Court Opinion

ID: 6866390
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:55:12.116089+00
Date Added: 2024-06-11T08:50:10.915375
License: Public Domain

AUGUSTUS N. HAND, Circuit Judge
(dissenting in part).
I concur in the opinion of Judge CHASE except as to the claims covered by the qualified releases. In all the other cases the unqualified releases barred the claims here sought to be proved by the landlords. Three claims in which there were qualified releases but which are not among the nine first mentioned, namely, Nos. 5241, 5281, and 5287, did not reserve rights to future rent. The nine claims as to which I dissent are all asserted in cases in which the original leases were modified by agreement of the parties prior to the enactment of section 77B of the Bankruptcy Act (11 U.S.C.A. § 207) and in which the landlords had accepted surrender of the demised premises pursuant to the agreements. In the agreements there were not only modifications or assignments to the landlord by the trustee and the bankrupt of all their interest in the leases but also general releases by the landlords of all claims against the trustee, the bankrupt, and the bankrupt estate. There were, however, riders attached to. each instrument in substantially the following form qualifying the releases:
“Nothing in this Article shall be deemed a waiver by the Landlord of the right to *207prove against the bankrupt estate any provable claims to which the bankruptcy court may adjudge the Landlord is entitled, but this shall not be deemed to render any claim a provable claim which is not otherwise such or relieve the Landlord from the necessity of proving and obtaining the allowance of any such claim, or preclude the trustee from contesting such proof or allowance.”
Now this rider, which is part of the same instrument that contained the general release and so modified the relation of landlord and tenant as to bring about a surrender, cannot be regarded as an instrument which did not “limit in any way the effect of the agreements for lease modifications.” The prevailing opinion is based upon the theory that the rider did not involve any alteration of the rights of the parties to future rent claims as they would liave stood if it had never been added to the agreement. Such an interpretation of the acts and written memorials embodying their understandings contradicts the purpose of the rider. It is said in the opinion that the leased real estate was “surrendered to and accepted by the landlords without any reservation of rights under the leases against the lessee. * * * ” But that, I think, is not at all what was done. Not only did the statement in the rider that there was no “waiver by the Landlord of the right to prove against the bankrupt estate any provable claim” limit the general release, but the rider cannot have the meaning intended unless it be taken to reserve against the bankrupt’s estate any claims which existed but for the surrender and general release. Indeed, this is exactly what the master found to have been the intent of the parties who made the agreements; and the trustee and the debenture bondhofclers have conceded the purpose of the qualified releases was to reserve future rent claims for judicial determination. See Trustee’s Brief, pp. 11, 29, 37; Debenture Bondholders’ Brief, pp. 12, 13.
The master held that the future rent claims contemplated as provable were those that might have been proved had the decision of the Supreme Court in Manhattan Properties, Inc., v. Irving Trust Co., 291 U.S. 320, 54 S.Ct. 385, 78 L.Ed. 824, gone the other way and allowed proof of claims for future rent. But remedial legislation as to sttch claims was already before Congress when the agreements were made, and the riders nowhere limited claims which might be proved to those that the law then allowed. The riders specified “any provaable claims to which the bankruptcy court may adjudge the Landlord is entitled.” This, I think, embraced any claims which might then be provable or which might become provable through subsequent legislation. The enactment of section 77B as an amendment of the existing Bankruptcy Act allowed proof of future rent claims to a limited amount, and these the nine claimants should be allowed to prove. I can see no distinction between a provability arising from legislative sanction and provability arising from judicial decision.
I would add that the effect of the assignments and surrenders was not litigated in the court below, which considered only the effect of the releases and interpreted them as reserving merely such claims for future rent as might be proved in bankruptcy prior to the enactment of section 77B.
The order so far as it affected the nine claims I have mentioned should be reversed, and proof of these claims should be allowed in the 77B proceeding.