Opposition Brief — Atwell Building Corp. v. Sound, Inc.
Supreme Court brief1949
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JITICE © SUD T * |
FILE COPY | ~ FILED
APR 11 1949
oe || CHARLES ELMORE Lit
Gc
IN THE
Supreme Court of the United States
Ocroser Term, A. D. 1948.
No. 661
In THE MatTTer OF
SOUND, INC., a Corporation,
DeEsror.
ATWELL BUILDING CORPORATION, a Corporation,
Petitioner,
vs.
SOUND, INC., a Corporation, anp FRED DONENBERG,
TRUSTEE,
Respondents.
BRIEF OF RESPONDENT, SOUND, INC., DEBTOR, IN
OPPOSITION TO PETITION FOR WRIT OF CER-
TIORARI.
‘ Joun A. Busstan,
208 South La Salle Street,
Chicago 4, Illinois,
Attorney for Respondent,
Sound, Inc., Debtor.
THE GUNTHORP.WARREN PRINTING COMPANY, 210 WEST JACKSON, CHICAGO
INDEX.
PAGE
Opinions ££ fF ere 1
Daletithae «oon nnn sninne ots 660000608 00006neSkST bs 2
Respondent’s Statement of the Case................ 3
Reasons Relied Upon for Denial of Writ............ 7
AveeMORE oon cccrccesccsesenssacescesensestsesecas 9
TaBLe or CasEs.
Adams v. Ore Knob Copper Co., 7 Fed. Rep. 634, 639.. 21
Bishop v. Trustees of Bedford Charity, 28 L. Jour. 25. 28
Bowman v. Foot, 29 Conn. 331, 336.................. 17
Donovan v. Murphy, 217 Ill. App. 31, 36.............. 16
Fifty Associates v. Howland, 11 Met. 99............ 28
Gomek we ‘Weis GR GR Bis oan ccdcccteciatiavecicn 21
Knickerbacker L. Ins. Co. v. Morton, 96 U. S. 234,
Ste Se Gey Sica +c bie chainls :oumnicdcwiendee’ 12
In Re Larkey, 214 Fed. 867, 871.................... 25
Magnum v. Coty, 262 U. S. 159, 67 L. Ed. 923........ 7-9
Medinah Temple Co. v. Currey, 162 Ill. 441, 445...... 21
Model Dairy Co. v. Foltis-Fischer, 67 F. (2d) 704, 706,
Moffat Tunnel Improvement Dist. v. Denver & S. L.
Ry. Co., 45 F. (2d) 715, 730
Montello Brick Works, 163 Fed. 624, 628, Affirmed 167
MEE Hide bas Wha GAdald da 0 ee ea dend ode kan Ox
Morrison v. Smith (Maryland), 44 Atl. 1031, 1032.... 16
Schneider v. Springmann, 25 F. (2d) 255, 256
Sexton v. Chicago Cold Storage Co., 129 Ill. 318, 332.. 16
ii
Shannon v. Jacobson, 262 Mass. 463, 160 N. E. 245... 9
Smith v. Goodman, 149 Ill. 75, 84..................., 16
Sproul v. Help Yourself Store, 16 Fed. 2d 554........ 21
Stewart v. Griffith, 217 U. S. 323, 30 S. Ct. 528, 529,
DU A PEL oho ceccausecyenbsengsensechebecsen 1
Title & Trust Co. v. Hisey, 95 F. (2d) 555. ........... 10
U. S. Trust Co. v. Schaeffer, 542 N. Y. S. 2d 530...... 2]
Re Walker, 98 F. (3d) BBL, BBS... ww. wwe ccwceces 143]
Waukegan Times Theatre Corp. v. Conrad, 324 IIl.
a, Gs GUE shai ncewarsccvesesccsicevess 15-16-20-25
Webster v. Nichols, 104 Ill. 160, 171................ 1)
Weece v. Gaunt, 327 Ill. 21, 22... 1... ccc cece eens 16
Willoughby v. Lawrence, 116 Ill. 11, 12.............. 16
Woodworth & Harding, 75 (App. Div.) 54, 59........ 24
Text Books anp STaTuTEs.
Fe eee. Sr rere eee err 9
Amer. Jur. Vol. 19, page 488, Sec. 28............... 26-27
Kent’s Commentaries, 14th Ed., page 133.......... 20-27
-
IN THE
Supreme Court of the United States
Ocroser Term, A. D. 1948.
No. 661.
In THE MATTER OF
SOUND, INC., a Corporation,
Desror.
ATWELL BUILDING CORPORATION, a Corporation,
Petitioner,
vs.
SOUND, INC., a Corporation, anv FRED DONENBERG,
TRUSTEE,
Respondents.
BRIEF OF RESPONDENT, SOUND, INC., DEBTOR, IN
OPPOSITION TO PETITION FOR WRIT OF CER-
TIORARI.
OPINIONS OF COURT BELOW.
On January 23rd, 1948, after notice to all counsel of
record, the Special Master to whom the matter was re-
ferred, after hearings and consideration of the evidence,
documentary and oral, rendered his written report to the
Court (R. 70 to 77, inel.). His findings of fact and conclu-
sions of law (R. 72-74) recommended the dismissal of
Atwell Building Corporation’s Petition for Possession of
Leased Premises.
No written objections were filed by Counsel for Atwell,
under Rule 53 E(1-2) of Federal Rules of Civil Procedure.
a
-
The District Court, on February 6th, 1948, took the
Master’s Report and Atwell’s oral objections thereto, the
nature of which do not appear of record under advisement
(R. 77), and on February 9th, 1948, the Court confirmed
the Master’s Report and overruled Atwell’s oral objections
thereto (R. 77).
The Circuit Court of Appeals for the Seventh Circuit
affirmed the Decision of the District Court dismissing At-
well’s Petition. No petition was filed by Atwell for rehear-
ing and the Court’s mandate was issued and filed in the
District Court January 13th, 1949 affirming the decree of
the District Court cismissing Atwell’s Petition for Pos-
session of the Leased Premises, with costs. The Court's
opinion (R. 109) is reported in 171 Fed. (2d) 253.
JURISDICTION.
Petitioner does not show any Jurisdictional Grounds for
a review on a Writ of Certiorari in that Counsel fail to
show:
(a) That the decisi... of the Court of Appeals is in
conflict with the decision of another Circuit Court of Ap-
peals on the same matter;
(b) That the decision in this case is in conflict with the
decisions of this Court on the same subject matter;
(c) No showing of public interest has been made. This
litigation is between private citizens of the State of IIli-
nois and involves purely contractual rights. The legal
principles involved have long been settled by the Courts of
this State. The Federal cases on the same subject ui-
formly follow the Rules of Decision of the Courts of this
and other States.
