Appeals, Circuit Judge Swy- ‘gert dissénting, affirmed the Distriet Court. The majority opinion attempted to distinguish the Kaufman case on- the ground that the evidence of ihtention rendered inapplicable the otherwise undisputed Illincis rule that. .the landlord in liable. (App. 45) ‘ v7 s ‘ : a ad ta é : ARGUMENT. THE MAJORITY OPINION OF THE SEVENTH CIR- ‘COURT OF APPEALS IS IN DIRECT CON. WITH ILLINOIS LAW AS SET FORTH IN THE KAUFMAN CASE ON THE IMPORTANT QUES- TION WHETHER ILLINOIS LAW IMPOSES UPON © * THE LANDLORD OR THE TENANT THE BURDEN. OF UNFORESEEN STRUCTURAL saa alacant TO THE LEASED PREMISES. — , In Guaranty Trust Co.‘v. York; 326 U.S. 99, 109 » 1965) | this Court stated: | ‘ ‘Erie R. Co. v. Tompkins was not an sae to. formulate scientifie legal terminology. It expressed - a policy that touches vitally the proper distribution of judicial power between State and federal courts. , . The nub of thé policy that underlies Erie R. Co. v. ¥. Tompkins i is that for the same transaction the acci- dent of a suit by a non-resident litigant in a federal . court instead of in a State court a block away shotid not lead to a substantially different result.’’ If the decision of the court below is allowed to ‘stand, an Illinois litigant seeking a détermination of whether the landlord or the tenant must bear the burden of unforeseen structural additions to the leased ‘premises will hereafter, get a diametrically epposite result depending or whether the state or federal forum is selected. By the Kaufman case, the burden of providing a source. of heat ‘where the outside utility discontinues service was placed squarely upon the landlord, absent an express cov- \ °® ‘lish the customer relation with the utility. 8 enant to the contrary or a warrant for a change in this rule of liability that is ‘plainly discoverable.”’ In the case at bar, the burden’ of providing a sourge of heat where the outsidé‘utility discontinues service is App.3 _ “2 ‘warth, 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’’ te the land- lord 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 bur- den of maintaining ‘‘t# heating plant.” _ The court inferred from the foregoing substantial evi- dence 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 re- flected the landlord’s, state of mind. We think the infer- ences are not, clearly orrencems. 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 no error in this conclusion. It was unnecessary for the court to find, as argued hy Woolworth, that the parties ‘‘formulated’’ a mutual intention with respect to future heating. It was enough if there was substantial evideuce 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 tio 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 Sue { oots ; al 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 indi- ~ cation of the intention of the landlord not to assume an et 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 ° gs 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 Jaw based on the in- ferences 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 Kaufmdn 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 conclu- sions, 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 Illinvis Commerce Commission that the Illinois Power Company could discontinue service. The Illinois Appellate Court reversed a judgment for the landlord, on the ground that inctolintion ‘ef the bepting at | xe gn ng sale pgltnne Tse apes f installations and repairs as muy be necessary t © comply with uch laws, orders or require- - : App. 5 equipment, undég 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 i is important to note that the Kaufman nda was estab- lished 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 in- ferring 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 obli- gation for future heating and stated that an obligation to repair the heating plant was ‘‘unacceptable.’”’ This em- braced any future event, and Woolworth knew it, or should have known it at the time the lease was made. Wa can- not read the Kaufman case as making it incumbent upon. the landlord to expressly exempt himself in the lease from. ~ sucha liability where there is substantial evidence of in- tention. 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 —— to pay for the heating plant. For the reasons given, the Soeemens 1 is afiirmed. Swycert, Circuit Judge (dissenting). é ° ® es App. 6 ¢ ‘te Kaufman v. Shoe Corp. ah shales: TR: Age. 