Court Opinion

ID: 6966917
Source: CourtListenerOpinion
Date Created: 2022-07-24 01:55:31.481887+00
Date Added: 2024-06-11T16:08:39.207548
License: Public Domain

Mr. Justice Carter delivered the opinion of the court: We agree with the Appellate Court in holding that the contract between appellee and Morris, and which he assigned to the New England Clam Bake Company, partook of the nature of a lease, by which a certain space in the World’s Fair grounds, 50 by 250 feet, was set apart to the clam bake company, to be used by it for a restaurant, under the conditions specified, during the continuance of the exposition, for the stipulated price or rental of twenty-five per cent of the gross receipts. When appellant, as trustee under the two deeds of trust executed by the company, took possession of the property, effects and premises on the 8th day of August, about one-half of the term had expired, and the company was then in arrears to appellee to the amount of $2763.85. The Equitable Trust Company on August 9, under a bill filed by judgment creditors of the clam bake company, was appointed receiver, and by order of the court and consent of appellant took possession of the premises and of all the property and effects then in the hands of appellant as trustee. It is not, of course, claimed that the receiver, by the mere fact of its appointment and taking possession, became bound to perform the contract, but the question is whether, after it had taken possession and under the order of the court carried on the business as it had theretofore been carried on by the insolvent company, until the end of the term, and received all the benefits and profits of the contract from thenceforward, it should not also, in view of the circumstances shown in the record, be required to assume the burdens and to pay the stipulated price for the part of the term it so carried on the business and received the receipts. The total gross receipts of the receiver were $57,974.95, and the court ordered that one-fourth of this amount be paid to appellee, but refused to order the receiver to make good out of this fund the default of the insolvent company. It is difficult to see any just grounds on which to base objections to this order. But appellant insists that if the receiver was bound to pay anything, it was bound to pay only a reasonable compensation for the privileges enjoyed, and was in nowise bound by the price stipulated in the contract, and insists that it is shown by the pleadings upon which the question arises, that the contract price was unreasonable and excessive, and that the court erred in refusing to refer the cause to the master to take proof as to the reasonable value of the privileges the receiver enjoyed. This position cannot be sustained on this record. The contract with appellant was the principal thing of value in the assets of the company, and its value consisted in the continuance of the use of the premises set apart and of the privileges conceded by the contract. This was recognized by the bill under which the receiver was appointed, and it seems to have been one of the purposes of the bill to continue the contract in force and prevent the discontinuance of the business under it and the closing up of the restaurant. It contained this allegation: “And your orators show that the creditors of the said company are pressing it for payment, and especially the World’s Columbian Exposition is demanding immediate payment of certain sums claimed to be due it from said clam bake company, and is threatening to close up the restaurant and the business of said clam bake company for want of such payment; and your orators show that if said restaurant is closed the said clam bake company has no substantial assets with which its indebtedness can be paid. If a receiver is appointed and allowed to conduct and close out said business and reduce its assets to money in due course, your orators believe that a large part, if not the whole, of the indebtedness of said company will be paid.” And this prayer: “That a receiver may be appointed of the property, assets and estate of said company, who shall take possession thereof and convert the same into money and distribute the same according to law, and in the meantime, for the purpose of more effectually realizing the proper returns from such assets, that said receiver may be authorized by a further order of court to conduct and manage the business of said New England Clam Bake Company and keep said restaurant and clam bake in operation; that an injunction may issue, pursuant to the practice in this court, enjoining all parties from interfering with said receiver or his possessions,” etc. And in the order of the court appointing the receiver, among other things, was the following: “And that said receiver proceed at once to take possession of all the property of said company, and reopen its said restaurant at the World’s Fair, and to continue, until the further order of the court, to conduct the business thereof as near as may be in the manner in which it has heretofore been conducted, and for that purpose to make such purchases and employ such help as may seem needful.” Appellant, who was then in possession, as trustee, under the deeds of trust, was not hostile to these proceedings, but consented thereto and voluntarily delivered possession to the receiver, with a provision in the order that all his rights should be preserved to the same extent as if he had retained possession. It was not by any of the parties at that time suggested to the court that the contract price was excessive, and that the receiver ought not to continue the business on the same basis as it had been carried on by the insolvent, nor did the receiver, in any of its reports to the court, make any complaint of the contract. Nothing, however, was