In re Murray Realty Co., 28850.

• Decision Date: 30 September 1940
• Docket Number: No. 28850.,28850.
• Citation: 35 F. Supp. 417
• Parties: In re MURRAY REALTY CO.
• Court: U.S. District Court — Northern District of New York

35 F. Supp. 417

In re MURRAY REALTY CO.

No. 28850.

District Court, N. D. New York.

September 30, 1940.

Daniel J. Seubert, of Syracuse, N. Y., for bankrupt.

Hiscock, Cowie, Bruce & Lee, of Syracuse, N. Y., for Presbyterian Society in Village of Syracuse.

Costello, Cooney & Fearon, of Syracuse, N. Y., for E. E. Edwards & Son, creditor, and trustees of Daniel M. Edwards' estate.

Francis P. Maloney, of Syracuse, N. Y., for Willis H. Michell, trustee of Murray Realty Co., bankrupt.

MOSCOWITZ, District Judge.

This is a petition for a review of the referee's order.

By an agreement dated April 30, 1917, the First Presbyterian Society in the Village of Syracuse, hereinafter described as the "Lessor", leased to Daniel M. Edwards, now deceased, a building called the Murray Building in Syracuse, New York, for a term of twenty years beginning on May 1, 1921, and ending on April 30, 1941. The agreement provided that Edwards pay all taxes, local assessments, insurance, water rates and repairs in connection with the operation and maintenance of the building during the term of the lease. Upon taking possession of the premises, Edwards expended approximately $100,000 in remodelling the building. On January 3, 1921, Edwards assigned the lease to Murray Realty Company, which was adjudicated a bankrupt in this court on June 10, 1940. Willis H. Michell, upon his election and qualification as trustee in bankruptcy of the Murray Realty Company on June 21, 1940, assumed the lease. To date there has been no default in the payment of rents under the lease. Prior to the bankruptcy of the Murray Realty Company, Edwards died.

The lease provides in part as follows: "It is further agreed that the insolvency or bankruptcy of the second party `(Edwards)' or of any successor, shall at the option of the first party, `(the lessor)' its successors and assigns, terminate this lease and change the second party and all persons holding under him into a tenant or tenants `holding over' after the expiration of the term without consent."

Subsequent to the appointment of the trustee in bankruptcy of Murray Realty Company, the trustees of the lessor at a formal meeting unanimously passed a resolution terminating the lease under the above-quoted provision and gave notice to the trustee that in view of the fact that a petition in bankruptcy had been filed by Murray Realty Company and a receiver appointed and a trustee elected, the lessor terminated the lease. On June 28, 1940, an order was granted directed to the lessor and to all subtenants occupying the said building to show cause before the referee in bankruptcy why all the subtenants should not pay rent directly to the bankrupt's trustee and why the lessor should not be restrained from interfering with the trustee's collection of rents. The Church appeared specially before the referee and questioned the jurisdiction of the court. It also maintained that it had the right to terminate the lease in accordance with the option contained in the above-quoted paragraph of the lease and that such termination had become effective upon the giving of notice.

Upon the hearing of testimony, the referee determined that the court had jurisdiction to restrain any interference by the lessor in the collection of rents from the subtenants and that the termination option contained in the lease was limited solely to Edward's bankruptcy or that of his estate, but was not operative upon the bankruptcy of any assignee from Edwards.

The testimony showed that the rent due under the lease has been paid to the lessor and that the Estate of Daniel M. Edwards is solvent. The expiration date of the lease is April, 1941, and it cannot be urged that any damage will be suffered by the lessor in the event that the termination of lease under the option is not recognized by the court. In the event that the lease is terminated, the lessor will receive an excess over and above the amount called for under the lease, since the rents collected by the tenant from the subtenants exceeds in a substantial degree the amounts due to the lessor under the main lease.

The sole issue presented in this case is whether the word "successor" contained in the option paragraph includes the assignee of the original tenant. In reaching a conclusion as to the construction of the word "successor", it should be noted that in describing the lessor in whose favor the option exists, the phrase "first party, its successors and assigns" is used. Although the testimony does not show the...