Empire Distilling Co. v. McNulta, 77 F. 700

Empire Distilling Co. v. McNulta

77 F. 700 | 7th Cir. | 1897

JENKINS, Circuit Judge,

after this statement of the facts, delivered the opinion of the court.

While a petition of intervention need not be as formal as a bill of complaint, and should perhaps be distinguished for brevity, it yet should exhibit all tire material facts which are relied upon for the specific relief invoked, embodying, either by recital or by reference, so much of the record in the original suit in which the petition is filed as is essential to show a right to the particular relief demanded by (lie petition. Where, subsequently to the tiling of the petition of intervention, proceedings have been had under the original bill which would fortify the right of the intervening petitioner, either to the particular relief demanded or to some other relief, the matter should be incorporated into the petition of intervention by amendment. In determining, therefore, the question of the relief, if any, to which the appellant, the Empire Distilling Company, intervener, is entitled, upon demurrer to its petition of intervention, we have not deemed ourselves at liberty to consider the proceedings subsequent to the filing of the petition of intervention, and which resulted in a sale of the properties of the Distilling & Cattle-Feeding Company and a decree by which the rights of the creditors of that company were protected; and this because these proceedings have been in no way incorporated into the petition and are not properly before ns upon appeal from a decree dismissing the petition of intervention upon demurrer.

*704The claim of the appellant, as presented by its petition of intervention, in substance, is that, notwithstanding the order of the court of May 29, 1895, directing the receiver not to assume the lease between the appellant and the P. H. Rice Distilling Company, which it is alleged was adopted by the Distilling & Cattle-Feeding Company, and because, as is asserted, the latter company was in fact solvent, notwithstanding the bill of complaint charged its insolvency, those orders should be disregarded, and it is thereupon demanded that the receiver be instructed to assume the lease and to pay the fixed rental due and to accrue under the lease. The claim preferred is that, because of the alleged solvency of the Distilling & Cattle-Feeding Company, the receiver, as such, is bound to assume all the contracts of the company, to execute them so far as they remain unexecuted, and to discharge all liabilities which have accrued under them. We do not so understand the law to be. A receiver does not become liable upon the covenants of the lease because of his position as receiver, but because and only because of his own acts in respect thereto. He becomes liable when he has elected to assume the lease, or has taken possession of the demised premises, and con(inued in possession, under such circumstances as in the law would be equivalent to such an election. High, Rec. § 273; Com. v. Franklin Ins Co., 115 Mass. 278; Oil Co. v. Wilson, 142 U. S. 313, 323, 12 Sup. Ct. 235. He is allowed a reasonable time — a breathing space, so to speak — to investigate and determine the desirability of the adoption of the lease in the interest of the estate he represents; and this even when be has taken possession under the lease. Whatever may be the rights of the lessor as against the defendant whose estate has passed under receivership, or with respect to the payment of . any claim arising under the lease out of that estate in the possession of the court, it is still true that the lessor cannot force upon the receiver, under any circumstances, the adoption of the lease. That is a matter for his judgment and decision under tire order and direction of the court appointing him. This petition of intervention seeks substantially the specific performance of that lease by the receiver for a term of 25 years from the 19th day of August, 1887, with revaluation of the property during each 5 years of the term for readjustment of the rental. To effect this purpose the court below must needs retain jurisdiction of the cause during the entire period stated, and assume possession of the demised premises, although it might be most unprofitable in the interest of the creditors to do so. The method is impracticable and not to be sanctioned. Quain’s Appeal, 22 Pa. St. 510.

The intervening petition also demands payment by the receiver of rent accrued and to accrue without any regard to funds in his hands, and without allegation that he has the present means to comply with the demand. While it is true that the petition alleges the solvency of the distilling company, — if we may properly regard such an allegation by one who comes in under a bill which alleges insolvency and seeks relief from a court which has taken possession of the property under such, charge of insolvency, — it nowhere asserts that the receiver had reduced the assets into cash, so as to permit *705payment of Hie claim; nor could if be permitted that other creditors should tie anticipated by the petitioner in the payment of its demand. Bo that, whether this petition of intervention is to be regarded as one for the specific performance by the receiver of the lien in question, or one in payment of damages as a claim against: the Distilling & Cattle-Feeding Company, it was equally insufficient.

We have said that we could not properly consider the subsequent proceedings in the cause upon this petition. If we could, it would not avail the appellant upon a petition of intervention directed against the receiver, asking specific action by him. The subsequent proceedings show the sale of certain properties of the Distilling & Cattle-Feeding Company, subject to a condition that the purchaser should pay in cash of the purchase price so much as should be required to discharge such claims filed, or which should thereafter by leave of (he court be filed, as should upon final hearing be allowed and ordered paid. If the intervening petitioner has just claim against the estate which has thus passed under the decree to the purchaser, it has adequate remedy, not by petition against the receiver, but by petition against the purchaser for an order at foot of the decree determining and ascertaining the amount of its claim, and directing its payment: by the purchaser. We are therefore for the present relieved from the consideration of the interesting question discussed at: the bar, whether the decree of ouster of the corporate privileges and franchises of the Distilling & Cattle-Feeding Company absolved its (‘state from any claim by the appellant under the lease, arising after such ouster. That question would properly arise upon presentation of a claim against the estate. The decree will be affirmed.