139 F. 275 | N.D.N.Y. | 1905
This was an involuntary proceeding, but adjudication was made without contest, and the matter referred to a referee. At the very beginning of the proceeding, H. Walter Lee, subsequently chosen trustee, was appointed receiver. He was an attorney at law of the Supreme Court of the state of New York, and also admitted to practice in the District Court of the United States. Frederick H. Hazard was the attorney for the petitioning creditors, and filed the petition, procured the appointment of the
From the stenographer’s minutes of March 14, 1903, it appears that the bankrupt appeared in person and by A. W. Orvis and Mr. Rosenthal, his attorneys, that Hastings & Gleason appeared for the
With an estate of $4,656.36 for distribution, the referee, at the final meeting of creditors, by his order of May 20, 1905, made the following allowances: To Hastings & Gleason, as attorneys for the trustee, disbursements, $164.88; services, $900; total, $1,064.88. To F. H. Hazard, as attorney for petitioning creditors, disbursements, $35.94; services, $50; total, $85.94. To A. W. Orvis, as attorney for the bankrupt, disbursements, $109.32; services, $600; total, $709.32. To J. C. Dolan, as attorney for certain creditors, disbursements, $16.50; services, $650; total, $666.50. To C. A. Hitchcock, as attorney for a certain creditor, disbursements, $28.08; services, $50; total, $78.08. To F. H. Neary, as attorney for certain creditors, disbursements, $30.78; services, $50; total, $80.78. To H. C. Quinby, as attorney for certain creditors, disbursements, $338.09; services, $150; total, $488.09. To Conger & McDear, as attorneys for certain creditors, disbursements, $9.80; services, $50 ; total, $59.80. J. F. Akin, attorney for certain creditors, services, $75. . To the jewelers’ association, not a creditor, but an association having a deep interest in ferreting out and exposing and punishing such transactions, disbursements, $138.80; and to H. Walter Dee, such trustee, for his services as receiver, $150, as allowed by the judge who appointed him, and $184.10, disbursements; and further says the order:
“It appearing to tiie satisfaction of the referee that the trustee has rendered services to the estate over and above the usual and ordinary responsibility of his trust, and that he is entitled to a compensation therefor, and that the*279 sum of $250 Is a reasonable compensation therefor, it is ordered that the trustee do, out of the funds in his hands to the credit of this proceeding, retain to his own use the sum of $584.10; being the amount of his said allowance as receiver, his said allowance as trustee, and his said disbursements as receiver and trustee. It is further ordered that the trustee is entitled to the sum of $154.87 commissions as trustee upon the moneys disbursed and to be disbursed by him, and that he do, therefore, out of the moneys in his hands, retain to his own use the said sum of $184.57.”
As a justification for the allowances to the attorneys for the general creditors, the referee says:
“It appearing to the satisfaction of the referee that the services of Mr. Hazard, Mr. Alcin, Messrs. McLear & Conger, Mr. Dolan, Mr. Quinby, and Mr. Neary have been beneficial to the estate to the extent of the allowances hereinbefore made to them, it is,” etc.
These allowances, aggregating $4,356.36, made by the referee in the final decree for the distribution of the estate, reduce the amount for distribution to creditors from $4,656.36 to the sum of $300, in round numbers — a trifle over 1 per cent, of the proved and allowed claims.
This order and decree for the distribution of this estate in bankruptcy and making these allowances must be modified. As already stated, allowances to general creditors, one or more, who employ and pay counsel and incur and pay' other expenses in doing things to benefit and increase the estate, and which have that effect, cannot be made unless the trustee has not been appointed at the time it is done, or, having been appointed, he has neglected or refused to act in the matter. Even in such case, unless there be an emergency demanding immediate action, the order and direction of the court should be first sought. In this case the trustee had an abundance of able counsel. There was nothing complex or very difficult in the case. The situation demanded considerable faithful, plodding work. No difficult questions of law were involved. Mr. Quinby says that he represented the jewelers’ association and board of trade, and certain clients of theirs, who were creditors of the bankrupt, Felson. His statement is frank and in all respects truthful. It is not doubted, and cannot be doubted, that he expended money (representing these associations) and performed services of value to the estate and all the creditors, but he was not employed by the trustee. And as stated, the trustee was not neglecting his duty. Mr. Quinby testifies that he, representing these associations, employed J. C. Dolan in the matters in question, and paid his bill, $80.45, and that he in the same behalf employed James F. Akin, ’and .paid his bills, $159.14. As these gentlemen represented other creditors in the litigation and proceeding, they must look to them for their compensation for such services. Mr. C. A. Hitchcock and Conger & McLear represented creditors, but were not employed by* the trustee. Mr. E. H. Neary says that he represented certain creditors, and also R. G. Dun & Co., and had had frequent interviews with the bankrupt, Felson, for months before the bankruptcy, and that he attended all the hearings, and thinks his knowledge and attendance was valuable to the estate. Probably this is true, but he was not employed by the trustee. F. H. Hazard was the'
’ “(5) Authorize the business of bankrupts to be conducted for limited periods by receivers, the marshals, or trustees, if necessary in the best interests of the estates, and allow such officers additional compensation for such services, but not at a greater rate than in this act allowed trustees for similar services.” ■ Act Feb. 5, 1903, c. 487, 32 Stat 797 [U. S. Comp. St. Supp. 1903, p. 409].