RESPONDENT’S STATEMENT OF THE CASE.
Petitioner’s statement of the case is not correct and is
an unfair presentment of the facts.
The summary of the facts as stated by the Circuit Court
of Appeals (R. 109) is a correct statement and affirms the
findings of the Master (R. 70-74), as confirmed by the lower
Court (R. 77).
Petitioner, Atwell Building Corporation (hereinafter
sometimes referred to as ‘‘ Atwell’’), leased to Respondent,
Sound, Inc. (hereinafter sometimes referred to as
“Sound’’), the Eighth Floor of its building, located in
Chicago, for light manufacturing purposes, for the term
commencing October Ist, 1945 and ending September 30th,
1950 (Ex. ‘‘B’’, R. 22).
The Lease contained the following pertinent provision:
‘Third :—That in order more effectually to secure
to the lessor the payment of rent and the performance
of all other covenants herein contained, it is agreed as
an additional condition of this lease that the filing of
any petition in bankruptcy or insolvency by or against
the lessee shall constitute a breach of this lease and
thereupon ipso facto, and without entry or other ac-
tion by the lessor, this le>se shall terminate and not-
withstanding any other provisions of this lease the
lessor immediately upon said termination and without
action or notice, shall be entitled to recover as liqui-
dated damages for such breach an amount equal to
the amount of the rent reserved in this lease for the
unexpired portion of the term thereof, plus the esti-
mated cost of obtaining a new tenant for the demised
premises, less the fair rental value of the premises for
said unexpired portion of said term.”’
a
4
On November 8th, 1946, an involuntary petition in bank.
ruptey was filed against Sound, Inc., but no adjudication
in bankruptcy has been entered. On February 28th, 1947,
Sound filed its Petition in the bankruptcy proceeding for
reorganization under Chapter X and Fred Donenberg was
appointed Trustee.
Counsel for Atwell concede that soon after the filing of
the Petition for adjudication against Sound, the President
of Atwell learned of the pendency of the bankruptcy pro-
ceeding (R. 42) but nevertheless being aware of its pend-
ency, Atwell billed Sound for rent in accordance with the
terms of the lease for the months of December, 1946 and
January, 1947. See Trustee and Sound Ex. 2 a-b-c and d
and 7 a-b-e and d, R. 68 and following pages.
Sound paid Atwell’s bills as rent and the payments were
accepted as rent by Atwell. Findings, based on these ex-
hibits and oral evidence (R. 42, 43, 55, 56, 57, 57) were
made by the Master, confirmed by the District Court and
affirmed by the Court of Appeals.
From February, 1947 to and including August, 1947,
Atwell billed Sound for use of the leased premises but
payments were made as rent, and as found by the Master
and confirmed by the Court (R. 73, 74, 77), were accepted
by Atwell as rent.
This practice continued until January, 1948, when Atwell
again changed and billed Sound as rent and all rent stands
paid as rent to and including March, 1949.. The monthly
payments of rent made from August, 1947 to and including
March, 1949 are not shown in the record, but we believe
counsel for Atwell will, as he did in the Court of Appeals,
concede that these payments have been made.
Atwell at no time during Donenberg’s Trusteeship billed
him for rent or for use of the premises. Statements in
each month were billed in the name of Sonnd, Ince.
5
Sound’s Answer (R. 24) to Atwell’s Petition for Posses-
sion set forth the defense that Atwell’s acceptance of rent
with knowledge of Sound’s bankruptcy and its subsequent
conduct constituted as a matter of law a waiver of the pro-
visions of paragraph 3 of said lease.
This defense and the substantial evidence offered and
received in evidence, as found by the Master, confirmed by
the lower courts, constitute the crux of the whole contro-
versy.
The bankruptcy proceeding was instituted November 8,
1946 (R. 2). Sound’s Petition to Reorganize was filed Feb-
ruary 17, 1947 (R. 11) and approved by the Court Febru-
ary 28, 1947 (R. 15). On March 3, 1948, a Joint Plan for
the Reorganization of Sound was filed in this proceeding
(R. 81), and a hearing thereon was set for April 23, 1948,
notice of which was given to all of Sound’s creditors, in-
eluding Atwell.
This Plan (R. 81) included a provision for the confirma-
tion of Atwell’s lease and further provided that the court’s
decree confirming the Plan would include adequate provi-
sions for the protection of lessor’s interest under said lease
as shall be determined by the court to be just and equitable.
On March 5, 1948 (R. 82), Donenberg, Trustee, filed his
written declaration confirming said lease. No objection was
made by Atwell to the filing of the Joint Plan nor to the
form of Donenberg’s declaration confirming the lease (R.
82). In the orderly course of procedure, the matter came
on to be heard on April 23rd, 1948, no objections being
filed by any party in interest, including Atwell. Upon
hearing, the court, by appropriate order, approved the
Joint Plan and set a hearing to consider the confirmation
thereof on May 25th, 1948.
Again, in the orderly course of procedure, after due
notice to all creditors, including Atwell, the Plan, as ap-
6
proved by the court, came on to be heard, and upon hearing,
was confirmed by appropriate decree, and, again, Atwell
made no objection. The decree included appropriate pro.
visions that Donenberg, Trustee, should, on June 15, 1948
turn back to Sound, Inc., the Debtor, all of its property
and assets pursuant to the Joint Plan, as approved and
confirmed by the court, and, accordingly, on said date,
Donenberg, Trustee, by appropriate bills of sale and as.
signments, returned to Sound, Ine. all of its property and
assets, including all of its right, title and interest in and
to the Atwell lease. Again, with full knowledge of the
proceedings, Atwell made no objection or protest.
Subsequently, on November Ist, 1948, Donenberg, as
Trustee of Sound in the reorganization, filed his Final
Report and Account as such Trustee, which Report and
Account was approved by the court and he was discharged.
Therefore he has no further interest in the proceeding.
REASONS FOR DENIAL OF THE WRIT.
I.
Under Rule 38(5) of this Court and the principle set
forth in Magnum v. Coty, 262 U. 8. 159, this Court, in the
exercise of its sound judicial discretion, should, under the
facts and the law applicable to this case, deny Petitioner
a review on certiorari.
Il.
The Master, the District Court and the Court of Appeals
were correct in deciding that Atwell, by the billing and
acceptance of rent, with full knowledge of Sound’s bank-
ruptey, waived the breach under paragraph 3 of the lease
and that the lease was not ipso facto terminated on
Sound’s bankruptey and thereby rendered ‘‘Void.’’ The
lease was only rendered ‘‘Voidable’’ at Atwell’s election
and it chose to waive the breach.
