Case Name: In the Matter of August May & Aaron Berwin, Bankrupts
Court: United States District Court for the Southern District of New York
Jurisdiction: United States
Decision Date: 1874-03
Citations: 47 How. Pr. 37
Docket Number: 
Parties: In the Matter of August May & Aaron Berwin, Bankrupts.
Judges: 
Reporter: Howard's Practice Reports
Volume: 47
Pages: 37–42

Head Matter:
UNITED STATES DISTRICT COURT.
In the Matter of August May & Aaron Berwin, Bankrupts.
Southern District of New York.
At Chambers, 4 Warren street, m the city of New York, in sand district,
on the 10th day of March, A. D. 1874.
In bankruptcy.
A claim for rent which accrued after the filing of the petition in bankruptcy, under a lease executed prior to such filing, is not provable in
bankruptcy.
I, the undersigned register in charge of the above entitled matter do hereby certify: That the firm of T. H. & T. W. Conkling have proved a claim before me against the said estate of $1,101^4-701' rent of premises, leased by them to the bankrupts from the 1st day of May, 1871, to the 1st day of May, 1873, at a rental of §3,500, payable monthly on the first day of each and every month, beginning with the first day of June, 1871, claiming the sum aforesaid as and for the rent due under the said lease from January 1st, 1873, to May first of the same year, after crediting the sum of sixty-five dollars paid them by the assignee for the use of said premises after the bankruptcy.
The petition in bankruptcy was filed on the 28th day of December, 1872, the rent of said premises having been paid up to the 1st of January, 1873.
The assignee objects to the proof on the ground :
1. That after the bankruptcy he surrendered the premises to the landlords by delivering the keys to their agents.
2. That he hired the premises from the agent of the land lords during the month of January, 1873, at a stipulated price of five dollars a day, and paid for the days he used and occupied the same the sum of sixty-five dollars.
3. The assignee claims that the claim is not of the character specified in section 19, and cannot, therefore, under the last clause of that section, be allowed against the estate.. That the language of the seventh clause of section 19, providing that “ where the bankrupt is liable to pay rent, which rent falls due at fixed or stated periods, the creditor may prove for a proportional part thereof, up to the time of the bankruptcy,” followed by the words in the last clause of the section—“no debt other than those above specified, shall be proved or allowed against the estate,” in effect forbids the proving of a claim for rent which accrued subsequently to the bankruptcy.-
Touching the first two objections made on the part of the assignee, I think the provisions of the re-entry clause of the lease obviate any force that might otherwise be claimed for them.
As to the third objection, I think the construction of the act claimed by the assignee cannot prevail.
1. It would be unjust. There can be no doubt of the personal liability of the tenant for such rent. Ho good reason can be assigned for cutting the creditor off from his dividend upon such a claim. It is in no way necessary to the full and fair operation of the act to do so.
Again, to give the act this construction as to rent would necessitate the giving it the same construction in reference to all “ other debts ” which “ fall due at fixed and stated periods.” The act couples them together so that it would be impossible to apply a rule to the case of rent, which would not equally apply to all other debts that fall due, as a large class of debts do fall due, at fixed and stated periods.
The closing words of the clause in question seem to indicate a mere purpose to provide a convenient, method of proving claims, rather than to prohibit the proving of such claims.
The twenty-third section of the English bankruptcy law, providing for the disclaiming of tenures burdened with onerous covenants, provides that “the person injured by the operation of that section may prove the amount of such injury as a debt against the estate of the bankrupt.” Our act has no such provision, and the assignee would not probably be at liberty to give proof in diminution of the damages which the landlords claim by the terms of this lease. It seems to be contemplated that the measure of damages is the rent reserved in° the lease, less such sum as they may have received from a subsequent letting, or from the use and occupation thereof by themselves. It clearly enough appears from the testimony, herewith handed up, that the landlords were unable to obtain a larger sum than that credited (§65), for the use of the premises during the four months in question, and that they did not personally occupy the same. I am, therefore, of the opinion that the claim should be allowed.
The said assignee objecting to the decision aforesaid, and the parties accepting the issue as above stated, desire said issue to be certified to the court for decision.
I have, therefore, certified the foregoing with the testimony and exhibits taken by me bearing on said issue and proof of claim on file. The parties desire to be heard by counsel before the district judge.