paid to appellant, although the receiver paid all the rest of the expenses of the receivership, and appellee on September 14 filed its intervening petition for an order directing the receiver to pay the percentage stipulated in the contract. This petition was answered by appellant on the 16th of October, and the allegation in the petition that the receiver was authorized by the court to conduct the business under the contract was then denied, and for the first time, so far as the record discloses, the position was taken that the percentage reserved in the contract was unreasonable and unfair to the other creditors, and it was not until after the close of the exposition, and then by amendment to the answer, that it was alleged or claimed that the contract price was in excess of the reasonable value. By this amendment it was alleged “that said percentage is greatly in excess of the fair and reasonable value of the premises and privileges used and enjoyed by said receiver for the conduct of said restaurant business.” It would seem that from such a state of facts all parties must at the time have understood that the receiver, under the order of the court, had elected to perform the contract undertaken by the clam bake company, and to realize and take for the benefit of its creditors all there was of value to them to be derived from such performance. The general principle contended for by appellant, that a receiver has, subject to the order of the court, the right to elect whether he will perform the contract or not, and is entitled to a reasonable time after taking possession in which to make such election, is not denied. It is so laid down by many authorities. Railroad Co. v. Humphreys, 145 U. S. 82, 105; Park v. Railroad Co. 57 Fed. Rep. 799; Railroad Co. v. Railroad Co. 58 id. 268; United States Trust Co. v. Wabash Railway Co. 150 U. S. 287; Central Trust Co. v. Wabash Railway Co. 34 Fed. Rep. 259. See, also, Express Co. v. Railroad Co. 99 U. S. 191; Ellis v. Railroad Co. 107 Mass. 1; In re Metz, 6 Ben. 571; In re Hamburgher, 12 Nat. Bank Reg. 277; In re Lynch, 7 Ben. 26. But we have been referred to no case holding that where the lease or contract is of itself a thing of value to the creditors, and the receiver, under the order of the court, takes possession of the premises and conducts the business which the insolvent had been unable to continue, and, without any act of disaffirmance or notice that he would not be bound by the contract, completes the term and receives the profits and all the benefits from such possession and continuance of the business, the receiver may then repudiate the contract and pay only on the basis of a quantum meruit. It is, however, contended by appellant that the receiver was not his receiver, or one appointed on his application, and that the lessor must himself be the actor in such cases, and must put the receiver to his election, and that unless he does so the receiver is bound to pay only the reasonable value, and in support of this proposition cites some of the cases above mentioned. We shall not stop here to analyze these cases, but an examination will show that they do not sustain the proposition insisted on by appellant to the extent that in all cases, or under facts similar to those in the case at bar, the receiver will not be bound by the terms of the lease unless put to his election by the lessor. As was said by this court in Smith v. Goodman, 149 Ill. 75, in reference to an assignee under the act concerning voluntary assignments (p. 81): “The assignee is entitled to a reasonable time in which to ascertain whether the leasehold estate can be made available for the benefit of creditors or not. * * * There is not entire uniformity of decisions as to when the assignee will be held to have accepted the lease and bound himself to perform its covenants, and no general rule can be laid down as to the effect of specific acts of the assignee in determining whether there has been an election to take the leasehold as a part of the assigned property. An examination of the adjudged cases is valuable only as fixing the general principle by which the case is to be governed, which would seem to be, that the assignee will not be held to have accepted the lease unless it be shown that he has done so expressly, or, by unequivocal acts inconsistent with the right of entry by the landlord, has indicated an election to appropriate the leasehold estate.” No reason is perceived why the receiver may not either expressly elect, or by unequivocal acts inconsistent with the right of entry by the landlord, indicating an election to appropriate the leasehold estate, be held to have done so impliedly, without any act on the part of the landlord whatever putting the court or the receiver to an election. Under the facts shown by this record it would be inequitable to allow the receiver, or appellant for the receiver, to repudiate the contract, and the courts below were correct in holding that the receiver must be held to have elected to adopt the contract. In view of the above recited facts we do not deem it important whether appellee had a right of re-entry or not for non-payment of the percentages reserved in the contract, or whether or not it had the right to declare a forfeiture, for if the receiver, by the consent of the creditors, elected to take the place of the insolvent and to perform the contract for the remainder of the term, and did so, receiving the benefits therefrom, a court of equity would not permit its said receiver at the end of the term, when it would be too late for the other party to take any action it might think proper for the protection of its own interests, to say that it had not assumed the obligation to pay at the contract price. The judgment of the Appellate Court is affirmed. Judgment affirmed.