III.
A condition in a lease once waived by the lessor with
full knowledge that grounds for termination had occurred,
he will not be heard to say thereafter that the lease was
terminated.
IV.
Under all the authorities, the question whether Atwell
waived the breach of the lease with knowledge of Sound’s
bankruptey was a question of fact, and the Master found
that Atwell, having billed and accepted rent from Sound,
with knowledge of such bankruptcy, constituted a waiver
of such breach and the Master’s findings (R. 73), based
upon substantial evidence and adopted by the District
Court and affirmed by the Court of Appeals, should not be
set aside, unless clearly erroneous.
V.
Atwell, by its conduct, is estopped from asserting that
the lease is not now in force, and, under the facts and
circumstances of this case, the question has become moot.
VI.
A Court of bankruptcy is a Court of Equity and this
proceeding in Equity calls for the application of Equitable
Principles.
VII.
Our answer to Contentions of Counsel for Atwell and
eases cited by him.
ARGUMENT.
I.
Under Rule 38 (5) of This Court and the Principle Set Forth
in Magnum v. Coty, 262 U. 8. 159, This Court in the Ex-
ercise of Its Sound Judicial Discretion, Should, Under the
Facts and the Law Applicable to This Case, Deny Peti-
tioner a Review on Certiorari.
Under Rule 38(5) of this Court, in light of this Court’s
interpretation of the rule, as stated in Magnum v. Coty,
262 U. S. 159, 67 L. Ed. 922, this Court should deny Peti-
tioner a review on Certiorari.
In the Magnum case, at page 163, this court said:
‘“‘The question how the court should exercise this
power next arises. The jurisdiction to bring up cases
by certiorari from the circuit courts of appeals was
given for two purposes; first, to secure uniformity of
decision between those courts in the nine circuits; and,
second, to bring up cases involving questions of impor-
tance which it is in the public interest to have decided
by this court of last resort. The jurisdiction was not
conferred upon this court merely to give the defeated
party in the circuit court of appeals another hearing.
Our experience shows that 80 per cent of those who
petition for certiorari do not appreciate these neces-
sary limitations upon our issue of the writ.’
Moreover, under Title 28 U. S. C. A., Sec. 725, and cases
cited, the rule of this case is controlled by the decisions of
this State and no Federal question is really involved.
Sec. 725 provides:
‘‘Laws of States as Rules of Decision. The laws
of the several States, except where the Constitution,
treaties, or statutes of the United States otherwise
10
require or provide, shall be regarded as rules of
decision in trials at common law, in the courts of the
United States, in cases where they apply (R. §,
& 721).”’
And in Title Ins. € Trust Co. v. Hisey, 95 Fed. (2d) 555,
the court recognized the principle that Federal courts
should take cognizance of the state law upon questions
of this character. The court said at page 561:
‘‘The California courts have settled beyond a per-
adventure of a doubt that ‘the acceptance of rent by
the landlord from the tenant, after the breach of a
condition of a lease, with full knowledge of all the
facts, is a waiver of the breach, and precludes the
landlord from declaring a forfeiture of the lease by
reason of said breach’ (citing cases).’’
However, as will be seen from a review of the cases
cited and discussed under our proposition II the Federal
Courts have uniformly followed the Rules of Decisions of
the State Courts on the question involved in this case.
IL.
The Master, the District Court and the Court of Appeals
Were Correct in Deciding That Atwell, by the Billing
and Acceptance of Rent, with Full Knowledge of Sound's
Bankruptcy, Waived the Breach Under Paragraph 3 of
the Lease and That the Lease Was Not Ipso Facto Ter-
minated on Sound’s Bankruptcy and Thereby Rendered
‘*Void.’’ The Lease Was Only Rendered ‘‘Voidable”’ at
Atwell’s Election and It Chose to Waive the Breach.
Counsel also concede that Atwell, with knowledge of
Sound’s bankruptcy, billed Sound for rent and accepted
monthly payments as rent.
The Circuit Court of Appeals cites the case of
a
Moffat Tunnel Improvement Dist. v. Denver & S. L. Ry. Co.,
45 Fed. (2nd) 715, 730; in support of its holding that as
paragraph 3 of the lease was for the sole benefit of Atwell,
it had the right on Sound’s bankruptcy to waive the breach,
acknowledge the continued existence of the lease, and that
having done so, the Master and District Court were right
in finding, based upon substantial evidence, that Atwell
was thereafter bound by its course of conduct. In the
Moffat case, the Circuit Court of Appeals for the Tenth
Cireuit (pp. 30, 31) said:
“Other amici curiae contend that the contract is
illegal because the railway is not bound for the full
term, in that by Section 9 of the lease, the lease is
terminated without notice and the lessor may re-enter
if there is a default in the payment of rental for a
year or more. Such provisions are familiar in leases
and contracts of sale, and are uniformly held to be
for the benefit of the lessor or vendor and may be
waived by him. The contention that a party to a
contract may relieve itself of liability by default in
its own obligations thereunder, is unusual but not
unprecedented. A similar contention was made in
Stewart v. Griffith, 217 U. 8. 323, 30 8. Ct. 528, 529,
o4 L. Ed. 782, 19 Ann. Cas. 639, where the language
was even stronger, the contract there providing that
in case of default, the down payment ‘is to be for-
feited and the contract of sale and conveyance to be
null and void and of no effect in law.’ There was a
default and the seller brought an action for the balance
of the price, and the buyer contended that by for-
feiting the down payment, he was relieved of further
liability, because the contract was then null and void.
But the Supreme Court held otherwise saying:
‘“‘*The condition plainly is for the benefit of the
vendor, and hardly less plainly for his benefit alone,
except so far as it may have fixed a time when Stewart
might have called for performance if he had chosen to
do so, which he did not. This being so, the word
It
a
12
‘*void’’ means voideble at the vender’s election, and
the condition may be insisted upon or waived, at his
choice (citing cases)’ ’’ (Italics ours).
The Court of Appeals also cites Schneider v. Springmann,
25 Fed. (2nd) 255, 256, wherein the Court of Appeals for
the Sixth Circuit (pp. 255) said:
**(1,2) Two considerations lead us to agree with
the District Judge. One is that ordinarily the party
for whose benefit a condition is provided has an
election whether or not to insist upon the condition;
and this principle applies to leases as well as to other
contracts. ‘Leases which * * * declare that on the
happening of the contingency the demise shall there-
upon become null and void (mean) that the forfeiture
may be enforced * * * at the option of the lessor.’
