In re Ells

• Decision Date: 19 January 1900
• Docket Number: 1,722.
• Citation: 98 F. 967
• Parties: In re ELLS.
• Court: U.S. District Court — District of Massachusetts

98 F. 967

In re ELLS.

No. 1,722.

United States District Court, D. Massachusetts.

January 19, 1900

Thomas Weston, for bankrupt.

Walter N. Buffum, for proving creditor.

LOWELL District Judge.

The bankrupt was tenant of premises under a lease, of which one clause read as follows:

'Provided also, and these presents are upon this condition, that if the lessee, or his executors, administrators, or assigns do or shall neglect or fail to perform or observe any of the covenants contained in these presents, and on his or their part to be performed or observed, or if the estate hereby created shall be taken on execution or by other process of law, or if the lessee, or his executors administrators, or assigns, shall be declared bankrupt or insolvent according to law, or if any assignment shall be made of his or their property for the benefit of creditors, then and in any of the said cases (notwithstanding any license of any former breach of covenant, or waiver of the benefit hereof, or consent, in a former instance) the lessors, or their successors, heirs, or assigns, lawfully may, immediately or at any time thereafter, and without demand or notice, enter into and upon the said premises, or any part thereof, in the name of the whole, and repossess the same as of their former estate, and expel the lessee and those claiming through or under him, and remove their effects (forcibly, if necessary), without being deemed guilty of any manner of trespass, and without prejudice to any remedies which might otherwise be used for arrears of rent or preceding breach of covenant, and upon entry as aforesaid this lease shall determine; and the lessee covenants that in case of such termination he will indemnify the lessors, their successors, heirs, and assigns, against all loss of rent and other payments which they may incur by reason of such termination during the residue of the time first above specified for the duration of the said term.'

The landlord seeks to prove against the estate for the difference between the present letting value of the premises for the residue of the original term and the rent for the same period fixed by the lease. It is nowhere expressly stated that the landlord entered under the clause above quoted, but it sufficiently appears. To decide this case, it is necessary first to inquire (1) what, after the lessee's bankruptcy, but in the absence of the clause mentioned, would become of the estate created by the lease? and (2) what would be the rights of the landlord if he had entered under the clause mentioned for some cause other than bankruptcy, e.g. for failure to pay rent.

1. The law concerning the effect of bankruptcy upon a leasehold of the bankrupt is stated in Ex parte Houghton, 1 Low. 554, Fed. Cas. No. 6,725:

'The earlier law of England, which we have adopted in this country, was that the assignees of a bankrupt have reasonable time to elect whether they will assume a lease which they find in his possession; and, if they do not take it, the bankrupt retains the term on precisely the same footing as before, with the right to occupy, and the obligation to pay rent. If they do take it, he is released, as in all other cases of valid assignment, from all liability, excepting on his covenants; and from these he is not discharged in any event.'

See, also, Hall, Landl. & T. 346.

I can find nothing in the act of 1898 to produce a result different from that of the act of 1867. Had there been no clause giving the lessor the right to re-enter, the trustee in bankruptcy would have had a reasonable time to elect whether to assume or to refuse the lease. If he had assumed it, the bankruptcy would have operated like any other assignment, and would have released the bankrupt from all liability, except upon those of his covenants not already broken which would have remained binding upon him after any other assignment. If the trustee had refused to take the lease, the bankrupt would have remained tenant as before. In Re Jefferson (D.C.) 93 F. 948, 951, the learned judge said:

'And yet the court sees no way to avoid the conclusion that the relation of landlord and tenant in all such cases ceases, and must, of necessity, cease, when the adjudication is made. If the relation does cease, the landlord afterwards has no tenant, and the tenant has no landlord. At the time of the adjudication the bankrupt is clearly absolved from all contractual relations with, and from all personal obligations to, the landlord growing out of the

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