In re All Star Feature Corp.

| S.D.N.Y. | Apr 21, 1916

LEARNED HAND, District Judge.

[1,2] I do not think it is necessary to suppose that the parties made a bilateral contract of forbearance and security. Perhaps the lessor might have evicted the lessee at any time and the lessee have reclaimed the films without paying for more than the work actually done on each particular film reclaimed. That question I leave open. Yet the parties intended that the lessor should have some security for the rent and the other charges, and this security was to be by retaining the films. So much indeed is too plain for dispute; the only question is whether the lessor gave up any quid pro quo for that security. De facto it did, because it let the time pass and it let the lessee keep possession. Under the ninth article of the agreement it could have taken away that possession at any time, and its failure to do so would have been a good enough consideration, if the parties actually intended an exchange. Forbearance, even without an agreement to forbear, will serve as a consideration, if it be completed. Morton v. Burn, 7 Ad. & El. 19; Crears v. Hunter, L. R. XIX Q. B. D. 341; Alliance Bank v. Broom, 2 Drewry & Sm. 289; Edgerton v. Weaver, 105 Ill. 43" court="Ill." date_filed="1882-11-20" href="https://app.midpage.ai/document/edgerton-v-weaver-6961856?utm_source=webapp" opinion_id="6961856">105 Ill. 43. The lessor gave the forbearance and relied only on the lien. That was a performance.

It is quite true that here there was no express reference to forbearance in the contract and no statement that the lien was in exchange for it, but the situation reasonably implied that the parties so intended it. If the lessor had not received the assurance, and if the lessee had tried —it would not doubt have been successful — to take away the films without paying the rent, there can be no doubt that the lessor would have eventually asserted its rights under the ninth article. The cause of its inaction was the promised lien; it cannot be supposed that the connection between that inaction and the agreement to give security was wholly unconscious. It may be that the lessor did not actually contemplate eviction, yet even that is likely; certainly it contemplated an immediate assertion oí such rights as it had, and that was enough. Hurley v. At., Top. & Santa Fé, 213 U.S. 126" court="SCOTUS" date_filed="1909-04-05" href="https://app.midpage.ai/document/hurley-v-atchison-topeka--santa-fe-railway-co-97001?utm_source=webapp" opinion_id="97001">213 U. S. 126, 29 Sup. Ct. 466, 53 L. Ed. 729" court="SCOTUS" date_filed="1909-04-05" href="https://app.midpage.ai/document/hurley-v-atchison-topeka--santa-fe-railway-co-97001?utm_source=webapp" opinion_id="97001">53 L. Ed. 729, seems to have nothing to do with the case.

The final question is of authority. Farnham was the assistant manager, in charge of the details under Raver, who was the president and general manager. The two were generally intrusted with the active conduct of the affairs of the company. In the everyday management of the affairs of the company they were faced with the alternative of insisting upon an immediate release of the property at the risk of the landlord’s resort to his remedies, or of telling him to hold the goods till he got payment. The practical decision that the second alternative was for the company’s benefit seems to me quite within the powers to be naturally implied in such officers. It is quite wrong to speak of it as though it were a pledge de novo of the assets. The films were already pledged for part of the charges; the term was in effect pledged by the right of re-entry. All the officers did was to substitute a more convenient security for a less convenient, and this arose in the daily dispatch of business of the company.

[3] As to costs, I award them against the estate. I have repeatedly held that, when a trustee contests the claim of an outsider, the contro-versy is inter partes, and costs follow as in any other case. Why the creditors of a bankrupt should have any warrant for litigation free from the usual risks, I confess I have never been able to see. If the bankrupt had resisted the claim unsuccessfully, no one would think of asking exemption for him; but, when it is the creditors, it seems to be very hard, at least in this district, to dislodge the notion that they are in some sense wards of the court and entitled to special consideration.

Petition to review dismissed. Order affirmed, but with costs to the Willat Film Manufacturing Company.