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Palmer v. Connecticut Railway & Lighting Co., 311 U.S. 544 (1941)

Palmer v. Connecticut Railway & Lighting Co.

No. 38

Argued November 15, 1940

Decided January 6, 1941

311 U.S. 544


1. In a railroad reorganization under § 77 of the Bankruptcy Act, upon rejection by the trustees of a 999-year lease of street railway properties having 969 years to run, the measure of the lessor's damages is the present value of the rent reserved less the present rental value of the remainder of the term. Connecticut Railway & Lighting Co. v. Palmer, 305 U. S. 493, 305 U. S. 504. P. 311 U. S. 555.

2. In applying this rule to so long a lease, since the evidence of damages is necessarily limited to a period of definite forecast, the damage may be estimated for a limited future period upon evidence of rental value derived from a period of past operation of the leased property. P. 311 U. S. 555.

There being no suggestion that the rental agreed upon was other than a reasonable return upon the value of the demised property, fairly negotiated, it is fair to presume, until something else is shown, that, for the long years ahead, the rent and rental value are the same. Consequently, proof of rental value smaller in amount than the rent reserved, for a term of years shorter than the remainder of the lease, is, in the absence of evidence as to other years, proof of the damage in such shorter period. P. 311 U. S. 557.

3. Opinion evidence of rental value may be considered in determining the lessor's damages, but has little, if any, probative force beyond the immediate years, and cannot be permitted to fix rental value for the purpose of determining damages in the indefinite future. P. 311 U. S. 556.

4. Upon evidence of past earnings of demised street car properties over a period of fourteen years, including three years of operation by the lessor after rejection of the lease, the Circuit Court of Appeals, reversing the District Court, estimated the probable earnings for eleven years succeeding the rejection, upon the basis of which, and of the rent reserved for that period, it found and awarded damages to the lessor.


(1) There being no dispute over the facts proven, the sufficiency of the proof of damage was for the Court of Appeals. P. 311 U. S. 558.

Page 311 U. S. 545

(2) This Court, on this review, deals with the method of proving damages, not the measure. P. 311 U. S. 558.

(3) The evidence formed an adequate basis for a reasoned judgment, and justified an award. P. 311 U. S. 558.

(4) Although the business changed from trolley to bus transportation within two years of the end of the base period, and management changed from lessee to lessor, in view of the established character of the business, these changes were not sufficient to affect the probative value of past experience. P. 311 U. S. 559.

(5) Nothing is more indicative of the value of franchises and properties of street railways and bus lines, for lease or sale, than past earnings. P. 311 U. S. 560.

(6) In proving compensatory damages, certainty in the fact of damage is essential; certainty as to the amount goes no further than to require a basis for a reasoned conclusion; the injured party is not to be barred from a fair recovery by impossible requirements. P. 311 U. S. 560.

(7) The failure of the lessor to produce further evidence, through experts or transportation surveys, was not fatal to its case. P. 311 U. S. 561.

109 F.2d 568 affirmed.

Certiorari, 309 U.S. 653, to review a judgment reversing an order of the District Court and awarding damages to the present respondent for rejection of its lease in a railroad reorganization case.

Page 311 U. S. 551

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