Central Trust Co. v. Chicago Auditorium Ass’n, 240 U.S. 581 (1916)

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Central Trust Company v. Chicago Auditorium Association

Nos. 162

, 174

Argued January 12, 1916
Decided April 3, 1916
240 U.S. 581

APPEAL FROM THE CIRCUIT COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Syllabus

Appeals from decisions of the circuit court of appeals, allowing or rejecting a claim in bankruptcy, are, in the absence of the certificate prescribed by § 25b-2, limited under § 25b-1 to cases involving federal questions of the kind described in § 237, Jud.Code.

Whether damages for anticipatory breach of an executory contract which one of the parties can cancel on notice after a stated period can be recovered for the life of the contract or only up to the end of such period after the breach involves no federal question.

Where the question on which a cross-appeal is based is of general importance in relation to questions involved on the direct appeal, the court may, and in this case does, allow a certiorari in lieu of the cross-appeal which must be dismissed.

The general rule, the exceptions to which are not material in this case, is that where a party bound by an executory contract repudiates his obligations or disables himself from performance, the promisee has the option to treat the contract as ended, and may maintain an action at once for damages occasioned by the anticipatory breach.

The intervention of bankruptcy held, under the circumstances of this case, to constitute such a breach notwithstanding the petition was involuntary, and also held that the claim of the promisee is one founded upon a contract expressed or implied, and provable under § 63a-4, and that the damages may be liquidated under § 63b.

In this case, held that the claim may be proved for damages occasioned by the breach covering the entire life of the contract notwithstanding the party proving the claim had the right to cancel on a stated notice, that provision not being reciprocal.

216 F. 308 affirmed as to allowance of claim; cross-appeal therefrom dismissed; certiorari allowed and reversed as to amount of claim allowed.

The facts, which involve the effect of bankruptcy of one party to an executory contract and the right of the other party to regard the same as an anticipatory breach of the contract and to prove its claim against the bankrupt’s estate, are stated in the opinion.