Gen. No. 26,949 | Ill. App. Ct. | Apr 18, 1922
delivered the opinion of the court.
Counsel for complainant contend that the circuit court erred in overruling the master’s report and in dismissing complainant’s bill for want of equity, because
(1) The said proposal and acceptance together constitute a binding agreement which embraces all the essential terms of a valid lease for years.
(2) The agreement is clear, certain and unambiguous, untainted with fraud or undue advantage, and it would be unjust to deny to complainant a specific performance of it.
(3) The defendants are precluded from attacking the validity of the agreement or its enforceability in equity, for the reason that at the time performance was originally demanded by complainant they placed their refusal to perform upon other grounds.
Regarding counsels’ first point, it is not disputed that on March 18, 1915, the defendants executed and delivered to complainant the written proposal, wherein they agreed to give complainant a 30-day option to purchase' the property described therein for $100,000, or to lease the property to complainant for 99 years without revaluation at $5,000 per year. The consideration of $1.00, recited in the proposal, was not in fact paid, and defendants could have withdrawn the option at any time before its acceptance. The instrument, therefore, amounted to a continuing offer during the 30-day period. (Threlkeld v. Inglett, 289 Ill. 90" date_filed="1919-06-18" court="Ill." case_name="Threlkeld v. Inglett">289 Ill. 90, 94.) Defendants did not withdraw their offer, and on April 17, 1915 (before the expiration of said period), complainant in writing “elected to exercise the option” given him to lease the property for the term and at the annual rental as offered. Upon this acceptance defendants’ offer was changed into a binding promise. (Threlkeld v. Inglett, supra, p. 95; Carter v. Love, 206 Ill. 310" date_filed="1903-12-16" court="Ill." case_name="Carter v. Love">206 Ill. 310, 316.) The question arises whether the terms of the contract are sufficiently definite and certain to enable a court of equity to enforce it, — in other words, whether those terms embrace all the essential elements of a valid contract for a lease for years. In Jones on Landlord and Tenant, sec. 137a, p. 170, it is said: “Under the authorities, to create a valid contract of lea,se, but few points of mutual agreement are necessary: First, there must be a definite agreement as to the extent and bounds of the property leased; second, a definite and agreed term; and third, a definite and agreed price of rental, and the time and manner of payment. These appear to he the only essentials.” This is the rule in Illinois. (Miller v. Gordon, 296 Ill. 346" date_filed="1921-02-15" court="Ill." case_name="Miller v. Gordon">296 Ill. 346, 350.) In the present contract the premises to be demised are definitely described, and a definite term and a definitd annual rental are mentioned. The time when the rental is to be paid during each year is not mentioned, but where the amount of the annual rental is fixed without specifying the time of payment, the law provides that it is payable at the end of the year, no custom or usage to the contrary being shown. (2 Tiffany on Real Prop., 2nd Ed., sec. 409; McFarlane v. Williams, 107 Ill. 33" date_filed="1883-06-16" court="Ill." case_name="McFarlane v. Williams">107 Ill. 33, 42; Ridgley v. Stillwell, 27 Mo. 128" date_filed="1858-03-15" court="Mo." case_name="Ridgley v. Stillwell">27 Mo. 128, 134; Parker v. Gortatowsky, 129 Ga. 623" date_filed="1907-11-18" court="Ga." case_name="Parker v. Gortatowsky">129 Ga. 623, 626.) We are of the opinion that all the essential elements of a valid contract for a lease for years are contained in the agreement in question. As said in Miller v. Gordon, 296 Ill. 346" date_filed="1921-02-15" court="Ill." case_name="Miller v. Gordon">296 Ill. 346, 350: “Many other agreements and conditions might be incorporated in a lease, and usually are, but they are not essential to a complete and binding lease.” And we think it sufficiently appears from the proposal and acceptance, as found by the master, that the parties agreed that the term of the lease was to commence on April 17, 1915, the date of complainant’s acceptance of the proposal. (Miller v. Gordon, supra.) In Levin v. Saroff (Cal.) 201 P. 961" date_filed="1921-09-22" court="Cal. Ct. App." case_name="Levin v. Saroff">201 Pac. 961, 963, it is said: “The mere fact that a written lease was in contemplation does not relieve either of