In re Little River Lumber Co.

| W.D. Ark. | Feb 15, 1900

KOGEKS, District Judge.

In this matter the action of the referee is affirmed. The trustee in this case at the time this claim should have been resisted had removed from the state. Under the advice of his counsel, to the effect that he had no right to employ an attorney for the purpose of resisting fraudulent claims, he declined to employ counsel. Being away from the state, and his counsel declining to act without remuneration, the counsel in this case, using the name of one of their clients, A. Demarce, resisted the claim of O’Dwyer & Ahern, and successfully defeated it, thus increasing the assets of the estate for the benefit of all the creditors to the extent of about S 1,000. The court is somewhat familiar with the services rendered in this case, and thinks the allowance made by the referee is not exorbitant. This allowance is made and goes as a part of the expenses of the administration of the estate, and is allowed under the general equity powers of the bankrupt court. It seems to me that, on well-recognized equitable principles, an attorney who, under the circumstances of this case, intervened and successfully resisted an unjust claim, ought to be paid by the estate which was benefited by his services. The injustice of requiring the intervening creditor to pay the attorney is manifest. His distributive share of the funds preserved to the estate would not pay one-tliird of the attorney's fee if he were required to pay for the services. It is inequitable and unjust to permit the other creditors to avail themselves of his services, accompanied by the necessary risk, involving costs, etc., and then share in the estate without contributing to the payment of the attorney who did the work. The court, however, does not intend that this case shall become a precedent for future cases. The better opinion is that at the first meeting of the creditors, when the trustee is elected, if the creditors believe the services of an attorney for the trustee are necessary for the preservation of the estate, they should, at the same time they elect a trustee, elect an attorney to perform such services as he may require. In re Smith, 1 Am. Bankr. B. 37. In the event they do not do so, and the trustee becomes satisfied that the services of an attorney are necessary, the referee should direct him to employ an attorney, his services to be compensated upon application to the court, the amount to be charged as part of the expense of the administration of the estate. The referee, however, should always satisfy himself, by conference with the trustee, that an attorney’s services are necessary, and ought not to authorize the employment of one where the creditors have not elected one, except ■where there is an imperative necessity therefor in order to subserve the best interest of the estate. In view of the whole" spirit of the bankrupt law, counsel who are required to represent the trustee must expect only such remuneration as will actually compensate them for services rendered. The court will endeavor, in all these cases, to so conduct the administration of the estate as to best subserve the interest of both creditor and debtor. The allowance of $125 by the referee to Kirby & Carter is affirmed, and the. referee will cause the same to be paid as a part of the expense of the administration.