Respectfully submitted.
I. T. WILLIAMS,
Register in, Bankruptcy.
Brewster & Crowell, for the landlords.
The Assignee, in person.

Opinion:
Blatchford, J.
T. H. & T. W. Conkling have proved a claim against the bankrupts for $1,101.64, and interest from May 1st, 18-73, " being a balance for rent of premises " let to the bankrupts by T. H. & T. W. Conkling, by a lease bear ing date February 17 th, 1871, and expiring May 1st, 1873. The rent claimed in the proof is for the four months from January'1st, 1873, to May 1st, 1873, at the rate of $291.66 per month, less. a credit of sixty-five dollars as paid. The assignee of the bankrupts has filed with the register an objection to such claim and proof of debt, on the ground that the alleged debt or claim is not provable against the said estate under the bankruptcy act, "for the reason that the said debt or claim, or any part thereof, did not exist at the time of the filing of the petition for the adjudication of bankruptcy herein, to wit, the 28th day of December, 1872." The register has taken testimony in the premises, not under an order made by him in pursuance of .General Order JSTo. 34, on a petition to him for the re-examination of the claim, but apparently by the consent of the parties.
Thereupon the register has certified to the court, under section 4 of the act, the question or issue, as to whether the claim should he allowed. He also has certified the testimony and the proof of claim. The lease forms a part of the testimony.
The petition in bankruptcy was filed on the 28th of December, 1872. The rent under the lease was fully paid up to the 1st of January, 1873, before the petition in bankruptcy was filed. The rent reserved hy the lease was payable monthly, on the first day of each month, at the rate of $3,500 per year. The lease was for two years from the first of May, 1871. The first rent became payable on the 1st of June, 1871. The rent for the month from January 1st, 1873, to February 1st, 1873, did not become payable till February 1st, 1873. The 'adjudication of bankruptcy was made before February 1st, 1873.
The nineteenth section of the act provides that all debts due and payable from the bankrupt at the time of the adjudication of bankruptcy, and all debts then existing but not payable until a future day, a rebate of interest.being made where no interest is payable by the terms of contract, may be proved against the estate of the bankrupt. Where the bankrupt is liable to pay rent or other debt falling due at fixed and stated periods, the creditor may prove for a proportionate part thereof up to the time of the bankruptcy, as if the same grew due from day to day, and not at such fixed and stated periods. If any bankrupt shall be liable for unliquidated damages arising out of any contract or promise, the court may cause such damages to be assessed in such mode as it may deem best, and the same so assessed may be proved against the estate.
It is contended for the lessors, that this claim for rent was, under the nineteenth section, a debt existing at the time of the adjudication of bankruptcy, but not payable until a future day, and that, therefore, it may, by the terms of that section, be proved against the estate. The case is sought to be likened to that where an article is purchased to be paid for in installments, at fixed periods, and only part of the installments are paid before an adjudication of bankruptcy, in which case, it is contended, the vendor can prove his debt for the remaining installments, a rebate of interest being made if no interest is payable by the terms of the contract. This might be so if there were not a special provision for the case of rent falling due at fixed and stated periods. And there seems to be a reason for such special provision in regard to rent, in the fact that where an article is purchased the consideration is or is assumed to be executed, while in the case of rent, the consideration is asssumed to be not executed but executory, the use and occupation being m futuro. But, whatever the terms of payment of rent may be, the creditor may prove for a proportionate part thereof up to the time of the bankruptcy, as if the same grew due from day to day, and not at the periods fixed by the contract of letting. The provision in regard to rent not yet due, and to proving for a proportionate part of it, with the further provision that no other than the specified debts shall be proved, makes it entirely plain that this debt, as proved, cannot be allowed. Whatever is not provable will not be discharged. The provisions in regard to what debts may be proved are arbitrary, but such provisions do not affect the existence or validity of such debts as are not provable, nor does a discharge release them. If the debt is provable it comes in for a dividend, and can unless it is an accepted debt be discharged. If it is not provable, it does not come in for a dividend, but it will not be discharged.
The words " the time of the bankruptcy," mean the time when the petition was filed, to which time the adjudication relates. The rent to that time has been paid. The objection of the assignee to the proof of debt, as made, is sustained and the claim set forth in the proof of debt is disallowed.