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 sub- ject to judicial determination whether it was the obliga- tion of the landlord or the tenant to pay for the instailation. “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 adture made neces- sary by unforeseen future events not within the contem- plation of the parties when the lease was made. The bur- ‘den of patereecen 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 Com- pany’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 or, to shift on the‘tenant a burden which would natur‘all> fall on the landlord, the warrant for the change should be plainly discoverable in oor — ”” . (Emphasis supplied. ) oe 7 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 — distinguishable ia Keufmen. - ‘ r to App. 7 > Before discussing the Paste, however, a further observa-. tion seems appropriate. It is my view. that the rule laid down in Kaufman should not be given the narrow inter- e. pretation 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 pro- vision 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 land- lord or the tenant should purchase the steam from the Power Company’ Woolworth wanted the landlord to pur- ‘chase the steam froin the utility and supply heat to Wool- ‘worth at Woolworth’s expense. ‘ The landlord objected. Woolworth acceded to the landlord’s view and agreed to ' eontract directly with the Power Company. _The fact that the provision in the original draft of the . lease requiring the landlord to make repgirs 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 in- stallation of a new structufal addition. This requirement in the printed original draft was obviously superfluous and inappropriate since #hert was no heating plant in the build- ing at the time the lease was made. i) oe?” App. 8 Similarly, 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 su- perfluous 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 distin- guished from furnishing the heat itself. Therefore, the deletion of this provision does not give rise to an infer- ence 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, addi- tions, 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 altera- ~agage igs Somer Sy rien ates satire partitiinn ground floor converting the entire “Ay demined. pre eis iconic wet 7 ‘ — ~™ + App..9 extending the ground floor and seiaiinia into the pres- ~ ent light court areaway ; furnish and install year-reund - air conditioning and ventilation; furnish and install new store fronts across the front af ‘the ground floor of the demised premises with stainless steel entrance doors, all in accordance with Tenagit’s plans and speci- - fications , Fe gee (Emphasis 8 jed.) The bens was ER on July 1, 1953. The Illinois Power Company did not notify Woolworth until J une 17, 1957 that it had been granted permission by the Illinois Com- merce Commission to discontinue heating sérvice in Dan- ville effective June 1, 1960. In order to operate its busi- . ness, Woolworth had to make structural changes to the burned-out portions of the building, and also had to “fit the same for occupancy., It is evident that the only inten- tion 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 ‘‘reason- able diligence’’ tg complete the work and: “Upon completion, of such alterations, additions and changes and the opening of Tenaxt’ s store for busi- — mess in the entire demised premises, the Landlord . agrees : within fifteen (15) days after demand there- fore, to reimburse the Tenant in. the amount of One Hundred Forty Thousand ($140,000.) Dollars, toward the cost of such work.’’ (Ant. 15.) (Emphasis supplied.) Clearly, ‘this article anticipated only such structural changes as were necessary to fit the premises for occu- pancy. It is uncontradicted that for many yeiys after - “occupancy a furnace was) not needed sinee a public utility was supplying the heat. I fail to see how this article, : / v takes App. 10 limited as it is as to time, can show, intention as to who was to have the burden of installing a furnace should fu- ~ ture events make such installation necessary. It is admitted that neither party*during the course of the negotiations referred to the possible cessation of serv- ice 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 note- worthy that Woolworth made no provision in its design specificatiens for future installation of a furnace in ihe renovated building. Finally, there is no evidence that Woolworth was aware of the rumor that the Illinois Power _ Cémpany 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 partice 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 instellthe heating plant. These inferences, in my opinion: are far too tenu- ous to warrant a determination, implicit in the finding, that the shift of the landlord’s burden to the tenant is ‘‘nlainly discoverable’’ either in thé lease itself. or in the prior negotiations of the parties. | In applying the rule of Kaufman, which I think is neces- sary, 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 leas& premises. Accordingly, I believe the District Court’s finding as to the intention of the parties is clearly erroneous. For these reasons I respectfully dissent. I would reverse. ¢ f ~ ‘ APPENDIX B - Opinion of the United States District Court for the East- _ ern District of Illinois filed January 10, 1962, The opin- ion is not reported. OPINION BY THE HONORABLE rae PLATT. This is an action by F.