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FOURTH DIVISION

MARCH 21, 2002

JUSTICE HARTMAN delivered the opinion of the court:

Plaintiff, Nebel, Inc., and defendant, The Mid-City NationalBank of Chicago, are the lessor and lessee under a 99-year real-estate lease (Lease), containing a rent payable in gold clause,originally executed in 1906. Plaintiff demanded rental payments tobe made with gold coins, pursuant to the Lease, which defendantrefused. In a three-count complaint, plaintiff charged defendantwith a breach of the lease (count I); sought a declaration ofrights (count II); and subsequently voluntarily dismissed countIII. Plaintiff claimed that a 1988 amendment to the Lease (LeaseAmendment) constituted a new obligation which revived the goldclause, as authorized by a 1977 federal statute and, alternatively,asserted that if the Lease Amendment was not a new obligation, anovation occurred which revived the enforceability of the goldclause. Defendant's answer denied both theories.

Plaintiff's motion for partial summary judgment was denied bythe circuit court. Thereafter, the parties cross-moved for summaryjudgment on counts I and II of plaintiff's complaint. The courtgranted defendant's summary judgment motion with respect to countsI and II and denied plaintiff's motion on the same counts. Plaintiff appeals.

The legal issues presented in this appeal include whether thecircuit court erred by granting defendant's summary judgment motionbased on a finding that (1) the Lease Amendment did not create anew obligation, thereby making the gold clause in the Leaseunenforceable; and (2) no novation between the parties, to beconstrued as a new obligation, occurred.

On May 1, 1906, Hiram B. Peabody, as lessor, and Alexander W.Hannah, as lessee, entered into the subject Lease for land andimprovements located at 801 West Madison Street in Chicago (subjectpremises). The Lease term commenced on May 1, 1906, and terminateson April 30, 2005. Monthly rent for the subject premises duringthe first five years was $1,090 and, thereafter, $1,333.33 and 1/3cents, until expiration of the Lease term.

As previously noted, the Lease includes a gold clause,requiring the lessee to pay the rent "in standard gold coin of theUnited States, of not less than the present weight and fineness,which is at the present time measured by the standard of weight andfineness observed by the mint and fixed by the laws of the UnitedStates of America, twenty three and twenty-two hundredths (23-22/100) grains Troy weight for each dollar." The Lease covenantsthat "no acceptance by the said lessor of any currency or legaltender *** shall be construed to be a waiver on the part of thesaid lessor of the right to demand payment of any other unpaidinstallment or installments of such rent in standard gold coin ***or its equivalent in value."

On June 5, 1933, the United States Congress adopted a jointresolution that made unenforceable all obligations requiringpayment in gold;⁽¹⁾ however, in 1977, the 1933 Congressionalresolution was amended making obligations requiring payment in goldenforceable if issued after October 27, 1977.⁽²⁾

The Lease also requires that the lessee pay for all realestate taxes, insurance and repairs, and expressly grants thelessee the right to assign his or her interest in the Lease withoutthe lessor's consent. No language contained in the Leasedischarges a lessee from his or her obligations under the Leasesubsequent to an assignment; rather, upon assignment, the assigneeagrees to comply with all terms, covenants and agreements providedfor in the Lease.

During the Lease term, the lessee's interest had been assignedfour times. First, on December 31, 1909, Hannah assigned hisinterest in the Lease to Charles E. Davis. Next, on March 1, 1911,Davis assigned his interest to Jacob Mayer. Then, on October 26,1926, Mayer assigned his interest to Chicago Mid-City BuildingCorporation (Building Corporation).⁽⁴⁾ Thereafter, on December 30,1976, Building Corporation assigned its interest to defendant. Defendant, Building Corporation's sole shareholder, voted todissolve Building Corporation on the same date defendant assumedliability as lessee of the Lease.⁽⁵⁾ The 1976 assignment providedthat defendant agreed to comply with all Lease terms, covenants andagreements, but did not articulate language regarding BuildingCorporation's liability under the Lease.⁽⁶⁾ Defendant is the currentlessee of the subject premises.

On July 5, 1984, plaintiff purchased the subject premises andbecame the lessor. By deposition, Peter Anagnost, an attorney andmanaging agent for plaintiff, testified that he personallynegotiated the purchase price of $300,000 for the property,believing the rent payments were $16,000 per year. The gold clausein the Lease was not discussed during negotiations.

Upon effectuating the purchase of the subject premises,Anagnost believed that Building Corporation was the lessee. Hereceived a "lease synopsis" from The Northern Trust Company(Northern Trust), successor trustee of the Howard B. Peabody Trust,which stated that Building Corporation was the current assignee ofthe tenant's interest in the Lease.⁽⁷⁾ Anagnost had no knowledge ofthe 1976 Lease assignment to defendant nor Building Corporation'sdissolution at the time of purchase.⁽⁸⁾

By deposition, Kenneth A. Skopec, defendant's vice-chairmanand chief executive officer, testified that Anagnost did notinquire as to whether Building Corporation was the actual tenantfor the subject premises. Skopec stated that defendant did notnotify plaintiff about the 1976 Lease Assignment nor BuildingCorporation's dissolution. Upon plaintiff's purchase of thesubject premises, defendant, not Building Corporation, paid rent toplaintiff.