the contracting parties from the responsibility of a contract which was already expressed in writing. When one party refuses to execute the- lease according to the contract thus made, the other has a right to fall back on the written propositions as originally made, and the absence of the formal agreement contemplated is not material.” Counsel for defendants argue, in substance that, even conceding that the proposal and acceptance would constitute a binding contract for a lease for a short term of years, they do not embrace all the elements essential to a leáse for a term of ninety-nine years. We do not understand that the rule as to what are the essential elements of a lease for years is any different, whether the term is for one year, five years or ninety-nine years. Blackstone says: “An estate for years is a contract for the possession of lands or tenements for some determinate period” (Cooley’s Blackstone, 2nd Ed., vol. 2, p. 139). In Bushman v. Faltis, 184 Mich. 172" date_filed="1915-01-29" court="Mich." case_name="Bushman v. Faltis">184 Mich. 172, a bill for a specific performance of a contract for a lease for 99 years of certain real estate in the City of Detroit was filed and defendant’s demurrer to the bill was overruled and he appealed. The contract was certain and definite as to the names of the parties, the description of the property, the length of the term and the amount of the annual rental. In affirming the order of the chancellor in overruling the demurrer the court said, p. 179:
“If the lease provided for in the agreement were for any ordinary short-term lease, the well-established rule might be applied that the law will imply that a lease with usual covenants required by such leases shall be drawn and signed. * * * However, the provision in the instant case being for a 99-year lease, and it not appearing that the execution of 99-year leases has become so common as to establish a custom and make it possible to say what covenants and agreements would usually go into and become part of such a lease, this rule cannot be said to apply. However, as the agreement to lease sets forth definitely in our opinion all the essential requirements of a lease, * * * it cannot be said, because other and different covenants might have been agreed upon, that what in fact has been provided for is too uncertain and indefinite to permit of specific performance.”
As to the second point made by counsel for complainant, we are of the opinion that, inasmuch as the agreement is clear, certain and unambiguous and untainted with fraud or undue advantage, specific performance of the agreement should be decreed. (Cumberledge v. Brooks, 235 Ill. 249" date_filed="1908-06-18" court="Ill." case_name="Cumberledge v. Brooks">235 Ill. 249, 257; Corrigan v. Ralph, 265 Ill. 571" date_filed="1914-12-16" court="Ill." case_name="Corrigan v. Ralph">265 Ill. 571, 578; Riemenschneider v. Tortoriello, 287 Ill. 482" date_filed="1919-04-15" court="Ill." case_name="Riemenschneider v. Tortoriello">287 Ill. 482, 485.) Counsel for defendants contend here, as they did on the hearing before the master, that it would be unfair and inequitable to enforce the agreement because it does not contain a covenant that complainant is to pay the taxes and assessments levied on the property during the term of the lease. In 24 Cyc. 1074, it is said: “In the absence of agreement or special covenant, the duty to pay all State, municipal, and county taxes and assessments, which during the term of the lease become chargeable upon the premises, is imposed by law upon the landlord.” But we also believe it to be the law “even where there is no covenant by the lessee to pay taxes, so much of the taxes as are levied on account of improvements put on the land by the lessee are chargeable to him.” (24 Cyc. 1075; 18 Amer. & Eng. Encyc. Law, 2nd Ed. 651; Watson v. Home, 7 Barn. & Cress. 285, 290; Philadelphia, W. & B. R. Co. v. Appeal Tax Court, 50 Md. 397" date_filed="1879-02-07" court="Md." case_name="Philadelphia, Wilmington & Baltimore Railroad v. Appeal Tax Court">50 Md. 397, 413.) The master, in discussing in his report the contention of counsel for defendants, said:
“It is clear that if the defendants are compelled by decree of this court to execute and deliver a lease of this property to the complainant, the complainant, or his successors in interest, would have the right to erect a building of great value on this property; and the annua! taxes on the land and such a building would be far more than the annual rental of $5,000 per year.