To Mr. Lee, as trustee, the referee makes an allowance of $184.10 for disbursements. His statutory commissions and compensation
“It is well settled that a person, being a trustee, cannot perform legal services for himself as trustee, and have compensation therefor from the estate he represents. Nor is he under obligation to perform such legal services because he is the trustee. In many cases the compensation permitted by the bankruptcy act to a trustee in bankruptcy would not pay 10 per cent, of the value of the purely legal services rendered in addition to those legitimately performed by the trustee in the discharge of the usual duties of that office. However, when a trustee performs legal services, he cannot have additional compensation therefor.”
See 1 Perry on Trusts (2d Ed.) § 432; Parker v. Day, 155 N. Y. 383, 49 N. E. 1046; Collier, as Executor, v. Munn et al., 41 N. Y. 143.
Collier on Bankruptcy (5th Ed.) referring to this question, says (page 474) :
“It was held early in the administration of the present law that a trustee who was also an attorney could be allowed the same fees that would have been paid to other competent counsel. This may be doubted, the trustee’s fee being limited by section 48 ancl general order 35 (3), 89 Fed. xiii, 32 C. C. A. xxxiv.”
In re Florence B. Mitchell, 1 Am. Bankr. Rep. 687, is but the opinion of a referee, and is not sustained by reason or authority. The referee cited Perkins’ Appeal, 108 Pa. 314, 56 Am. Rep. 208, It was there held:
“(1) The just and proper compensation of a trustee depends upon the circumstances of each case, and cannot be determined by an inflexible rule. Such compensation may be claimed and awarded in a gross sum, and not by way of commissions.
“(2) A trustee, who is also a member of the bar, may be allowed credit in his account for a fee to himself for professional services rendered by him to, and for the benefit of, the trust estate, shortly prior to his appointment as trustee.
“(3) A trustee, who is a member of the bar, may be allowed compensation for services of a professional character rendered by him, after his appointment as trustee, in the investigation of an account filed by the executors of his deceased predecessor in the trust, in addition to compensation for the performance of his ordinary duties as trustee.”
“(3) The compensation allowed to trustees by the act shall be in full compensation for the services performed by them; but shall not include expenses necessarily incurred in the performance of their duties and allowed upon the settlement of their accounts.”
The allowance of $250 to the trustee not only violates the provisions of the act, but the general order of the Supreme Court. That allowance must be disallowed.
It appears that James C. Dolan did perform some services for the trustee. The court finds from the proof that the value of such services was $125, and his allowance is reduced to that amount. He has already been paid $'63.20 disbursements. • Hastings & Gleason have been paid $381.03 disbursements allowed by this court. The amount of their allowance for services to the trustee is reduced to $600, which is found to be a full and fair compensation for all services rendered by them to the trustee as his attorney. To this will be added the disbursements not heretofore allowed and paid. It has been seen, in reciting the appearances in the proceedings before the referee, that on each occasion, with one exception, that firm appeared for petitioning creditors and creditors and the jewelers’ association, not for the trustee. These attorneys must look to their creditor clients for further compensation, if they are entitled thereto. Uet the dividends go to the creditors, and let the creditors pay their attorneys. It is not for the court or referee to undertake, by “allowances,” to see that the attorneys for creditors are taken care of. It is the’ duty of the court to take care of the creditors, and the duty of the creditors to take care of their attorneys, except in cases where allowances are difectly authorized and permitted. The bankruptcy act of 1898 was framed and must be administered in the interest of creditors. This is a case where the transactions and conduct of the bankrupt justly aroused the indignation of the whole jewelry trade. The association took up the matter, and have pressed it honestly and sincerely in aid of the trustee; but this court cannot find, and indeed there has been no suggestion, that the trustee failed in his duty, so as to warrant allowances from the estate to creditors and associations who generously came to his aid because of the general desire and determination to vindicate the law.
The court has made and filed an order modifying the order under review in accordance with this opinion.