Source: https://www.legalcrystal.com/case/95748/conrad-rubin-lesser-vs-pender
Timestamp: 2018-02-19 22:25:06
Document Index: 582510536

Matched Legal Cases: ['§ 60', '§ 60', '§ 64', '§ 60', '§ 60', '§ 60', '§ 64', '§ 60', '§ 60', '§ 60', 'sui generis', '§ 64', '§ 64']

Conrad Rubin and Lesser Vs Pender - Citation 95748 - Court Judgment | LegalCrystal
Conrad, RubIn and Lesser Vs. Pender - Court Judgment
LegalCrystal Citation legalcrystal.com/95748
Case Number 289 U.S. 472
Appellant Conrad, RubIn and Lesser
Respondent Pender
.....court of appeals for the second circuit syllabus 1. payments made by the debtor in contemplation of bankruptcy "to an attorney and counselor at law, solicitor in equity, or proctor in admiralty," "for services to be rendered," are subject to be summarily page 289 u. s. 473 reexamined by the referee as to their reasonableness, under § 60(d) of the bankruptcy act. p. 289 u. s. 475 . 2. the payments covered by § 60(d) are to be distinguished from the allowances contemplated by § 64(b)(3) which are made out of the bankrupt estate for legal services in its administration. p. 289 u. s. 476 . 3. the jurisdiction to reexamine under § 60(d) depends not on the specific nature of the services to be rendered, but upon the state of mind.....
Conrad, Rubin & Lesser v. Pender - 289 U.S. 472 (1933)
U.S. Supreme Court Conrad, Rubin & Lesser v. Pender, 289 U.S. 472 (1933)
reexamined by the referee as to their reasonableness, under § 60(d) of the Bankruptcy Act. P. 289 U. S. 475 .
2. The payments covered by § 60(d) are to be distinguished from the allowances contemplated by § 64(b)(3) which are made out of the bankrupt estate for legal services in its administration. P. 289 U. S. 476 .
3. The jurisdiction to reexamine under § 60(d) depends not on the specific nature of the services to be rendered, but upon the state of mind of the debtor -- upon whether his thought of bankruptcy was the impelling cause of the transaction. P. 289 U. S. 477 .
4. The test of jurisdiction under § 60(d) is not whether the services to be rendered are "germane to the aims of the Bankruptcy Act." P. 289 U. S. 478 .
5. The payments may well be "in contemplation of bankruptcy" though the purpose was to bring about an arrangement with creditors that would prevent bankruptcy. P. 289 U. S. 478 .
rendered shortly before the filing of an involuntary petition. The order was sustained by the District Court ( In re David Bell Scarves, Inc., 52 F.2d 755) and by the Circuit Court of Appeals. 61 F.2d 771. This Court granted certiorari.
The District Court concluded that the thought of bankruptcy was the impelling motive of the debtor corporation when its president retained appellants. And the Court of Appeals was of the opinion that, in these circumstances, the payment was made "in contemplation" of bankruptcy within the meaning of § 60(d). [ Footnote 1 ]
That provision has been held to be sui generis. It does not contemplate a plenary suit, but a summary proceeding. In re Wood & Henderson, 210 U. S. 246 , 210 U. S. 251 -253. The class of cases to which it refers is not that of preferences or of fraudulent conveyances. Id. The provision authorizes reexamination of payments or transfers when made by a debtor (1) "in contemplation of the filing of a petition by or against him," (2) "to an attorney and counselor at law, solicitor in equity, or proctor in admiralty," and (3) "for services to be rendered." Such payments or transfers are only to
from the provision of § 64(b)(3), 11 U.S.C. 104(b)(3), [ Footnote 2 ] with respect to the priority of a reasonable attorney's fee in the distribution of an estate in bankruptcy. [ Footnote 3 ] See Furth v. Stahl, 205 Pa. 439, 442, 55 A. 29, 30; Pratt v. Bothe, 130 F. 670, 673. Section 60(d) relates to payments and transfers made by the bankrupt prior to bankruptcy from his own property for services to be rendered to him, § 64(b)(3) to an allowance to be made for legal services out of the estate under administration. See In re Rolnick, 294 F. 817, 819. The services within the latter provision are those rendered in aid of the administration of the estate and the carrying out of the provisions of the Act. See Randolph v. Scruggs, 190 U. S. 533 , 190 U. S. 539 ; In re Kross, 96 F. 816; In re Mayer, 101 F. 695; In re Rosenthal & Lehman, 120 F. 848; In re Christianson, 175 F. 867. Section 60(d), authorizing a reexamination of payments and transfers by the bankrupt for services to be rendered, has a broader scope. It contains no intimation of an intention to limit the jurisdiction to reexamine to a particular sort of legal services for the payment of which the debtor has disposed of his property. The point of the provision conferring jurisdiction for a summary reexamination is not the specific nature of the legal services to be rendered, but that the
We agree with the Court of Appeals that the criteria of jurisdiction to reexamine are distinct from the criteria of the decision on the merits. As to the jurisdiction to reexamine, the controlling question is with respect to the state of mind of the debtor and whether the thought of bankruptcy was the impelling cause of the transaction. Compare United States v. Wells, 283 U. S. 102 , 283 U. S. 117 -118; Tripp v. Mitschrich, 211 F. 424, 427. If the payment or transfer was thus motivated, it may be reexamined and its reasonableness be determined. Undoubtedly, while the question thus relates to the debtor's motive, the nature of the services which he seeks and for which he pays may be taken into consideration as it may throw light upon his motive. It is not impossible that the services may have been so wholly separate from any exigency of bankruptcy as to indicate that the thought of bankruptcy was in no sense controlling. But, given the fact that the payment or transfer was in contemplation of bankruptcy, the inducement of the transaction affords, from the standpoint of the statute, sufficient ground for authorizing a summary inquiry into its reasonableness. The manifest purpose of the provision is to safeguard the assets of those who are acting in contemplation of bankruptcy, so that these assets may be brought quickly and without unnecessary expense into the hands of the trustee, and to provide a restraint upon opportunities to make an unreasonable disposition of property through arrangement for excessive payments for prospective legal services. In re Wood & Henderson, supra; Pratt v. Bothe, supra. We said in the case of Wood & Henderson that the statute
In this view, we are unable to conclude that the question whether the services for which the payment or transfer is made are "germane to the aims of the Bankruptcy Act," as suggested in some of the decisions, [ Footnote 4 ] furnishes the test of the jurisdiction to reexamine. The test of jurisdiction, we repeat, is given by the express language of the statute. In the exercise of jurisdiction, all questions bearing upon the reasonableness of the transaction, including the purpose and nature of the services, are open to consideration. But it is insisted in the instant case that the payment to appellants could not properly be regarded as made in contemplation of bankruptcy, and hence within the jurisdiction to reexamine, because the payment was for the purpose of engaging appellants to conduct negotiations with creditors in order to arrange for an extension of time, and, if necessary, for the operation of the business under the creditors' supervision, and thus to avoid a forced liquidation and ultimately to restore the business to a sound basis. We find no ground for saying that the fact that such purposes were in view establishes, as matter of law, that the payment was not in contemplation