In re Mitchell

• Decision Date: 08 April 1902
• Docket Number: 50.
• Citation: 116 F. 87
• Parties: In re MITCHELL.
• Court: U.S. District Court — District of Delaware

116 F. 87

In re MITCHELL.

No. 50.

United States District Court, D. Delaware.

April 8, 1902

Christopher L. Ward, for trustee.

Anthony Higgins, for creditors.

BRADFORD District Judge.

In this case the executors of J. Taylor Gause filed with the referee in bankruptcy for New Castle county December 27, 1901, a claim against the estate of the bankrupt, Samuel Mitchell for rent for certain demised premises situate in said county from September 25, 1901, to March 25, 1902, amounting to $762.50; alleging that said sum was entitled to priority under the laws of Delaware, that no part of it had been paid and that no security had been received for the same. Mitchell was on his own petition adjudged a bankrupt December 9, 1901. The trustee in bankruptcy by petition filed with the referee February 22, 1902, excepted to a portion of the claim, and thereafter on the same day the referee, having certified that he was indirectly interested in the subject-matter of the petition, it together with the claim was, pursuant to section 43 of the bankruptcy act, filed in this court. Thereafter by leave of the court the trustee filed an amended petition modifying his original exception to the claim. The parties through their respective attorneys have filed a statement of facts, as follows:

'Statement of Facts.

1. On December 9th, A.D. 1901, Samuel Mitchell, the bankrupt, was the tenant of the premises, 219 Market Street in the City of Wilmington, State of Delaware, owned by estate of J. Taylor Gause, under a lease, copy of which is annexed.

2. On December 9th, A.D. 1901, the said Samuel Mitchell filed his voluntary petition in bankruptcy. The same day he was adjudicated a bankrupt and the case was referred to Arthur W. Spruance, Esq., referee in bankruptcy, and on December 23rd, A.D. 1901, Edmund S. Hellings, Esq., was appointed trustee in bankruptcy.

3. The said trustee occupied the said premises first as a place of storage of the assets of the bankrupt and afterwards for the purpose of selling said assets, until the fifteenth day of February, A.D. 1902, when he ceased to occupy the said premises and delivered the keys thereof at the office of Anthony Higgins, Esq., attorney of record for said estate of J. Taylor Gause, at the same time by letter, a copy of which is attached to this agreed statement of facts and made a part thereof, expressing a desire to surrender possession of said premises to said estate of J. Taylor Gause, offering to pay for the use and occupation of the premises from the day of filing of said petition in bankruptcy to said 15th day of February, at the rate at which the premises were rented to said bankrupt, and as to the balance of the rent from said 15th day of February to March 25th, A.D. 1902, expressly disclaiming all responsibility and liability, and since said 15th day of February, the said trustee has not had the use or occupation of said premises.

4. The said premises have not been rented to any tenant. There has been no acceptance of the surrender by the landlord or his agents and no such dealing with the premises as would amount to a surrender in law.

5. Rent is paid up to the twenty fifth day of September, A.D. 1901, and nothing beyond that date.

6. There were on demised premises assets of the bankrupt amply sufficient to satisfy the landlord's claim for rent and not subject to any exceptions under the laws of the State of Delaware.'

The lease referred to in the agreed statement of facts is as follows:

'This agreement made this eighth day of January, one thousand nine hundred and one, witnesseth, that Samuel Mitchell of the City of Wilmington, New Castle County and State of Delaware, has rented from H. T. Gause and H. W. Gause, executors under the will of J. Taylor Gause, deceased, of the said City of Wilmington, a certain piece or parcel of land situate in the said City of Wilmington, known as No. 219 Market Street, together with a four story messuage thereon erected, for the term of one year from the twenty fifth day of March, 1901, at the rent of fifteen hundred and twenty five ($1525) dollars per annum, to be paid in monthly portions in advance of one hundred and twenty seven dollars and eight cents each, and the said Samuel Mitchell doth hereby, for himself, his heirs, executors and administrators, covenant and promise to pay to the said H. T. Gause and H. W. Gause, executors as aforesaid, or their assigns, the said rent in the proportions aforesaid, and he the said Samuel Mitchell, his executors and administrators, shall and will not at any time during the said term, let or demise, or in any way dispose of, the hereby demised premises, or any part thereof, for all or any part of the term hereby granted, to any person or persons whatever without the consent and approbation in writing of the said H. T. Gause and H. W. Gause, executors as aforesaid, or their assigns, first had for that purpose, and at the expiration of the said term, yield up and surrender the possession of said premises with the appurtenances unto the said H. T. Gause and H. W. Gause, executors as aforesaid, or their assigns, in the same good order and condition as the same now are, reasonable wear and tear thereof and accidents happening by fire or other casualties, excepted.

