*1 (No. 33567. Company
Cerny-Pickas et vs. C. R. al., Appellees, & Jahn
Company, Appellant. Jan. Opinion Rehearing denied November filed JJ., dissenting. Klingbiel, Maxwell, Hirsh & Clausen, Miller, Chicago, appellant. Coath, Edward Bradley, S. Katherine Edward J. all of elty, Chicago, appellees. Noh Mr. delivered the of the Schaefer opinion Justice court:
Cerny-Pickas leased & Company R.C. Com- Jahn pany large industrial building machinery and equip- ment. destroyed A found jury that the fire was caused lessee, the primary question here is whether under the provisions of the lease the lessee is responsible for the loss. as sub- Insurance Company, lessor and Orient an action brought under the lessor’s policy,
rogee the lessee to County against court of Cook superior ma- the leased *2 for the loss of building, recover damages the The lessor claimed $125,000; and chinery equipment. fire that the The complaint alleged subrogee, $23,617.54. the violation of ordinances of was caused the lessee’s by in construction of the of city partitions Chicago regulating and of a water heater, the and the installation gas building The lessee denied the other acts of by charges of and made the defense that the lease special and to exonerated it from wholly any liability exempted or to for lessor, anyone it, claiming subrogated or fire loss caused not the any fire, whether or was lessee’s negligence.
The case first decided on A was the pleadings. judgment entered in favor of the lessee upon ground of as a matter of law, provisions lease, completely exonerated it from for loss due to Upon Court for the First appeal Appellate District held that, because of considerations of public policy, exculpatory pro in visions contracts should not be construed to a exempt party loss from its resulting own negli or violation of gence a positive duty law, imposed and that the provisions lease were not a bar re to covery. (347 Ill. This App. 379.) judgment Appel late Court was and so interlocutory, was not subject this review After court. the case was and remanded, before it was tried this upon merits, in Jackson court, First National Bank Forest, Lake ex Ill. 453, different pressed views with respect public policy applicable clauses in exculpatory leases. remandment a trial
Upon jury resulted in a verdict and the lessee in judgment against the sum of $49,538.29. Court Appellate affirmed, (4 Ill. 2d App. 164,) and we leave granted to appeal. are these: the lease relevant * * * including said premises, will keep Lessee “2. ** and *; in good repair,
all appurtenances, said will any way, yield up in lease, this termination of (loss and repair condition good premises Lessor ** *. and wear excepted) incur any expense shall not obliged “8. Lessor demised said improvements upon repairing and in this clause connected therewith save as provided, or at own will all his expense keep improvements Lessee other causes by fire, (injury otherwise good repair as well as beyond good control Lessee’s excepted) and and wholesome will condition, tenantable comply local or and all laws ordinances general regulations, ap- * * thereto *. plicable shall insurance on Lessor
“14. equipment machinery hereby leased, Lessee *3 in pay any for increase fire insurance agrees premium on such insurance due to increase in insur- policies, ance rate due to the nature of or the business, Lessee’s manner its of conduct of the business.
“26. Before into entering of said possession premises, shall Lessee and deliver Lessor public insurance in the amount of Ten Thousand also Dollars; civil riot and commotion insurance, the leased covering property. In case said shall be rendered premises untenant-
“29. able by fire or other casualty, at may, Lessor his option, terminate this lease, or said repair within sixty days, so to or failing do, upon destruction of said premises by fire, other casualty, term created hereby shall cease and determine.”
