In re McCrory Stores Corporation, 59.
| Decision Date | 05 November 1934 |
| Docket Number | No. 59.,59. |
| Citation | 73 F.2d 270 |
| Parties | In re McCRORY STORES CORPORATION. WALKER et al. v. IRVING TRUST CO. |
| Court | U.S. Court of Appeals — Second Circuit |
Pleasants & Lowry, of New York City (Samuel A. Pleasants and Benjamin G. Myron, both of New York City, of counsel), for petitioners-appellants.
Rosenberg, Goldmark & Colin, of New York City (Max Freund, of New York City, of counsel), for trustee-appellee.
Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.
By lease of May 8, 1926, the petitioners-appellants let to McCrory Stores Corporation certain premises at Fort Worth, Texas. In the following clause the lease purported to grant to the owners of the real estate a lien on rentals to become due McCrory Stores Corporation from subtenants:
"To secure the payment of all sums to be paid by the Lessee to the Lessors, as Rent for said premises, or otherwise, including the aggregate of the installments unpaid in the event they shall be declared due and payable under the provisions of the Lease, with interest and attorney's fees thereon, as herein provided for, a Lien is hereby granted by the Lessee to the Lessors, their successors or assigns * * * upon any and all moneys that may hereafter be due and owing the said Lessee by its subtenants (if any) on said premises, or in respect thereof, or any part thereof, whether for Rent or otherwise, and said Lien shall be prior in right to all other Liens upon such leasehold estate property and premises and moneys. * * *"
McCrory Stores Corporation paid all rentals due to and including the month of January, 1933. On January 14, 1933, McCrory Stores Corporation filed its voluntary petition and was on that date duly adjudicated a bankrupt, and the Irving Trust Company was later elected trustee. Thereafter the trustee collected the following sums due from subtenants to the bankrupt on account of rentals for periods prior to February 1, 1933:
Unremitted rentals for December
1932, in hand December 28 ......... $100.00
Net rentals from subtenants received
during January, 1933 .............. 815.75
Net rentals received on or subsequent
to February 1, 1933, for
rentals due from subtenants for
periods prior to January 1, 1933 .. 1,043.00
_________
$1,958.75
The trustee likewise collected from
subtenants the following rentals
accrued after February 1, 1933 .... 2,732.18
_________
$4,690.93
On April 26, 1933, pursuant to order of the bankruptcy court, the trustee disaffirmed and rejected all right, title, and interest in and to the lease and notified the owners of the real estate to that effect and that it assumed no liabilities under the same.
The bankrupt failed to pay rent to the owners due on February 5, March 5, April 5, and May 5, 1933, aggregating $10,066.64.
The trustee in bankruptcy makes no claim to the subrents aggregating $2,732.18 which accrued after February 1, 1933. These the bankruptcy court ordered paid to the owners of the property; the bankrupt being after that date in default in payment of rent under the main lease.
The owners of the real estate filed a petition in the bankruptcy court in which they claimed a lien on the $1,958.75 of subrents accrued prior to February 1, 1933, and before there was any default under the main lease, as well as upon the $2,732.18 subrents accrued thereafter. Referee Stephenson denied the application so far as it related to the $1,958.75 on the ground that the covenant in the lease providing for a lien on subrents extended only to those accruing after a default in payment of rent on the main lease. His decision was affirmed by Judge Knox, from whose order the present appeal has been taken.
We think the court below was right in holding that the clause in the lease giving subrents as security was limited to those accruing after default. In our opinion it cannot reasonably be supposed that the lessee intended to deprive itself of the full right to...
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