Odell v. Bedford Co.

224 F. 996 | E.D.N.Y | 1915

CHATEIELD, District Judge.

It appears from the papers that the Edison Company had a contract with the Bedford Company at a rate substantially smaller than that charged at retail for temporary service. After the filing of the petition in bankruptcy, as well as after the appointment of receivers in the equity action, question was raised by the Edison Company as to the payment of the amounts due at the time of filing the petition for electric current, and also as to the rate of pay•ment for the future.

Under the terms of the contract, the Edison Company cotild have given notice of breach and suspended service unless the arrears were paid up. They by stipulation agreed to defer their right to act upon this breach and to continue supplying current to the receivers, if the receivers should deposit in a special account the amount, over the contract price, which would be payable to the Edison Company at the ordinary retail rate, and it was further stipulated that the acceptance of the amount admitted to be due under the contract might be had without prejudice to this question of election. It was evident at the time that this stipulation was entered into that the Bedford Company was planning a settlement or composition with its creditors and that it would wish to continue or renew the contract with the electric light company. There was, therefore, no necessity for the receivers or for the estate in bankruptcy to elect whether it would undertake to carry on the contract as an asset.

It may be assumed that under the decisions of Eames v. H. B. Claflin Co. (D. C.) 220 Fed. 190, and Atchison, T. & S. F. Ry. Co. v. Hurley, 1S3 Fed. 503, 82 C. C. A. 453, an election for continuation of a contract would have been subject to its burdens as well as its benefits, and the receivers would have stood in the shoes of the Bedford Company, and therefore have been liable to pay up the arrears if they sought to reap the benefits. But that question was postponed, and, inasmuch as the composition has gone through, it lies now between the Bedford Company and the Edison Company to decide whether the Bedford Company, in resuming or carrying on its contract, can hold the Edison Company to the percentage paid the other creditors of the arrears which were a provable debt at the time the petition in bankruptcy was filed. Whether the Edison Company would be held to receive a preference, if it should insist upon the reinstating of the contract, with the payment of arrears, is not involved in the present motion. The receivers, during the time they were in possession, were enabled to put off the time of election on their part with respect to the future contract. They have turned over to the Bedford Company the question of rights and payments under the contract in substantially the position in which it was when the receivers took possession. They are liable, as for rent, for the reasonable amount of use. While under ordinary circumstances the price reserved in the contract or lease is evidence of reasonable use, it is not conclusive. It does not seem equitable to compel the Edison Company by restraining order to furnish current, as before, to the receivers, and then to treat the Edison Company as if they had not been prevented from exercising their rights, and as if the termination of the lease had been left free to them.

It is true that the rate charged for current in the contract must be assumed to have been a reasonable and profitable rate, and that the difference in price would be adjusted solely with reference to the term of service. If the receivers could show that the Edison Company is charging more for its current to them than to other customers, where the amount of current and contract is the same, or if the difference in price in the charge made to the receivers could be shown to be because of any fictitious change in the service, then a reference would be ordered and the reasonable value fixed. ' But upon the papers as submitted the sole question is whether the ordinary and reasonable value for use should lie paid by the receivers during what was substantially an interval or lapse in the carrying out of the contract.

The motion for payment of the retail charge while the receivers were obtaining the current will be granted.