C-B Realty & Trading Corp. v. Chicago & North Western Ry. Co.

                                             Fourth Division
                                             June 26, 1997










No. 1-96-1344

C-B REALTY and TRADING CORP., a corp.;  )  APPEAL FROM THE
HARRIS TRUST & SAVINGS BANK, a corp.    )  CIRCUIT COURT OF
as trustee under trust agreement dated  )  COOK COUNTY.
July 25, 1975; JULIUS BRAUN, MORRIS     )
BRAUN, joint venturers under the style  ) 
of C-B REALTY JOINT VENTURE,            )
                                        )  
         Plaintiffs-Appellants,         )  
                                        )  
v.                                      )
                                        )
CHICAGO AND NORTH WESTERN RAILWAY CO.,  )
a corp., and CHICAGO AND NORTH WESTERN  )
TRANSPORTATION, a corp.,                )  HONORABLE   
                                        )  JOHN N. HOURIHANE,
         Defendants-Appellees.          )  JUDGE PRESIDING. 


     PRESIDING JUSTICE WOLFSON delivered the opinion of the court:    
     This case possesses a Dickensian quality.  It concerns a
contract entered into in 1908 and a lawsuit filed in 1974. 
Unfortunately, this decision probably will not put an end to the
dispute.  
     We are called on to decide what the parties to the contract
meant when they agreed to a "water-tight" floor for a railroad
bridge (they meant water-tight) and we must decide a dispute over
who is to pay real estate taxes for the land under the bridge (the
railroad does).


FACTS
     The plaintiffs in this case are C-B Realty and Trading
Corporation, Harris Trust & Savings Bank, as trustee under trust
agreement dated July 25, 1975, Julius Braun, Morris Braun, Eve
Braun, joint venturers under the style of C-B Realty Joint Venture
(collectively C-B Realty).  The defendants are Chicago & North
Western Railway Company and Chicago and North Western Transportation
(collectively C&NW).
     We issued an opinion concerning this case in C-B Realty &
Trading Corp. v. Chicago & North Western Railway Co., 198 Ill. App.
3d 926, 556 N.E.2d 634 (1990).  We found and now restate the
following facts:
          "In 1974, plaintiffs *** sued defendants *** for
     breach of two covenants in a 1908 contract pertaining
     to the payment of certain taxes and the maintenance of
     a railroad bridge.
          In 1980, the trial court entered partial summary
     judgment in favor of plaintiffs by ruling that the two
     covenants ran with the land, and that plaintiffs were
     entitled to enjoy the benefits conferred by the
     covenants.
          In 1988, following a trial without a jury,
     concerning only damages and not liability, the court
     awarded plaintiffs $541,422.92, the full amount sought.
          ***  Defendant operates an elevated commuter
     service to a passenger depot in Chicago.  Just north of
     the passenger station is a railroad bridge which passes
     over a portion of a former railroad freight warehouse. 
     The warehouse extends in a semicircular manner eastward
     under the bridge, and then curves southward.
          In 1908, defendant's predecessor in interest
     entered into a contract with the Pittsburgh,
     Cincinnati, Chicago and St. Louis Railway Company,
     relating to the construction of that railroad bridge,
     and the transfer of rights in certain property in
     Chicago.
          In 1959, plaintiffs acquired title to the land
     upon which the freight warehouse rests, along with some
     adjoining property, as the successor to the interests
     of the Pittsburgh Company.
          On September 20, 1974, plaintiffs filed this suit. 
     Count I was withdrawn.  Count II sought a judgment
     declaring that defendant was obligated to pay
     three-fourths of plaintiffs' taxes.  The 1908 contract
     stated in paragraph 9 that defendant would pay
     three-fourths of taxes levied on the land now owned by
     plaintiffs.  