In 1988, defendant undertook a plan to construct a parking lotand data processing/drive-thru banking facility on property west ofthe subject premises. Defendant also sought to construct apedestrian walkway to connect the bank building on the subjectpremises with the new data processing/drive-thru facility. Plaintiff, however, objected to the construction of the walkwaywithout its consent.

Plaintiff's former counsel, George C. Pontikes, testified thathe drafted a Lease Amendment that would permit defendant toconstruct the walkway. The Lease Amendment authorized: (1)construction of the walkway; (2) inclusion of defendant as a partyto the Lease Amendment; and (3) reaffirmance of all provisions ofthe 1906 Lease. The parties negotiated the following provisions,which eventually were included in the final draft of the LeaseAmendment: (1) waiver of objection to construction; (2)construction and removal of the walkway; (3) maintenance of thewalkway and insurance; (4) liens, taxes and assessments on thewalkway; (5) reimbursement for the lessor's expenses and costsincurred in the negotiation of the Lease Amendment; (6) thelessee's indemnification of the lessor in case of default or otherliability which the lessor may suffer; and (7) default by thelessee under the terms of the Lease Amendment, which would beconsidered a default by the lessee under the Lease.

Pontikes sent drafts of the Lease Amendment to D. AlbertDaspin, an attorney representing defendant. Daspin reviewed thedrafts and sent back revisions to Pontikes. Compared to otherprovisions in the Lease Amendment, Pontikes spent a short amount oftime negotiating the language of the integration clause, althoughhe changed the language Daspin drafted to include use of the word,"reaffirmed," instead of "shall continue," with regard to theeffect of Lease provisions, as shown in the following paragraphs. The record shows no objection by defendant to inclusion of languagereaffirming the terms of the Lease in the Lease Amendment. Theparties did not discuss the gold clause during negotiations.

Plaintiff and defendant signed the Lease Amendment, entitled,"First Amendment To Lease," on February 24, 1989, with an effectivedate of November 30, 1988. Pertinent to this appeal, the LeaseAmendment stated, "[e]xcept as otherwise expressly modified by thisfirst Amendment, all the terms and provisions of the Lease arereaffirmed and are not modified by this First Amendment."

Thereafter, on September 16, 1998, plaintiff made a writtendemand to defendant that, commencing October 1, 1998, defendant hadto pay the monthly rent "in gold coin, as provided in the lease." Defendant's refusal to pay rent in gold triggered plaintiff'scomplaint for declaratory judgment and other relief.

In its January 30, 2001 order, the circuit court found that nonew obligation was undertaken by defendant after October 27, 1977. According to the court, "[d]espite the use of the term reaffirm [inthe Lease Amendment], nothing really changed except the fact thatthe bank was given permission to build a pedestrian walkway." Thecourt also held that no novation occurred. The court's February 2,2001 order denied plaintiff's summary judgment motion and granteddefendant's motion as to counts I and II of the complaint. Plaintiff appeals from the orders entered on March 21, 2000, andFebruary 2, 2001.

A reviewing court exercises de novo review when determiningwhether the circuit court properly granted a motion for summaryjudgment. Zoeller v. Augustine, 271 Ill. App. 3d 370, 374, 648N.E.2d 939 (1995) (Zoeller). Summary judgment "shall be renderedwithout delay if the pleadings, depositions, and admissions onfile, together with the affidavits, if any, show that there is nogenuine issue as to any material fact and that the moving party isentitled to judgment as a matter of law." 735 ILCS 5/2-1005 (West2000). Summary judgment is a "drastic means of disposing oflitigation and therefore should be allowed only when the right ofthe moving party is clear and free from doubt." Purtill v. Hess, 111 Ill. 2d 229, 240, 489 N.E.2d 867 (1986). The court must awardsummary judgment with caution to avoid preempting a litigant'sright to trial by jury or his right to fully present the factualbasis of a case where a material dispute may exist. Lamkin v.Towner, 246 Ill. App. 3d 201, 204, 615 N.E.2d 1208 (1993). Indetermining a summary judgment motion, the court must construe thepleadings, affidavits, depositions and admissions on file strictlyagainst the moving party and liberally in favor of the opponent. In re Estate of Hoover, 155 Ill. 2d 402, 410-11, 615 N.E.2d 736(1993). Reversal of a summary judgment motion is warranted if, onreview of the case, a material issue of fact or an inaccurateinterpretation of the law exists. Zoeller, 271 Ill. App. 3d at374.

