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Manhattan Properties, Inc. v. Irving Trust Co., 291 U.S. 320 (1934)

Manhattan Properties, Inc. v. Irving Trust Co.

No. 505

Argued January 10, 1934

Decided February 5, 1934*

291 U.S. 320


1. The claim of a landlord for future rents based on a covenant to pay rent in a lease terminated by reentry on the bankruptcy of the tenant is not a provable debt under § 63(a) of the Bankruptcy Act. P. 291 U. S. 332.

So held in view of the great weight of judicial authority construing that section and similar provisions of earlier Acts, and in view of the legislative history of the subject.

2. The fact that a provision of a statute which has received a settled construction from federal courts has remained unaltered notwithstanding that Congress has repeatedly amended the statute in other respects is persuasive that the construction accords with the legislative intention. P. 291 U. S. 336.

3. Sections 73-76, added to the Bankruptcy Act by the Act of March 3, 1933, were enacted to permit extensions and compositions not theretofore possible, for individuals only, and the clause of § 74(a) providing that "[a] claim for future rent shall constitute a provable debt and shall be liquidated under § 63(b) of this Act," is to be related to this novel procedure, and not taken as an amendment of § 63(a) or as declaratory of its meaning. P. 291 U. S. 336.

4. A covenant by a tenant to indemnify the landlord for loss of rent he may suffer during the residue of the term after reentry by the

Page 291 U. S. 321

landlord upon the bankruptcy of the tenant, and which can come into operation only after the bankruptcy, and only if the landlord sees fit to reenter on that ground, is not a basis for a debt provable in the bankruptcy proceedings. P. 291 U. S. 338.

5. Such a covenant is not the equivalent of an agreement that bankruptcy shall be a breach of the lease and that the consequent damages to the lessor shall be measured by the difference between the present value of the remainder of the term and the total rent to fall due in the future. P. 291 U. S. 338.

66 F.2d 470, 473, affirmed.

Review by certiorari, 290 U.S. 619, of orders sustaining the rejection of claims for loss of future rents, in two bankruptcy cases.

Page 291 U. S. 328

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