William Filene's Sons Co. v. Weed - 245 U.S. 597 (1918)
U.S. Supreme Court
William Filene's Sons Co. v. Weed, 245 U.S. 597 (1918)
William Filene's Sons Co. v. Weed
Argued December 17, 18, 1917
Decided February 4, 1918
245 U.S. 597
Rent issues from the land, is not due until the rent day, and is due in respect of the enjoyment of the premises let.
Where, however, a lessee corporation not only undertook to pay as rental all sums payable by its lessor under overleases of the same premises, but also, as the inducing consideration for the lease, covenanted to pay at all events a certain amount per annum, in monthly installments throughout the term, and, if the lease should be terminated sooner, to pay a sum measured at the same rate for the unexpired portion, less a discount, held (1) that the covenant created a present indebtedness, independent of rent, for the whole amount so stipulated to be paid, and (2) that, upon the appointment of receivers in a purely equitable proceeding to carry on the lessee's business and pay its debts, and upon their declining the lease, leaving rent in default, the lessor, by reentry pursuant to the lease with the court's consent, might perfect its claim to the amount payable under the covenant for the unexpired term, and
that the claim thus perfected was provable within the time fixed by the court for proof of claims against the receivers.
Held further, in such case, that the lessor might in like manner perfect and prove its claim under the lessee's covenant to pay as damages the difference between the rental value at the date of entry and the rent reserved, for the residue of the term, for such is not a covenant to pay or accelerate rent, but a personal covenant liquidating damages upon a footing that is familiar and fair.
When a court, without statute, takes possession of all the assets of a corporation to satisfy its debts, the rights and equities of the creditors are determined by their contracts with the debtor. It is error to give to the filing of the bill the effect of the filing of a petition in bankruptcy or to exclude a lawful claim made within the time fixed for proving claims and maturing within a reasonable time before distribution can be made.
A covenant for the payment of so much per annum in monthly payments throughout the term, and if the lease is terminated sooner, for anticipating the payments for the unexpired portion "less a discount at the rate of five percent per annum on payments so anticipated," construed as intending a simple discount on the payments as they would fall due -- i.e., monthly.
230 F. 31 reversed.
The case is stated in the opinion.