-W. Woolworth, lessee, against . .Henri A. Meis, Trustee, owner, to recover $14,065.48, which _ was the amount expended by it to install a heating plant .in the leased premises. é The parties introduced evidence of the circumstances . and negotiations leading to the execution of the lease. Prior to 1953 F. W. Woolworth leased the first floor and basement of a four story building on Vermilion Street in Danville, Illinois, for a retail variety store. Included in the lease was the connecting basement in the Milner Hotel building on Main Street which connected in an ‘‘L’’*shape on the rear of the Vermilion Street location. The 60 premises were heated .by steani furnished by the Hli-- nois Power Company. The amount of steam used by . the plaintiff was measured by a common meter and Meis billed Woolworth monthly for an agreed persegiage of ‘ the heating cost. ie destroyed the Milner Hotel building in March, 1953. Shortly thereafter negotiations started for a new lease whic) was to include the rebuilt Milner Hotel‘ and the Vermilion Street site. Mr. Thorpe, who was super- dent of real estate for F. W. Woolworth in its Chicago oif@e, was the principal negotiator for Woolworth. The surstiony of the ChicagaPoffice included the major portion of Illinois, Indiana “and Mi igan, and it contained over two hundred (200) Woolworth stores. The negotiations ® ae / | App.12 _ te ; were conducted for the defendant by Mr. Henri A. Meis, Mr. Horace E. Gunn, his atterney, and Mr. Raymond Rose, an accountant and attorney employed by Meis Bros. Mr. Edwin H. Anderson participated in a part of the negotia- tions as superintendent of construction for Woolworth. The lease on the premises was finally executed by the parties.as of July 1, 1953, for a term commencing July 1, 1953, and ending on April 30, 1978, with an option on the part of Woolworth to renew for an additional ten years ~~ at an annual minimum rental of $32,500.00. The Illinois Power Company was furnishing steam heat for the premises and on June.17, 1957, notified the plain- “tiff that it had been granted permigsion to discontinue 61 heating service-jn, Danville, Illinois, effective June 1, tk 1960, by the Illinoié Commerce Commission. This re- ’ quired the. installation of the controversial heating plant to make the premises suitable for use as a retail store. ‘Paragraph 12 of the complaint which is admitted by the answeg sets forth: ‘‘Pursuant to written stipulation of the parties dated July 6, 1960, it was agreed that, sinc: the plaintiff and defendant were in dispute as to who had the obligation of installing the new heating unit, plaintiff would proceed to install a new heating system prior to the heating season which would commence approximately . September 15, 1960 and advance the cost thereof, with the understanding said installation would _ be » without prejudice to th t of plaintiff to seek rcim- bursement from the defendant for the cost of said installation, and without prejudice to the right of the defendant hsm that. he was not iiable for such cost.’’ The preliminary draft of the lease submitted by Thorpe contained : *: App. 13 ‘‘Art. 19. The Landlord agrees at Landlord’s ex- -pefise to furnish to the demised premises sufficient heat during Tenant’s usual business hours to maintain therein a temperature of 72° from September 15th until May 15th of each year. The Tenant agrees to pay Landlord monthly fer such heat at the usual rate established by the local utility supplying such heat.’’ 62 Meis refused to accept such a clause. | Rose testified that at a meeting with Thorpe ‘‘we said we would not agree to that; that it was objectionable to us, that we didn’t , want to have any obligations to furnish heat.’’ ‘ Thorpe redrafted the lease but failed to modify this Article. His attention was again called to the objection by Gunn and he submitted the modification which reads: “nm °** “The Landlord agrees at Landlord’s expense to install and connect an adequate separate meter for the purpose of measuring all steam for heat consumed by the Tenant in the demised premises. The Tenant agrees to purchase and pay for the steam indicated by said meter to have been consumed by the Tenant from the public utility to which the demised premises are connected.’’ ase Woolworth would ignore the change in this Article, and give no effect to the omission ‘‘to furnish to the demised ‘ , premises sufficient heat....’’ Article 19, as well as Arti- cle 18, provided that Woolworth was to pay for the heat. Rose expressly stated the reason for the modification was to eliminate the obligation to furnish heat. Thorpe did not appear at the trial. The change in the wording of this Art&le and Mr. Rose’s statement should have made Thorpe aware that Meis would not be obligated to furnish‘ heat. 63 There was also a change from the original draft of the lease in Article 20, which read: ) o ~~ . App. 14 ‘¢Art. 20. The Landlord agree[d] to make and pay for all repairs, structural or otherwise, to the exterior of the building . . . of which the demised premises are a part, including but not limiting said repairs to ~ \ the streets, curbs, sidewalks and alleys, and also to— \ make and pay for &ll repairs to the interior of said \ building which may be of a structural nature .. . and \also to make and pay for all necessary repairs to the , heating — and such other, repairs,’, structural or _ otherwise. . . .’’ (Emphasis supplied.) | Defendant’s Exhibit 4, being a letter from Thorpe to Meis, states: . In Article 20, delete ‘streets, curbs and alleys’ in the third line, and in the 5th and 6th line, delete ‘to the heating plant and such, other repairs,’ and adding the ¢nd of paragraph 2\from the premises owned or controlled By the Landlord.’’ (Emphasis supplied.) From this quotation, coupled with the change in the pro- vision to furnish the heat, Woolworth knew or should have known that Meis was not going%o be bound to furnish heat if it became necessary due to the discontinuance of steam service by the Illinois Power Company. 64 It must have been known to both parties that the - Illinois Power Company, as a public utility, was con- trolled by the Illinois Commerce Commission. It could permit Illinois Power Company to discontinue an unprof- itable part of its business. Neither Woolworth nor Meis could control this situation. Meis festified that there was a ‘‘well-founded rumor’? i in Danville that the Illinois Power - Company might tinue the steam heat service in Danville, but speci | this was not mentioned in the negotiations. Since Thorpe and the mai::ger of the Wool- worth store failed to appear as witnesses, the evidence does not disclose whether Woolworth knew of this a & tig App. 15 No explanation was offered by W ouhwerth as to why its store manager and Thorpe did not testify that they had no knowledge of the rumor, and the presumption could be that one or both of them knew of the rumor. Cf. Morris v. Pennsylvanigg R. Co., (1956) 10 Ill, App. 2d 24, 33. Thorpe was not naive in negotiating leases. He was the superintendent of real estate for Woolworth and leasing premises was his business. Whether Woolworth knew of the ‘‘well-founded rumor,’’ it should have known that the Illinois Power Company could disvontinue furnishing heat with the consent of the Illinois Commerce Commission. 65 Another important provision of this lease relative to the issues in this case is: ‘‘Art..15. Within thirty (30) days from the deliv- ery of this lease, the Tenant agrees to proceed with reasonable diligence at its cust 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, con- verting the same to a one-story and basement building; remove partitious on the ground floor converting the entire demised premises into a single enlarged sales- room, extending the grgund floor and basement. into the present light court areaway; furnish and install year-round air conditioning and ventilation; furnish and install Magnesite Terrezzo floor and, fluorescent lighting in the ground floor sales area, and furnish and install new store fronts across the front of the ground floor of the demised premises with stainless steel en- trance doors, all in.accordance with the tenant’s plans and specifications and subject however to all applica- ble, Federal and State Municipal Laws and Regula- tions and in compliance therewith. Anything herein to the contrary notwithstanging, the Landlord agrees Nog ne — 66 -‘*Upon completion of such alterations, additions and and the opening of Tenant’s store for business in entire demised premises, the Landlord = 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.”’ ; 8 | Thus, it was Woolworth’s obligation to ‘‘fit’’ the demised premises for its occupancy, with no control by Meis as to what ‘“ ! additions and changes’’ were to be made. Meis was not required to do anything to make the premises tenable for, Woplworth, except that upon ‘com- pletion of the ‘‘alterations, additions and changes,’’ and within fifteen days after demand was made, to pay $140,000.00 toward the cost of the work. The lease was for. a term of twenty-five (25) years, with an additionai ten (10) years at the option of Woolworth. Woo!worth knew that during the period of its tenancy it would require the premises to be heated. Meis had refused to be obligated to furnish heat. If Minois Power shut off its service a heating plant would be a necessity. Under Article 15, Woolworth accepted the premises in the condition that existed after fire had destreyed the Milner building, and agreed to ‘‘fit’’ the premises for its occupancy during the -term of the lease. “—~ 67 The lease included the entire Milner building when rebuilt, the ground floor and basement of the Vermilion , App.17 Street site, except the two entryways to the three upper floors. . (Schedule A-1 of the lease.) Anderson testified that he prepared the plans and specifications for Wool- worth, and that the heating plant was installed in the in- a room; that this space was made available because the ¢ity of Danville refused to permit the installation of an incinerator. Meis, although he still had the three floors above the ground floor on Vermilion Street, had no right. to install a heating plant in the demised premises under the terms of the lease. It seems obvious that had Meis intended to be obligated to instal] a heating plant in the basement he certainly would have reserved a space in the demised premises for the heating plant. Woolworth contends that the facts in the instant case are similar to the facts in Kaufman v. Shoe Corporation . of America, (1960), 24 Ill. App. 2d 431, aid that this Court should follow the decision in that case. In the Kaufman case, the premises were rented for twenty-five (25) years commencing July 1, 1952. The lease was executed in 1949. At the time the lease was executed the premises were heated by steam furnished by Lllinois Power Com- pany. The cost of the steam was paid by the tenant. 68 The Illinois Power Company' was permitted in 1958 to discontinue furnishing steam in Champaign, Illinois, where the premises were located. The landlord installed the heating plant and was attempting to recover the cost of installation from the Shoe Corporation, the tenant. The - trial court held the tenaiit was obligated under’ the lease to install a heating plant, and if a chimney or flue were required, the landlord should pay for these structural _changes. The leave required the tenant to keep the build- ings and improvements in good repair, but did not obli- gate the tenant to make any. structural repairs. “The land- lord contended, that based upon the tenant’s covenant to repair, it was required to install the heating _ The e App. 18 Appellate Court reversed the trial court, and held that the’ landlord was obligated under the lease to pay the entire cost of the heating plant. At page 435 the Appellate Court said: | ‘*Certain fundamental principles aid us in deter- mining the question before us. An express covenant to repair will not be enlarged: by construction. Holly- wood Bldg. Corp. v. Greenview Amusement Co., 315 Ill. App. 658, 43 N.E. 2d 566. Where the parties to a lease of real property have expressly covenanted as to repairs, the express covenant takes the place of any implied covenant and becomes the measure of liability of the respective parties. A general covenant of the » tenant to repair, or to keep the premises inf repair, merely binds him to make the ordinary repairs reason- 69 ably required to keep the premises in proper condition ; it does not require him to make repairs involving strue- tural changes. In order to shift on the tenant a burden which would naturally fal! on the landlord the warrant for the change should be pleinly discoverable in the lease. 51 C.J.S., Landlord and Tenant, See. 368. ‘*Where a tenant covenants merely to repair and _ the alterations or additions to the premises are of a structural or substantial nature and are made neces- sary by extraordinary or unforeséen future events not within the contemplation of the parties at the time * the lease was executed, the landlord i is ordinarily held liable for such alterations or additions.”’ This Court is of the opinion that Kazfmen v. Shoe Cor- poration of America, supra, is uot persuasive here. In the instant case the terms of the lease were different fron the terms of the Igase in Kaufman. Furthvrmore, the parties intreduced in evidence the condition of the prem- ises before the lease was executed, and the negotiations leading to the final draft of the lease. No such evidence appears in the Kaufman case. The instant case is clearly distinguishable on the facts and terms of the lease, and in particular Article 15, wherein Woolworth covenanted :to = App. 19 make structural ‘‘alterations, additions and changes.’’ It is not a situation where the tenant merely covenanted to repair and where ‘‘the landlord is ordinarily held liable for such alterations or additions.”’ 70 Woolworth further contends that Article 22 of the_ lease should be construed as a covenant on the part of the defendant to install a heiting plant. Article 22 provided in part as follows: ; ‘*The Landlord agrees that if any federal, state or municipal government or any department or division thereof has or hereafter shall condemn the building of which the demised premises are a part as unsafe or as not in conformity with the laws and ‘regulations relating to the use, occupation and construction there- of, or has ordered or required or shall hereafter order or require any rebuilding, alteration or repair thereof or installations Merein, 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 require- ments... .’’ There was no governmental order directed to either Wool- worth or Meis which required a heating plant, nor was there any particular kind of fuel ordered to be used, as was the order in Belmont Hotel, Inc. v. New Jersey Title and Guaranty Cof%, (1945), 132 N.J.L. 403, 40 Atl. 2d 778. The order of the Interstate Commerce Commission could go no further than to permit the Illinois Power Company to dis- continue furnishing steam. The Court in determining the issue in this case has re- viewed the pertinent provisions of the lease in order to construe the lease, and to carry out the intention of the parties. The primary object in construing the lease is to determine and give effect to the intention of the 71 parties. Sixty-Third ¢ Halsted Reaity Co. v. Goldblatt, * (1951), 342 Ill. App. 389. The parties have aided the App. 20 Court by offering in evidence, without objection, parole evidence of the circumstances at the time the lease was executed, and the negotiations leading to the execution of the lease in its final form. The Court. has given weight fo these circumstances and negotiations, and has placed - itself in the position of the parties at the time-of the nego- tiations. There was deleted from the original draft of the _ lease the provisions that Meis would furnish heat and - repair the heating plant. Such omissions are of import- ance in ascertaining the intention of the parties when con- . sidered with the particular article which appears in the lease. Seulerecki v. Oppenheimer, 1918, 283 Ill. 525, 532. *Moreover, if it had been intended that Meis would install a heating plant the parties would have reserved space by the terms of the lease for its installation. When Article 15 of the lease is considered, the intention of the parties becomes more obvious. In Article 15 Woolworth agreed ‘to make such alterations, additions and changes to the demised premises as it deem[ed] necessary or convenient to fit the same for its occupancy, included but not limited’? to certain improvements ‘‘in accordance with [its] plans and. specifications, ’’ and Meis agreed ‘‘to reimburse [Woolworth] in the amount of One Hunéred Fort? 72 Thousand ($140,000.00) Doiiars, toward the cost of such work.’’ The improvements cost $143,615.00. It is a logical conclusion, based upon. ail the evidence and the — terms of the lease, that the lease should be constrned to obligate Woolworth to install and pay for the heating plant in the event it became necessary to make oat premises suitable for its occupancy. This opinion may serve as findings of fact and conclu- sions of law. Final judgment in accordance herewith will be entered. Dated this 10th day of January, 1962. App. 21 APPENDIX C Opinion of the Appellate Court of Illinois, Third District, ‘in Ethel B. Kaufman ¥2 Shoe C orporation of America, an Ohio corporation, filed February 18, 1960, reported at 24 Ill. App. 2d 431, 164 N.E. 2d 617: Jupce Rorrn periverep THE Opinion or THE Court. This. is a declaratory judgment action to declare the ¢ rights of the parties ander a written lease. There is no factual dispute and the questions involved are pre- sented by the pleadings. “In October, 1949, ‘the plaintiff and defendant entered into the lease here ih question, by which plaintiff leased certain premises in the City ef Champaign, for use as a _ stote, to the defendant for a period of 25 years commencing ~ | on July 1, 1952, arftl ending on June 30, 1977. The specified rental for the term was $500,000 payable at the rate of $20,000 per year in equal monthly ‘payments. At the time | ~this lease was executed the building was heated with steam furnished by’and purchased from Illinois Power Company. The steam was brought to the building by Illinois Power Company and then circulated through the ‘building by . means of radiators and other fixtures. Cost of ‘the steawn . was paid