Ewell v. Dagg, 108 U. 8. 148, 149, 2 S. Ct. 408, 412
(27 L. Ed. 682). See, also, Taylor’s Landlord and
Tenant (8th Ed.) & 492°’ (Italics ours).
To the same effect is Montello Brick Works, 163 Fed.
624, and affirmed by the Circuit Court of Appeals, 167
Fed. 482.
Here it is to be noted that the Court in the Moffat case,
supra, cites the case of Stewart v. Griffith (supra) decided
by this Court.
In the \Stewart case, Justice Oliver Wendell Holmes
wrote the opinion concluding that the forfeiture provision
was plainly for the benefit of the vendor alone. That the
vendor had the right to call for strict performance which
he chose not to do. Thus, as a matter of law, as applied
to our case, the word ‘‘Void’’ means ‘‘Voidable’’ at
lessor’s option and that the condition may be insisted upon
or waived at lessor’s choice.
Another case in point decided by this court and also
cited in the Moffat case is Knickerbacker L. Ins. Co. v.
Morton, 96 U. S. 234, 24 L. Ed. 689.
13
This Court, in an able opinion by Justice Bradley, page
692, said :
‘‘Forfeitures are not favored in the law. They are
often the means of great oppression and injustice.
And, where adequate compensation can be made, the
law in many cases, and equity in all cases, discharges
the forfeiture, upon such compensation being made.
“The case of leases is not without analogy to the
present. It is familiar law, that, when a lease has
become forfeited, any act of the landlord indicating
a recognition of its continuance, such as distraining
for rent, or accepting rent which accrued after the
forfeiture, is deemed a waiver of the condition (citing
cases).
. . . . *
‘‘And then the learned Judge cites authorities, going
back to the Year Books, to show that a determination
of a man’s election in such cases may be made by
express words, or by act; and that if, by word or by
act, he determines that the lease shall continue in
existence, and communicates that determination to the
other party, he has elected that the other shall go on
as tenant.
. > . . o
‘*These cases show the readiness with which courts
seize hold of any circumstances that indicate an elec-
tion or intent to waive a forfeiture’’ (Italics ours).
Therefore, contrary to the contention of Counsel for
Atwell, this Court has decided the principle involved in
this case, t.e., that the acceptance of rent with knowledge
of an absolute cause for forfeiture is a waiver of the
condition.
Provisions similar to paragraph 3 of Atwell’s lease are
familiar in leases and have been uniformly held to be for
the sole benefit of the lessor and thus may be waived by
14
him. There are no cases to the contrary and counsel for
Atwell do not cite any. The Circuit Court of Appeals iy
our case also cite Model Dairy v. Foltis-Fischer, 67 Fed,
(2nd) 704, wherein the Circuit Court of Appeals for the
Second Cireuit recognize this rule in stating that the
lessor’s election not to exercise the right of re-entry on
the bankruptcy of the lessee is final and may be inferred
from receipt of rent accruing after the breach, and at
page 706, said:
‘*Though delay as such is immaterial, if the lessor
elects not to re-enter his decision is final; it will be
inferred from the receipt of rent accruing after the
breach, or from any other recognition of the continu.
ance of the term. Greene’s Case, 1 Leonard 262;
Green’s Case Croke’s Eliz. 3; Pennant’s Case, 3 Coke,
64(b); Goodright v. Davids, 2 Cowp. 803; Roe y.
Harrison, 2 Term Rep. 425; Courts have been at times
astute to find that the lessor has so elected (Italics
ours).
and at page 707, continuing, said:
‘** * * The question of ‘estoppel’ is closely related
to what we have just said. Indeed, it is hard to find
more in it than election; because, if the lessor’s con-
duct onee indicates an election not to pursue his
remedy, he may not pursue it, whether the lessee has
acted in reliance on it or not.’’
And In re Walker, 93 Fed. (2d) 281, 283, 346, the court
in effect said that although the debtor, as trustee, was not
authorized to pay any rent, if the lessors in fact received
the payments as rent, it would toll their re-entry. All the
Federal decisions we have been able to find follow the rule
as laid down by the Supreme Court of this state and the
courts of last resort of other states in holding that pro-
visions similar to paragraph third of Atwell’s lease do
not render the lease void upon lessee’s bankruptcy but
only voidable at lessor’s election. The leading case in
—
15
Illinois which has been cited with approval in many other
cases is Webster v. Nichols, 104 Ill. 160. The court, at
page 171, in holding that a provision in the lease against
the assignment of lessee’s interest to be for the sole benefit
of the lessor and that the receipt of rent subsequently
accruing from the tenant, knowing of a cause of forfeiture,
is a waiver of such forfeiture, said:
“The clause in the lease providing that the
premises shall not be assigned without the written
consent of the lessors, is clearly for the benefit of the
lessors only. It does not render the assignment when
otherwise made, absolutely void, but voidable only,
at the option of the lessors or their representatives.
** * ‘any act done by a landlord knowing of a cause
of forfeiture by his tenant, affirming the existence of
the lease, and recognizing the lessee as his tenant, is
a waiver of such forfeiture (1 Williams’ Saunders,
287; 2 Platt on Leases, 471; 1 Washburn on Real
Property, 454). The receipt of rent subsequently
accruing from the tenant by the landlord is such an
act, and the forfeiture thereby waived (Bleeker v.
Smith, 13 Wend. 530; Jackson y. Allen, 3 Cow. 220,
and authorities cited by Sutherland, J. 230).’ Ireland
v. Nichols, 46 N. Y. 416. See also, Shattuck v. Lovejoy,
8 Gray 204; Fisher v. Deering, 60 Ill. 114 (Italics
ours).’’
And in Waukegan Times Theatre Corporation v. Conrad,
324 Ill. App. 622 (1945), our Appellate Court in following
the rule laid down in Webster v. Nichols, supra, said at
page 632:
“This well recognized rule has its foundation, at
least in part, upon the fundamental rule, that one
having the exclusive right to terminate an executory
contract, must abrogate it altogether, if at all. He
cannot be heard to say it is valid for one purpose,
and, in the same breath, that it is invalid for all other
purposes, but is founded chiefly upon the principle of
common honesty and natural justice, which the law
16
exacts of mankind in their intercourse and dealings
with each other (Schimp v. Cedar Rapids Ins. Co.,
124 Ill. 354, 357). In the case at bar, as in Webster
v. Nichols, supra, appellants are attempting to enforce
rights under an assignment, by seeking to recover for
the unpaid fuel oil bill, under the terms of the lease,
and in addition to accepting the rent from the several
assignees, including appellee, they accepted rent from
appellee, without protest or condition, for the month
of September, 1938, after they had notice of the bank-
ruptcy of Silverman. Under the doctrine laid down
in Webster v. Nichols, supra, this was also a waiver
of forfeiture on account of such bankruptey.’’
