## Facts

- Daisy Harts (landlord) leased two buildings in Chicago to Arnold Brothers (tenant) under a written lease.
- The lease required the tenant to keep the premises in proper condition during the term and to restore (or surrender) the buildings in their original condition when the lease ended.
- During the lease term, Arnold Brothers made material changes to the buildings that Harts claimed were unauthorized and constituted waste and breach of the lease covenants.
- Harts filed suit before the lease term expired, seeking an accounting and damages for waste based on the alterations already made.
- The Superior Court found that waste had occurred but awarded only nominal damages because Harts did not present evidence that the alterations decreased the market value of the property.
- The Appellate Court reversed on the damages measure, holding that the proper measure was the reasonable cost to restore the buildings to the condition required by the lease.
- Arnold Brothers appealed to the Supreme Court of Illinois, arguing (1) restoration cost was improper without proof of diminution in value and (2) the suit was premature because the lease had not yet terminated.

## Issues

1. When a lease requires a tenant to maintain premises and restore them to their original condition at the end of the term, is the landlord’s measure of damages limited to diminution in market value, or may it be the reasonable cost of restoration based on the lease language?
2. May a landlord sue during the lease term for waste and breach of present repair/maintenance duties (and related relief), or must the landlord wait until the lease ends?

## Decision

- The Supreme Court of Illinois held that the measure of damages for breach of repair/maintenance and restoration obligations depends on the lease covenants the parties agreed to.
- The Court rejected the view that the landlord is confined to nominal damages (or to a market-value test) merely because she did not prove a reduction in market value.
- Where the tenant promised to restore the buildings to their original condition, the reasonable cost of restoration is an appropriate measure of damages for the tenant’s breach, subject to ordinary limits of reasonableness.
- The Court recognized that a landlord is not required to wait until the end of the lease to sue where the tenant has already committed waste and breached ongoing duties to maintain and repair during the term.
- The Court approved the Appellate Court’s use of restoration cost as the proper measure in light of the lease and did not treat the action as barred solely because it was brought before lease termination.

## Legal Principles

- The proper measure of damages for a tenant’s breach of covenants to repair, maintain, or restore leased property is determined by the specific language of the lease.
- If the tenant covenants to restore or return the premises in a stated condition, the landlord may recover the reasonable cost of putting the premises into that condition, even without proof of diminished market value.
- A market-value diminution measure is not mandatory where it does not reflect the tenant’s contractual promise regarding physical condition.
- A landlord may sue during the lease term for waste and for breach of present duties to maintain and repair after the wrongful acts occur; the claim is not automatically premature because the lease has not expired.
- Restoration-cost damages must be connected to the breach and limited to reasonable amounts consistent with contract-damages rules.

## Conclusion

In *Harts v. Arnold Brothers*, the Illinois Supreme Court treated the lease covenants as controlling on remedies, holding that a landlord seeking damages for tenant alterations and waste is not limited to nominal damages for lack of market-value evidence where the tenant promised to restore the premises; instead, the landlord may recover the reasonable cost to restore the buildings to the required condition, and the landlord may bring suit during the lease term for waste and breaches already committed.


Harts v. Arnold Brothers, 149 N.E. 420 (1925)