Supreme Court of the United States, 1934

Irving Trust Co. v. A. W. Perry, Inc.

Supreme Court of the United States · Decided December 3, 1934 · Roberts

293 U.S. 307; 55 S. Ct. 150; 79 L. Ed. 379; 1934 U.S. LEXIS 1008 (United States Reports)

Counsel

Mr. Edward K. Hanlon, with whom Mr. Charles K. Beekman was on tlje brief, for petitioner., Mr. Thomas F. Dougherty, with whom Messrs. Albert Stickney and Hersey Egginton were on the brief, for respondent., By leave of Court, briefs amicorum curiae were filed by Messrs. Walter E. Hope and H. Struve Hensel on behalf of the Trustees in Bankruptcy of Louis K. Liggett Co., in support of petitioner; and Messrs. Thomas Hunt and Earle W. Carr on behalf of the Trustees of the A. Shuman Real Estate Trust, in support of respondent.

Cases that cite this one

29 later published cases cite this decision. The 25 that cite it most often are listed here.

Oldden v. Tonto Realty Corporation (2d Cir. 1944)
Kennedy v. Boston-Continental Nat. Bank (1st Cir. 1936)
Walter D. Sanders, Trustee in Bankruptcy for the Atlanta Times, Inc., Bankrupt v. Commercial Credit Corporation (5th Cir. 1968)
Minot v. Irving Trust Co. (2d Cir. 1935)
Urban Properties Co. v. Irving Trust Co. (2d Cir. 1935)
Kennedy v. Boston-Continental Nat. Bank (District Court, D. Massachusetts 1935)
In re Sturgis Iron & Metal Co., Inc. (United States Bankruptcy Court, W.D. Michigan 2009)
In re W.T. Grant Co. (District Court, S.D. New York 1984)
80 Pine Inc. v. European American Bank (District Court, E.D. New York 1976)
In the Matter of the Plywood Company of Pennsylvania, the Plywood Company of Pennsylvania, Debtor (3d Cir. 1970)
In re Lion Overall Co. (District Court, S.D. New York 1943)
Giesy v. American Nat. Bank (District Court, D. Oregon 1940)
Schoenfeld v. COMMISSIONER OF INTERNAL REVENUE (9th Cir. 1939)
Electrical Products Consolidated v. Sweet (10th Cir. 1936)
Jacob Ruppert Realty Corp. v. Bank of United States (New York Supreme Court 1935)
First Nat. Bank of Chicago v. First Nat. Bank of Wheaton (7th Cir. 1935)
In re Owl Drug Co. (District Court, D. Nevada 1935)
David G. Baird and Mildred B. Baird v. Commissioner of Internal Revenue (3d Cir. 1971)
In re the Atlanta Times, Inc. (United States District Court for the Northern District of Georgia 1966)
In re Bill's Bargain Store No. 4, Inc. (District Court, N.D. Ohio 1962)
Jersey Boulevard Corp. v. Lerner Stores Corp. (Md. 1935)
First Nat. Bank of Chicago v. Irving Trust Co. (2d Cir. 1934)
Commissioner of Insurance v. Massachusetts Accident Co. (Mass. 1942)
Borserine v. Maryland Casualty Co. (8th Cir. 1940)
Connecticut Railway & Lighting Co. v. Palmer (Supreme Court of the United States 1939)

This list shows which later cases cite this one. It does not say how they treated it, and no review of that has been done. Not a substitute for Shepard’s or KeyCite — verify before relying.

Opinion

Mr. Justice Roberts

delivered the opinion of the Court.

The respondent was lessor in a lease having a number of years to run at the date of the tenant’s bankruptcy. The writing stipulated:

“. . . for the more effectual securing to the Lessor of the rent and other payments herein provided, it is agreed *310 as a further condition of this lease that the filing of any petition in bankruptcy or insolvency 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 hereof less the fair rental value of the premises for the residue of said term."

Respondent filed a proof of claim, based upon this clause, which the referee expunged. The District Court affirmed the order. The Circuit Court of Appeals, reversing the decree of the District Court, directed that the claim should be allowed. 1 The case is here upon writ of certiorari.

Decision is to be made under §§ 1 (11) and 63 (a) and (b) of the Act of July 1, 1898, as they stood prior to the filing of the petition on September 30, 1932, and the presentation of respondent's proof of claim on March 29, 1933. 2 The subsequent amendments of June 7 and 18, 1934. 3 are by their terms inapplicable.

In Manhattan Properties, Inc. v. Irving Trust Co., 291 U. S. 320, we reserved the question of the provability of a claim for liquidated damages arising upon such a covenant. The petitioner’s contention is that inasmuch as claims for future rent, or for damages for the breach of the covenant to pay rent, or claims upon contracts of indemnity conditioned upon reentry by the landlord subsequent to bankruptcy, were there held not provable, it logically follows that a claim for stipulated damages for *311 breach of the lease may not be proved. We hold otherwise.

By the terms of the contract the filing of the petition in bankruptcy was, of itself, and irrespective of the election of lessor or lessee, a breach of the lease. The claim of the landlord, consequent upon the breach, arose and matured at the moment of the filing of the petition. The claim is not for rent reserved or upon the lease as such, but is founded upon an independent express contract, and hence within the very words of § 63 (a) 4.

The Circuit Court construed the stipulation as an agreement on the part of the tenant to pay as liquidated damages, in the event of the specified breach, an amount equal to the difference between the present fair value of the remaining rent due under the lease and the present fair rental value of the premises for the balance of the term. The covenant is fairly susceptible of this construction. So read, the court held the clause provided a reasonable formula for ascertaining the damages of the landlord, did not smack of a penalty, and was therefore enforceable. See Wm. Filene’s Sons Co. v. Weed, 245 U. S. 597. We concur in the view that the contract, as its terms were interpreted and applied, supports a provable claim for the stipulated damages.

The judgment of the Circuit Court of Appeals is

Affirmed.

69 F. (2d) 90.

U. S. C. Tit. 11, §§ 1 and 103.

Public No. 296 [c. 424, 48 Stat. 911] and Public No. 387 [c. 580, 48 Stat. 991], 73d Congress.

Case-law data current through December 31, 2025. Source: CourtListener bulk data.