To the same effect are the following Illinois cases:
Willoughby v. Lawrence, 116 Ill. 11, 12; Seaton v. Chicago
Cold Storage Co., 129 Ill. 318, 322; Smith v. Goodman,
149 Ill. 75, 84; Weece v. Grant, 337 Ill. 21, 22; Donovan v.
Murphy, 217 Ill. App. 31, 36, and many others could be
cited but none to the contrary.
This rule has been settled by the great weight of au-
thorities, if not by all, as will be seen by a review of the
decisions of the Courts of last resort of other states.
In the case of Morrison v. Smith, 44 Atl. Rep. 1031, 1032,
the Supreme Court of Maryland said:
‘‘The ordinary waiver of forfeiture occurs by an
acceptance of rent which became due after a breach
committed by the tenant. Tayl. Landl. & Ten. (7th
Ed.) Sec. 497. This seems to be the well recognized
rule of law on the subject, settled by the great weight
of authorities, if not by all. * * * We hold that upon
a proper construction of the lease, considering all its
terms and provisions, with the view of arriving at the
intention of the parties, it was votdable only upon a
breach of the covenant by the lessee, at the election
of the lessor, and not absolutely void, as contended for
by the appellant;’’ (Italics ours).
17
And in Bowman v. Foot, 29 Conn. 331, the Supreme
Court of Connecticut said, page 337:
‘‘High authority sanctions the idea that the accept-
ance of rent accruing after condition broken, is in law
a waiver of the forfeiture, and not evidence of such
waiver merely. It has also been said by judges of
eminence, that the right of the party who pays money
to control its application, constrains the lessor who
receives rent, tendered as such, to waive his claim of
forfeiture. The only point which we propose to settle
as the law of the present case is, that, upon the facts
stated, there was no legal determination of the lessee’s
ek or
“One of these covenants was for the payment of a
quarterly rent upon certain quarter-days named. In
a subsequent part of the instrument is a proviso of
the following tenor: ‘Provided, however, that if the
lessee neglects to pay the rent, etc., then this lease
shall thereupon, by virtue of this express stipulation
therein, expire and terminate, and the party of the
first part may, at any time thereafter, re-enter said
premises, and the same have and possess as of his
former estate.’
~ = * . =
page 338.
“It was the clear intent of the parties, whatever
they may have supposed to be the legal consequences
in detail of such a stipulation, to attach to the demise
a condition for the lessor’s benefit, upon the breach of
which he was authorized to compel the tenant to sub-
mit to a forfeiture of his tenancy.
“The legal interpretation of the instrument agrees
with this manifest intent. There is no peculiar sig-
nificance to the words ‘shall expire and terminate’.
They mean just as much, and just as little, as would
the more common phrase, ‘shall become void,’ if in-
serted at the same place. Indeed it appears that both
terms were employed together in a lease, the con-
struction of which was the subject of determination
in the case of Jackson v. Harrison, 17 Johns 66. It
was there provided that in case the rent should not
18
be paid ‘it should be lawful for the lessor to re-enter,’
etc. and that ‘the lease and estate thereby granted
should cease, determine and become utterly void, if
the lessor should elect so to consider it.’ It is well
understood that such expressions as these in leases
for years do not designate the non-payment of rent
as an event, like a death or a marriage, at the date
of which an estate shall cease at all events. If 0,
it would be in the power of the tenant, whenever his
leasehold property became unprofitable or onerous, to
relieve himself, at any pay-day, of his duty to retain
it, by simply violating his own covenants. Such a
construction would be a plain perversion of the intent
of the parties. Accordingly, such stipulations are now
universally taken to be for the advantage of the land.
lord. ‘Void’ means ‘voidable at his election.’ Jones
v. Carter, 15 Mees. & Wels., 718. ‘Expire and termi-
nate’ is also an elliptical phrase meaning ‘expire and
terminate at the lessor’s option.’ This principle of
construction leaves us nothing to do with a distinction,
which is said to prevail between freehold interests
and leases for years, requiring in one case, and not
requiring in the other, an entry or claim to divest an
estate wholly void by the breach of a condition. In
cases like the present, the estate is not wholly void by
reason of a breach. Compare Shep. Touch., pages
139 and 194. See also Doe v. Bancks, 4 B. & Ald. 401.
To ascertain the law of the case in hand, we must fill
up the ellipsis. The lease is to expire and terminate
after non-payment, at the option of the lessor, who
may then re-enter and annul the tenancy.
‘“‘This rendering of the contract makes the duration
of the lease contingent on the exercise by the lessor
of his right to terminate it. To denote how this is to
be done, the instrument, fairly read, implies that a
re-entry shall take place; the usual technical mode
prescribed in such contracts, indicating, in the case of
estates, less than freehold, not necessarily a literal
entry, but some proceeding that should in a significant
and decisive manner declare the forfeiture of the lease
and assert the landlord’s rights’’ (Italics ours).
—_— «
Thus, it clearly appears from the rule laid down in the
aforementioned cases, as applied to leaseholds, that an
ipso facto termination of forfeiture clause which renders
a lease void on breach thereof may be waived by the lessor,
as the word ‘‘void’’ means voidable, and that ‘‘expire and
terminate’? mean @xpire and terminate at lessor’s election,
and that, as the Circuit Court of Appeals said in our case,
the cases turn upon the conduct and intention of the
lessor with reference to his rights under the lease after
knowledge that a breach has occurred, and, therefore, if
Atwell did not want to treat the lease as terminated, it
had a right to do so.
Here it is to be especially noted that Atwell did not
avail itself of its right reserved in the aforementioned
| paragraph 3 of said lease to file a claim in Sound’s bank- |
ruptey for rent accruing after the date of bankruptcy. As |
a matter of fact, this was not necessary, as it has received
since the date of Sound’s bankruptcy all the monthly pay- |
ments of rent from Sound and has accepted same. Hence |
no injury.
| The Court of Appeals further said that based upon the
| facts of our case established by substantial evidence as
found by the Master and confirmed by the District Court,
it makes no difference to a court of bankruptcy, which is
in effect a court of equity, (paragraph 3) whether the
provision of the lease is termed a conditional limitation or
a condition subsequent. It provides for termination or
forfeiture upon breach of paragraph 3, and as we have
seen from a reading of the cases means ‘‘At Lessor’s
Option.’ Therefore, regardless of what the provision is
called, it being strictly for the benefit of the lessor, under
all the authorities, may be taken advantage of only by
him and him alone therefore, if he chooses, he may waive
it, which he did.