The effect of public policy upon exculpatory clauses in leases of business property generally was considered in Jackson v. First National Bank Forest, Lake Ill. of 415 what was there said need not be here. repated
396 the lessee which relieve provisions
More particularly, fires with respect its negligence own responsibility indi contracts between been be valid private held to have and not interests against viduals with reference to private Co. Railway Prescott & Phoenix Fe, (Santa. policy. public Check Cf. v. Grant Construction Co. 228 177; Bros. U.S. Kansas Railroad 491; v. Illinois Central Co. Ill. ley 257 Yards Reich & -Mo. Sons, A. Stock Co. v. Inc. City 2d That of the of one -, grounds S.W. 250 case failure was lessee’s charged this altera ordinances comply making building think, tions is we of building not, controlling sig nificance. Johnson See, Pendergast, v. Ill. 308 255. most exoneration argument strongly against urged of the lessee the lease words many does not so that the lessee be free from fires re provide from its own if the lease sulting course, Of contained such an that would the end express provision, But matter. because the covered not contingency it express does not that the language, follow instrument all not, when may are considered, show parties themselves intended that the lessee should not be liable. That determination made consideration instrument as a Mac Andrews & whole. Forbes Co. v. Mechanical Mfg. Co. 288; Llewellyn Ill. 367 Board v. Education, West Re 254; Ranney Ill. frigerator Co. Ill. Consolidated Coal 560; Peers, Co. v. Ill. then to the terms Looking of the lease, it is clear that parties contemplated that the contingency *4 be might or destroyed damaged by fire. The first reference possibility in clause 2 of the lease which provides that upon termination of the lease the lessee will turn over the premises to the lessor “in good condition and repair * * (loss by fire and wear excepted) In the absence of any contrary expression lease,
397 is not to the lessor damages lessee liable his the result of own from fire which is not un- Therefore, Tenant, sec. (Tiffany, Landlord liability the lessee from less this clause of the lease exempts it does his own for loss resulting obligation. no more than restate the lessee’s common-law Rover, Heel Co. v. Day Wood Upon authority Natural Ohio 349, 588, St. Slocum N.E. 123 175 Products the lessor con- Co. 747, Mass. N.E. 292 cedes that the effect relieve the lessee of this clause is “to under the lease from duty of restoring of how it this have been regardless may Under damaged. form of lease there contractual on duty was no longer the lessee to restore the The lessor how- building.” argues, that the lessee’s ever, liability tort remains, although contract has been eliminated. There are areas of the in which the distinctions be law tween liability in contract and in tort may sig nificant, their despite remote and accidental We origin. are not satisfied, that such however, distinctions are rele vant in determining to words used meaning given laymen their defining rights obligations. word “fire” is used without qualification throughout lease before us. Its natural would include all meaning fires, of their regardless To origin. express meaning which the lessor contends, lease would have to be altered modify word “fire” by the words “not qualifying due to lessee’s It is negligence.” more reasonable to assume, we think, laymen would regard word “fire” as all fires whether including negligent otherwise. origin Under familiar standard fire policies insurer obligated fires caused by negligence. Lycoming Ins. Co. v. Barringer, Ill. 235; Couch, Cyclopedia of Insurance Law, par. 1488; An Brewer, Inductive Ap proach the Liability of the Tenant for Negligence, 31 Boston L. Rev.
398 it would lessor the construction urged
Under fire insur- carry to the lease to both parties necessary would have The lessee if are to be they ance protected. his lessor fires due to to insure against the kind of Whether fires due to other causes. against avail- commercially needed lessee have policy would into is at was entered best able when the lease present In the lease Boston present dubious. Rev. (31 L. for fire insurance the lessor in clause to pay agrees 14 and machinery. leased parties building, equipment fire that the risk loss should be insured contemplated not they we see no reason to did against suppose insurance which covers customary policy contemplate re- both accidental and fires. clause 26 negligent Although quires the lessee kinds carry to of insurance, specified to insurance is limited responsibility respect obligation any increase insurance premium due nature of its business or the manner in which it was conducted. From the lease as a whole we conclude that the lessee was not h> be liable for loss regardless cause that the fire, and intended that the parties lessor should solely look to insurance as compensation any kind of
While the cases are not accord, we believe that the result here reached by better reasoned supported decisions. years Seventy Lothrop ago Thayer, v. 466, Mass. 138 the court 475, said: “The ancient has law been acquiesced in, and consciously the cost of unconsciously, or the landlord, value of the risk enters into the amount of rent.” And in the case of General Mills leading v. Goldman, 2d Fed. 359, the court said : (p. 366) 184 “They necessarily consciously on the figured rentals to be paid as tenant the source of the fire insurance pre- miums and intended that the cost of insurance was to come from the tenants. In practical effect the tenant paid cost of the fire insurance.” Wood Day Heel Co. Rover, v. 123
399 conclusion. our also supports 588, Ohio St. N.E. 349, 175 Carstens v. are contrary cases principal Pac. 939, 259, Wash. Co. Western Pipe Steel 252 142 and Winkler Pac. Warner, Morris v. Cal. 279 2d Co. S.E. Amusement N.C. Appalachian not cases it does appear In the of these first two to insurance with respect the leases contained provisions *6 third similar case, In the like those in the lease before us. the court relied were but involved, Mills case and the in the General upon opinion dissenting the of the Court present first upon opinion Appellate case.
The the and the Court judgments of Appellate superior court of Cook are and the cause is County reversed, each remanded to the directions to dismiss superior court, amended plaintiff’s complaint.
Reversed and with directions. remanded, Klingbiel, Mr. dissenting: Justice I cannot or conclusion of the accept reasoning majority.
