In re Garment Center Capitol, 112.

• Citation: 93 F.2d 667,115 ALR 202
• Decision Date: 03 January 1938
• Docket Number: No. 112.,112.
• Parties: In re GARMENT CENTER CAPITOL, Inc. IRVING TRUST CO. et al. v. AMERICAN SILK MILLS, Inc.
• Court: U.S. Court of Appeals — Second Circuit

115 ALR 202, 93 F.2d 667 (1938)

In re GARMENT CENTER CAPITOL, Inc. IRVING TRUST CO. et al. v. AMERICAN SILK MILLS, Inc.

No. 112.

Circuit Court of Appeals, Second Circuit.

January 3, 1938.

O'Connor & Farber, of New York City (Arnold T. Koch and Earle R. Koons, both of New York City, of counsel), for plaintiffs-appellees and appellants.

Henry I. Fillman, of New York City (Maxwell C. Katz and Henry I. Fillman, both of New York City, of counsel), for defendant-appellant and appellee.

Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.

AUGUSTUS N. HAND, Circuit Judge.

In January, 1930, defendant leased a loft at 500 Seventh avenue, New York City, from Garment Center Capitol, Inc., for a term beginning February 1, 1930, and ending January 30, 1934, at an annual rent of $15,200, payable in monthly installments of $1,266.67 on the first day of each month. The defendant failed to pay the rent for December, 1932, and January, 1933. Pursuant to the provisions of the lease the receivers of Garment Center Capitol, Inc., served defendant with a notice terminating the lease for nonpayment of the foregoing installments of rent and directing it to vacate the demised premises not later than February 3, 1933. The notice stated that the receivers intended to hold the defendant liable for "all rent now due or hereafter accruing together with any and all damages which may be sustained by them as well as all expenses incurred in connection with any reletting of the premises. * * *" Defendant did not vacate the premises, and on March 8, 1933, the receivers instituted a summary proceeding whereby they obtained possession and received a judgment for the rent due for December, 1932, and January, 1933. The receivers entered into possession in June, 1933.

The lease contained a clause imposing a continuing liability upon the defendant in case of default and the termination of the lease by notice, and authorizing the landlord to relet as agent of the tenant. The clause read as follows:

"Sixth: * * * If the Landlord shall re-enter, repossess or resume possession of the said premises, either by force, process of law, summary proceedings, surrender, re-possession or otherwise, or shall dispossess or remove therefrom the Tenant or other occupant thereof or the effects or property of Tenant or occupant either pursuant to the provisions of this lease or pursuant to any law now existing or which hereafter may be enacted, then and in any of said events the Landlord shall have the right to re-let said premises or any part thereof as agent for the Tenant or otherwise and to receive the rent therefor and the Tenant shall pay to the Landlord all the Landlord's expenses in connection with re-entering, repossessing or resuming possession of the said premises by force, process of law or otherwise, including costs in legal proceedings, attorneys' fees and all other disbursements, together with the difference (as ascertained at the end of each calendar month during the residue of term as the same would have existed had no default been made) between the rents and sums hereby reserved and agreed to be paid by the Tenant during said month and those otherwise received on account of the rent of the demised premises for such month. * * *"

The cause of action set forth in the complaint is identical in all respects (except as to the period of time covered) with that stated in an action heretofore brought, the decision of which is reported in Irving Trust Company v. American Silk Mills, 2 Cir., 72 F.2d 288. The plaintiffs here are the trustees in a proceeding for reorganization under section 77B of the Bankruptcy Act, 11 U.S.C.A. § 207 and note, who succeeded the receivers in equity. The trial court directed a verdict in the sum of $6,004.20, together with interest amounting to $15 and costs in the sum of $43.10, upon which a judgment was entered for $6,062.30.

The judgment was for damages for loss of rents for the months of October, 1933, to January, 1934, inclusive. The trial judge refused to allow damages for the month of September, 1933 (though the plaintiffs sought to recover them), on the ground that they had split their cause of action as to that month by not including them in the former action. That action was to recover damages for the months of February, 1933, to August, 1933, and the circumstances of the recovery of the judgment therein will be discussed hereafter.

The defendant appeals on the ground that the...