Here it is to be especially noted that Counsel for Atwell
does not answer the Court of Appeals decision to the effect
a
that it makes no difference whether paragraph 3 of the
lease is termed a conditional limitation or condition gub.
sequent. Atwell certainly was the only one that had the
right of re-entry for condition broken and, hence, there
appears to be no logical reason why it could not, if it
chose, waive the breach which the lower courts held it did,
We will show, under our Answer to Contentions of Coun.
sel for Atwell (XII), page 26 hereof, that the distinctions
between conditions and limitations are extremely subtle
and artificial, Kent’s Commentaries, 14th Ed., page 133,
20
Hl.
A Condition in a Lease Once Waived by the Lessor With
Full Knowledge That Grounds for Termination Had Oc-
curred, He Will Not Be Heard to Say Thereafter That
the Lease Was Terminated.
It was established by substantial evidence and found by
the Master and confirmed by the lower courts that Atwell
by the acceptance of rent waived the breach of the lease
with knowledge of Sound’s bankruptcy and as a matter of
law was therefore estopped from contending that the lease
was terminated by the institution of bankruptcy proceed-
ings.
As was said in Model Dairy Co. v. Foltis-Fischer, supra,
at page 707:
«* * * The question of ‘estoppel’ is closely re- |
lated to what we have just said. Indeed, it is hard to |
find more in it than election; because if the lessor’s —
conduct once indicates an election not to pursue his
remedy, he may not pursue it, whether the lessee has
acted in reliance on it or not.’’
Also, our Appellate Court, in the case of Waukegan
Times Theatre Corporation v. Conrad, supra, said:
‘‘A condition once waived is forever gone.”
_—
And the Court of Appeals so held (R. 110, 111):
‘Since the appellant did not treat the lease as ter-
minated, although it had full knowledge that the
grounds for termination had occurred, it will not be
heard to say afterwards that the lease had been ter-
minated.’’
IV.
Under All the Authorities, the Question Whether Atwell
Waived the Breach of the Lease With Knowledge of
Sound’s Bankruptcy Was a Question of Fact, and the
Master Found That Atwell, Having Billed and Ac-
cepted Rent from Sound, With Knowledge of Such
Bankruptcy, Constituted a Waiver of Such Breach and
the Master’s Findings (R. 73), Based Upon Substantial
Evidence and Adopted by the District Court and Affirmed
by the Court of Appeals, Should Not Be Set Aside, Unless
Clearly Erroneous.
The courts have uniformly held that whether there was
a breach of a lease with knowledge of the cause of for-
feiture, is a question of fact and whether there is a waiver
in a particular case is largely a matter of intention. To
this effect, Shannon v. Jacobson, Mass. 160 N. E. 245 ;
Grant v. White, 42 Mos. 285; U. §. Trust Co. v. Schaeffer,
042 N. Y. S. 2d 530; Sproul v. Help Y ourself Store Co.,
(1926; C. C. A. 3d) 16 F. (2d) 554; Adams v. Ore Knob
Copper Co., 7 Fed. Rep. 634, 639; Medinah Temple Com-
pany v. Currey, 162 Ill. 441, 445.
The Master found, based upon substantial evidence, oral
and documentary (R. 42, 43, 55, 56, 57, 68, and Sound’s
Ex’s. 1 to 10, inclusive), that Atwell, with knowledge of
Sound’s bankruptey, waived the breach by acceptance of
rent, and his findings were adopted by the District Court
ma
22
(R. 77) and approved by the Circuit Court of Appeals (R.
111), wherein the Court said:
‘*When the event upon which the termination was to
take place happened, a breach of the lease occurred,
The appellant had a right, since the provision was for
its benefit, to do one of two things—stand on the
breach and treat the lease as terminated, or ignore the
breach and acknowledge the continued existence of the
lease. Having done the latter, as the court found
upon substantial evidence, the appellant is bound by
its course of conduct.’’
V.
Atwell, by Its Conduct, Is Estopped from Asserting That
the Lease Is Not in Force, and, Under the Facts and Cir.
cumstances of This Case, the Question Has Become Moot.
The bankruptcy proceeding was instituted November 8,
1946 (R. 2). Sound’s petition to reorganize was filed and
approved February 28, 1947 (R. 15). On March 3, 1948
a Joint Plan for the Reorganization of Sound was filed in
this proceeding (R. 81) and a hearing thereon was set for
April 23, 1948, notice of which was given to all of Sound’s
creditors, including Atwell. This plan (R. 81) included
a provision for the confirmation of Atwell’s lease and
further provided that the court’s decree confirming the
Plan would include adequate provisions for the protection
of lessor’s interest under said lease as shall be determined
by the court to be just and equitable. Immediately, (R.
82) on March 5, 1948, Donenberg, Trustee, filed his written
declaration confirming said lease. No objection was made
by Atwell to the filing of the Plan nor to the form of
Donenberg’s declaration confirming the lease (R. 82). In
the orderly course of procedure the matter came on to be
heard on April 23rd, no objections being filed by any party
in interest, including Atwell, upon hearing the court by
——
appropriate order approved the Plan and set a hearing to
consider the confirmation thereof on May 25th. Again
in the orderly course of procedure, after due notice to all
creditors, including Atwell, the Plan as approved by the
court came on to be heard and upon hearing was confirmed
by appropriate decree and again Atwell made no objection.
The decree included appropriate provisions that Donen-
berg, Trustee, should on June 15, 1948, turn back to Sound,
Inc., the Debtor, all of its property and assets pursuant to
the Plan as approved and confirmed by the court and ac-
cordingly on said date, Donenberg, Trustee, by appropriate
bills of sale and assignments returned to Sound, Ine. all
of its property and assets, including all of its right, title
and interest in and to the Atwell lease. Donenberg has
since filed his Final Report and Account, which has been
approved by the Court, and has been discharged as Trus-
tee and, therefore, has no further interest in the proceed-
ing.
Here it is to be particularly noted that from November
1946 to the present time Atwell has received its rent each
month, all of which was paid as rent and received by it as
such. Therefore having suffered no injury and at the
same time seeking the aid of this court to oust Sound of
the possession of the leased premises does not come with
good grace.
Under all the circumstances the question has become
moot.
The only case we have been eble to find wherein a paral-
lel situation existed is Woodworth v. Harding, 75 (App.
Div.) N. Y. 54, 59.
