## Facts

- A landlord leased a ground-floor storeroom to a commercial tenant to operate a jewelry shop.
- The lease included a covenant that the landlord would not rent any other storeroom in the building to a tenant “making a specialty” of selling Japanese or Chinese goods or pearls.
- The landlord later leased another storeroom to a different tenant under a lease that barred that tenant from making a “specialty” of pearl sales, but did not bar all pearl sales.
- The original tenant learned the other tenant was selling pearls and claimed the landlord had breached the exclusivity covenant.
- The original tenant notified the landlord that the lease was breached, vacated the premises after paying two months’ rent, and stopped paying rent.
- The landlord refused to treat the lease as terminated and sued for unpaid rent for the balance of the term.

## Issues

1. Whether the landlord breached the exclusivity covenant by leasing to another tenant who sold pearls, where the covenant barred only tenants “making a specialty” of pearl sales.
2. Whether any such breach was sufficiently material to permit the tenant to terminate the lease, abandon the premises, and cease paying rent.
3. Whether the tenant’s proper remedy for breach of an exclusivity covenant is termination of the lease or damages.

## Decision

- The Supreme Court of Illinois affirmed judgment for the landlord for unpaid rent.
- The court held the tenant was not justified in treating the lease as terminated based on the other tenant’s pearl sales.
- The tenant remained liable for rent because the alleged conduct did not fall clearly within the covenant’s limited prohibition or warrant forfeiture of the lease.

## Legal Principles

- Exclusivity covenants in leases are construed narrowly according to their language; a restriction limited to a tenant “making a specialty” of specified goods does not bar incidental sales by other tenants.
- A landlord’s breach of a lease covenant does not automatically give the tenant a right to rescind, abandon the premises, or stop paying rent unless the lease clearly makes the covenant a condition permitting termination.
- Forfeiture of leasehold rights is disfavored; absent clear contractual authorization or a fundamentally defeating breach, the tenant’s remedy is generally an action for damages rather than termination.

## Conclusion

The court enforced the tenant’s rent obligation and refused to treat an asserted violation of a limited “specialty” exclusivity clause as grounds for unilateral lease termination, concluding that any relief for the tenant lay in damages rather than forfeiture or abandonment.


University Club of Chicago v. Deakin, 106 N.E. 790 (Ill. 1914)