     '9. The North-Western Company [now defendant]
          will pay all taxes and assessments which may
          be levied against said overhead bridge or
          structure, and will also pay three-fourths of
          all taxes and assessments which may be levied
          against the tract of land owned by the
          Pittsburgh Company [now plaintiff], across
          which the said overhead structure is
          located.'
               Count III of the complaint alleged that defendant
     had failed to maintain a water-tight floor on its
     bridge, and sought compensation for damage to the
     freight warehouse.  The 1908 contract stated in
     paragraph 3 that defendant would maintain the bridge
     with a water-tight floor over the freight house.  
     '3. The North-Western Company [now defendant]
          will construct, maintain and renew at all
          times the said bridge or structure so that
          the same shall have a water-tight floor
          construction over the entire area of the
          tracks and property of the Pittsburgh
          Company, and the North-Western Company at its
          own sole cost and expense, will reconstruct
          and rearrange the freight house of the
          Pittsburgh Company [now plaintiff] in
          accordance with said Exhibit A and under the
          direction of Chief Engineer of the Pittsburgh
          Company.'
               Cross-motions for summary judgment were filed on
     the issue of whether paragraphs 3 and 9 were covenants
     running with the land.  On December 19, 1980, Judge
     Murray entered an order in favor of plaintiffs, finding
     paragraphs 3 and 9 created covenants running with the
     land.  The judge explained that the two paragraphs
     involved the enjoyment of the land, and such benefits
     and obligations passed with the ownership.  On January
     14, 1981, the judge modified the December 19 order by
     finding it was not final and appealable because other
     issues had yet to be decided.
          On October 28, 1985, trial commenced before Judge
     Mackoff.  The court limited the issues to plaintiffs'
     damages after finding that the December 19, 1980 entry
     of partial summary judgment determined all issues of
     liability.  Following trial, by orders dated April 15,
     and July 6, 1988, Judge Mackoff entered judgment
     awarding plaintiffs the sum of $541,422.92."  C-B
     Realty & Trading Corp. v. Chicago & North Western Ry.
     Co., 198 Ill.App.3d 926, 928-30, 556 N.E.2d 634 (1990). 
     [End of 1990 opinion.]
          We agreed with Judge Murray's ruling, but, for reasons that
no longer matter, this court reversed the judgment entered in the
first trial and ordered a new trial.  
     At the new trial, C-B Realty alleged, among other things,
the same causes of action described in counts II and III of the
1974 complaint.  At trial, C-B Realty asked $972,052 for property
damage and $410,829.66 for back real estate taxes.  C-B Realty
sought punitive damages of $1,355,000.  
     The trial court found that C-B Realty's claim that C&NW had
a duty to pay certain taxes under the 1908 contract was untimely
filed.  The trial court awarded C-B Realty $36,351 for the water
damage to its building and for lost rent.  The trial court did
not award punitive damages.  C-B Realty appeals.  We reverse and
remand in part and affirm in part.
OPINION
1.  Real estate taxes
     The 1908 contract contained the following provision:
     "9. [The defendant] will pay all taxes and assessments
     which may be levied against said overhead bridge or
     structure, and will also pay three-fourths of all taxes
     and assessments which may be levied against the tract
     of land owned by [the plaintiff], across which the said
     overhead structure is located."
          C-B Realty contended C&NW failed to honor this provision of
the contract.  C&NW filed a motion for summary judgment on this
count, alleging C-B Realty's claim was untimely.  
     C-B Realty bought the property in 1959.  It had leased it
since 1939.  The parties' dispute over C&NW's responsibility for
3/4 of the property taxes levied on the building arose in 1961. 
     C-B Realty first filed this lawsuit in September 1974.  C&NW
argued that its motion for summary judgment should be granted
because C-B Realty did not file its lawsuit within 10 years after
the dispute first arose.  Without stating its reasons, the trial
court granted C&NW's motion for summary judgment.
     C-B Realty contends the trial court should not have granted
C&NW's motion for summary judgment.  It says that its claim was
timely.  