The court in discussing the relative rights of a lessor
and lessee after the lessee’s receiver had returned all of
the property and assets belonging to the lessee, including
the lessee’s interest in the leasehold, said:
The receiver represented Harding as well as his
E
creditors. The receiver held the property subject to
the order of the court, and was finally ordered ap.
parently to return it to Harding. He held the leased
premises as well as the assets located therein, and
when he returned the property to Harding he re.
turned his interest in the lease with it. Harding could
insist as against the plaintiffs that his rights under
the lease had not been taken from him by the bank.
ruptey proceedings, which had terminated in a return
of the property and building to him. And the plain-
tiffs could insist that their rights in the lease against
Harding had not been taken away by the appointment
of the receiver, the taking possession of the property
by him, the holding possession until the termination
of the proceedings and the returning of the property
and the leased building to Harding. (Italics ours.)
24
Under this authority the effect of Donenberg returning
all of Sound’s property and assets, including the Atwell
lease hold estate placed Atwell and Sound in the same po-
sition they were in prior to the time the petition in bank-
ruptey was filed with the lease binding on both parties.
We submit that the question thus brought to this court
by Atwell has become moot.
VI.
A Court of Bankruptcy Is a Court of Equity and This Pro.
ceeding in Equity Calls for the Application of Equitable
Principles.
What motive could Atwell have in wanting to oust Sound
from possession of the leased premises, when lessor must
admit that all rental payments have been made to date,
and there is no evidence that future rentals will not be
met. An examination of the lease discloses a possible
reason. Ordinarily, rent during the term of the lease in-
creases, but for some reason not of record here, the rent
_ a
was to be reduced (R. 20, Ex. b) which provides rental
payments for the full term of five years as follows:
Nine (9) payments at Two Thousand One Hundred
Eighty-five and no/100 Dollars ($2,185.00).
Fifty (50) payments at One Thousand Seven Hun-
dred Sixty and no/100 Dollars ($1,760.00).
One (1) payment of One Thousand Six Hundred
Eighty-five and no/100 Dollars ($1,685.00).
It is common knowledge and the court may take judicial
notice of the fact that there is and has been for the past
several years acute shortage of improved real estate, in-
cluding commercial and industrial space. This has brought
about an unprecedented demand. Possibly a special offer
for Sound’s space. Thus to regain possession of the de-
mised premises would enable Atwell to relet the premises
at greatly increased rent. This seems the only possible
motive and if it succeeds, Sound is hopelessly without a
home, because there is just no place for it to go.
But we are in a court of equity and must bear in mind
the application of equitable principles as was said in Wau-
kegan Times Theatre Corporation v. Conrad, supra, page
639 :
25
‘‘The court said the only conceivable benefit which a
forfeiture would confer upon the landlords was that
they might, if relieved of the present tenants, be able to
lease the premises at a higher rental, a consideration
which should not commend itself to a court of equity.”’
And In Re Larkey, 214 Fed. 867, 871, the court said:
‘*T think the clear effect of these decisions is that the
bankruptcy court may dispose of matters which come
before it, upon equitable principles, when justice and
equity require that it should do so. While many cases
might arise in which it would be considered equitable
to enforce, against a bankrupt’s estate, a surrender of
leased premises for breach of covenants, with a right
of re-entry, because the landlord could not proceed to
enforce his legal right in any other court, still the bank.
ruptey court may properly refuse such relief when jj
would be inequitable to grant it. To hold otherwise
would be to deny the right to apply equitable princi.
ples in proceedings which are in equity.’’
This is a proceeding in equity and applying equitable
principles under all the facts and circumstances of the case
this court should follow the ruling of the lower courts,
Vil.
Our Answer to Contentions of Counsel for Atwell and Cases
Cited by Him.
Counsel for Atwell contends that paragraph 3 of the lease
should be construed as a conditional limitation and that by
reason thereof, regardless of Atwell’s subsequent conduct
with knowledge of Sound’s bankruptcy, the lcase was auto-
matically terminated upon institution of bankruptcy pro-
ceedings and that the doctrine of waiver and estoppel has
only to do with conditions subsequent.
We do not concede that this provision created truly a
conditional limitation, as was said by the author in Amer-
ican Jurisprudence, Vol. 19, page 488, Sec. 28:
‘*The true conditional limitation exists where prop-
erty goes over to a third person upon defeasance in-
stead of reverting to the creator.”’
But as the Circuit Court of Appeals said (R. 110):
‘*We think that it makes no difference to a court of
bankruptcy, which in effect is a court of equity, whether
the provision of the lease was a conditional limitation
or a condition subsequent. It was obviously made for
the benefit of the lessor (Moffat Tunnel Improvement
Dist. v. Denver &@ S. L. Ry. Co., 45 F. 2d 715, 730;
Schneider v. Springmann, 25 F. 2d 255, 256) and if the
lessor did not want to treat the lease as terminated, it
27
had a right to do so. Since the appellant did not treat
the lease as terminated, although it had full knowl-
edge that the grounds for termination had occurred, it
will not be heard to say afterwards that the lease had
been terminated.’’
We believe no useful purpose would be served to discuss
the distinction between a conditional limitation and a con-
dition subsequent as the distinction is extremely subtle
and artificial and has no application to the facts of our
case, which involves a leasehold, with the sole right of
re-entry in the lessor for condition broken. As stated by
the author in Kent’: Commentaries, Lacy’s Ed., page 132-
133, in discussing conditions and limitations:
‘‘Whether the words amount to a condition, or a
limitation, or a covenant, may be matter of construc-
tion, depending on the contract. The intention of the
party to the instrument, when clearly ascertained
is of controlling efficacy; though conditions and limi-
tations are not readily to be raised by mere inference
and argument (b). The distinctions on this subject
are extremely subtle and artificial; and the construc-
tion of a deed, as to its operation and effect will after
all depend less upon artificial rules than upon the ap-
plication of good sense and sound equity to the object
and spirit of the contract in the given case.’’
This statement of the Court of Appeals is fully supported
by the autuoritses and may we again call the Court’s at-
tention to the case of Bowman vy. Foot, supra, cited here
at page 17. In this case, the Supreme Court of Connecti-
cut said in effect that a provision such as paragraph 3 of
Atwell’s lease is now universally taken to be for the ad-
vantage of the landlord. ‘‘Void’’ means ‘‘voidable at his
election’’ and ‘‘ Expire and terminate’’ being also an ellipti-
cal phrase, means ‘‘Expire and terminate at lessor’s op-
tion’? and that in the case of a breach of a condition in a
lease for years, an entry or claim to divest the lessee’s
28
estate is required as the lease is to expire and terminate
only at lessor’s option and accordingly if lessor chooses he
may waive it.
