Crook v. Zorn
| Decision Date | 06 April 1938 |
| Docket Number | No. 8685.,8685. |
| Parties | CROOK v. ZORN. |
| Court | U.S. Court of Appeals — Fifth Circuit |
W. M. Crook, of Beaumont, Tex., for appellant.
Chas. F. Heidrick and Lamar Cecil, both of Beaumont, Tex., for appellee.
Before SIBLEY and HOLMES, Circuit Judges, and MIZE, District Judge.
This appeal is from an order of the District Court sustaining a petition for review by appellee to set aside an order of the referee allowing parts of appellant's claim for rent, with statutory lien therefor, and sustaining the order of the referee on appellant's petition for review from the allowance of certain claims as secured and having priority over the claim of appellant. Under the holdings of the District Court, as well as the view we take of the matter, the second proposition becomes moot.
On November 22, 1933, appellant leased a certain store building in Beaumont, Tex., to the bankrupt, a Texas corporation. By this lease, the property was let for the period from February 1, 1934, to January 31, 1939. The rental was $30,000, payable in monthly installments ranging from $400 per month during the first year to $600 per month during the fifth year. Appellant had the option to terminate the lease in case of default by the lessee. On October 15, 1936, the bankrupt was in default in the payment of rents, and on that date another agreement was made.
The second agreement was in the form of a letter from appellant to the bankrupt. It recited the default and alleged other breaches in the original agreement. It then proposed a rental on a month-to-month basis according to the terms of the original lease, except as otherwise provided therein, at the rate of $750 per month, provided that the lessee agreed to vacate the premises on ninety days' written notice from the lessor, the right of the lessee to occupy to continue thereunder until January 31, 1939, subject to appellant's right to terminate, and provided that, after April 1, 1937, but not prior thereto, lessee should have the right to terminate by giving ninety days' written notice of intention to move. The lessor agreed to accept notes covering the unpaid balance which then amounted to $2,000.
On December 12, 1936, the lessee was adjudicated a bankrupt, and shortly thereafter filed its schedules, listing appellant as a secured creditor with claims in the amount of $750 for the current month and $2,000 with interest, as evidenced by a note given pursuant to the second agreement. In due time, appellant filed proof of a secured claim in the amount of $9,518.75. This amount was arrived at by adding to the amount due on the note the rentals under the contract by letter of October 15, 1936, for one year from that date, but the claim conceded a reduction if the trustee should elect to terminate by giving ninety days' written notice of intention to move on April 1, 1937. The amount of the claim when so reduced is $7,268.75. The trustee duly filed his objection to the allowance of the claim as secured. On January 15, 1937, the trustee gave notice to terminate the lease on thirty days' notice, without liability for additional rent.
The assets of the estate were sold, but did not bring enough to pay the claim of appellant in full. Thereupon appellant petitioned the referee to direct the trustee to hold the funds intact subject to his claim, without the payment of the fees and expenses other than those necessary to the preservation of the estate.
Article 5238, Revised Statutes of Texas, provides as follows:
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