White v. Griffing

Paré, C. J. It was an important question, in this case, whether Wildman, the assignee in bankruptcy, had elected to appropriate the lease in question for the benefit of the creditors of the bankrupt, and had performed some act of owner-. ship over the property in pursuance of such election. He was not bound to take the property and appropriate it for such purpose unless the lease was valuable. His duty required him to determine whether the lease would or would not be beneficial to the creditors of the bankrupt, and to act accordingly. In Turner v. Richardson et al., 7 East, 336, Lord Ellen-borough says: “It has been decided that assignees of a bankrupt are not bound to take what Lord Kenyon called a damnosa hcereditas; property of the bankrupt which, so far from being valuable, would be a charge to creditors; but they may make their election. If however they do elect to take to the property, they cannot afterwards renounce it because it turns out to be a bad bargain.” Gross, J., says, in the same case: “ They were assignees of a bankrupt’s estate for the benefit of his creditors, and they were to'consider whether, it were for the benefit of the creditors that they should take to the property or waive it. On the one hand, if they entered and were possessed, they became liable to be sued upon the bankrupt’s covenants for rent and non-repair, which might amount to more than the value of the lease; on the other hand, if the lease were valuable, and they did not take to it, the creditors would have had a right to call upon them for neglect of their duty.” Ckitty, in his work on Contracts, page 240, says: “ It is clear that the interest of the bankrupt in any such land, or under any such conveyance or agreement for a conveyance, or lease or agreement for a lease, does not vest in his assignees absolutely by virtue of the fiat; but such interest remains [447] in the bankrupt until the assignees do some act amounting to an acceptance thereof.” In Copeland v. Stevens, 1 Barn. & Ald., 593, the court says: “ The assignees of a bankrupt are not bound to accept a term of years that belonged to the bankrupt, subject to the rents and covenants, for the object of the statute and of the assignment being the payment of the bankrupt’s debts, and the assignees under the commission being trustees for that purpose, the acceptance of a term which, instead of furnishing the means of such payment, would diminish the fund arising from other sources, cannot be within the scope of their trust and duty.” Parsons, in his work on Contracts, Vol. 3, page 489, says: “If the assignee elects not to take, the lease remains in the bankrupt, with all its advantages and all its burdens, and free from all claims or right either of the assignee or of the creditors.” Washburn, in his work on Real Property, Vol. 1, page 340, says: “And in cases of general assignment by insolvents, or by proceedings in insolvency, the assignee will have a reasonable time in which to ascertain whether the lease can be made available for the benefit of creditors, before he will be obliged to make his election,” (whether he will claim the lease under the assignment or not.) Tt follows, therefore, if Wildman the assignee did not accept the assignment of the leasehold estate of the bankrupt, that the lease remained the property of the bankrupt, and consequently the defendant would be liable on his guaranty, inasmuch as it appears that the rent which had accrued during a part of the time covered by the guaranty is in arrears. If Wildman accepted the assignment, then it follows that he sold the interest of the bankrupt in the lease to the plaintiff, who was the lessor of the property to the bankrupt, and both the lease and the guaranty thereby became extinguished before the year covered by the guaranty had expired; for the acceptance of the assignment of the lease took relation from the time when the bankrupt proceedings were instituted, which [448] was before the year covered by the guaranty had expired, and consequently there could be no liability on the part of the defendant. Hence the liability of the defendant turns upon the question whether or not Wildman accepted the assignment of the lease. During the trial of the case in the court below, the defendant, in order to show that Wildman did in fact accept the assignment of the lease, offered evidence to show that he employed counsel to defend an action of summary process brought by the plaintiff, against the bankrupt. The plaintiff offered Wildman as a witness, who testified that he had no recollection whether h¿ employed counsel to defend the bankrupt in the suit or not, but thought lie did not assume the responsibility of defending the case. The defendant in rebuttal offered a witness to prove that he heard Wildman engage counsel to defend the suit. The plaintiff objected to the reception of this evidence, and the court excluded it, and we think the court erred in so doing. The suit was brought after Wildman had been appointed assignee, and if he then had accepted the assignment of the lease it would be expected of him to defend the bankrupt. This evidence therefore was pertinent and important evidence upon the question whether he had accepted the assignment. It does not appear upon what ground the objection to the evidence was based, but probably upon the ground that it was evidence in chief, and was not proper rebutting testimony. But after Wildman had testified that he thought he did not assume the responsibility of defending the suit, the evidence was proper to disparage his testimony, and thereby support the evidence which had been offered in chief. His testimony tended to establish the fact that he did not employ counsel to defend the suit, although he did not testify positively on the subject. Doubtless the evidence offered in rebuttal might have been given in chief; still, inasmuch as it was not done, it was properly admissible in rebuttal to discredit the testimony of Wildman. [449] We have refrained from deciding whether the court below erred in omitting to charge the jury, as the defendant requested, that the sale of the assignee’s interest in the lease, and the acceptance of quite a sum of' money as the proceeds of the sale, were in law an acceptance of the lease under the assignment, for if the question of acceptance is one of fact,: a new trial must be advised, on account of the ruling which we have just been considering, the evidence rejected by the court being admissible upon the question of acceptance as one of fact; and if the question be one of law, and the court therefore erred in refusing so to charge the jury, we could do no more than grant a new trial. We will say, however, that it is difficult to see how an assignee in bankruptcy can sell the lease of the bankrupt, and receive therefor a large sum of money for the benefit of creditors, without accepting the assignment of the lease. In Turner v. Richardson, supra, the assignees advertised the lease for sale at public auction, in order to ascertain whether it had any value; and this was done without stating that the leasehold estate belonged to them; and afterward, in accordance with the advertisement, the lease was put up for sale, but no bidder appearing.the estate was not sold; and it was held that the assignees might thus experiment in order to ascertain whether the lease had any value, without committing themselves to an acceptance of the lease. But the court strongly intimate that if a bidder had appeared and the premises had been sold, the assignees would have been holden to an acceptance of the assignment. In Hastings v. Wilson, 1 Holt N. P. C., 290, the assignees put up the premises at public auction, and there was a purchaser, and a deposit paid, but the contract of sale went off without the assignees showing why they did not enforce the sale. It was held that the assignees were liable. In Welsh v. Myers, 4 Camp., 368, the bankrupt was lessee' of pasture land, and the assignee suffered his cows to remain on the land for two days, and ordered them to be milked' there. Lord Ellenborough was of the opinion that this was-an adoption of the lease by the assignee. [450] So, intermeddling with the farm land of the bankrupt has been held sufficient to establish an acceptance by the assignee. Thomas v. Pemberton, 7 Taunt., 206. So also carrying on business upon the premises. Clarke v. Hume, 1 Ry. & Mood., 207. These cases, and many more which might be cited, seem to go as far as the defendant requested the court to go in this case. A new trial is advised. In this opinion the other judges concurred.