In witness whereof, the said Samuel Mitchell and the said H. T. Gause and H. W. Gause, executors as aforesaid, have hereunto set their hands and seals, the eighth day of January one thousand nine hundred and one.

Samuel Mitchell, (Seal) H. T. Gause, (Seal) H. W. Gause, (Seal)

Executors under will of J. Taylor Gause, deceased.

Sealed and delivered in the presence of

Henderson Wier as to Samuel Mitchell,

F. H. Megaw, as to H. T. and H. W. Gause.'

It is not necessary to quote from the letter referred to in the statement of facts, as it is admitted that there was no surrender of the premises by the tenant to his landlords. The trustee in his original exception to the claim alleges that 'only a portion of said whole amount, to wit, the sum of three hundred seventeen 70/100 dollars for rent due September 25th, 1901, to December 9th, 1901, is entitled to priority under the provisions of the bankruptcy act,' and prays that an order be made disallowing said claim as filed, 'reducing the same to the sum of three hundred seventeen 70/100 dollars. ' In his modified exception the trustee claims that 'only a portion of said whole amount, to wit, the sum of two hundred fifty four 16/100 dollars for rent due September 25th, 1901, to November 25th, 1901, is entitled to priority' under the provisions of said act, and prays for a disallowance of 'the said claim as filed' and 'a reduction of the same to the sum of two hundred fifty four 16/100 dollars. ' By the terms of the lease the rent was to be paid in monthly instalments of $127.08 each in advance. It is admitted in the statement of facts that the rent was 'paid up to the twenty-fifth day of September, A.D. 1901, and nothing beyond that date. ' Being payable in advance, the rent to October 25, 1901, was due and payable October 25, 1901; and the rent to December 25, 1901, was due and payable November 25, 1901; the aggregate being $381.24. This amount represents an indebtedness or money demand which under the covenants of the lease matured and was collectible by action or distress prior to the adjudication, December 9, 1901. Sections 8, 12, c. 120, Rev. Code Del. There can be no question that it was provable against the estate of the bankrupt. The real controversy turns on the questions whether the remaining instalments of rent payable December 25, 1901, January 25, 1902, and February 25, 1902, were so provable, and, if so, whether they were entitled to priority. By section 1, (11) of the bankruptcy act, "debt' shall include any debt, demand, or claim provable in bankruptcy. ' Section 63 provides that debts of a bankrupt which may be proved against the estate are

'(1) A fixed liability, as evidenced by a judgment or an instrument in writing, absolutely owing at the time of the filing of the petition against him, whether then payable or not, with any interest thereon which would have been recoverable at that date, or with a rebate of interest upon such as were not then payable and did not bear interest.

(4) Founded upon an open account, or upon a contract express or implied.' Section 64, in providing for priority of debts, includes 'debts owing to any person who by the laws of the states or the United States is entitled to priority. ' While this section places certain other debts higher in the scale of priority than those above mentioned, this fact does not appear to have any pertinency to the case in hand, as no debts higher in such scale are set up or referred to. It is urged with much ability and ingenuity by the counsel for the trustee that the claim, in so far as it relates to rent, not in arrear, but growing due, does not disclose a debt or demand provable in bankruptcy. To sustain this contention it must appear that under the laws of Delaware a money rent growing due for the balance of the renting year is not a debt or demand, or that, if it is, it is not embraced in sub-division (1) or (4) of section 63 of the Bankruptcy Act. But I have no doubt that under the statutes and judicial decisions in Delaware a money rent, though not in arrear, but growing due for the balance of the renting year, is a debt or demand. It is true that, except as provided to the contrary in section 65, c. 120, Rev. Code Del., hereinafter quoted, only rent in arrear is the subject of a distress. Sections 19, 37, c. 120. But claims for rent growing due are, within certain limits, peculiarly favored in Delaware. Sections 60 and 61 of the same chapter are as follows:

'Sec. 60. If goods and chattels of a tenant being upon

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