Irving Trust Co. v. A. W. Perry, Inc.
293 U.S. 307 (1934)

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U.S. Supreme Court

Irving Trust Co. v. A. W. Perry, Inc., 293 U.S. 307 (1934)

Irving Trust Co. v. A. W. Perry, Inc.

No. 22

Argued November 5, 6, 1934

Decided December 3, 1934

293 U.S. 307


1. A claim based upon a covenant in a lease which provides that the filing of a petition in bankruptcy by or against the lessee shall constitute a breach of the lease, that ipso facto and without entry or other action by the lessor, the lease shall be terminated, and

Page 293 U. S. 308

that thereupon the lessor shall be entitled to damages equal to the amount of the rent reserved for the residue of the term less the fair rental value of the premises for the residue of the term, is provable in bankruptcy under §§ 1(11) and 63(a) and (b) of the Bankruptcy Act, as it was prior to the amendments of June 7 and 18, 1934. P. 293 U. S. 311.

So held upon construction of the covenant as an agreement on the part of the tenant to pay as liquidated damages, in the event of the specified breach, an amount equal to the difference between the present fair value of the remaining rent due under the lease and the present fair rental value of the premises for the balance of the term.

2. The claim is not for rent reserved or upon the lease as such, but is one founded upon an independent express contract, and is within the very word of § 63(a)(4) of the Bankruptcy Act. Manhattan Properties, Inc. v. Irvin Trust Co., 291 U. S. 320, distinguished. P. 293 U. S. 311.

69 F.2d 90 affirmed.

Certiorari, 292 U.S. 620, to review a judgment reversing a judgment of the District Court which affirmed an order of the Referee in Bankruptcy disallowing a claim based upon a covenant in a lease.

Page 293 U. S. 309

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