In re Arbycraft Co., 13370.
| Decision Date | 27 March 1961 |
| Docket Number | No. 13370.,13370. |
| Citation | 288 F.2d 553 |
| Parties | In the Matter of the ARBYCRAFT CO., Debtor. Appeal of Bornot DEHON, Creditor. |
| Court | U.S. Court of Appeals — Third Circuit |
Reuben Singer, Philadelphia, Pa., (Meade & Singer, John R. Meade, William J. Campbell, Philadelphia, Pa., on the brief), for appellant.
Nathan Lavine, Philadelphia, Pa., (Adelman & Lavine, Melvin Lashner, Philadelphia, Pa., on the brief), for Debtor.
M. E. Maurer, Philadelphia, Pa., for Receiver.
Before KALODNER, STALEY and HASTIE, Circuit Judges.
This is an appeal from the reversal by the District Court of the Order of the Referee in Bankruptcy allowing as an administration expense of the Receivers a bill for repairs to a boiler on the premises leased to the debtor, and occupied by it at the time during the pendency of a Chapter XI, 11 U.S.C.A. § 701 et seq., proceeding.
The Referee, in his Opinion, based his disposition on his conclusion of law that the tenant was liable for the repairs under the terms of the lease and his finding that the "tenant" in his capacity as agent for the Receivers in the conduct of the business, had acquiesed in the making of the repairs.
The District Court reversed the Referee's Order and disallowed the landlord's claim. It premised its action on its view that the Referee had erred in concluding "as a matter of law that the tenant debtor was liable under the terms of the lease for the cost of the repairs", and its further determination that the Referee had erred in his finding as to acquiescence.1
The critical facts may be summarized as follows:
In November, 1959, the Arbycraft Co. ("debtor") filed a petition for arrangement under Chapter XI of the Bankruptcy Act. Receivers were appointed and authorization granted to them to operate debtor's business2 and to employ any of its personnel in the course of such operation. Pursuant to the authorization stated the Receivers employed debtor's executive vice-president, Girard Esayian, to operate the business.
Debtor's business was conducted in a building which it had leased in March, 1956. The lease3 in effect at the time the events pertinent here transpired, contained the following clauses:
On January 19, 1960, the boiler in use on the leased premises failed to function and Esayian telephoned one Harry M. Rommel, who was the real estate agent of the landlord, Bornot Dehon, to acquaint him with the situation but Rommel was out of his office. Subsequently (the record does not disclose the date) Rommel returned Esayian's call.
Thereafter, Esayian engaged the Triple A Welding Service to perform such work as might be necessary to get the boiler back in operation. While the Triple A men were at work employees of C. Rodney Morris and Son, Inc., appeared and advised Esayian they had been instructed by Rommel to work on the boiler.
With reference to the foregoing incident, Esayian testified as follows: (Hearing before the Referee, February 25, 1960).
C. Rodney Morris testified to the effect that the work done by his men on the boiler was in the category of "repairs".
The February 25, 1960 hearing was held as the result of presentation to the Bankruptcy Referee, as costs of administration, a bill of $119.60 from the Triple A Welding Service for its services; and another for $1,133.00 by the Morris firm for its work. Counsel for the debtor objected to the payment of the Morris bill as an administration expense on the grounds that (1) the work done on the boiler was not "repairs" but a "replacement of the essential elements of the boiler tubes," and accordingly the debtor (as lessee) was not liable under his lease, and (2) the landlord acted as a "volunteer" in engaging Morris to do the work on the boiler "and there is no provision in the lease * * * which gives the landlord the election to repair and charge it to the tenant."
Following the hearing, the Referee rendered his Opinion and Order in which he made the fact-findings that the work done on the boiler constituted "repairs" and that Esayian had acquiesced in their performance by Morris, and stated "I concluded as a matter of law that the tenant would be liable under the terms of the lease for this bill." The Referee further found that the debtor's estate was liable for the payment of the Morris bill as an expense of administration since Esayian, acting within the course of his employment, by the Receivers to manage debtor's business, had acquiesced in the performance of the repairs by Morris.
It may be noted parenthetically that no evidence was offered by the Receivers or the debtor at the hearings with respect to the Morris bill. It must further be observed that, while the Referee and the District Court in their opinions referred to the Morris bill as the "claim" of the landlord, and the parties have continued to do so on this appeal, the record discloses that the landlord never paid the Morris bill and that it was presented to the Receivers as a claim of Morris.
The District Court, in its Opinion, agreed with the Referee's finding that the work on the boiler constituted "repairs" but reversed his allowance of the Morris bill for these reasons:
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