William Filene's Sons Co. v. Weed

Background

A business called William S. Butler & Company was placed in receivership after a creditor’s bill. The property owner, Wm. Filene’s Sons Company, held a lease that required the lessee to pay twenty thousand dollars annually and to make further payments on certain terminations. The receiver elected not to assume the lease, the property owner reentered the premises on December 9, 1912, and later claimed the contracted payments and additional damages. The receiver asked the court for instructions about what should be paid out of the company’s assets.

Reasoning

The Court addressed whether the yearly twenty thousand dollars and the agreed damages were enforceable claims against the company in receivership. The Court found the twenty thousand dollars was a separate, personal covenant earned when the lease was made and payable despite nonuse of the premises, subject to the lease’s agreed five percent discount on anticipated payments. The Court rejected the idea that filing the receivership bill had the same effect as a bankruptcy petition that would bar such claims. It also allowed the contract’s agreed method of measuring damages for the unpaid period, while disallowing claimed reletting expenses.

Real world impact

The decision means property owners can enforce clear, contracted post-termination payments and liquidated damages against a company in receivership when the contract so provides, with agreed discounts applied. Courts supervising receiverships should not dismiss lawful creditor claims simply because a receivership bill was filed, though distribution remains governed by the receivership process and amounts are subject to the contract’s terms.