Imagens das páginas
PDF
ePub

788, 100 Fed. 270; Re Hays, F. & W. Co. 117 Fed. 879.

Then it must create a breach of the contract, and, the adjudication relating back to the filing of the petition, the breach of the contract occurs simultaneously with the commencement of the bankrupt proceedings; and the cause of action arising for the breach of the contractual relationship between the bankrupt and the claimant also arises simultaneously with the institution of the bankruptcy proceedings. Re Swift, 50 C. C. A. 254, 112 Fed. 315. All damages may be recovered that may have accrued by reason of this breach of the contract now.

Rochm v. Horst, 178 U. S. 1, 44 L. ed. 953, 20 Sup. Ct. Rep. 780; Re Stern, 54 C. C. A. 60, 116 Fed. 604; Re Frederick L. Grant Shoe Co. 66 C. C. A. 78, 130 Fed. 881; Schrandt v. Young, 2 Herdman (Neb.) 546, 89 N. W. 607; Rule v. McGregor, 117 Iowa, 419, 90 N. W. 811.

Messrs. H. C. Tobey, W. S. McClintock, I. J. Ringolsky, and Thomas L. Bond, for appellee:

The adjudication in bankruptcy of the tenant did not terminate the contract of lease.

Re Ells, 2 N. B. N. Rep. 360, 98 Fed. 967; Re Mitchell, 8 Am. Bankr. Rep. 324, 116 Fed. 89; Re Pennewell, 55 C. C. A. 571, 9 Am. Bankr. Rep. 490, 119 Fed. 139; Re Collignon, 4 Am. Bankr. Rep. 250; Re Curtis, 109 La. Ann. 171, 9 Am. Bankr. Rep. 286, 94 Am. St. Rep. 445, 33 So. 125; Witthaus v. Zimmerman, 91 App. Div. 202, 11 Am. Bankr. Rep. 314, 86 N. Y. Supp. 315; White v. Griffing, 44 Conn. 437; 16 Am. & Eng. Enc. Law, 2d ed. p. 776; Beach, Modern Law of Contracts, § 407; Re Webb. 6 Nat. Bankr. Reg. 302, Fed. Cas. No. 17,315; Re Mahler, 3 N. B. N. Rep. 39, 105 Fed. 428.

The lessor, by his own act, terminated the lease, and not the adjudication in bankruptcy.

Re Arnstein, 101 Fed. 706; Ex parte Houghton, 1 Low. Dec. 554, Fed. Cas. No. 6,725.

Sanborn, Circuit Judge, delivered the opinion of the court:

The contention of counsel for the appellant is that the claim of the lessor is not for rents which were payable after the petition for adjudication in bankruptcy was filed, but for damages for a breach of the contract in the lease to pay these rents; that the adjudication in bankruptcy dissolves all contractual relations of the bankrupt at the date of the filing of the petition in bankruptcy (Re Jefferson, 2 Am. Bankr. Rep. 206, 93 Fed. 948; Bray v. Cobb, 3 Am. Bankr. Rep. 788, 100 Fed. 270; Re Hays, F. & W. Co. 117 Fed. 879); that the dissolution of a contractual relation is a breach of the contract; and that, for the breach of the contract to pay the rents accruing subsequent to the filing of the petition, a claim for damages may be allowed in bankruptcy (Re Swift, 50 C. C. A. 264, 112 Fed. 315; Re Stern, 54 C. C. A. 60, 116 Fed. 604; Re Frederick L. Grant Shoe Co. 66 C. C. A. 78, 130 Fed. 881).

It is, however, the nature of the claim, and not the name which is applied to it, that conditions its provability in bankruptcy. Watson's claim was for $20 of the $60 per month which the lessee had agreed to pay him for rent of the leased premises for one hundred and fifteen months after the petition in bankruptcy was filed. In reality, his claim was for the entire $50 per month, but he had received by the surrender to him of the premises by Brown under their contract of March 2, 1903, and had credited to him, the rental value of the premises, $40 per month, so that the rent which he claimed remained unpaid was but $20 for each month.