     C-B Realty contends that the 20-year limitation that applies
to the recovery of land should apply in this case.  735 ILCS
5/13-101 (West 1992).  C-B Realty did not bring an action to
recover land or to seek the right to enter onto land.  It sought
a declaratory judgment defining the terms of the 1908 contract. 
In its appellate brief, C-B Realty cites no case law suggesting
that section 13-101 should apply in this case.  This section does
not apply.
     This is not an action concerning the recovery of land.  It
concerns the interpretation of a contract.  The statute of
limitations in this case is 10 years.  735 ILCS 5/13-206 (West
1992).
     In this case, the statute of limitations bars part of C-B
Realty's claim.  Both sides agree the tax dispute first arose in
1961.  C-B Realty did not file suit until September 1974, 13
years later.  C-B Realty cannot collect taxes that came due
before September 1964.
     C-B Realty argues that even if the statute of limitations 
had expired for the first tax years, it should be allowed to
collect taxes that became due after 1964.  It contends that
C&NW's duty to pay taxes is similar to the duty to make
installment payments.  It claims that a new cause of action, with
its own statute of limitations, arises every time a party fails
to make an installment payment.  
     Obligations payable in installments run separate statutes of
limitation against each installment at the time it becomes due. 
Luminall Paints, Inc. v. La Salle National Bank, 220 Ill. App. 3d
796, 802, 581 N.E.2d 191 (1991).  See also Light v. Light, 12 Ill. 2d 502, 506, 147 N.E.2d 34 (1957); In re Marriage of Kramer,
253 Ill. App. 3d 923, 928, 625 N.E.2d 808 (1993); Thread & Gage,
Co. v. Kucinski, 116 Ill. App. 3d 178, 184, 451 N.E.2d 1292
(1983).  "[B]ecause each breach of a continuous duty has its own
accrual date, a plaintiff may sue on any breach which occurred
within the limitation's period, even if earlier breaches occurred
outside the limitation period. [Citations.]"  Hi-Lite Products
Co. v. American Home Products Corp., 11 F.3d 1402, 1409 (7 Cir.
1993).
     C-B Realty could not know what damages it would suffer in
future years because of C&NW's refusal to pay taxes.  "[T]he
statute of limitations for all potential harm should not begin to
run immediately upon the initial breach; the extent of future
harm could vary or cease completely depending on the extent of 
the defendant's later wrongful conduct.  'Where the potentiality 
of future harm is not clear, ... limitations should not run until
damages become recoverably certain.'  [Note, Developments in the
Law: Statutes of Limitations, 63 Harv. L. Rev. 1177, 1206
(1950).]"  Skinner v. Shirley of Hollywood, 723 F. Supp. 50, 54
(N.D. Ill. 1989).
     C&NW contends the 1908 contract does not obligate it to pay
real estate taxes at all.  C&NW says that the 1908 contract never
was intended to apply to locally assessed real estate taxes.  It
claims the 1908 contract addresses only railroad assessments and
taxes.  The parties who signed the contract contemplated that the
property always would be owned by a railroad company and subject
only to railroad taxes.  The contract, says C&NW, was not
supposed to apply to other kinds of taxes that might be levied on
the property.  
     The 1908 contract provides that C&NW "will pay ***
three-fourths of all taxes and assessments which may be levied
against the tract of land owned by [the plaintiff], across which
the said overhead structure is located."  (Emphasis added.)  The
1908 contract does not distinguish between local taxes and
railroad taxes.  We find that the 1908 contract obligated C&NW to
pay real estate taxes.  "All," we believe, means all.
     Because C-B Realty has a clear right to enforce the tax
provision, it did not have to file a suit establishing its
contractual rights within 10 years after the dispute first arose. 
The fact that C-B Realty raised the issue by way of a declaratory
judgment action does not alter our view.  That would be placing
mere form well above common sense substance.
