Court Opinion

ID: 8634500
Source: CourtListenerOpinion
Date Created: 2022-11-24 19:42:58.873524+00
Date Added: 2024-06-11T16:55:53.133387
License: Public Domain

DILLON, Circuit Judge.
The bankrupt, owning a hotel, made a lease of it for five years to one Parks, reserving rent. Being indebted to the petitioners, the bankrupt, to secure them, it is alleged, “assigned, transferred and delivered possession of said lease to the petitioners, with the consent and sanction of said Parks, the lessee.” At the same time it is further alleged, that “the bankrupt executed to the plaintiffs a power of attorney to receive and collect the rents accruing .under the said lease, and to do and perform all acts with reference' to said lease that the said lessor himself could do.” And it is further alleged that lessee accepted the lessor’s bill in the plaintiffs’ favor for the amount of their debt against the lessor, said bill to be paid out of the rents as they fell due. No copy of the lease or assignment, or power of attorney is in the record, but according to the averments it must be taken that the assignment was in writing. In the absence of the written assignment and instrument I can do no more than to indicate the legal rights of the parties upon the facts set forth in the plaintiffs’ petition.
If the transaction between the bankrupt and the plaintiffs gave to the latter any rights or equities in respect to the rents or the demised property, the assignee in bankruptcy takes the estate subject thereto. In this respect he stands precisely in the place of the bankrupt. Assuming the allegations of the petition to be true, they show in the plaintiffs, as against the bankrupt, such rights in respect to the rents or demised property as the law will recognize and protect. It is well settled that it is .competent for the lessor to separate, by contract or devise, the rent from the reversion, retaining one and disposing of the other, or disposing of the rent to one person and the reversion to another. 1 Washb. Real Prop. 338, where many cases are collected.
Whatever the contract between the bankrupt and the plaintiffs shows the former disposed of to the latter, will be binding upon the former and his assignee in bankruptcy. In Russel v. Russel. 1 Brown. Ch. 269, it was decided that the pledge of a lease by the lessor, by delivery, merely, was in equity a mortgage of the lease-hold estate as against the assignee in bankruptcy. Much more clearly would this be the case where there was an express assignment and delivery of the lease by the lessor to secure a debt. In Ex parte Wills, 1 Ves. Jr. 162, Lord Chancellor Thurlow, said: “An assignment of rents and profits is an odd way of conveying, but it amounts to an equitable lien, and would entitle the assignee to come into equity and insist upon a mortgage.”
The petition states a ease which, prima fa-cie. as to the demised estate puts the plaintiffs, so far as necessary to secure payment of their debt against the bankrupt, in the place of the bankrupt, and therefore the demurrer of the assignee ought to have been disallowed. The extent of the plaintiffs’ rights I can not determine in the absence of. the lease, the assignment and power of attorney. I only hold that the petition makes a case giving, to some extent at least, a lien which the bankruptcy court should respect. I see no reason why the rights of the plaintiffs and assignee may not be well determined upon the petition of the plaintiffs.
The order sustaining the demurrer and dismissing the petition is reversed, and the district court directed to permit the assignee .to answer the petition if he shall be so advised. Ordered accordingly.