In re Mitchell, No. 136

No. 136 | 2d Cir. | Mar 10, 1914

PER CURIAM.

[1,2] The two caretakers, one by day, the other by night, actually performed the services they were employed to render for 32 days. They were employed by express authority of the bankruptcy court. Their compensation has been fixed by the court at $160, and there seems to be no dispute as to the reasonableness of that sum. No claim is made by the sheriff for any poundage or fees. It is merely the payment of watchmen that is asked for. Apparently the reason for nonpayment of this claim is the circumstance that the trustee has disbursed substantially all the assets of the estate.

The trustee states that the net amount realized was $492.22; that he paid out various sums, which are enumerated in his affidavit, aggregating $195.60, and also for disbursements of attorneys for the petitioning creditors and himself $128.11. This would leave a balance of $178.51, which would be sufficient to meet the claim of these caretakers, had not the trustee paid $150 to the firm of attorneys (of which he is a member) which appeared for the petitioning creditors and subsequently for the trustee, and $75 to the attorney for the bankrupt.

The Bankruptcy Act, however, provides that the debts to have priority and to be paid in full out of the bankrupt estates and the order of payment shall be as follows:

“(1) The actual and necessary cost of preserving the estate subsequent to filing the petition.”

Debts incurred in recovering property transferred or concealed and the cost of administration, including reasonable attorney’s fees, are subordinated to the debts incurred for preservation of the estate, are to be paid only after the debts in class 1 have been paid in full. Section 64b. The trustee should not have paid out the funds of the estate for these purposes until he had first paid whatever was due for preserving the estate.

The order is reversed, and cause remanded, with instructions to the trustee to pay to the caretakers so much of their claim as represents services subsequent to October 31, 1911, the date when petition was filed. Presumably he will be able to obtain a refund of his payments to the attorneys; but, if he cannot do so, he will have to stand the loss of this improvident payment.