     The real estate taxes were due at regular intervals, just
like installment payments.  This case is similar to Luminall.  In
Luminall, the defendant owed the plaintiff a share of certain
rents when those rents became due.  This court found, "*** each
time [the defendant] receives excess rent from a lessee of the
premises and fails to pay [the plaintiff] its share of those
rents, [the plaintiff] may bring an action for breach of
contract."  Luminall, 220 Ill. App. 3d at 802.  The plaintiff
could recover only those rents that the defendant had failed to
pay in the last 10 years.  It could not collect earlier rents.  
     Just as the defendant in Luminall had a duty to pay the
rents as they became due, C&NW had a duty to pay 3/4 of real
estate taxes as they became due.  Every time C&NW refused to pay
the real estate taxes, a new cause of action arose.  Each of
those causes of action had its own statute of limitations period. 
None of the statutes of limitation for the real estate tax claims
that arose after September 1964 ran by the time C-B Realty filed
its suit in September 1974.  It was error to grant C&NW's motion
for summary judgment.
2.  The definition of "water-tight"
     According to the 1908 contract, C&NW agreed:
     '3. [The defendant] will construct, maintain and renew
     at all times the said bridge or structure so that the
     same shall have a water-tight floor construction over
     the entire area of the tracks and property of [the
     plaintiff], and [the defendant] at its own sole cost
     and expense, will reconstruct and rearrange the freight
     house of [the plaintiff.]'  (Emphasis added.)
          C&NW built a bridge over the roof of the plaintiff's
building around 1911.  Over the next 60 years, the building was
used as an unheated warehouse.  
     During the time the plaintiffs occupied the building, a "pan
& drainage" system was used to make the bridge water-tight.  The
system used pans to collect dripping water and downspouts to
funnel the water outside of the building.
     Between the time the bridge was built and 1970, the bridge 
occasionally leaked.  On request, C&NW fixed the leaks.  No one
complained that the system to maintain water-tightness was so
inadequate that it breached the 1908 agreement.
     Around 1970, C-B Realty began to complain about the pan and
drain system.  The bridge's leaks began to cause water damage to
the building.  The damage continued over the next 25 years. 
     Also around 1970, C-B Realty began to plan to convert the
warehouse into offices.  C-B Realty's plans were not compatible
with the pan and drain system.  C-B Realty wanted C&NW to remove
the pan and drain system and replace it with another type of
waterproofing so that it could construct offices.  
     C&NW refused to replace the pan and drain system.  C-B
Realty sued.  
     This case was tried without a jury.  The trial court found,
as a matter of law, that the term "water-tight" was ambiguous. 
When reaching this conclusion, the trial court considered the way
the parties had interpreted the 1908 contract over six decades. 
The trial court held that the term "water-tight" referred to a
system only as water tight as could be achieved by a pan and
drain system.  It held that C&NW was not obligated to provide a
"water-tight" system compatible with C-B Realty's plans to
convert the warehouse into offices.  
     The trial court held that it would have reached the same
decision if the term "water-tight" were not ambiguous.  The trial
court found that through the parties' course of dealing, C-B
Realty had accepted the level of "water-tightness" provided by
the pan and drain system as it existed before 1970.  It held that
C-B Realty had waived the right to a completely water-tight
system.  The trial court held C&NW was responsible for water
damage caused when the pan and drain system failed, but only to
the extent that C-B Realty could prove those damages.  We agree.
     "The primary objective in construing a contract is to
determine and give effect to the intention of the parties at the
time they entered into the contract."  Zale Construction Co. v.
Hoffman, 145 Ill. App. 3d 235, 241, 494 N.E.2d 830 (1986). 
Whether a contract is ambiguous is a question of law.  If no
ambiguity exists, the intention of the parties must be determined
from the instrument itself.  Farm Credit Bank of St. Louis v.
Whitlock, 144 Ill. 2d 440, 447, 581 N.E.2d 664 (1991); Bonnie
Owen Realty, Inc. v. Cincinnati Insurance Co., 283 Ill. App. 3d
812, 820, 670 N.E.2d 1182 (1996).