At the close of the hearing the referee found that the rental value of the premises was $47.50 per month, and that the only rent remaining unpaid was $12.50 per month for the one hundred and fifteen months subsequent to February, 1903, and this amounted to $1,437.50, which he allowed to the appellant under the name of damages for the breach of the contract in the lease.

Appellant's claim is one for future rent, and as such is not provable under the bank ruptcy act.

These facts demonstrate the proposition that, while counsel and the referee call this allowance damages for a breach of the lease, it is in fact nothing but that part of the

Re Mahler, 3 N. B. N. Rep. 39, 105 Fed. 432; Re Arnstein, 101 Fed. 706; Re Hev-monthly rent which was to accrue after the enor, 144 N. Y. 271, 39 N. E. 393; Deane petition was filed, which the referee found v. Caldwell, 127 Mass. 242; Atkins v. Wil- that the lessee had not paid by his surrencox, 53 L. R. A. 118, 44 C. C. A. 626, 3 N. der of the leased premises to the lessor in B. N. Rep. 497, 105 Fed. 595; Fidelity Safe March, 1903. But rent which the bankrupt Deposit & T. Co. v. Armstrong, 35 Fed. 567; has agreed to pay, and which is to accrue Brown v. Schleier, 55 C. C. A. 475, 118 subsequent to the filing of the petition in Fed. 981; Re Curtis, 109 La. 171, 9 Am. bankruptcy, does not constitute a provBankr. Rep. 286, 94 Am. St. Rep. 445, 33 able claim under the bankruptcy law of So. 125. 1898 (Act July 1, 1898, chap. 541, 30 Stat.

at L. 562, 563, U. S. Comp. Stat. 1901, p., lessee will pay any rents after his default 3447), because it is not "a fixed liability and the re-entry by the lessor. The use absolutely owing at the time of and occupation of the premises during the the filing of the petition against him" (§ term of the lease were the consideration for 63a), and because it is not an ex- the payment of the monthly rents, and the isting demand, but both the existence payment of the rents was the consideration and the amount of the possible future de- for the use of the premises. If the rent mand are contingent upon unforeseen for any month was not paid, or if waste

[ocr errors]

events, such as default of the lessee, re-entry by the lessor, and assumption by the trustee, so that it is neither an unliquidated nor a liquidated provable claim ( 63b). Walla Walla v. Walla Walla Water Co. 172 U. S. 1, 19, 43 L. ed. 341, 349, 19 Sup. Ct. Rep. 77; Re Ells, 2 N. B. N. Rep. 360, 98 Fed. 967, 969, 970; Re Mahler, 3 N. B. N. Rep. 39, 105 Fed. 428, 430; Fidelity Safe Deposit & T. Co. v. Armstrong, 35 Fed. 567, 569; Re Hevenor, 144 N. Y. 271, 274, 39 N. E. 393; Re Commercial Bulletin Co. 2 Woods, 220, Fed. Cas. No. 3,060; Re Collignon, 4 Am. Bankr. Rep. 250; Atkins v. Wilcox, 53 L. R. A. 118, 44 C. C. A. 626, 3 N. B. N. Rep. 497, 105 Fed. 595; Re Curtis, 109 La. 171, 9 Am. Bankr. Rep. 286, 292, 295, 94 Am. St. Rep. 445, 33 So. 125; Re Heinsfurter, 97 Fed. 198; Beers v. Hanlin, 3 N. B. N. Rep. 749, 99 Fed. 695; Lamson Consol. Store Service Co. v. Bowland, 52 C. C. A. 335, 338, 114 Fed. 639, 642; Wilson v. Pennsylvania Trust Co. 52 C. C. A. 374, 114 Fed. 742.

