Toni's Conversation Clothes, Inc. v. First Bank (In re Toni's Conversation Clothes, Inc.)

21 B.R. 894, 1982 Bankr. LEXIS 3669
CourtUnited States Bankruptcy Court, N.D. Illinois
DecidedJuly 22, 1982
DocketBankruptcy No. 81 B 6036; 81 A 3616
StatusPublished

This text of 21 B.R. 894 (Toni's Conversation Clothes, Inc. v. First Bank (In re Toni's Conversation Clothes, Inc.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Toni's Conversation Clothes, Inc. v. First Bank (In re Toni's Conversation Clothes, Inc.), 21 B.R. 894, 1982 Bankr. LEXIS 3669 (Ill. 1982).

Opinion

MEMORANDUM AND ORDER

ROBERT L. EISEN, Bankruptcy Judge.

This cause came to be heard on the plaintiff-debtor’s application for summary judgment as to liability and the defendant’s motion for entry of summary judgment in its favor. The court, being fully advised in the premises and having carefully considered the pleadings and memoranda, hereby denies the plaintiff-debtor’s application and grants the defendant’s motion for summary judgment.

The plaintiff-debtor (Toni’s) claims that the defendant (Bank) who is the lessor of the premises in which Toni’s store is located breached its covenant not to lease to a competitor of Toni’s in the same shopping center. The Bank contends that Toni’s lacks standing to sue for breach of covenant, that the Bank did not breach the covenant and that even if the Bank had breached the covenant, Toni’s acquiesced in such breach and has waived its right to assert the claim.

FINDINGS OF FACTS

1. On January 10, 1970 Antoinette Cer-one, d/b/a Toni’s Conversation Clothes, as lessee entered into a written lease agreement with the defendant Bank as lessor, for the premises located within the Tradewinds Shopping Center, Hanover Park, Illinois.

2. The lease agreement between the parties contained a covenant that the landlord Bank, so long as Toni’s was not in default, would not rent any space in the shopping center to a tenant whose principal business was a full line woman’s wear shop in Toni’s price range of medium to better.

3. The Lease Agreement was amended on June 14, 1971, November 3, 1972 and September 8,1978. All lease agreements as amended contained the restrictive covenant regarding competitors.

4. In December of 1975, Antoinette Cer-one, d/b/a Toni’s Conversation Clothes, incorporated her business as an Illinois Corporation under the corporate name Toni’s Conversation Clothes, Inc.

5. On September 1, 1976 under a sublease with Zayre, Inc., “Hit or Miss”, a discounter of woman’s apparel, opened a store in the Tradewinds Shopping Center. The sublease from Zayre, who had been a tenant in the shopping center since October 30, 1968 was not subject to approval from the lessor Bank. In fact, “Hit or Miss” was an affiliate of Zayre and Zayre’s lease in [896]*896provision 17.2(c) specifically stated that Zayre could at any time during the term of the lease assign its interest in the lease or sublet the whole or any part of the demised premises for any purpose to any business organization affiliated with Zayre.

6. On September 3, 1976 and on numerous other occasions the plaintiff orally informed the Bank through its agent, Jay Heyman of Landau and Heyman, Inc. of its displeasure with the presence of “Hit or Miss” and contended that this was a direct violation of the restrictive covenant in its lease agreement.

7. On May 20, 1981 Toni’s filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code.

8. On August 6, 1981 the Bank filed an Application to Compel Adoption or Rejection of the Lease Agreement and on September 21, 1981 an order was entered by this court finding that Toni’s elected to adopt the lease as modified.

DISCUSSION

Section 56 of the Federal Rules of Civil Procedure provide the standards for when it is proper to render a summary judgment. Section 56(c) states that “the judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”

This case presents an unusual situation. Toni’s presented a petition for summary judgment. The Bank both responded to that petition and filed its own motion for summary judgment. As a result, clearly both parties contend that there are no material issues of fact and this case is ripe for summary judgment in someone’s favor.

