Blackall v. Morrison

Mr. Justice Boggs delivered the opinion of the court: The errors assigned by appellant John D. Ware present two questions: (a) Should the receiver of thé Economical Drug Company have been required to pay rent at the rate of $833.33 per month, or ought evidence have been received to show the reasonable rental value of the premises occupied by him, and the receiver ordered to pay solely according to the development of such evidence? (b) Should the sum of $2500 paid Blackall & Son by the Economical Drug Company when the lease for the premises was executed, have been applied as a set-off in favor of the receiver of the drug company against any sums due for the rent of the premises? The Superior Court entered an order directing the receiver to occupy the premises No. 121 South Clark street and conduct the business of the insolvent drug company there, and to pay rent therefor at the rate of $833.33 per month until the court should otherwise direct by a subsequent order. No other order was entered relative to the place where the business of the drug company should be carried on or as to the amount to be paid for rent of the premises. Pursuant to this order the receiver occupied the premises and transacted the business of the company therein. He paid a monthly rental of §833.33 until Black-all & Son became insolvent, and then declined to pay for the month of July, for the reason Morrison, the original lessor, Blackall & Son, and the assignee of Blackall & Son, each claimed they were entitled to receive it, and for the further reason it was claimed Blackall & Son had become, insolvent and were unable to protect and keep alive the lease by making the necessary payments to Morrison; that the drug company was entitled to demand the return of the §2500 paid by it to Blackall & Son for the faithful fulfillment of the obligations of the drug company under the terms and conditions of the lease, but if such obligations were performed, to be applied in payment of the rent for the three months last preceding the termination of the lease, or to have such sum set off against the rents. That the rent was too high was not suggested as a ground of refusal to pay rent. The Chicago Title and Trust Company, as assignee for the firm of Blackall & Son, sought, by way of a petition filed in the Superior Court in the case in which the decree was rendered appointing a receiver for the drug company, to obtain an order of the court directing the payment to it of a portion of the rent, and A. H. and B. S. Blackall, who composed the firm of Blackall & Son, and the executor of the original lessor, Ezekiel Morrison, joined in said petition, and asked the court to determine the merits of their respective claims to the rent for the month of July, 1894, and the accruing rents for the period during which the petitions were pending in court for hearing. The appellant Ware, who was interested in the assets of the drug company as a judgment creditor thereof, filed an answer to the petition of the trust company, assignee of Blackall & Son, and a cross-petition, in one instrument. The allegations of the answer and cross-petition relate only to the contentions of the various persons claiming to be entitled to receive the rents, and to the claim that the said sum of $2500 paid by the drug company to Blackall & Son on the lease should be applied to the payment of the demand for rents. There is an allegation that the premises, on account of the alleged unfavorable surroundings, are unsuitable and undesirable as a location for a drug store, and that the rental value thereof is not above $500 per month, and a suggestion that the receiver shall be ordered to secure a more advantageous location and at a cheaper rental. The prayer of the petition is, that the court may order that the sum of $2500 paid to Blackall & Son, as before mentioned, should be applied to any claim for rent against the drug company, and that the receiver of the drug company should be ordered to secure other premises in which to transact the business of the company. It does not appear the complaint sought to be urged in this court, that the Superior Court should have ascertained and ordered the receiver to pay the reasonable rental value of the premises, was presented by any of the petitions or answers filed in the Superior Court. The allegations of the petition of the appellant Ware are consistent only with the theory he understood the premises were occupied under an order of the court fixing the rental to be paid therefor, and that he desired the court should make further order with relation thereto, directing the receiver to vacate the premises and secure a more desirable and cheaper location. The Superior Court had ordered the receiver of the drug company to occupy the premises in question and conduct the business of the company there, and had fixed the amount he should p.ay as rent therefor at the sum of $833.33 per month until the court should otherwise order. The receiver complied with this order, resisted the action of forcible detainer brought by Morrison to recover possession from him, and continued in the occupancy of the premises during all the period of time for which he was ordered to pay rent by the decree. His occupancy was under the order of the court fixing the amount to be paid as rent, and, no subsequent order having been made, the parties entitled to rent were entitled to receive the amount provided to be paid by the order of the court. It would be highly unjust to allow the receiver to occupy the premises under an order providing for the payment of a fixed sum per month as rent, and after such occupancy had continued for nearly a year, while the parties were contending as to whom the monthly sum was to be paid, to insist that payment of rent should not be made according to the provisions of the order, but that the party entitled to the rent should be required to show by proof the reasonable rental value thereof. As to the second question presented by the appellant Ware, we think the judgment of the Appellate Court is also correct. The payment of the said sum of §2500 by the drug company to Blackall & Son was for the purpose of securing the performance by the drug company of its obligations in the lease, with the further provision if such obligations were performed that the sum should be applied in discharge of the rents for the last three months of the lease, and if not performed the same should be forfeited to Blackall & Son as liquidated damages. It is unnecessary we should determine whether the language thus used by the parties should be construed to allow the recovery of only such damages as it should appear had been actually sustained, for the reason the testimony warranted the conclusion the damages actually sustained exceeded the sum of §2500. The lease had twenty-three and one-half months to run after the date of the last payment ordered to be made by the decree appealed from. Blackall & Son were required by the lease executed by them to Morrison to pay the sum of §708.33 per month, and the drug company, under its contract with Blackall & Son, the sum of §833.33 per month. The difference in these monthly payments is $125, and to that extent Blackall & Son were damaged by the failure of the drug company to fulfill its obligations to them. A loss of this sum per month for the remaining period of the lease, to-wit, for the period of twenty-three and one-half months, would make a total of §2937.50. We agree with the Appellate' Court in its conclusion that the Superior Court erred in holding the rents should be allowed as a set-off against the sum paid by agreement of the parties as liquidated damages. It only remains to determine whether the Appellate Court erred in apportioning the fund created by the payment of the rents between the claimants thereto. The proceeding was pending in a court of equity. Blackall & Son, and Charles E. Morrison, executor of Ezekiel Morrison, "deceased, voluntarily became parties thereto, and each expressly prayed the “benefit of such relief as they might be found entitled to in the premises.” From every equitable point of view, Blackall & Son, being insolvent, were only entitled to receive the residue after the payment to the executor of Morrison of the amount due him. It would have been manifestly wrong and inequitable to have ordered the entire fund to be paid to Blackall & Son and to have remitted Morrison to his remedy against them in their insolvent condition. Neither of these parties complains of the decree directing the remainder of the rent for the month of July, 1894, to be paid to the assignee of Blackall & Son. Whether the assignee of Blackall & Son is entitled to receive the amount decreed to be paid to the members of that firm is not raised by the record nor referred to by any of the parties in interest. The appellant Ware is in nowise interested in it. We make no ruling upon that point. Nor is anything herein said to be construed as determining the right of the executor of the estate of said Morrison, deceased, to the amount to be paid said executor, as against the rights and interests of other parties, if such other parties have intervening rights and interests superior to those of such executor, as herein determined. The judgment of the Appellate Court is affirmed. Judgment affirmed.