     The term "water-tight" is not intrinsically ambiguous. 
Neither the court nor the defendants explain how "water-tight"
has any meaning beyond its obvious definition.  The term "water-
tight" is unambiguous.  
     C-B Realty argues the trial court incorrectly determined
that it waived the right to have the "water-tight" contractual
provision strictly enforced.  It claims it never waived the right
to a water-tight bridge.
     For a party to waive a right, the facts must indicate that
the party knowingly relinquished that right.  The facts must show
the party was aware of the right and of the defective condition. 
Shaw v. Bridges-Gallagher, Inc., 174 Ill. App. 3d 680, 688, 528 N.E.2d 1349 (1988).  Provisions of a contract may be waived by
parole agreement.  Beverly Bank v. Alsip Bank, 106 Ill. App. 3d
1012, 1017, 436 N.E.2d 598 (1982).  "[S]ilence, coupled with
knowledge by one party and detrimental reliance by the other
party, could result in an acceptance of a change in contract
terms."  Martz v. MacMurray College, 255 Ill. App. 3d 749, 752,
627 N.E.2d 1133 (1993).  
     This court has found that a party can waive a contract
provision by failing to object to its breach.  In Bartels v.
Denler, 30 Ill. App. 3d 499, 333 N.E.2d 640 (1975), the
defendants hired the plaintiff to work at a supermarket.  The
plaintiff's employment contract said the plaintiff could not
"without the consent of [the defendants], directly or indirectly,
*** be engaged in or concerned with any other duties or pursuits
whatsoever during the term of this agreement."  The contract said
that the defendants would pay the plaintiff a yearly incentive
bonus.  Bartels, 30 Ill. App. 3d at 500.  
     During plaintiff's employment, plaintiff also worked at a
drugstore.  The plaintiff never informed the defendants of his
other employment, but the defendants found out about it from
other sources.  The defendants did not terminate the contract at
that time.  
     Six months after the defendants discovered the plaintiff's
other employment, the defendants learned that the plaintiff had
also gone into business for himself.  The plaintiff had quit five
days earlier, giving the 30 day notice mandated by the contract. 
Although the plaintiff had abided by the other terms of the
contract, the defendants refused to pay the incentive bonus.  The
plaintiff sued.  
     The trial court found for the plaintiff.  It found that the
plaintiff had not started his business until after the employment
contract term had ended.  It held that the plaintiff's job at the
drugstore did not affect its decision.  It said, "[T]he
Defendants waived any violation for reason of the Plaintiff being
employed in a drug store *** as they learned of that employment
and made no request of the Plaintiff that he terminate that
employment."  Bartels, 30 Ill. App. 3d at 501.
     The appellate court agreed with this finding:  "It is well
established that a party to a contract may waive provisions
contained in the contract for his benefit.  I.L.P. Contract s
408.  Although plaintiff's part-time job constituted a violation
of the restrictive covenant, the defendants' conduct upon
learning of such employment waived strict compliance with that
provision of the contract."  Bartels, 30 Ill. App. 3d 501-02. 
See also Jacobs v. Carroll, 46 Ill. App. 3d 74, 83, 360 N.E.2d 136 (1977) (when party did not act on a breach of contract in
1972, it could not use that breach to avoid the contract in
1974).  
     This case is similar to Bartels.  In this case, C&NW used a
pan and drainage system to make the bridge water-tight.  For 30
years, despite occasional leaks, C-B Realty never complained
about the sufficiency of water-tightness this system created. 
True, the parties meant for the bridge to be completely water-
tight when the 1908 contract was executed, and they meant it when 
C-B Realty bought the property in 1959.  But C-B Realty waived
the right to a completely water-tight bridge by remaining silent
until 1970.  
