205 Pa. 439 | Pa. | 1903
Opinion by
It is to be regretted that the court did not file an opinion, or give reasons in any form for its decree. Where the decision of an auditor, referee or other officer acting in a judicial capacity is overruled by the court, justice to the court itself as well as to the officer and the parties, suggests that the reasons should bo stated. In the present case to a careful and elaborate report made by the auditor, the court’s own officer, exceptions which went merely to the result without indicating the grounds were sustained. No reasons were given by the court and no sufficient ones are advanced by the appellee or perceived by this court. We are obliged therefore to discuss the case from the report of the auditor.
The jurisdiction of the court is clear. The auditor found, and it is not questioned, that the trustee in bankruptcy expressly agreed that the property should be sold under the mortgage. For this there was good reason, as such sale, divesting dower, would be likely to bring a larger fund than a sale under the bankruptcy proceedings which would leave the dower existing as an inchoate incumbrance. The purchase money was then paid into court and an auditor appointed to report distribution on the petition of the trustee. He was therefore es-topped from contesting the jurisdiction.
But independently of his acts or agreement the jurisdiction is clear. The court was distributing a fund in its own hands raised by it on its own process. Its authority to do so did not depend on any one’s consent. See Bardes v. Hawarden Bank, 178 U. S. 524; Louisville Trust Co. v. Comingor, 7 Am. Bank. Rep. 421.
The second question raised before the auditor and elaborately discussed by him is equally clear. The appellant was the mortgagee in the mortgage upon which the fund was realized, the mortgagor being one of the bankrupt firm, and the point made against the claim is that it was void as a preference under the bankrupt act. But under the facts as found and
A pledge or payment for a consideration given in the present or to be given in the future whether in money or goods or services is not a preference. The object of prohibiting preferences is to prevent favoritism whether for secret benefit to himself or other reason among a debtor’s creditors who ought in fairness to stand on the same footing. A transaction by which the debtor parts with something now, in return for something he acquires or is to acquire in the future is not within the mischief the act was aimed against. Section 60 therefore expressly recognizes this class of transactions but as it is capable of abuse, provides for a re-examination and reduction if necessary to a reasonable amount, by the court on petition of the trustee or a creditor. No such examination has been called for in the present case, and the auditor finds expressly that the amount of plaintiff’s fee was reasonable for the services rendered.
It was urged before the auditor that the services were not of the kind mentioned in section 64 of the act, and therefore could not be allowed. But the two sections have no necessary connection. The language of section 64 is “the debts to have priority, except as herein provided, and to be paid in full out of bankrupt estates, and the order of payment shall be (1) the actual and necessary cost of preserving the estate subsequent to filing the petitions; (2) the filing fees paid by creditors in involuntary cases ; (3) the cost of administration, including the fees and mileage payable to witnesses as now or hereafter provided by the laws of the United States, and one reasonable attorney’s fee for the professional services actually rendered, irrespective of the number of attorneys employed, to the petitioning creditors in involuntary cases, to the bankrupt
The argument of the appellee in this court is based on the view that as the mortgage was not actually executed until after the services of the plaintiff were partly rendered, it was a payment or pledge for an antecedent debt and therefore must stand in the same class as the claims of general creditors. But this view ignores the facts as found by the auditor. The plaintiff was retained as counsel on November 25 and within a few days his compensation was agreed upon “ without regard to the length of time occupied,” the services as already noted being primarily to try to arrange the affairs of the firm with the creditors so as to avoid proceedings in bankruptcy. The mortgage was executed on December 19, while the efforts of plaintiff were still in progress, and the petition in bankruptcy was not filed until December 28. The character of the act as to whether it should be regarded as a preference or not must be determined by the circumstances under which it was done. Here the compensation was agreed to in advance on the retainer
The judgment is reversed and distribution directed to be made in accordance with the report of the auditor, the costs of this appeal to be paid by the appellee, Frank M. Crawford.