In Deane v. Caldwell, 127 Mass. 242, 244, Chief Justice Gray (subsequently Mr. Justice Gray of the supreme court) announced the true rule upon this subject in these words: "Before the day at which rent is covenanted to be paid, it is in no sense a debt. It is neither debitum nor solvendum; for, if the lessee is evicted before that day, it never becomes payable. Bordman v. Osborn, 23 Pick. 295. It is not within the provision of a bankrupt act allowing 'uncertain or contingent demands' to be proved against the estate of a bankrupt, because it is not an existing demand, the cause of action on which depends upon a contingency; but the very existence of the demand depends upon a contingency."

was permitted, the lessor had the option to repossess himself of the premises, and to withold from thenceforth the consideration for future instalments of rent, or to permit the lessee to continue in possession of the property, and to enforce the collection of the rents by an action or by some other proceeding. He could not, however, do both. His resumption of the premises necessarily constituted, in the absence of an express agreement to the contrary, a termination of the lease, and a release of the lessee from the payment of all the instalments of rent he had promised to pay there. after. Lamson Consol. Store Service Co. v. Bowland, 52 C. C. A. 335, 338, 114 Fed. 639, 642.

Moreover, if by contract or by virtue of legal proceedings the lessor became entitled to the possession of the premises, and also to the difference between the amount which he might secure from another tenant, or the rental value of the leasehold, and the rents reserved, that amount would always be uncertain and contingent upon future events. Re Hevenor, 144 N. Y. 271, 274, 39 N. E. 393.

When the petition in bankruptcy was filed, no rent was due and unpaid. There was therefore no debt owing by the lessee to Watson, and the latter had no legal demand or claim against him under the lease. The future existence of any such claim or demand, and its amount, if it ever came into existence, were contingent upon (1) the future default of the lessee; (2) the exercise by the lessor of his option to resume the possession of the leased premises if such a default should occur; and (3) upon the assumption of the lease by the trustee in bankruptcy. For the latter had the option to take the leasehold estate, and to assume the payment of the agreed rents. Ex parte Houghton, 1 Low. Dec. 554, Fed. Cas. No. 6,725; Ames v. Union P. R. Co. 60 Fed. 966, 970, 971; Re Ells, 2 N. B. N. Rep. 360, 98 Fed. 967, 968. As the lessor had no legal claim or demand against the lessee for the agreed rents to be paid in the future, when the petition in bankruptcy was filed; and as the future existence and the amount of such a claim were both contingent upon unforeseen future events,-Watson had no provable claim for any part of these rents. Since his claim is in fact for nothing but $12.50 per month of the agreed rents pay

The lease before us admirably illustrates the principle. It provides that the lessee shall pay $60 per month for the term of ten years "for the use and benefit accruing to him from the use and occupancy" of the premises; that, if he pays these sums as they fall due, and performs all his covenants, he may hold and enjoy the premises; but that, if any rents are due and unpaid, or if default is made in any of his covenants, or if he allows any undue waste of any of the improvements on the premises, the lessor may at once re-enter and repossess the premises. The contract contains no covenant that the

able after the filing of the petition in bank- | liable for his debts; but he does acquire the ruptcy, the application to it of the title right to accept and assume, or to renounce, of a claim for damages for a breach of the the executory agreements of the bankrupt, lease neither changes its nature, nor makes as he may deem most advantageous to the it more provable than it would have been estate he is administering; and the parties if its real character had been described to those contracts which he assumes are by its name. still liable to perform them. And so throughout the entire field of contractual obligations the adjudication in bankruptcy absolves from no agreement, terminates no contract, and discharges no liability. Re Curtis, 109 La. 171, 9 Am. Bankr. Rep. 286, 94 Am. St. Rep. 445, 33 So. 125; Re Ells, 2 N. B. N. Rep. 360, 98 Fed. 967, 968; Witthaus v. Zimmerman, 91 App. Div. 202, 11 Am. Bankr. Rep. 314, 316, 86 N. Y. Supp. 315; White v. Griffing, 44 Corn. 437. 446, 447; Re Pennewell, 55 C. C. A. 571, 9 Am. Bankr. Rep. 490, 119 Fed. 189.

