TAD Jones Co. v. Winchester Repeating Arms Co.

• Decision Date: 07 November 1932
• Docket Number: No. 35.,35.
• Citation: 61 F.2d 774
• Court: U.S. Court of Appeals — Second Circuit
• Parties: T. A. D. JONES CO. v. WINCHESTER REPEATING ARMS CO. SOUTHEASTERN INV. CO. OF SAVANNAH, GA., v. UNION & NEW HAVEN TRUST CO. et al.

61 F.2d 774 (1932)

T. A. D. JONES CO. v. WINCHESTER REPEATING ARMS CO.

SOUTHEASTERN INV. CO. OF SAVANNAH, GA., v. UNION & NEW HAVEN TRUST CO. et al.

No. 35.

Circuit Court of Appeals, Second Circuit.

November 7, 1932.

Philip Pond, Joseph I. Shrebnik, and Samuel H. Platcow, all of New Haven, Conn., for appellant.

Eli J. Blair, of New York City, and Bristol & White and Albert H. Barclay, all of New Haven, Conn., for appellees.

Before L. HAND, SWAN, and AUGUSTUS N. HAND, Circuit Judges.

L. HAND, Circuit Judge.

The appeal involves the validity of a claim presented to the receivers of the defendant, a Delaware corporation, appointed in a creditor's bill to sequester and distribute its assets. The only question is whether the claim was valid. The facts are as follows: One, Davis, was the lessee of certain premises in Jacksonville, Florida, which he in turn let to the Winchester Company, a Connecticut company, which after that company's assignment of the term, hereafter mentioned, conveyed its assets to the defendant, which assumed its liabilities. Davis thereafter conveyed his reversion to the claimant. (It will be clearer to disregard Davis's tenure and treat him as tenant in fee, as the parties have done.) The lessee — the Connecticut company — covenanted with Davis to pay the rent and granted him a right of re-entry upon breach of this, as of other covenants, not necessary to set forth; but Davis reserved no right, after re-entry, to relet for the benefit of the lessee, and charge it with the difference, nor did the lessee promise to pay him that difference. Pending the term, the Connecticut company executed an instrument to the Bayshore Company, a Florida corporation, under which that company took possession, and by the terms of which the Connecticut company assigned its interest in the premises for the whole term, and the Bayshore Company covenanted to pay the same rent to Davis's order, to perform all the other covenants, and to keep the Connecticut company indemnified against any breaches by it. Upon the Bayshore Company's default the Connecticut company might re-enter, the term should end, and the Bayshore Company must pay the difference between the rent reserved and the fair rental for the property.

Thereafter in January, 1931, receivers were appointed for the defendant, the Connecticut company's general assignee, and these receivers on March thirtieth served notice on the claimant that they "elected to cancel" the lease, "cancelled and discharged all further liability" of the defendant, and "surrendered up said premises and all right title and interest" in them. Correspondence followed between the claimant and the receivers' attorney, which it is not necessary to set out in detail, or to describe further than to say that each side apparently took the view that the Connecticut company's assignment to the Bayshore Company was a sub-lease. A few days after the receivers' notice of cancellation, and before the correspondence just mentioned, the Bayshore Company wrote the claimant that, having learned from the receivers of their "repudiation" of the lease, its own rights as "sub-lessee" were at an end, and that it would at once leave the premises. Thereupon the claimant in turn wrote the receivers that it would "take possession" for their account, try to relet, and credit anything received upon its "claim against you." After some ineffectual efforts to that end, it finally relet to the Bayshore Company at a lower rent, not reserving any claim in its own favor arising by virtue of the Connecticut company's assignment of the lease. The claim in suit is for the difference for the rest of the term between the original rent and that arising under the second lease. The judge thought that the defendant was only a surety for the Bayshore Company, and that the claimant's release of that company was a discharge.

The land being in Florida, the authoritative interpretation of the Connecticut company's assignment to the Bayshore Company is to be found in the decisions of the courts of that state. Buchser v. Buchser, 231 U. S. 157, 34 S. Ct. 46, 58 L. Ed. 166; Tyler v. U. S., 281 U. S. 497, 501, 50 S. Ct. 356, 74 L. Ed. 991, 69 A. L. R. 758; Hinde v. Vattier, 5 Pet. 398, 491, 8 L. Ed. 168; Smith v. Staso Milling Co., 18 F.(2d) 736 (C. C. A. 2). In Florida (C. N. H. F. v. Eagle Crest Development Co., 99 Fla. 1238, 128 So. 844), an assignment of the whole term is not a sublease as between the lessor and the assignee, but a direct assignment, though the assignor — the former lessee — reserves a right of re-entry upon default of the assignee, and even though he is to receive a higher rent. This is the more general rule. Stewart v. Long Island R. R. Co., 102 N. Y. 601, 8 N. E. 200, 55 Am. Rep. 844. Therefore, as assignee of the original lease, the Bayshore Company was directly bound to Davis and later to the claimant, as assignee of the reversion, by the Connecticut company's covenants, so far as they ran with the land (Dunn v. Barton, 16 Fla. 765; C. N. H. F. v. Eagle Crest Dev. Co., 99 Fla. 1238, 128 So. 844, supra); among them that to pay rent. It is true that an assignee may relieve himself at any time by in turn assigning to another (Onslow v. Corrie, 2 Maddock, 330; McBee v. Sampson (C. C.) 66 F. 416; Durand v. Curtis, 57 N. Y. 7); his obligation arises from privity of estate, not from contract, and his assignment is effective, even though made for no other purpose than to evade liability. But some assignment is necessary; mere abandonment of the premises is not the equivalent. Blake v. Sanderson, 1 Gray (Mass.) 332; Seventy-Eighth Street, etc., Co. v. Purssell Mfg. Co., 166 App. Div. 684, 152 N. Y. S. 52; Tyler Commercial College v. Stapleton, 33 Okl. 305, 125 P. 443, 42 L. R. A. (N. S.) 162, Ann. Cas. 1916E, 837; Chicago Attachment Co. v. Davis Sewing-Machine Co. (Ill.) 25 N. E. 669; McLean v. Caldwell, 107 Tenn. 138, 64 S. W. 16; Moline v. Portland Brewing Co., 73 Or. 532, 144 P. 572). The Bayshore Company did not assign the term or try to, but merely moved out; it was still directly liable to the claimant for the rent.

In Florida as in several other states, upon a default in the payment of rent, the lessor may relet the premises for the account of the lessee, and charge him with the rent reserved as it accrues, less the amount received. Campbell v. McLaurin Inv. Co., 74 Fla. 501, 77 So. 277; Hickson v. Barton, 77 Fla. 105, 80 So. 745. Indeed, it is apparently his duty so to keep down his damages. This differs from the common-law, by which such a reletting is a re-entry, which ends the term, and with it the rent, which "issues" from the land. But the lessor may not safely agree with the lessee and a substitute that the substitute shall come in under a new lease, unless (we may for...