While Toni’s and the Bank’s recitation of the facts are not identical, no material controversy over them exists. Therefore, summary judgment is proper based on a resolution of the following law questions:

1. Whether or not Toni’s is a proper third party beneficiary under the lease to bring this action.

2. Whether or not the Bank is guilty of a breach of the lease’s restrictive covenant.

3. Whether or not if the Bank did breach its lease, did Toni’s nevertheless waive its right to bring this action due to lack of notice or unreasonable delay.

Proper Parties

It is not disputed by the parties that the lease entered into listed the tenant as Antoinette Cerone, d/b/a Toni’s Conversation Clothes. When Toni’s incorporated in 1975 the tenant’s name under the lease was not changed nor was it ever changed in subsequent leases. As a result, the Bank contends that Toni’s may not properly bring this action and only Antoinette Cerone herself could properly bring this action. The rule in Illinois is well established that where a person makes a promise to another, based upon valid consideration for the benefit of a third person, such third person may maintain an action on the contract. Joslyn v. Joslyn, 386 Ill. 387, 54 N.E.2d 475, Hartman v. Pistorius, 248 Ill. 568, 94 N.E. 131, Harts v. Emery, 184 Ill. 560, 56 N.E. 865. The test regarding third party beneficiaries is whether the benefit to the third person is direct to him or is but an incidental benefit to him arising from the contract. The beneficiary must be identified before he has an enforceable right but it is not necessary that he should be identified or identifiable at the time the contract is made. Avco Delta Corp. Canada Ltd. v. U. S., 484 F.2d 692 (C.A. 7 1973).

When the corporation Toni’s Conversation Clothes, Inc. was formed, the lease was not changed to so reflect that fact. The lease, however, clearly reflected at all times that it was made for the benefit of Toni’s Conversation Clothes. The Bank knew that Toni’s had incorporated and accepted rent checks from the corporation. Clearly, the intention of the parties as gleaned from the entire lease and surrounding circumstances must have been to have Toni’s directly benefit from that lease. [897]*897Carson Pirie Scott & Co. v. Parrett, 346 Ill. 252, 178 N.E. 498 (1931). Therefore, Toni’s is a proper third party beneficiary to bring this action under the lease.

Breach of the Lease

Toni’s is contending that in late 1976 the woman’s wear shop “Hit or Miss” was allowed to lease space in the Tradewinds Shopping Center in violation of the restrictive covenant contained in Toni’s lease. Toni’s has submitted affidavits based on personal knowledge from Antoinette Cerone, president of Toni’s and Carol Reed, corporate officer of the company which operates “Hit or Miss”. These affidavits state clearly that Toni’s and “Hit or Miss” carry similar lines of merchandise. Further, the Bank has not contradicted Toni’s affidavits with their own affidavits or other relevant evidence as is required under § 56(e) of the Federal Rules of Civil Procedure. Adickes v. S. H. Kress and Co., 398 U.S. 160, 90 S.Ct.

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Related

Adickes v. S. H. Kress & Co.
398 U.S. 144 (Supreme Court, 1970)
James H. Morrison v. Herbert v. Walker
404 F.2d 1046 (Ninth Circuit, 1969)
Carson Pirie Scott & Co. v. Parrett
178 N.E. 498 (Illinois Supreme Court, 1931)
Joslyn v. Joslyn
54 N.E.2d 475 (Illinois Supreme Court, 1944)
Harts v. Emery
184 Ill. 560 (Illinois Supreme Court, 1899)
Hartman v. Pistorius
94 N.E. 131 (Illinois Supreme Court, 1911)
Postal Telegraph-Cable Co. v. Western Union Telegraph Co.
51 Ill. App. 62 (Appellate Court of Illinois, 1893)
Glanz v. Halperin
251 Ill. App. 572 (Appellate Court of Illinois, 1929)
Edelman v. F. W. Woolworth Co.
252 Ill. App. 142 (Appellate Court of Illinois, 1929)

Cite This Page — Counsel Stack

Bluebook (online)
21 B.R. 894, 1982 Bankr. LEXIS 3669, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tonis-conversation-clothes-inc-v-first-bank-in-re-tonis-conversation-ilnb-1982.