|

2. An adjudication in bankruptcy does not dissolve or terminate the contractual relations of the bankrupt, notwithstanding the decisions to the contrary in Re Jefferson, 2 Am. Bankr. Rep. 206, 93 Fed. 948; Bray v. Cobb, 3 Am. Bankr. Rep. 788, 100 Fed. 270; and Re Hays, F. & W. Co. 117 Fed. 879. Its effect is to transfer to the trustee all the property of the bankrupt except his executory contracts, and to vest in the trustee the option to assume or to renounce these. It is the assignment of the property of the bankrupt to the trustee by operation of law. It neither releases nor absolves the debtor from any of his contracts or obligations, but, like any other assignment of property by an obligor, leaves him bound by his agreements, and subject to the liabilities he has incurred. It is the discharge of the bankrupt alone, not his adjudication, that releases him from liability for provable debts in consideration of his surrender of his property, and its distribution among the creditors who hold them. Even the discharge fails to relieve him from claims against him that are not provable in bankruptcy; and, since his obligation to pay rents which are to accrue after the filing of the petition in bankruptcy may not be the basis of a provable claim. his liability for them is neither released nor affected by his adjudication in bank- 4. Finally the adjudication in bankruptcy ruptcy, or by his discharge from his prov- did not constitute a breach of the lease, and able debts. One agrees to pay monthly it raised no cause of action as of the date rents for the place of residence of his fam- of the filing of the petition in bankruptcy. ily or for his place of business, or to render At that date the rent had been paid until personal services for monthly compensation March 1, 1903,-until twenty-two days after for a term of years; he agrees to purchase the date of the filing. There could thereor to convey property; and he then becomes fore have been no breach until March 1, insolvent and is adjudicated a bankrupt. 1903, when the rent for March fel due; His obligations and liabilities are neither and consequently there was no claim or terminated nor released by the adjudication. demand founded on a breach of the contract He still remains legally bound to pay the at the time the petition was filed, and, if rents, to render the services, and to fulfil one ever accrued, it arose many days after all his other obligations, notwithstanding the filing of the petition, and too late to the fact that his insolvency may render constitute a provable claim against the him unable immediately to do so. Nor are estate of the bankrupt. The rule of law those who contracted with him absolved that, where one has disabled himself from from their obligations. If he or his trustee performing a contract, it immediately pays the stipulated rents for his place of ripens, and an action for its breach arises, residence, or for his place of business, the which is illustrated by Re Swift, 50 C. C. lessors may not deny to the payor the use A. 264, 112 Fed. 315, wherein a stockbroker of the premises according to the terms of had made a contract to deliver stock the lease. If he renders the personal serv- to a customer, and he was held to ices, he who contracted to pay for them have made it impossible for him to may not deny his liability to discharge this fulfil his agreement by his adjudicaobligation. His trustee does not become tion in bankruptcy, which took the stock

3. Not only this, but, if counsel for appellant could sustain his proposition that the adjudication of bankruptcy absolved the parties to the lease from their contract at the date of the filing of the petition in bankruptcy, or terminated the lease on that day, still the lessor would have no legal claim against the estate, because the petition was filed on February 6, 1903, the rent was paid by Brown to March 1, 1903, there had been no breach of the contract when the petition was filed, and, if both parties were released from the agreement at that time, or if the lease was then terminated, neither party could have subsequently been in default under it or have committed a breach of it, because thereafter no contract would have existed to be defaulted, and no covenant to be broken.

from him, and vested it and all his 604, and Re Frederick L. Grant Shoe Co. property in his trustee, is not in conflict 66 C. C. A. 78, 130 Fed. 881, cited by apwith this conclusion, because the leasehold; pellant's counsel, fail to rule the question estate of Brown-the only thing essential here under consideration, because the to the performance of his contract-never breaches of contract in those cases occurred passed to his trustee, as the latter did not before the petitions in bankruptcy were filed. elect to assume it. Brown was not necessarily disabled by the adjudication from using or selling his leasehold, or from paying the rent. The mere probable financial inability of one to fulfil his contract, or to pay his debt not yet due, does not make them immediately due and actionable. The cases Re Stern, 54 C. C. A. 60, 116 Fed. ' firmed.

