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IN RE SOL DUCHOVNAY & SONS

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA


June 18, 1974

IN RE SOL DUCHOVNAY & SONS, INC.

The opinion of the court was delivered by: NEWCOMER

MEMORANDUM AND ORDER

 Newcomer, District Judge.

 This is an appeal by Granite Equipment Leasing Corporation from a decision of the bankruptcy Judge disallowing the bulk of its claim against Sol Duchovnay & Sons, Inc., a bankrupt. Granite claimed below for the rentals due from three leases with the bankrupt, the fair market value of the leased equipment, and attorney fees. Of these three items, the bankruptcy Judge allowed only the recovery of rentals due as of the date the leased machinery was sold at the bankrupt's landlord's distraint sale. (The bankruptcy Judge did allow the claimant a percentage of this amount as attorney fees). For the reasons stated below, we find that Granite is entitled to claim for the full rentals due on each lease and not just those due at the time of the landlord's sale.

 According to the bankruptcy Judge, claimant was barred by laches from asserting the disallowed amounts. It was established that upon default of payment by the lessee, Granite had the right to enter lessee's premises and remove the leased equipment, but that Granite chose not to do so when informed that lessee had made an assignment for the benefit of its creditors. Judge Goldhaber (the bankruptcy Judge) found that in November or December, 1970, Granite's representatives inquired of the assignee concerning the status of their machinery whereupon the assignee told them to "come and take it." Granite, knowing that Duchovnay was on the verge of bankruptcy and that the assignee had no intention of continuing payments on the lease, nevertheless did nothing. On January 6, 1971, Sol Duchovnay's landlord distrained on the leased machinery, and the machinery was sold on February 8, 1971. On the same day as the sale, but subsequent to it, the assignee filed a petition in bankruptcy. Granite's claim below consisted of the following items: I. (a) Rentals due beginning Septem- ber 10, 1970, at the rate of 678.67 per month, for the balance of the term of said lease, i.e., for 42 months $28,504.14 (b) Rentals due beginning Septem- ber 23, 1970, at the rate of $375.96 per month, for the balance of the term of said lease, i.e., for 44 months 16,542.24 (c) Rentals due beginning May 13, 1970, at the rate of $118.30 per month, for the balance of the term of said lease, i.e., for 47 months 5,560.10 Total rentals claimed $50,606.48 II. The fair market value of the leased equipment 25,000.00 III. Counsel fees 10,000.00 Total Claim $85,606.48

19740618

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