Geraghty v. Kiamie Fifth Avenue Corp., 78
Citation | 210 F.2d 95 |
Decision Date | 02 February 1954 |
Docket Number | No. 78,Docket 22818.,78 |
Parties | GERAGHTY v. KIAMIE FIFTH AVENUE CORP. |
Court | U.S. Court of Appeals — Second Circuit |
Charles Gottlieb, New York City, for respondent-appellant.
Irving Parker, New York City (Simpson, Thacher & Bartlett, New York City, Edward R. Farley, Jr., Brighton, N. Y., and Walter A. Lubanko, New York City, on the brief), for petitioner-appellee.
Before CLARK, FRANK, and HINCKS, Circuit Judges.
This appeal challenges the validity of a restraining order, issued by a referee in bankruptcy in reorganization proceedings of Huyler's, whereby appellant as landlord was prevented from terminating its lease to Huyler's for breach of condition.
On April 3, 1951, Huyler's filed a petition in the district court praying for an arrangement pursuant to Chapter XI of the Bankruptcy Act, 11 U.S.C.A. § 701 et seq. On the same day a referee entered an order authorizing the debtor to adopt its leases, among which was the lease here in issue from appellant, Kiamie Fifth Avenue Corporation, dated January 31, 1950, letting certain premises to Huyler's for a term of 10 years for 7 per cent of the latter's gross sales, with a $12,000 yearly minimum. Also on the same day the debtor caused to be prepared and sent to its general creditors and landlords a letter notifying them of the filing of the petition. The letter stated inter alia that:
This letter was received by appellant in due course shortly after its dispatch on April 3.
The filing of the petition was a breach of a condition of the lease, entitling appellant, within a reasonable time after notice, to cancel.1 The letter constituted notice of the breach and, we think, of the referee's order of adoption of the lease.2 Thereafter debtor sent appellant its checks for each of the months of April, May, June, July, and August in the amount of the minimum monthly rental, which appellant accepted and deposited. The excess rental was to be computed semiannually, and there became due on July 31, 1951, the sum of $635.19 which was not paid. Further, the September minimum rent was not paid when due.
On September 18, 1951, the referee appointed a receiver, who duly notified appellant of his appointment. Subsequent to this notice, on September 21, appellant's attorney wrote the receiver:
On September 28 the receiver countered:
Debtor tendered checks for $500 on September 28, for $433.34 on October 8, and for $500 on October 15, together totaling the amount of rent due from September 18, when the receiver took office, to November 1 — all of which were accepted by appellant. Ten days later, on October 25, appellant served notice of its election to cancel the lease by reason of debtor's breach of condition and failure to pay rent when due. On October 29 the receiver brought this petition before the referee, seeking a permanent injunction against the threatened cancellation.
Appellant relies primarily on Clause 29 of the lease, which reads in part as follows:
But assuming the validity of this clause, there remain several questions. Clause 22(b), quoted in footnote 1 supra, required appellant to exercise its option to cancel within a reasonable time of notice of the breach. Though the clause negatives appellant's acceptance of rent as a waiver, still appellant waited nearly seven months from notice of the bankruptcy and adoption of the lease before making its election. The inference is not unreasonable that it originally chose to...
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W. F. M. Restaurant, Inc. v. Austern
...disputed by tenant. Hence, the mere filing of the petition against tenant triggered the right of election (see Geraghty v. Kiamie Fifth Ave. Corp., 2 Cir., 210 F.2d 95, 97; Matter of Sound, Inc., 7 Cir., 171 F.2d 253, 254, cert. den. 336 U.S. 962, 69 S.Ct. 892, 93 L.Ed. 1114; Matter of Scho......
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