Weeks v. International Trust Co.

• Decision Date: 06 October 1903
• Docket Number: 473.
• Citation: 125 F. 370
• Parties: WEEKS v. INTERNATIONAL TRUST CO.
• Court: U.S. Court of Appeals — First Circuit

125 F. 370

WEEKS v. INTERNATIONAL TRUST CO.

No. 473.

United States Court of Appeals, First Circuit.

October 6, 1903

Edward E. Blodgett and G. Philip Wardner (Eugene P. Carver, on the brief), for plaintiff in error.

Robert M. Morse (William M. Richardson, on the brief), for defendant in error.

Before COLT, Circuit Judge, and BROWN and LOWELL, District Judges.

LOWELL District Judge.

This is an action brought against the plaintiff in error, receiver of the Broadway National Bank, upon a covenant in a lease of the first floor and basement of a building on Milk street, in Boston, given by the predecessors in title of the defendant in error to the bank. In this opinion the plaintiff in error will be called the defendant, and the defendant in error the plaintiff. The bank had occupied since 1884 a part of the premises described in the lease. On March 30, 1893, the owners of the building had let the first floor to the bank. The lease ran for six years from April 30, 1893, and was signed, on the part of the lessee, 'Broadway National Bank, by James B. Kellogg, Cashier. ' On August 11, 1898 Parkman and others, then owners of the premises, executed to the bank the lease here in question for a term of 10 years from April 1, 1899, at a rent of $6,000 a year. This lease was signed, 'Broadway National Bank, by Roswell C Downer, President. ' There was no vote authorizing Downer to negotiate or to execute the lease, but the directors knew that he was negotiating for a lease in behalf of the bank and on July 27, 1898, they voted that he be authorized to execute a lease from the bank to one Pray, upon such terms and with such covenants as to Downer might seem fit. By this vote they intended to authorize Downer to let to Pray one-half of the basement which the bank was then occupying under a verbal agreement for a new lease made with Parkman and the other owners of the property. A lease for two years was thereafter executed by Downer in accordance with the vote. On March 28, 1899, the lessors sold the whole building to the defendant in error. On December 16, 1899, the bank became insolvent, and the comptroller of the currency appointed Wing as its receiver. On February 15, 1900, the comptroller released the estate of the bank to the defendant, as the stockholders' agent. Between December 16, 1899, and January 5, 1900, the plaintiff entered upon the premises and repossessed itself of the same as of its former estate. The plaintiff agreed with the receiver and the defendant that the occupation of the premises by the two latter after January 5, 1900, should be taken as a tenancy at will, and should not operate as a waiver by the plaintiff of its termination of the lease or the bank's tenancy thereunder, nor operate as an affirmance or acknowledgment by the bank or the receiver or the stockholders' agent of any liability on their part under the lease. The defendant occupied the premises until May 19, 1900. Except as above stated, the plaintiff had possession of the premises since its re-entry. The bank's charter was issued September 29, 1884, and was limited to expire October 3, 1904.

The lease, in addition to the terms above stated, contained the following clause:

'Provided, always, and these presents are upon this condition, that if the said lessee or its successors or assigns do or shall neglect or fail to perform and observe any or either of the covenants contained in this instrument, which on its or their part are to be performed, or if the said lessee shall be declared bankrupt or insolvent according to law, or if any assignment shall be made of its property for the benefit of creditors, then and in either of the said cases the lessors, or those having their estate in the said premises, lawfully may, immediately or at any time thereafter, and whilst such neglect or default continues, and without further notice or demand, enter into and upon the said premises or any part thereof, in the name of the whole, and repossess the same as of their former estate, and expel the said lessee and those claiming under it, and remove its effects (forcibly, if necessary), without being taken or deemed guilty of any manner of trespass, and without prejudice to any remedies which might otherwise be used for arrears of their discretion, relet the premises, at the risk of the lessee, who shall remain for the residue of said term responsible for the rent herein reserved, and shall be credited with such amounts only as shall be by the lessors actually realized.'