“It does not follow, however, that the lessors would have to pay the taxes. As a matter of law, the master believes and so finds, that (while the question is not free from doubt and has never been squarely decided in Illinois) if this contract be construed as not requiring the payment of taxes by either party and as leaving the whole matter of the payment of taxes to be determined by law, the lessors would have to pay the taxes on the land only, while the lessee would have to pay the taxes on any improvements he might erect thereon.
./‘But the master believes, and so finds, that this contract was intended by the parties, and should be construed as providing that the rental of $5,000 per year is to be net to the lessors; that is to say, that the lessee is to pay all the taxes and assessments. The expression— ‘to purchase our property for $100,000 net to us’— taken in connection with the expression,— ‘ or to lease the same to you for ninety-nine years without revaluation at $5,000 per year,’ seems to make such a construction reasonable and necessary.
Again, the words— ‘without revaluation, at-$5,000 per year,’ taken by themselves, appear to the master to warrant the construction that the rent is to be a definite and fixed annual rent for the entire term. If the lessors had to pay all or part of the taxes from year to year, which would, of course, fluctuate, depending on the tax rate and the value of the property, the rent enjoyed by the lessors could not be said to be really defir nite and fixed.
“The ninety-nine year lease provides that the lessee ‘will pay all water rates, taxes and assessments, general and special, and all other impositions ordinary and extraordinary, of every kind and nature whatsoever, levied or assessed upon the said demised premises or any part thereof, or upon any buildings or improvements at any.time situated thereon, or levied or assessed upon the interest of the lessors in or under this lease during the term of this lease (except inheritance and income taxes so-called).’
“There is nothing in the evidence to show that any objection to this was made by Mr. Williams or his attorney.
‘ ‘ On the arguinent before the master the complainant by his attorney again offered to pay all taxes and assessments, as aforesaid, during the term of the lease.
“I find, therefore, that there is no merit in the last-mentioned contention of the defendants.”’
We agree with the master’s statements, his argument and his conclusion.
Counsel for defendants make the further contention, as we understand it, that it would be unfair and inequitable to enforce the agreement because defendants would not have any security for the payment of the annual rent, such as the erection on the premises by complainant of an appropriate building". A sufficient answer to this is, we think, that the contract, embodying the essential elements of a valid contract for a lease for years, makes no reference to the erection of a building on the premises. It is true that in the tentative draft of lease presented by complainant, as evidence of his good faith, there was contained a provision for the erection by him on the premises of a building costing not less than $75,000 within three years, and that upon the presentation of the draft Williams told complainant that any building to be erected should cost twice the value of the lots, and ought to be built in one year instead of three. But it is also true that complainant was not obligated by the contract to erect any building on the premises.
In view of the foregoing it is unnecessary for us to discuss the third point, above mentioned, made by counsel for complainant, further than to say that in our opinion it has merit.
Our conclusion is that the decree of the circuit court, dismissing for want of equity complainant’s bill, should be reversed and the cause remanded with directions that the court enter a decree for the specific performance of the agreement in question by the defendants. In view of complainant’s offer to pay all taxes and assessments levied on the premises during the term of the lease (said offer being contained in the tentative draft of lease presented on April 17,1915, and renewed on the hearing before the master), we deem it equitable to all parties that the specific recommendations of the master as to the decree be adopted, and, accordingly, we direct the circuit court to enter a decree, ordering and directing the defendants forth"with to execute, acknowledge and deliver to the complainant a lease of the premises in question for the term of 99 years from the date of said decree without revaluation, at a rental of $5,000 per year, — said lease to provide that the complainant pay all water rates, taxes and assessments, general and special, and all other impositions ordinary and extraordinary, of every kind and nature whatsoever, levied or assessed upon the said demised premises or any part thereof, or upon any buildings or improvements at any time situated thereon, or levied or assessed upon the interest of the lessors in or under the lease during the term of the lease (except inheritance and income taxes so-called).
Reversed ■and remanded with directions.
Barkes and Morrill, JJ., concur.