It cannot be doubted, as the majority opinion empha- that sizes, of parties contemplated contingency or destruction damage by But the here question con- cerns not the means physical whereby were premises but the the means damaged were agency whereby brought into operation. subject of is whether the fires dispute are merely contemplated ones, accidental or whether they include as well fires caused by fault of the lessee. The validity of clauses beyond is likewise exculpatory scope As present inquiry. majority opinion out, points this question has been settled. The issue one solely construction. relied language by the majority found in
clause 2 of the lease which provides upon termination the lessee will turn over the lessor “in premises good condition and (loss repair by fire and wear ex- ordinary the lessee is mean that Does that clause
cepted).” its own by caused damage relieved from the lease hold unless not to so ought We negligence? therefor. injury and Since certainly definitely provides relief such liability, results commonly between clearly should agreed upon consequence the ques- leave in should not doubt ambiguity parties, tion of “Whether an exception intention. tenant’s fire includes fire caused negli- a
injury unless on the but, intention gence depends parties, clearly the exception contemplates lia- it be construed tenant’s will not except for such bility injury.” (51 Landlord C.J.S. should because a more Tenant, not, sec. Courts result be reached construe equitable may thereby, seemingly a contract into that do not exculpatory provisions spe- cifically therein. appear
I cannot covenant agree to surrender condition “loss good wear excepted” may be construed to relate reasonably to the lessee’s tort It concerns liability. rather the lessee’s contractual liability *7 to make or rebuild in case of repairs destruction fire. by The reason for these common in inserting sur- exceptions render clauses of is leases to a relieve apparently tenant, who has to agreed in from keep premises a repair, contractual liability to or rebuild structures repair damaged or destroyed by accidental fire. as do in Appearing they paragraphs relating and return of the upkeep prop- such erty, are not exceptions to designed relieve the lessee from tort liability. Had the parties intended to excuse the lessee from negligence in a fire causing or other type damage would they doubtless have said inso ex- press terms. It is to be that expected a lessor would agree to negative any contractual duty on the part lessee to restore premises by damaged accidental fires. But it is not natural lessor would that agree a to release the lessee its by own caused from be- in a contract be looked terms hardly would Such accord rule The business men. general tween Am. Thus, understanding. this common Jur. “A tenant it is stated: section Tenant, Landlord his landlord liable for however, injury is, the demised on destruction of a by even though tenant’s by proximately the term lease at the end of contains a provision ” loss fire.’ he shall yield ‘subject by possession seems It clear to me that contingency contemplated in the case at bar one of from acci- by was loss parties dental fires from the only. This evident exception fire, 8 of which refers to “injury by paragraph lease, or other causes beyond control.” sup- (Emphasis Lessee’s Use of the “other” word indicates that the “fire” plied.) beyond control, lease was fire lessee’s contemplated or not caused other fault. majority says since the lessee would be opinion not liable for accidental fires even in the absence to that the inclusion effect, of the clause in- evidences an tention to enlarge of its scope so as exculpation include fires. But in negligent my con- opinion proper struction of the clause leads to an exactly conclu- opposite sion. clause refers to loss by wear as ordinary well as to loss fire. The lessee would not be liable for loss by “ordinary wear” even in the absence of the clause, unless those words mean more, clause in this something merely restates the respect common-law consequences. Yet it could hardly maintained that wear” “ordinary meant to include negligent If damages premises. the clause does no more than restate the lessee’s common- law obligation as to loss such wear, must be likewise limit of its effect as to loss The two *8 are treated exactly alike. If, as the de- majority opinion clares, word “fire” meant to include all fires regard- less of their the lessee seem be would exonerated origin even for those caused with malice or intent was not intended have destroy. Certainly word such an unqualified meaning. that the cost of insurance enters into the argument
amount of rent has no more here than the validity con- verse that reduced risks result in lower insurance argument costs and hence lower rentals. The former type argu- ment is used in frequently for liability proposing legislation fault, without but it is hardly appropriate determining and liabilities based rights consent, intention, tortious conduct. Carried to its conclusion it would logical substantially refashion the law of torts in most commercial affairs.
The lease in the case at bar does not refer to injury through and there negligence lessee, is no specific exemption liability for the of its consequences negli- Contracts gence. exempting liability are strictly construed against on party them, relying clear and explicit language required absolve person from such liability. There is no basis for such a construc- tion in the case. The present Appellate Court, my opin- ion, rightly affirmed the of the trial judgment court, should judgment be affirmed.
Mr. concurs in the dissent. foregoing Maxwell Justice
(No. 33714. Humphrey et al, Appellants, vs. Chevrolet, Inc.,
City of et al., Appellees. Evanston Opinion November Rehearing denied Jan. filed