The conclusion is that a claim for damages for a breach of a contract in a lease to pay instalments of rent for the use of the premises at times subsequent to the filing of the petition in bankruptcy is not provable under the bankruptcy law of 1898, and the order of the District Court is af

UNITED STATES CIRCUIT COURT OF APPEALS, FIRST CIRCUIT.

Town of NAHANT, Plff. in Err.,

v.

UNITED STATES of America, Impleaded,

etc.

(136 Fed. 273.)

1. A state statute acquiescing in an attempt by the Federal government to acquire land within the state for the

The commonwealth of Massachusetts did not, by chapter 373 of the Acts of 1902, deluse of such government does not entitle the egate to the United States the authority to government to employ the local rule of dam-exercise the right of eminent domain of the ages as the measure of its liability for property taken.

commonwealth in this case.

2. The value of sewer and water pipes owned by a municipal corporation, and laid under streets which are taken by the Federal government under its power of eminent domain for an entirely different use, must be paid to the municipality.

[blocks in formation]

This right is independent of the consent of any state, and requires no state legislation as a condition precedent to its exercise.

Kohl v. United States, 91 U. S. 367, 23 L. ed. 449; Ft. Leavenworth R. Co. v. Lowe, 114 U. S. 525, 29 L. ed. 264, 5 Sup. Ct. Rep. 995.

NOTE. AS to right of public to compensation upon interference with its interests by the exercise of the right of eminent domain, see Seattle & M. R. Co. v. Washington, 22 L. R. A. 217; Heffner v. Cass & Morgan Counties, 58

Boston, 14 Gray, 282; People ex rel. Hayden
Perry v. Wilson, 7 Mass. 393; Glover v.
v. Rochester, 50 N. Y. 525; Currier v. Mari-
etta & C. R. Co. 11 Ohio St. 228; Butler v.
Thomasville, 74 Ga. 570; Peavey v. Calais
R. Co. 30 Me. 498; Burt v. Merchants' Ins.
Co. 106 Mass. 356, 8 Am. Rep. 339; Kohl v.
United States, 91 U. S. 374, 23 L. ed. 452.

[blocks in formation]

L. R. A. 353; Zanesville v. Zanesville Teleg. 504, 12 Am. Rep. 147.

& Teleph. Co. 52 L. R. A. 150.

To the extent of its impairment in useful

ness, the sewer system of the town has been | Merchants' Ins. Co. 106 Mass. 356, 8 Am. taken.

Rep. 339.

The roads, streets, and paths referred to being devoted to purposes strictly public, and held by the town merely as an agency of the state government for the performance of the strictly public duties devolved upon it, the town would not be entitled to compensation for a taking by the commonwealth for other public purposes.

Mt. Hope Cemetery v. Boston, 158 Mass. 509, 35 Am. St. Rep. 515, 33 N. E. 695; Re Certain Land, 119 Fed. 456.

Sewerage and water pipes constructed upon or under public ways are personal property. The right of the town to maintain and use them is not a right of property in real estate.

Eaton v. Boston, C. & M. R. Co. 51 N. H. 504, 12 Am. Rep. 147; Monongahela Nav. Co. v. United States, 148 U. S. 343, 37 L. ed. 474, 13 Sup. Ct. Rep. 622; Sedgw. Stat. & Const. Law, 2d ed. pp. 462, 463; United States v. Lynah, 188 U. S. 445, 47 L. ed. 539, 23 Sup. Ct. Rep. 349; United States v. Alexander, 148 U. S. 191, 37 L. ed. 417, 13 Sup. Ct. Rep. 529; Pumpelly v. Green Bay & M. Canal Co. 13 Wall. 166, 20 L. ed. 557; Old Colony & F. River R. Co. v. Plymouth County, 14 Gray, 155; Thompson v. Androscoggin River Improv. Co. 54 N. H. 545; Arimond v. Green Bay & M. Canal Co. 31 Wis. 316; People ex rel. Manhattan Sav. Inst. v. Otis, 90 N. Y. 48.

