In re Jay-Norm Corporation, 85778.
| Decision Date | 30 December 1958 |
| Docket Number | No. 85778.,85778. |
| Citation | 174 F. Supp. 866 |
| Court | U.S. District Court — Southern District of California |
| Parties | In the Matter of JAY-NORM CORPORATION, a California corporation, Bankrupt. |
Craig, Weller & Laugharn, Los Angeles, Cal., for trustee.
Richard E. Erwin, Los Angeles, Cal., for petitioner on review.
Prior to bankruptcy, Jay-Norm Corporation as lessee and Haig M. Prince as lessor executed a lease covering real property which provides for monthly installments of rent to be paid on the 25th day of each month. The lease also provides that if bankruptcy is filed by the tenant and remains for a period in excess of five days, this fact shall, at the option of the lessor, be deemed a breach of the lease. It further provides that in the event of failure to pay rent the lessor, at his option, may declare a breach of the lease.
The installment of rent due on February 25, 1958, is unpaid. On March 5, 1958, the bankrupt filed a voluntary petition in bankruptcy, an adjudication was made, the trustee of the bankrupt estate took possession of the demised premises and occupied them until March 30, 1958, on which date he terminated the occupancy. The lessor contends he is entitled to rent as a priority debt under Section 64, sub. a of the Bankruptcy Act, 11 U.S. C.A. § 104, for the entire period of the trustee's occupancy, i. e. from March 5, 1958, to March 30, 1958.
On May 7, 1958, the Trustee in Bankruptcy filed a "Petition for Order to Show Cause Determining Trustee's Liability For Administration Rent". Following a hearing on the Order to Show Cause, the Referee filed his findings of fact and ordered that the lessor be allowed a priority as an expense of administration under Section 64, sub. a of the Bankruptcy Act (11 U.S.C.A. § 104) only six days' rent covering the period from March 25, 1958, through March 30, 1958, and that the lessors' claim for the remaining portion of the rent be allowed only as a general unsecured claim.
In California rent payable monthly on a day certain accrues and becomes due on that day, and the landlord cannot be divested of his right to the entire month's rent as rent is not apportionable. In re Benguiat, D.C., 20 F. Supp. 504; Title Insurance & Trust Co. v. Amalgamated, 63 Cal.App. 29, 218 P. 71; Harabedian v. Parnell, 96 Cal. App.2d 358, 215 P.2d 73; Hindin v. Caine, 104 Cal.App.2d 238, 231 P.2d 83; Friedman v. Isenbruck, 111 Cal.App.2d 326, 244 P.2d 718. Relying on this statement of the law the trustee argues that a month's rent accrued on February 25, 1958, which was prior to bankruptcy, and that the landlord is limited to a general claim for this month period.
The trustee's argument does not dispose of the essential question in this case. The rule that the month's rent accrues at the beginning of the day due and cannot be apportioned is for the benefit of the landlord and augments such other rights and privileges as he may have. It does not mean that he is required to accept the right to collect the month's rent and to accept the tenant's occupancy for the month, if he has a right of re-entry.
In the instant case there was a default in the payment of rent on February 25, 1958, which gave the landlord the option of re-entry. He had his choice—he could declare a breach of the lease and repossess or he could stand on the lease and demand the rent according to the terms of the lease. It is the landlord's position that he exercised his option to declare a breach of the lease and that he repossessed the demised premises prior to the filing of bankruptcy and the occupancy of the trustee. If the landlord's position is supported by the record, the trustee when he occupied the premises did not stand in the shoes of the bankrupt, but was directly liable to the landlord for the rent, and the landlord was entitled to a priority as an expense of administration under Section 64, sub. a of the Bankruptcy Act (...
To continue reading
Request your trial
-
In re Buttonwood Securities, Inc., Civ. A. No. 71-391-N.
...in Crook v. Zorn, 100 F.2d 792 (5th Cir. 1939). It is so ordered. 1 Benguiat appears to have been followed in In re Jay-Norm Corporation, 174 F. Supp. 866 (S.D.Cal.Cent.Div.1958). However, the award of administrative rent in that case turned on the factual question of whether or not the lan......
-
Bishop Cafeteria Co. of Omaha v. Ford
...a situation. See, Stiles v. Lambert, 39 Ala.App. 15, 94 So.2d 784; Lochner, Receiver v. Martin, 218 Md. 519, 147 A.2d 749; In re Jay-Norm Corp., D.C., 174 F.Supp. 866; Rogoski v. McLaughlin, 228 Ark. 1157, 312 S.W.2d 912; Petrelli v. Kagel, 37 Misc.2d 246, 235 N.Y.S.2d 383. Although this ru......
-
Sun Life Assurance Company of Canada v. Hoy
...174 F. Supp. 859 ... SUN LIFE ASSURANCE COMPANY OF CANADA, a corporation, Plaintiff, ... Clarence Abraham HOY and Paul R. Stockdale, Defendants ... Civ. No. 1629-D ... ...
-
Haydell v. Silva
...the demised premises. (Igauye v. Howard, 114 Cal.App.2d 122, 249 P.2d 558; Lydon v. Beach, 89 Cal.App. 69, 264 P. 511; In re Jay-Norm Corporation, D.C., 174 F.Supp. 866.) The defendant has admitted that he excluded the plaintiff from the leased premises beginning on May 2nd, the date on whi......