Summary
In Van Straaten & Havey, Inc., v. Foremost Silk Hosiery Mills, Inc., 126 N.J.Eq. 518, 10 A.2d 292, 293 (affirmed 127 N.J. Eq. 53, 11 A.2d 233), the court stated: "As was pointed out in Bloch v. Bell Furniture Co., supra [111 N.J.Eq. 551, 162 A. 414, 84 A.L.R. 885], future rent is not a debt in the sense that it is absolutely due but is merely a contingent liability, since, in case of termination of the tenancy, the landlord may lease the premises to someone else and thereby decrease or even completely destroy the liability.
Summary of this case from Wendt v. Bergen Sav. BankOpinion
01-09-1940
VAN STRAATEN & HAVEY, Inc., et al. v. FOREMOST SILK HOSIERY MILLS, Inc.
Pitney, Hardin & Skinner, of Newark (William H. Osborne, Jr., of Newark, of counsel), for receiver. Arthur M. Loeb, of New York City, for petitioner 500 Fifth Avenue, Inc.
Order Affirmed Jan. 25, 1940.
See 11 A.2d 233.
Syllabus by the Court.
In the absence of a statute providing for the following by the Court of Chancery of changes in the National Bankruptcy Act as to provable claims, the Court of Chancery will not change the established rule in this State that a claim is not provable against a receiver for future rent after surrender of premises by the receiver, even though the National Bankruptcy Act has been amended to allow the proving in bankruptcy of such a claim to the extent of one year's rent.
Suit by Van Straaten & Havey, Incorporated, and another, against the Foremost Silk Hosiery Mills, Incorporated, to review the disallowance of a claim made by 500 Fifth Avenue, Incorporated, against thereceiver of the Foremost Silk Hosiery Mills, Incorporated.
Disallowance confirmed.
Pitney, Hardin & Skinner, of Newark (William H. Osborne, Jr., of Newark, of counsel), for receiver.
Arthur M. Loeb, of New York City, for petitioner 500 Fifth Avenue, Inc.
LEWIS, Vice Chancellor.
This matter is before the court on a petition to review the disallowance of a claim made by 500 Fifth Avenue, Inc., against the receiver of Foremost Silk Hosiery Mills, Inc. Out of this same insolvency proceeding arose the case of C. Lee Havey, Receiver, etc., v. Alfred Hofmann et al., 121 N.J.Eq. 523, 191 A. 756, affirmed, 123 N.J.Eq. 589 and 590, 199 A. 75.
The hosiery mills was a tenant of the creditor under a lease, with the rent reserved at the rate of $2,400 a year. The receiver surrendered the premises and has paid for his use and occupation up to the time of such surrender. The sole question before the court is as to whether the landlord has a provable claim for the period of one year subsequent to the surrender.
The facts are undisputed. It appears that a short time prior to the appointment of the receiver herein, the National Bankruptcy Act was amended so as for the first time to give to a landlord the right to prove in bankruptcy a claim for rent for the period of one year subsequent to the surrender of the premises occupied by the bankrupt. 11 U.S.C.A. § 103. It is claimed by the landlord that this provision of the Bankruptcy Act requires the allowance of its claim in the present receivership in the Court of Chancery.
Prior to the amendment of the Bankruptcy Act it was well settled in this court that a receiver was liable for use and occupation only of the premises and that a claim for future rent was not provable. Stockton v. Mechanics' & Laborers' Savings Bank, 32 N.J.Eq. 163; Bloch v. Bell Furniture Company, 111 N.J.Eq. 551, 162 A. 414, 84 A.L.R. 885.
The argument in behalf of the landlord is that receiverships in Chancery necessarily follow the rules laid down by the Bankruptcy Act. While it is true, as stated in Bloch v. Bell Furniture Company, supra, there is practical advantage of maintaining harmonious doctrine in the administration of the assets of an insolvent corporation in the State and Federal courts, where the provisions of our statute and the rationale of our jurisprudence permit, however, this does not require this court to follow precisely any differences or changes in the Bankruptcy Act.
As was pointed out in Bloch v. Bell Furniture Company, supra, future rent is not a debt in the sense that it is absolutely due but is merely a contingent liability, since, in case of termination of the tenancy, the landlord may lease the premises to someone else and thereby decrease or even completely destroy the liability. In view of the well-settled rule that future rent is not provable, I do not consider that this court is justified in changing the rule merely because of a change in the Bankruptcy Act, in the absence of legislation providing for the following of changes in the Bankruptcy Act.
The disallowance of the claim by the Receiver will be confirmed.