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In re McCrory Stores Corp.

November 5, 1934

IN RE MCCRORY STORES CORPORATION; WALKER ET AL.
v.
IRVING TRUST CO.



Appeal from the District Court of the United States for the Southern District of New York.

Author: Hand

Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.

AUGUSTUS N. HAND, Circuit Judge.

By lease of May 8, 1926, the petitioners-appellants let to McCrory Stores Corporation certain premises at Fort Worth, Texas. In the following clause the lease purported to grant to the owners of the real estate a lien on rentals to become due McCrory Stores Corporation from subtenants:

"To secure the payment of all sums to be paid by the Lessee to the Lessors, as Rent for said premises, or otherwise, including the aggregate of the installments unpaid in the event they shall be declared due and payable under the provisions of the Lease, with interest and attorney's fees thereon, as herein provided for, a Lien is hereby granted by the Lessee to the Lessors, their successors or assigns * * * upon any and all moneys that may hereafter be due and owing the said Lessee by its subtenants (if any) on said premises, or in respect thereof, or any part thereof, whether for Rent or otherwise, and said Lien shall be prior in right to all other Liens upon such leasehold estate property and premises and moneys. * * *"

McCrory Stores Corporation paid all rentals due and including the month of January, 1933. On January 14, 1933, McCrory Stores Corporation filed its voluntary petition and was on that date duly adjudicated a bankrupt, and the Irving Trust Company was later elected trustee. Thereafter the trustee collected the following sums due from subtenants to the bankrupt on account of rentals for periods prior to February 1, 1933:

Unremitted rentals for December,

1932, in hand December 28 $100.00

Net rentals from subtenants re-

ceived during January, 1933 815.75

Net rentals received on or subse-

quent to February 1, 1933, for

rentals due from subtenants for

periods prior to January 1, 1933 ...


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