Plaintiff initially asserts that the circuit court erred bygranting defendant's summary judgment motion because the LeaseAmendment created a new obligation to pay rent in gold. Plaintiffargues, as a matter of law, that the Lease Amendment created a newcontract and that defendant, as lessee, reaffirmed all the termsand provisions of the Lease without any exception for or exclusionof the gold clause and, therefore, because the new obligation wasundertaken after October 27, 1977, the gold clause once again wasenforceable under the federal legislative amendment.

Defendant responds that no case law holds that an amendment toa lease can revive a gold clause or that an affirmation of a pre-existing gold clause revives that clause. Defendant contends thatparties may modify or amend provisions of a contract withoutaffecting their liabilities under other terms of the agreement. Defendant further argues that its obligation under the Lease arosein 1976, upon the assignment, and that the Lease Amendment was areaffirmance of its pre-October 1977 obligations. According todefendant, a lease which expressly states that "all terms andprovisions are reaffirmed and not modified by an amendment," is thecomplete opposite of a new obligation; rather, it is the merecontinuance of an existing obligation.

First to be determined is whether the Lease Amendment was anew obligation "entered into" after October 27, 1977, therebyreviving the enforceability of the Lease's gold clause. Althougha limited number of cases have held that a post-October 27, 1977novation of a lease created a new contract rendering the goldclause revived and enforceable⁽⁹⁾, the instant case is the first toinvolve consideration of a lease amendment and its effect onreviving the enforceability of a gold clause.

Traditionally, Illinois courts, when interpreting contracts,have required that "[a]n agreement, when reduced to writing, mustbe presumed to speak the intention of the parties who signed it." Western Illinois Oil Co. v. Thompson, 26 Ill. 2d 287, 291, 186N.E.2d 285 (1962). A lease is a type of contract generallygoverned by the rules of contract law. Midland Management Co. v.Helgason, 158 Ill. 2d 98, 103, 630 N.E.2d 836 (1994) (Midland). Inconstruing a lease, courts give effect to the intentions of theparties as expressed in the language of the document when read asa whole. Midland, 158 Ill. 2d at 104. If contract language isunambiguous, the intention of the parties must be ascertained bythe language used, not by constructions urged by the parties. MXLIndustries, Inc. v. Mulder, 252 Ill. App. 3d 18, 29, 623 N.E.2d 369(1993).

A modification of a contract is a change in one or morerespects that introduces new elements into the details of thecontract and cancels others, but leaves the general purpose andeffect undisturbed. Hartwig Transit, Inc. v. Menolascino, 113 Ill.App. 3d 165, 170, 446 N.E.2d 1193 (1983). A valid modificationmust satisfy all criteria essential for a valid contract, includingoffer, acceptance and consideration. Bass v. Prime Cable ofChicago, Inc., 284 Ill. App. 3d 116, 126, 674 N.E.2d 43 (1996).

In Barrett v. Lawrence, 110 Ill. App. 3d 587, 590, 442 N.E.2d599 (1982) (Barrett), a case relied upon by plaintiff, the courtfound that "[a]n agreement when changed by the mutual consent ofthe parties becomes a new agreement which takes place of the old."⁽¹⁰⁾ There, plaintiff entered into a contract with defendant to purchasea condominium with final payment due on December 1, 1981. OnDecember 7, 1981, the contract was amended to extend the final datefor payment and conveyance of title to January 1, 1982. Plaintifffiled suit to force defendants to put payments she had made on theproperty into an escrow account as required by statute. Defendantscontended that the amendment to the contract did not create a newagreement but simply extended the time of the old agreement.

In support of its finding that defendants were required to putpayments into an escrow account, the Barrett court cited Mahaffeyv. Wisconsin Central Ry. Co., 147 Ill. App. 43, 46 (1909), whichstated, "[a]n agreement changed is not the old or prior agreementbut a new one. When there is a change the minds of the partieshave met again and by the fact of the change, a new agreementarises. The minds of the parties may thus meet upon the terms ofthe old agreement with but the slightest change, yet the agreementthen made is a new one."

Two Illinois cases cited by the instant defendant, DeienChevrolet, Inc. v. Reynolds & Reynolds Co., 265 Ill. App. 3d 842,846, 639 N.E.2d 949 (1994) (Deien Chevrolet) and Nagle v. GeneralMerchandising Corp., 58 Ill. App. 3d 344, 347, 374 N.E.2d 1137(1978) (Nagle), both held that parties to a contract may modify itsprovisions without affecting the liability of the parties under theother terms. Both Deien Chevrolet and Nagle, however, involved analyses of the parties' conduct with regard to an intent to modifythe original agreement, not a written modification mutuallyconsented to by both parties, as in the present case.

In McKay Nissan, Ltd. v. Nissan Motor Corp. in U.S.A., 764 F.Supp. 1318 (N.D. Ill. 1991) (McKay Nissan), plaintiff, anautomotive dealership, alleged that defendant, a distributor,violated section 6 of the Illinois Motor Vehicle Franchise Act(Act) (1989 Ill. Rev. Stat. ch. 121