The town of Nahant had such an interest in the property taken as entitled it to compensation.

United States v. Lynah, 188 U. S. 445, 47 L. ed. 539, 23 Sup. Ct. Rep. 349; Webb v. Meyers, 64 Hun, 11, 18 N. Y. Supp. 711; Hand v. Brookline, 126 Mass. 324; Scott v. Manchester, 1 Hurlst. & N. 59, 2 Hurlst. & N. 204; White v. Hindley Local Bd. of Health, L. R. 10 Q. B. 219; Bailey v. New York, 3 Hill, 531, 38 Am. Dec. 669, 2 Denio, 433; Aldrich v. Tripp, 11 R. I. 141, 23 Am. Rep. 434; Oliver v. Worcester, 102 Mass. 489, 3 Am. Rep. 485; Child v. Boston, 4 Allen, 41, 81 Am. Dec. 680; Merrifield v. Worcester, 110 Mass. 216, 14 Am. Rep. 592; Murphy v. Lowell, 124 Mass. 564; Bates v. Westborough, 151 Mass. 174, 7 L. R. A. 156, 23 N. E. 1070.

If the water and sewerage systems were public property which could be appropriated without compensation by the commonwealth of Massachusetts, the United States stands differently.

St. Louis v. Western U. Teleg. Co. 148 U.

S. 92, 37 L. ed. 380, 13 Sup. Ct. Rep. 485,

26 Am. Law Rev. 520; Bates v. West

borough, 151 Mass. 174, 7 L. R. A. 156, 23

N. E. 1070.

Mr. William H. Garland, for defendant in error:

The town was not entitled to compensation for the taking of the land upon which its roads, streets, and paths were constructed. Cheshire v. Adams & C. Reservoir Co. 119 Mass. 356; Perley v. Chandler, 6 Mass. 453, 4 Am. Dec. 159; Millbury v. Blackstone Canal Co. 8 Pick. 473; Andover v. Sutton, 12 Met. 182; McHugh v. Boston, 173 Mass. 408, 53 N. E. 905.

These proceedings were to be governed by the laws of Massachusetts; and the rights of the town to the lands in question are determined by those laws.

Re Certain Land, 119 Fed. 453; Burt v.

New England Teleph. & Teleg. Co. v. Boston Terminal Co. 182 Mass. 397, 65 N. E. 835; Natick Gaslight Co. v. Natick, 175 Mass. 246, 56 N. E. 292; Com. v. Lowell Gaslight Co. 12 Allen, 75; Dudley v. Jamaica Pond Aqueduct Corp. 100 Mass. 183; Edmands v. Boston, 108 Mass. 535.

Aldrich, District Judge, delivered the opinion of the court:

This is a proceeding instituted by the United States for condemnation of certain land at Nahant needed by the general government for fortifications and coast defenses, together with all roads, ways, and avenues included in the description of land, as well as all buildings and structures. The petition of the United States contains a prayer for notice to certain parties of interest expressly named, and a general prayer for notice to all parties interested in the lands described, and parts thereof, and rights therein, and for an appraisement and valuation by a jury of the land and ways and interests therein, and any buildings standing on said land, including all damages sustained by the owner or owners thereof.

Following the prayer of the petition, the district court ordered notice to the parties of interest named, and to any and all other persons, corporations, and associations who may be interested in the lands described in the petition, or any parts thereof or rights therein; and that they and each of them appear before the court, and show cause why the petition should not be granted as prayed for.

The order further directed the marshal to serve a copy of the petition upon parties of interest expressly named, and to give notice to all persons, corporations, or associations interested, by publication, and the return shows that notice was in fact given in accordance with the order. Subsequently, but seasonably, the town of Nahant, in which the property is situated, filed its ap

« AnteriorContinuar »