for by the tenant. In 1958 the Illinois Power Company obtained authority from the Illinois Commerce — « . Commission to discontinue the steam heat service in Cham- -.péign: - The Illinois Power Company then notified the plaintiff and defendant that as of May 1, 1959, it would ‘discontinue furnishing steam for heating purposes, Such action by the power company ‘made necessary the installa-: ° tion/in the building of some type of heating equipment if the building were to be continued to be used as a store building. The tria] court held that the duty to install the & e Se. - App. 22 | : : © heating equipment devolved upon the defendant, except that if'a chimney or flue was required, these items consti- _ tuted structural changes, the cost of which should be borne by the plaintiff. Upon oral argument of this case in this court, it was disclosed by counsel that because of the exig- - - eneies of the situation, the heating equipment had been installed under an agreement that liability of the plaintiff or defendant fcr the cost thereof would abide the outcome . of this case. The basic question is whether the tenant is ted to install this heating equipment under the terins of its lease. Both counsel agree that the question here presented is without precedent in Illinois. The provisions of the lease which it is contended bear upon a solution of this problem are as follows : ‘The Lessee further agrees that neither the demised premises nor any building at any time situated thereon, or any part thereof, shall be used for any unlawful pur- pose, or for any purpose in violation of any lawful regu- lation, and that during the-said term thé demised premises, and every part thereof, and the buildings and improve- ments thereon, ‘shall be kept by thé “Lessee in-good re- pair, and in a clean, wholesome, insurable and rentable ' condition, and that all health and police regulations in all respects, and at all times, shall be fully complied with by the Lessee, and that all sidewalks and areas in front — and in the rear of said premises shall be-kept by the Lessee safe, secure and corfort to all lawful require- ments, provided, hewever, t the Lessee shall not be required to make any structural repairs and the Lessee agrees to save and keep harmless the Lessor at all times against any loss, damage, ‘costs or expenses which may be — ; oceasiqned by any failure of the Lessée to comply with any of the provisions of this lease, or which may result from any accident or injury or damage to person of property, , App. 23 ‘and happening or done in, upon or about the demfied premises, or resulting from any act or thing doné- or emitted to de done upon said premises, or any building ~ at any time situated thereon, or which may be due to any use or occupancy which may be niade thereof.’’ [1] It'is first contended that the obligation on the. part of the defendant to install the heating equipment is covered by the provision above,. by which the lessee cdve- nants to keep the premises in good’ repair. The word ré- . pair in this clause has its ordinary meaning as given in Funk & Wagnall’s New Standard Dictionary, to-wit: ' : / »- fr 4 “App. 25 a upon the defendant ( tenant) the duty of paying for any of these items, since the lessee is not required to absorb the cost ‘of dreating something new.”’ (eraphasis sup- - plied.) ae adh In Belmont Hotel, Inc. v. New Jersey Title Guarantee & Trust Co., 132 Nu. 403, 40 ‘Atl. 2d 778, the lease was - for 10 years, and provided that the tenant was to make all repairs and deliver up the premises at the expiration of the term in good condition, reasonable wear and tear and damage by the elements only excepted. ° The heating plant burned fuel oil. Subsequent to the execution of the lease and during the war period, because - of a searcity of fuel oil, federal authorities ordered con- version to coal as fuel which required the 4nstallation of new heating equipment. In making the conversion it be- came necessary to make certain changes, to install storage bins, coal chutes and an automatic stoker and it was neces- sary to employ an engineer and éentractor. -The landlord ‘refused to make the change’, and the tenant had them made and stied the landlord to recover the cost. ~The court held that the landlord was liablé for the cost of the changes. It said: “ ‘*The learned trial court concluded that the conversion of the heating system from fuel oil to coal burning did not constitute a repair, or maintenance within the meaning’ of the lease, which was the tenant’s obligation, but was a structural change, the obligation for which was the land- lovd’s. We concur with = eg view.”’ In Hordd Square Realty Cox. Saks é C0.,° 215 N.Y. 427, 109 N.it. 545, an owner of premises, pursugnt to an agreement, erected a building for a seedy ihr wide for use as a department store. The plans, which indicated a slight projection of display windows beyond the building i mye App.26 4 line into street lines, were approved by the commissioner _ of buildings. At the time the plans were approved and _ for many years prior thereto it was the policy and com- mon practice of the authorities to permit and sanction such slight projections of buildings beyond building lines. After the erection of the, building a 20 year lease was entered into. The lease provided that the tenant would keep ‘‘the. demised premises and every portion thereof, inside and outside, . . . in good order, condition and repair.’’ Some © 8 years after the execution of the lease there was a change _” of municipal policy and the parties to the Tease were di- rected to remove the encroachment. The question in- volved wag-whether the landlord or tenant should bear the cost of this removal. In holding that the landlord should bear the cost of removal, despite the provisiqns of the lease aforesaid, the court observed: ‘*Here the. tenant is sought to be charged with the ex- pense of making an impoftant and permanent structural change in the building occupied by him. This burden is one that usually falls upon the owner, and if ‘it is to be shifted to the tenant the warrant for the change should be plainly discovéfable in the lease. We can find in the lease no indication tha®this was the intention of the par- ties, . .. The language of this- lease, construed in the light of contemporaneous : regulations, usages, and- customs, seems to require the conclusion that it wag not the purpose of the parties to subject the tenart to an expense caused wholly by extraordinary and unforeseen building altera- tions made necessary by a subsequent and radicdl change in the policy of the municipal government, and we are brought to this conclusion despite the forceful argument of counsel for the plaintiff, in which he contends that the ex- pense of complying with the order of ‘the borough presi- dent, directing the removal of the show windows, comes within the very letter of the lease. We think that this App. a6 om , > extraordinary expense was not in the contemplation ‘of the parties when this lease was made.” emphasis sup- plied. ) . [6] Attention is called to an annotationpin 33 A. L. R. 530 and supplements thereto in which similar -cases may be found holding that comparable additions or changes do not fall within a ames s covenant to repair. From ‘the foregoing we ggnclude that the covenant df the de- fendarit, in the case at bar, to keep the premises in re- pair, does not = it to pay the cost of the heating equipment, ° It is contended that the provision requiring the defend- ant to keep the premises in a rentable condition is broad _ enough to obligate the defendant to install the heating equipment. But this provision must be considered in con- nection with the langnage that precedes’it. We are of the opinion that the proper construction is that the tenant is required to make such repairs as will keep the premises in a rentable condition, inat is, the-ordinary repairs reason- ably required to keep the premises in proper condition and prevent waste and decay. [7] Plaifitiff seizes upon the. language’ above; to-wit: . ‘‘and the Lessee agrees to save and: keep harmless the Lessor at all times against any loss, damage, costs or ex- penses ... resulting from any act or thing done or gmitted to be done upon said premises, or any building at any time Situated thereon,’’rand contends that the heating facilities are an expense occasioned or resulting from a thing ‘done upon said ptemises. This contention takes the language out of its true context. When the whole clause is considered it is apparent. that what is intended is an indemnification of the lessor against loss caused by default of the lessee . or by reason of any accident occurring upon the premises, whether through active negligence or — omission. - - ¥ a a ~~ - & ; App. 28 We are therefore of the opinion that the trial court erred in construing the lease in question to-require the defend- ant tenant to furnish the heating equipment. The order should have required the plaintiff to install the heating _equipment and any chimney, flue or other structure neces- sary to properly operate the same. om Accordingly the judgment of the Circuit Court of Cham- paign County is reversed and the cause is remanded with directions to enter a judgment. in accordance with’ this opinion. Reversed and remanded. Reyrnotps, P. J. and Carro.u, J., CoONCUR. , © ot o a 2 ta --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385601_0801%3A2. Public record. Not legal advice.