On June 21, 1901, the plaintiff brought suit. After setting out a part of the facts heretofore stated, the declaration proceeded as follows:

'That by the terms of said lease said bank, notwithstanding such entry and taking possession by the plaintiff, remained and remains responsible for the rent reserved by said lease; that the rent due on the last days of May, 1900, June, 1900, * * * and May, 1901, was unpaid; that demand for said rent was duly made of said bank when said amounts were severally due, and that the total amount of rent due and unpaid May 31, 1901, was $6,500, for which said bank is responsible; that on January 22, 1900, John W. Weeks was duly elected agent; * * * and that on February 15, 1900, the Comptroller of the Currency and Daniel G. Wing, receiver as aforesaid, duly transferred and delivered to said Weeks, as agent of the Broadway National Bank, all the assets and property of said bank; and that by virtue of the appointment of said Weeks as agent and of the other acts aforesaid he became and is liable to be sued in his own name for the rent hereinbefore set forth.'

The defendant pleaded a general denial and a payment, and also that upon the termination of the lease it became the plaintiff's duty to use all reasonable effort to relet the premises, so as to minimize the damages; that, if the plaintiff had used such effort, suitable and responsible parties were willing at various times to hire the premises in question at a rent as great as, or greater than, the rent reserved in the lease to the bank; that the plaintiff willfully and arbitrarily refused to accept these parties as tenants; that the defendant offered to the plaintiff several specified suitable and responsible tenants, whom the plaintiff arbitrarily and unreasonably refused to accept. At the trial the Circuit Court directed a verdict for the plaintiff for an amount equal to the rent reserved in the lease for the time in question, less certain payments actually made to the plaintiff by the occupant of the basement, formerly the bank's subtenant. The case is here upon the defendant's exceptions. In discussing some of these exceptions further evidence bearing upon them will be set forth in addition to the general statement of the case above made.

I. The defendant excepted to the jurisdiction of the Circuit Court. The jurisdiction is based upon Act Aug. 13, 1888, c. 866, Sec. 4, 25 Stat. 436 (U.S. Comp. St. 1901, p. 514):

'That all national banking associations established under the laws of the United States shall, for the purposes of all actions, by or against them, real, personal, or mixed, and all suits in equity, be deemed citizens of the states in which they are respectively located; and in such cases the circuit and district courts shall not have jurisdiction other than such as they would have in cases between individual citizens of the same state. The provisions of this section shall not be held to affect the jurisdiction of the courts of the United States in cases commenced by the United States or by direction of any officer thereof, or cases for winding up the affairs of any such bank.'

That the receiver of a national bank may be sued in the Circuit Court, irrespective of citizenship, was decided in Auten v. U.S. Bank, 174 U.S. 125, 19 Sup.Ct. 628, 43 L.Ed. 920. That a stockholders' agent in this respect stands like a receiver was decided by the Circuit Court of Appeals for the Ninth Circuit in Guarantee Co. v. Hanway, 104 F. 369, 44 C.C.A. 312. With that decision we find no reason to disagree. See, also, In re Chetwood, 165 U.S. 443, 459, 17 Sup.Ct. 385, 41 L.Ed. 782. The exception is overruled.

2. The defendant contended that the lease in question, whose term extended beyond the expiration of the bank's charter, was ultra vires and void, and he excepted to the ruling that the bank could take such a lease. In Brown v. Schleier, 118 F. 981, 55 C.C.A. 475, the Circuit Court of Appeals for the Eighth Circuit held that a national bank can take a lease for 99 years. That court said that the lease there in question 'was an interest which was salable during the life of the corporation or on its dissolution.' 118 F 984, 55 C.C.A. 478. In the case at bar the bank's interest could be alienated only with the consent of the lessor. But we are not prepared to hold that the difference (if there be one) between the lease in Brown v. Schleier and the lease in this case is material to the validity of the latter. Strictly speaking, the lease here in question is alienable, though alienable only upon a condition. The condition is usual, at any rate in Massachusetts. And the assignment of a lease, even where permitted unconditionally, does not free the lessee from his obligations thereunder; he remains liable on his covenants, unless the lessor expressly or by implication releases the liability. To require unrestricted assignability in those leases taken by a national bank which extend beyond its charter would hamper the bank in obtaining a lease, without relieving the bank from embarrassment at the charter's expiration. Considering that the charter of...