The Court further said at page 339:
‘“‘If a tenant’s right is thus voidable only, the op.
tion to avoid must be exercised under the contract and
according to legal usage. The re-entry clause at all
events creates a necessity for some positive act of the
landlord to determine his tenant’s estate.’’
. > + . .
‘*Where a léase is thus voidable, the landlord’s op.
tion to avoid it should be exercised at the proper point
of time and in the proper place; and above all, should
be brought home to the tenant’s knowledge through
some unequivocal act, in order to certify to him that
he is absolved from the further performance of a
lessee’s duties.’’
Citing cases: Fifty Associates v. Howland, 11 Met. 99;
Bishop v. Trustees of Bedford Charity, 28 L. Jour. 215;
which was afterwards reviewed in the Exchequer Cham-
ber.
The Court’s holding is stated at page 337:
‘*High authority sanctions the idea that the accept-
ance of rent accruing after condition broken, is in law
a waiver of the forfeiture, and not evidence of such
waiver merely. It has also been said by judges of
great eminence, that the right of the party who pays
money to control its application, constrains the lessor
who receives rent, tendered as such, to waive his claim
of forfeiture.
‘The only point which we propose to settle as the
law of the present case is, that, upon the facts stated,
there was no legal determination of the lessee’s es-
tate.’’
For the purpose of our case, it should be sufficient to say
that the provision was included for Atwell’s benefit and its
alone, and as the Court of Appeals said, Atwell had the
right to do one of two things—stand on the breach and
treat the lease as terminated, or ignore the breach and ac-
knowledge the continued existence of the lease. Having
done the latter, as the Court found upon substantial evi-
dence, Atwell is bound by its course of conduct. As we have
seen by numerous cases cited by us, the lease, upon the
happening of Sound’s bankruptcy, was not rendered ipso
facto void, but voidable only at Atwell’s option or election.
The condition under the facts as established by the evi-
dence, by reason of Atwell’s subsequent conduct in billing
Sound for rent and accepting payments as rent, was dis-
pensed with and Atwell cannot now be heard to say that the
lease was terminated upon Sound’s bankruptcy. Counsel
for Atwell have failed to show why as sole owner of the
right of re-entry for condition broken Atwell could not
waive the breach. There is no answer. It is a simple mat-
ter of contract law, and which the Court of Appeals in the
Schneider case, supra, cited herein at page 12 applies to
leases as well as other contracts.
None of the cases cited by counsel for Atwell are in point
because the question of waiver was not involved in any of
them.
On oral argument before the Circuit Court of Appeals,
counsel for Atwell relied upon the case of Jandrew v.
Bouche, 29 Fed. (2d) 346, to support his contention that
Atwell’s lease with Sound terminated upon Sound’s bank-
ruptey and that the provision could not be waived by At-
well, but as the Court of Appeals points out in its opinion
(R. 111), that case is not controlling because the question
of waiver was not involved. That case turned entirely upon
construction of the lease, whereas, here, our case turns
upon the conduct and intention of Atwell with reference
to the lease after knowledge of the breach and the court
30
said that the Jandrew case does not hold that a conditiona]
limitation when applied to a lease for a term of years, may
not be waived by lessor upon breach of condition.
In the Jandrew case, lessee was adjudicated a bankrupt
on January 16, 1928, and on January 27, a Trustee was
elected. On January 30, 1928, the Trustee sold the entire
assets of the bankrupt on the leased premises and turned
same over to the purchaser together with the keys of the
store, telling the purchaser that he had no interest in the
lease and that the purchaser would have to make arrange-
ments with the landlord if he desired to continue to oe-
cupy the premises. The lessor refused to deal with the
occupant of the building and filed her proof of claim in the
bankruptcy proceeding. Thus the court will readily see
that there was no continued occupancy by lessee after their
bankruptcy and no payment or acceptance of rent by lessor,
whereas, in our case, Atwell has received payment of rent
each month from the time of Sound’s bankruptcy to the
present time without objection or protest.
Counsel also cites the cases of Irving Trust Co., as Trus-
tee v. A. W. Perry, Inc., 293 U. 8. 307, 311; 79 L. Ed. 379,
382. An examination of this case discloses that it was
not an action for possession and the question of waiver was
not involved. Quite the contrary, the case involved the
right of a lessor to file and have allowed a proof of claim
in lessee’s bankruptcy proceeding for future rent equal
to the difference between the present fair value of the re-
maining rent due under the lease and the present fair rental
value of the premises for the balance of the term. Appar-
ently after lessee’s bankruptcy occurred, lessor, not re-
ceiving rent, with vacant premises on its hands, had no
other course to follow than to file a claim in the bankruptcy
proceeding, which the court justly allowed.
Likewise, an examination of Finn v. Meighan, 325 U.S.
_—
31
300, discloses that the question of waiver was not involved
or raised. This clearly appears from the opinion of this
Court and the Circuit Court of Appeals (146 Fed. 2nd 594).
Murray Realty Co. v. Regal Shoe Co., 193 N. E. 164
(N. Y.) page 165 was also a suit for rent and again we
see that the question of waiver was not involved and the
decision is not binding on this Court.
And in the case of Model Dairy, Inc. v. Foltis-Fischer
(Second Circuit), 67 Fed. (2d) 704. A study of this case
discloses that payments were consistently made for use and
occupation and not as rent and the court very properly
points out the distinction which we have cited in our brief
and again quote from page 706:
«* * * Tf the lessor elects not to re-enter his deci-
sion is final; it will be inferred from the receipt of rent
accruing after the breach, or from any other recogni-
tion of the continuance of the term. Greene’s case, 1
Leonard, 262; Green’s case, Croke’s Eliz. 3; Pennant’s
case, 3 Coke, 64 (b) ; Goodright v. Davids, 2 Cowp. 803;
Roe v. Harrison, 2 Term Rep. 425; Courts have been
at times astute to find that the lessor has so elected.’’
And again In Re Walker (also Second Circuit), 93 Fed.
(2) 281, the payments were not designated either as rent
or for use and occupation and the court stated that the
burden was on the Debtor to establish that the payments
were made as rent and in this regard it failed, but the
court did recognize as we have pointed out that if the
payments had been made as rent, it would have tolled the
lessor’s re-entry. Thus the cases clearly analyzed sustain
our contention that if the payments are actually made as
rent the lessor’s right of re-entry is thereby tolled.
32
Conclusion.
Based upon all! the facts and circumstances of this case
and in recognition of equitable principles, it is submitted
that the Petition for a Writ of Certiorari be denied.
Respectfully submitted,
Joun A. Bussian,
Attorney for Respondent,
Sound, Inc., Debtor.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.