Kothe v. Taylor Trust
Decision Date | 06 January 1930 |
Docket Number | No. 48,48 |
Citation | 74 L.Ed. 382,280 U.S. 224,50 S.Ct. 142 |
Parties | KOTHE v. R. C. TAYLOR TRUST |
Court | U.S. Supreme Court |
Mr. Frank H. Pardee, of Boston, Mass., for petitioner.
Messrs. George S. Taft and Thomas Hovey Gage, both of Worcester, Mass., for respondent.
April 20, 1927, respondent-the R. C. Taylor Trust-leased to one Turkel certain real estate, reserving rent at the rate of $4,000 per annum. The meager record before us does not affirmatively show the length of the term, but we accept the statement by counsel for both sides that it was two years. The lease contained the following provision:
'The filing of any petition in bankruptcy * * * by or against the lessee shall be deemed to constitute a breach of this lease, and thereupon, ipso facto and without entry or other action by the lessor, this lease shall become and be terminated; and, notwithstanding any other provisions of this lease the lessor shall forthwith upon such termination be entitled to recover damages for such breach in an amount equal to the amount of the rent reserved in this lease for the residue of the term thereof.'
Turkel having been adjudged bankrupt, the lessor filed proof of debt for $5,000, demanded as 'damages for breach of lease, * * * that being the same as the amount of rent reserved in the lease from February 15, 1928 to May 15, 1929, the end of the term.'
The referee disallowed the claim, 'for the reason that the proof is based on damages for the amount of rent running from the date of the filing of the petition to the end of the term of the lease, no part of such claim being for any rent which had accrued at the time of the filing of said bankruptcy petition.' The District Court affirmed his action; but the court below held the claim valid and allowable under section 63a(4) of the Bankruptcy Act of 1898, 30 Stat. 563 (USCA title 11, c. 7, § 103(a).
The trustee, petitioner here, maintains that the quoted provision of the lease imposed a penalty and did not express any lawful purpose to fix the liquidated damages which might follow failure to perform. On the other hand, the respondent insists that in view of the length of the term the agreement must be regarded as one for liquidated damages and therefore unobjectionable.
Sun Printing & Publishing Assn. v. Moore, 183 U. S. 642, 22 S. Ct. 240, 46 L. Ed. 366 and United States v. Bethlehem Steel Co., 205 U. S 105, 119, 27 S. Ct. 450, 51 L. Ed. 731, point out principles applicable to enforcement of contracts providing for payment of definite sums upon failure to perform. The courts are ...
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