Greenlee Foundries, Inc. v. Kussel

301 N.E.2d 106, 13 Ill. App. 3d 611, 1973 Ill. App. LEXIS 2081
CourtAppellate Court of Illinois
DecidedJuly 17, 1973
Docket58273
StatusPublished
Cited by5 cases

This text of 301 N.E.2d 106 (Greenlee Foundries, Inc. v. Kussel) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Greenlee Foundries, Inc. v. Kussel, 301 N.E.2d 106, 13 Ill. App. 3d 611, 1973 Ill. App. LEXIS 2081 (Ill. Ct. App. 1973).

Opinion

Mr. JUSTICE DOWNING

delivered the opinion of the court:

Plaintiff brought actions against defendants in the circuit court of Cook County to recover damages occasioned by defendants’ alleged violations of lease provisions, for whose performance plaintiff was responsible as a guarantor of defendants’ obligations under the lease. Defendants filed answers and an affirmative defense of impossibility of performance by reason of commercial frustration. The court below, sitting without a jury, entered a judgment for plaintiff in the amount of $8,048.82, and costs. Defendants appeal.

On March 8, 1962, defendant Casting Masters, Incorporated (hereinafter New Casting Masters) entered into a ten year1 lease, as lessee, for the use of premises located at 2640 West Wilcox Avenue on Chicago’s west side; the owner of the building at that time was Casting Masters, Inc. (hereinafter Old Casting Masters), whose corporate stock was controlled by Richard and Maurice Dunne. Simultaneously with the execution of the lease, plaintiff Greenlee Foundries, Inc. (hereinafter plaintiff) purchased all the stock in New Casting Masters, the lessee, and also executed a written guarantee for the payment of rent and the performance of all the lessee’s obligations under the March 8, 1962 lease.

Prior to March 8, 1962, Richard and Maurice Dunne controlled not only the Old Casting Masters stock, but the stock of New Casting Masters as well. The Dunne brothers sold all the stock in the last-mentioned company to plaintiff on March 8, 1962, and stayed on as employees at New Casting Masters beyond the date of sale to plaintiff; they later dissolved Old Casting Masters, distributing its asserts to the company’s shareholders.

On January 22, 1965, defendant Kussel (then an employee of plaintiff) purchased from plaintiff all New Casting Masters stock, and, in addition, by written agreement, Kussel personally guaranteed all New Casting Masters’ obligations under the March 8, 1962 lease. Simultaneously with the transactions between plaintiff and Kussel, defendant Stephani, by written agreement on January 22, 1965, personally guaranteed the performance of all Kussel’s and New Casting Masters’ obligations under the subject lease.

New Casting Masters was in the business of casting and molding metals for industrial use and operated its business on the premises at the West Wilcox Avenue address, an area characterized at the time of the execution of the lease by light-industrial businesses. A riot erupted in the area of the subject property in mid-year, 1966, bringing with it a high degree of tension and the destruction of property. When the rioting began, and immediately thereafter, the company had difficulty with absenteeism in the ranks of its employees, who, at that time, numbered about 16; some night-crew employees refused to work their shifts, and some day-crew workers stayed away as well. By October, 1967, eight or nine of the company’s employees had quit work altogether, dropping the number of steady employees to about eight, and the company’s production schedule fell off.

In June, 1967, New Casting Masters claimed roughly 25 customers; in October of that year, 19 or so; and in January, 1968, the number had dropped to about 15. The gross sales figures for the company in 1966 were $143,200.26; in 1967, $124,751.55; and in 1968, $66,527.67.

Prior to June, 1967, defendant Kussel commenced construction of a new building on Oakton Street in Elk Grove Township in the suburban area of northwest Cook County. In January, 1968, the company began moving its business from the subject premises to the new location on Oakton Street. The move was completed in mid-year, 1968. Prior to the completion of the move, in April, 1968, intensive rioting occurred in the area of the company’s leased premises at the Wilcox Avenue address, brought on in great measure by the assassination of Dr. Martin Luther King, Jr. on April 4 of that year. During the period of rioting in April, 1968, New Casting Masters shut down its operations for four or five days.

The March 8, 1962 lease contained a provision permitting either party to terminate the lease upon 30 days written notice should the premises become wholly -untenantable. Without giving notice of termination of the lease under that provision, New Casting Masters abandoned the building, which abandonment was fully accomplished in mid-year, 1968, when the company was operating at full volume in its new premises on Qakton Street in Elk Grove Township. From May, 1968 forward, plaintiff— recognizing its responsibility as guarantor of the defendants’ performance under the March, 1962 lease — began making rental payments for the subject premises; New Casting Masters and the individual defendants herein, Kussel and Stephani, failed to make rental payments or provide insurance after April, 1968, and failed to pay the 1967 real estate taxes.

The issues presented for review are these: first, whether the doctrine of commercial frustration is the law of Illinois and applicable to the case at bar; second, whether the judgment of the court below is against the manifest weight of the evidence presented there; and third, whether the conduct of the trial by defendants’ trial counsel was so grossly inadequate as to deny defendants due process of law.

I.

It is defendants’ contention that by reason of the radical changes in the conditions in the area of the subject premises, occasioned by the sudden, unforeseen urban rioting referred to above, defendants were relieved of their obligations under the March 8, 1962 lease by virtue of the doctrine of “commercial frustration,” a variant of the contract doctrine of impossibility of performance. Defendants urge that the devastating effects the rioting had upon the general state of affairs and property values on Chicago’s west side near the building on Wilcox Avenue were not contemplated when the lease was entered into March 8, 1962. Thus, it became impossible, New Casting Masters claims, to maintain its production schedule, to retain its employees, to meet its customers’ delivery requirements, and to draw its customers into the area to do business.

Plaintiff’s response to these arguments is threefold: first, that the doctrine of commercial frustration is not applicable to leases of real estate, and further, that the application of the doctrine in cases involving leases is against the public policy of Illinois; second, that regardless whether the doctrine is not applicable to leasehold agreements in Illinois, the facts adduced below in the instant case preclude the doctrine’s application here, since there was no showing in the trial court of total or near total destruction of the purposes of the lease agreement, which is required to successfully invoice the doctrine; and, finally, third, that no American cases can be found wherein the doctrine of commercial frustration was invoked successfully on grounds such as those relied upon in the case before this court, to wit: interference with the enjoyment of the demised premises by reason of race riots and racial disturbances.

Relatively few cases in Illinois have discussed the doctrine of commercial frustration, or “frustration of contract,” which, historically, grew out of circumstances which had given rise to die contract defense of impossibility of performance.

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Bluebook (online)
301 N.E.2d 106, 13 Ill. App. 3d 611, 1973 Ill. App. LEXIS 2081, Counsel Stack Legal Research, https://law.counselstack.com/opinion/greenlee-foundries-inc-v-kussel-illappct-1973.