Source: https://www.legalcrystal.com/case/96153/realty-associates-securities-corp-vs-o-connor
Timestamp: 2016-12-09 11:45:18
Document Index: 516777917

Matched Legal Cases: ['§ 40', '§ 40', '§ 74', '§ 12', '§ 40', '§ 68', '§ 61', '§ 40', '§ 68', '§ 74', '§ 202', '§ 12', '§ 30']

Realty Associates Securities Corp Vs O Connor - Citation 96153 - Court Judgment | LegalCrystal
Save as PDF Add a Tag Add a Note Semantics Visualize Realty Associates Securities Corp. Vs. O'Connor - Court Judgment	LegalCrystal Citationlegalcrystal.com/96153CourtUS Supreme CourtDecided OnApr-29-1935Case Number295 U.S. 295AppellantRealty Associates Securities Corp.RespondentO'ConnorExcerpt:.....bankrupt agreed to a composition providing for immediate payment of 15% of the par value of their bonds in cash; postponement of the time for paying the remaining principal, and reduction of interest rate, the interest to be paid only out of earnings, but to be cumulative and payable in full upon maturity of the principal. the composition also provided that they should be represented on the board of directors of the bankrupt company, and there were to be restrictions on the company's investments and creation of new debts.
that "the amount to be paid" upon which the referee's compensation should be computed under § 40(a),
was not the full principal amount of the bonds, but was no more than the 15% cash plus the market value of the bonds as it would be after..... Judgment:
Realty Associates Securities Corp. v. O'Connor - 295 U.S. 295 (1935)
1. The compensation of referees in bankruptcy for performance of their public duties, is limited to what is clearly warranted by law. P.
2. The provision in § 40(a) of the Bankruptcy Act allowing the referee one-half of 1% upon the amount to be paid to creditors upon the confirmation of a composition, must be construed in harmony with the policy of Congress to prevent extravagance in bankruptcy administration. P.
3. Bondholders of the bankrupt agreed to a composition providing for immediate payment of 15% of the par value of their bonds in cash; postponement of the time for paying the remaining principal, and reduction of interest rate, the interest to be paid only out of earnings, but to be cumulative and payable in full upon maturity of the principal. The composition also provided that they should be represented on the board of directors of the bankrupt company, and there were to be restrictions on the company's investments and creation of new debts.
was not the full principal amount of the bonds, but was no more than the 15% cash plus the market value of the bonds as it would be after applying the 15% in reduction of the principal. P.
295 U. S. 300
4. General Order XLVIII(4), which fixes the commissions of referees in proceedings under § 74 of the Bankruptcy Act, cannot control in the judicial determination of the compensation allowable in proceedings under § 12 of the act. P.
Bankruptcy Act, § 40(a), as amended, 11 U.S.C. § 68.
The creditors took the position that the percentage was to be computed upon the cash, and nothing else. The cash payments being
Referees in bankruptcy are public officers (11 U.S.C. §§ 61, 64), and officers of a court. Like public officers generally, they must show clear warrant of law before compensation will be owing to them for the performance of their public duties.
169 U. S. 316
169 U. S. 321
People ex rel. Rand v. Craig,
231 N.Y. 216, 221, 131 N.E. 894. Extravagant costs of administration in the winding up of estates in bankruptcy have been denounced as crying evils. Strengthening Procedure in the Bankruptcy System, Sen.Doc. No. 65, 72d Congress, 1st Sess. (1932), p. 53; also H.R. Rep. 65, 55th Congress, 2d Sess. (1898), p. 44. In response to those complaints, Congress has attempted in the enactment of the present statute to fix a limit for expenses growing out of the services of referees and receivers. Bankruptcy Act §§ 40, 48(d, e), as amended, 11 U.S.C. §§ 68, 76. The pay for referees is no longer involved in uncertainty as to the applicable percentage. By mischance, there is still uncertainty at times as to the principal amount to which the rate of to be applied. In cases of composition, the principal is "the amount to be paid to creditors upon the confirmation," and, before we can compute what is due, we must know what payment is. The ascertainment of that fact, like the ascertainment of facts generally in the discharge of the judicial function, is a process that must be flexible and broad enough to keep all the circumstances in view. In weighing their significance, a court will not forget that Congress meant to hit the evil of extravagance, and that the meaning of its words, if doubtful, must be adapted
The facts of the case before us define the scope of our decision. We are not required to adjudge the effect to be given to the acceptance of bonds or notes when made in different circumstances or with other possibilities of benefit. For like reasons, there can be no profit in stating or analyzing the holdings in other federal courts.
In re H. Batterman Co.,
231 F. 699;
In re Mills Tea & Butter Co.,
235 F. 815;
224 F. 333;
In re J. B. White & Co.,
225 F. 796;
Kinkead v. J. Bacon & Sons,
230 F. 362;
In re Columbia Cotton Oil & Provision Corp.,
210 F. 824. They grew out of situations very different from this one, and are not consistent with one another. No principle of general application can be extracted from them.
under § 74 of the Bankruptcy Act. Section 74 (11 U.S.C. § 202) and the rules applicable thereto have relation to proceedings for the relief of a debtor not a bankrupt who seeks a composition or an extension of his debts. The present proceeding under § 12 of the act, as amended (11 U.S.C. § 30) is for a composition by a bankrupt. The general order was passed in the exercise of the rulemaking power, and was directed to proceedings of a particular class. The jurisdiction that we now exercise is part of the judicial function, and is directed to proceedings of a different class. The one does not control the other.
268 U. S. 426
268 U. S. 434
174 U. S. 599