Court Opinion

ID: 6858258
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:45:00.135246+00
Date Added: 2024-06-11T16:05:11.963562
License: Public Domain

AUGUSTUS N. HAND,
Circuit Judge (dissenting).
The distinction largely relied on in the opinion of the majority between this ease and that of Manhattan Properties, Inc., v. Irving Trust Co., 290 U. S., 54 S. Ct. 385, 78 L. Ed. - (decided February 5, 1934), is that here the landlord gave a receipt to the tenant which is thought to affect the charaeter of the obligation assumed by the latter, This instrument acknowledged receipt of $50,000 for advances made by the landlord on account of the new building erected by the tenant which the latter agreed to “repay * * * in accordance with the terms of said contract.” The “said contract” referred to in the receipt is the lease. The lease provided that, after the advances had been made by the lessor to the tenant for the completion of the building, they should be consolidated by the lessee and repaid at the end of each lease year in annual installments of 2 per cent, of the total amount advanced and the balance at the end of the thirty-year term. The lease further provided that each installment “shall 1>® deemed additional rent hereunder and for the non-payment thereof on the dates aforesaid the lessor shall have the same rights and remedies with respect thereto as it has hereunder for non-payment of the specified rent herein provided for.”
j cannot see how it can be said that the installments to repay the advances of $50,000 were payable absolutely in any other sense than were the other payments for rent and taxes specified in the lease. If the landlord ba¿ chosen to re-enter because of a default in payment of any of these sums, and had instituted summary proceedings in order to do this, I have no doubt that he would have for-fejted all installments payable under the lease due subsequent to re-entry. His theory seemg to be tbat be is entitled to prove big £u]1 claim for tbe aavanees and also to re-enter for nonpayment of the ordinary rent and recover possession of his land improved by those expenditures. He in effect claims the right to “have his cake and eat it too.” I think it can make no difference whether he improved the land at an expenditure of $50,-000 and then leased it at a rental sufficient, *487when spread, over th(e term to repay this expenditure, or whether, as in this ease, he allowed the tenant to mate the improvements at the landlord’s expense, after the lease took effect, and increased the rent accordingly.
Clauses for repayment by installments of sums advanced by a landlord to improve leased premises are not unusual and do not essentially differ from other clauses for payment of rent or taxes. Such installments as became due subsequent to bankruptcy were not within the decision of the Supreme Court in Manhattan Properties, Inc., v. Irving Trust Co., supra, provable claims. Judge McDowell dealt with a similar situation in Re Boggs-Rice Co. (D. C.) 4 F. Supp. 431. There a landlord sought to prove a claim in bankruptcy based on a covenant in a lease to repay him in monthly installments for improvements to the demised premises. Claims for the installments accruing after bankruptcy were held to be nouprovable.
I think the order of the court below was right and should be affirmed.