Wm Filene Sons Co v. Weed

• Decision Date: 04 February 1918
• Docket Number: No. 93,93
• Citation: 245 U.S. 597,38 S.Ct. 211,62 L.Ed. 497
• Parties: WM. FILENE'S SONS CO. v. WEED et al
• Court: U.S. Supreme Court

245 U.S. 597

38 S.Ct. 211

62 L.Ed. 497

WM. FILENE'S SONS CO.

v WEED et al.

No. 93.

Argued Dec. 17 and 18, 1917.

Decided Feb. 4, 1918.

Messrs. George R. Nutter, James Butler Studley, and Louis D. Brandeis, all of Boston, Mass., and Francis B. James, of Washington, D. C., for petitioner.

Messrs. Frederick H. Nash and Charles F. Choate, Jr., both of Boston, Mass., for respondents.

Mr. Justice HOLMES delivered the opinion of the Court.

This case comes to this Court by writ of certiorari upon a bill for instructions filed by the receivers of William S. Butler and Company, incorporated. The receivers were appointed upon the prayer of a creditor, assented to by the corporation, in a bill brought for continuing the business until the assets could be applied in satisfaction of the com- pany's debts. Instructions are asked as to the amount to be paid to the petitioner, Wm. Filene's Sons Company, under a lease of the premises that William S. Butler & Co. occupied. The lease covered five parcels of land held by the petitioner, also as lessee, and ran for the terms, less one day, of the respective original leases, which expired at different dates, from December 30, 1917, to February 28, 1921. It provided for a reentry in case of a failure to perform any covenant, of bankruptcy, etc., or of a receiver being appointed and not discharged within ninety days. These proceedings were begun on November 7, 1912. On December 5, 1912, the receiver elected not to assume the lease and left the rent due December 1, unpaid; on December 9 the petitioner reentered in pursuance of leave granted by the Court, and on December 17 made demand upon the receiver for the sum that it alleges to be due. The receiver filed this petition for instructions on April 7, 1913. On September 30, 1913, the petitioner filed a formal claim, the time for proving claims not yet having expired.

The lease is made in consideration of the lessee's covenant to pay twenty thousand dollars a year until February 27, 1921 (the day before the longest of the original leases expired,) and of the other covenants therein contained by the lessee to be performed. The reddendum requires the payment as rental of all sums payable by the lessor under the leases to it at the times specified in their leases, 'together with a further sum of twenty thousand dollars yearly, payable in equal monthly instalments until February 27, 1921.' The lessor agrees, at the joint request of the lessee and the overlessors in all the original leases in force at the time, to cancel the overleases and abate the rent in respect of them upon payment of a sum equal to $20,000 a year for the residue of the term plus one day, 'less a discount at the rate of five per cent. per annum on payments so anticipated.' There is a proviso for an abatement of rent and other payments in case of fire, the taking of part of the premises, etc., 'except said payment of twenty thousand dollars per year'; and there is a further stipulation that if the overlease of any part of the demised premises is terminated, the payment of twenty thousand d llars per year shall continue without any abatement. Finally it is agreed that upon a termination of the lease as provided for the lessee will pay to the lessor, upon demand, a sum equal to twenty thousand dollars per year and at the same rate for a fractional part of a year, for so much of the period up to February 27, 1921, as remains unexpired, with one day added (less the five per cent. discount, as aforesaid), and will further make one of three several payments at the election of the lessor, of which it is only necessary to mention the second. This was to pay to the lessor as damages, the difference between the rental value and the rent and other payments named in the lease for the residue of the term, deducting, however, such sum as has been paid for the same period under the clause requiring the payment of twenty thousand dollars a year.

The substance of the petitioner's claim as argued before us is for a sum equal to twenty thousand dollars a year in monthly payments from December 9, 1912, to February 28, 1921, less a discount at the rate of five per centum per annum on the payments anticipated, and for whatever sum may represent its damages estimated in the manner that we have just stated as stipulated in the lease. The Courts below were of opinion that the twenty thousand dollars were simply an addition to the rent, that the provisions for payment upon termination of the lease were an attempt to secure a preference by accelerating the instalments and also were in the nature of a penalty, that the analogy of bankruptcy applied, and that the claim for the above-mentioned items could not be allowed. The Circuit Court of Appeals seems to have considered...