     The contract called for a water-tight "floor."  C-B Realty
knew from the beginning the bridge did not have a water-tight
floor.  Just as the defendants in Bartels accepted the
plaintiff's extracurricular employment by remaining silent for
over six months, C-B Realty accepted the pan and drain system by
remaining silent for 11 years.  By not complaining until 1970, C-
B Realty has relinquished the right to require C&NW to make the
bridge any more water-tight than afforded by a maintained pan and
drain system. 
     C-B Realty claims it was continuously injured and therefore
anything it did years before should not have an effect on its
right to file a suit later.  Whether C-B Realty's claim was
timely, however, is not an issue.  That C-B Realty had a right to
a separate cause of action every time the building suffered water
damage does not affect the trial court's finding that C-B
Realty's actions over three decades proved it accepted the pan
and drain system.
     C-B Realty alleges it proved greater damages than the trial
court awarded.  It requests that this court award it all of the
damages it demanded.  
     Plaintiffs have the duty to establish that they sustained
damages as well as a reasonable basis for computing those
damages.  We will not reverse a trial court's findings of damages
unless those findings are against the manifest weight of the
evidence.  City of Peoria Municipal Employees Association v. City
of Peoria, 217 Ill. App. 3d 550, 555, 577 N.E.2d 819 (1991).
     During trial, C-B Realty presented a great deal of evidence
describing economic losses presumably caused by the pan and drain
system.  One major item of damage C-B Realty claimed was that
because of the pan and drain system, it was unable to convert the
building into offices.  In addition, it argued it could not rent
the building as a heated or unheated warehouse.  C-B Realty
presented scant evidence showing how much it would cost to repair
those parts of the building which suffered water damage.
     The trial court held that C&NW was not required to install a
waterproofing system compatible with remodeling the building for
offices.  It found: C&NW had done nothing to prevent C-B Realty
from heating the warehouse; C-B Realty was entitled only to those
damages it had proven; C-B Realty proved it spent $14,400 on
emergency repairs; C-B Realty lost $21,951 in rent as an unheated
warehouse because of the water damage.  We find the trial court's
damage award is not against the manifest weight of the evidence.
3.  Punitive damages
     C-B Realty contends the trial court's decision not to award
punitive damages should be reversed.  
     Generally, punitive damages are not recoverable for breach
of contract, even if the breach was "wilful."  Punitive damages
are recoverable for a breach of contract only when "the conduct
causing the breach is also a tort for which punitive damages are
recoverable."  The party seeking punitive damages must show the
breaching party acted with malice, wantonness, or oppression. 
Morrow v. L. A. Goldschmidt Associates, Inc., 112 Ill. 2d 87, 94-
95, 492 N.E.2d 181 (1986).
     The trial court held C&NW had not acted with malice.  It
found that C&NW had been cooperative about fixing the pan and
drainage system in the past.  C-B Realty disagrees with this
finding, claiming that C&NW's actions were wilful and wanton.
     C-B Realty apparently contends it should receive punitive
damages merely because the breach of contract was wilful and
wanton.  Our Supreme Court has held that a wilful and wanton
breach of contract is not sufficient to award punitive damages. 
"Simply characterizing a breach of contract as 'wilful and
wanton' does not change the fact that plaintiffs are only seeking
recovery for harm to a contract-like interest.  We cannot agree
that a breach of contract becomes a tort just because the breach
was wilful and wanton."  Morrow, 112 Ill. 2d  at 98.  C-B Realty
never claimed that a separate tort warranting punitive damages
occurred in this case.  We affirm the trial court's refusal to
award punitive damages.
CONCLUSION
     We reverse the trial court's order granting the defendants'
motion for summary judgment on the real estate tax claim and
remand for further proceedings consistent with this opinion.  We
affirm the trial court's award of $35,351 for damages caused by
the leaking bridge.  We affirm the trial court's decision not to 

award punitive damages.
     REVERSED AND REMANDED IN PART, AFFIRMED IN PART.
     CERDA and BURKE, JJ., concur.