Richman v. Joray Corp., 6103.

• Decision Date: 03 August 1950
• Docket Number: No. 6103.,6103.
• Citation: 183 F.2d 667
• Parties: RICHMAN et al. v. JORAY CORP.
• Court: U.S. Court of Appeals — Fourth Circuit

183 F.2d 667 (1950)

RICHMAN et al. v. JORAY CORP.

No. 6103.

United States Court of Appeals Fourth Circuit.

Argued June 27, 1950.

Decided August 3, 1950.

John W. Thomas, Jr., Columbia, S. C. (Pinckney L. Cain and Thomas, Cain & Lumpkin, all of Columbia, S. C., on the brief), for appellants.

Henry H. Edens, Columbia, S. C. (Henry Hammer, Columbia, S. C., on the brief), for appellee.

Before PARKER and SOPER Circuit Judges, and GILLIAM, District Judge.

SOPER, Circuit Judge.

This action was instituted by the Joray Corporation, organized under the laws of New Jersey, against Harry Richman of Illinois, and the Capitol Amusement Company, a South Carolina corporation, to recover the sum of $7930 which the Joray Corporation claimed to be the balance due it from the sum of $10,000 deposited by it for the performance of its obligations as lessee of a bowling alley and building in Columbia, South Carolina, belonging to Richman and the Amusement Company. The defendants, hereinafter referred to as landlord or lessor, made answer denying the claim and filed a counter-claim for damages to the property and loss of equipment beyond ordinary wear and tear. The case was tried before the District Judge without a jury and resulted in a verdict for plaintiff in the sum claimed less $200 for damages to the premises, and the defendants have appealed on the ground that the property was security not only for arrearages of rent due and damages incurred on June 30, 1949, when the tenant surrendered the premises to the landlord, but also for any loss of rental which the landlord might suffer during the balance of the term of the lease.

The parties entered into the agreement of lease on September 15, 1944 for a term commencing October 1, 1944 and ending March 31, 1954, at an annual rental of $12,420 payable in equal monthly installments in advance on the first day of each month. The tenant deposited $10,000 with the landlord in accordance with paragraph 7 of the lease as follows:

"7. The tenant has this day deposited with the landlord the sum of Ten Thousand ($10,000.00) dollars as security for the faithful performance by the tenant of all of the terms and conditions, which it has undertaken to perform, which sum shall be returned to tenant only after the time fixed at the commencement of this agreement as the expiration of the term herein (notwithstanding this lease may be sooner terminated) provided the tenant has fully and faithfully carried out all of the terms, covenants and conditions on its part to be performed. * * *"

The lease also made the following provisions relating to the rights of the landlord if the premises should become vacant or if the tenant should default in the performance of its obligations under the lease or if certain other contingencies should occur:

"19. That if said premises or any part thereof, shall become vacant during said term; or should the tenant be evicted by summary proceedings or otherwise, the landlord or their representatives may re-enter the same either by force or otherwise, without being liable for prosecution therefor; and re-let the said premises or portions thereof from time to time as opportunity may offer and as the landlord may deem expedient, as the agent of the said tenant and receive the rent thereof; applying the same, first to the payment of such expenses as they may be put to in reentering and then to the payment of the rent due by these presents; the balance (if any) to be paid over to the tenant who shall remain liable for any deficiency; and any deposit given to the landlord by the tenant as security for the faithful performance of the terms and conditions of this lease, may be retained by the landlord until the time originally fixed as the expiration of the term."

"24. It is expressly understood and agreed that in case the demised premises, or any part thereof, shall be deserted or vacated, or if default be made in the payment of the rent or any part thereof as herein specified, or if, without the consent of the landlord, the tenant shall sell, assign or mortgage this lease or if default be made in the performance of any of the covenants and agreements in this lease contained on the part of the tenant to be kept and performed, or if the tenant shall fail to comply with any of the statutes, ordinances, rules, orders, regulations and requirements of the Federal, State and Municipal Government or of any and all their departments and bureaus applicable to said premises, or hereafter established as herein provided, or if the tenant shall file a petition in bankruptcy or be adjudicated a bankrupt or make an assignment for the benefit of creditors or take advantage of any provision of the insolvency act, the landlord, may if they so elect, at any time thereafter terminate this lease and the term thereof shall terminate, expire and come to an end on the date fixed in such notice as if said date were the date originally fixed in this lease for the termination or expiration thereof."

The lessee entered into possession under the lease and paid the stipulated rental for a period of more than three years. In the spring of 1948 the volume of business was reduced by the curtailment in size of the army post at Fort Jackson, South Carolina, and at the request of the tenant, the parties agreed that the rent should be reduced in the sum of $300 per month for the months of June, July, August and September, 1948; but it was expressly provided that the amount of the reduction should be made up on or before the expiration of the term of the lease.

The business continued to be unprofitable in 1949 and the plaintiff fell into arrears for rent in the sum of $2070 for the months of May and June. The tenant, finding itself unable to meet the obligations of the lease, again sought a reduction in rent. Negotiations between the parties ensued and finally on June 30, 1949, the defendants entered into a written agreement of settlement. Reference was made therein to the term of the original lease, the amount of the rental, the deposit of $10,000 by the tenant as security for the performance of its obligations, the breach by the tenant of the conditions of the lease, and the right of the landlord if it should so elect to terminate the lease in case of any default by the tenant; and in view of these considerations it was mutually agreed between the parties as follows:

"1. That the lease...