Source: http://openjurist.org/336/us/1
Timestamp: 2013-05-23 17:44:12
Document Index: 714404957

Matched Legal Cases: ['§ 77', '§ 221', '§ 77', '§ 212', '§ 221', '§ 228']

336 US 1 Leiman v. Guttman | OpenJurist
336 U.S. 1 - Leiman v. Guttman	Home336 us 1 leiman v. guttman
336 US 1 Leiman v. Guttman 336 U.S. 1
69 S.Ct. 371
93 L.Ed. 453
LEIMAN et al.v.GUTTMAN et al.
'The judge shall confirm a plan if satisfied that—* * *
Petitioners were attorneys for a protective committee representing public holders of the preferred stock of the debtor. The committee had on deposit 584 shares of the preferred stock from four stockholders. The committee agreed to hold those shares in escrow for the purpose of affording petitioners 'additional compensation' for their services in the reorganization proceedings of the debtor.1
We reviewed in Woods v. City Nat. Bank & Trust Co. of Chicago, 312 U.S. 262, 61 S.Ct. 493, 85 L.Ed. 820, and Brown v. Gerdes, 321 U.S. 178, 64 S.Ct. 487, 88 L.Ed. 659, the design of Ch. X insofar as fees and allowances are concerned. There we were dealing with fees and allowances payable out of the estate. Here we are dealing with fees which are incident to the reorganization but not payable out of the estate. Under the less comprehensive language of § 77B the leading authority was that the bankruptcy court had jurisdiction over the latter claims as well. In re McCrory Stores Corp., 2 Cir., 91 F.2d 947. We would be unmindful of history and heedless of statutory language if we held that the power of the bankruptcy court in this respect had been contracted2 as a result of Ch. X.
The control of the judge is not limited to fees and allowances payable out of the estate. Section 221(4) places under his control 'all payments made or promised' (1) by 'the debtor' or (2) 'by a corporation issuing securities or acquiring property under the plan' or (3) 'by any other person' for services rendered 'in connection with' the proceeding or 'in connection with' the plan and 'incident to' the reorganization. The services of petitioners concededly met those requirements; and the committee against whose stock a lien is sought to be asserted would plainly be included within the words 'any other person.' Moreover, these petitioners are included in the classes of claimants to whom the judge is empowered to allow reasonable compensation.3 To lift petitioner's claim from § 221(4) would therefore be to rewrite it or to hold that when extended so far it was unconstitutional. The latter has not even been intimated. The former is not permissible.
The aim of the expanded controls over reorganization fees and expenses is clear. The practice had been to fix them by private arrangement outside of court.4 The deposit agreement under which committees commonly functioned was viewed as a private contract,5 which granted the committee a lien on the deposited securities for its fees and expenses. By terms of the agreement the committee was normally the sole judge of their amount.6 This gave rise to serious abuses. There was the spectacle of fiduciaries fixing the worth of their own services and exacting fees which often had no relation to the value of services rendered.7 The result was that the effective amount received by creditors and stockholders under the plan was determined not by the court but by reorganization manager and committees.
Hence Congress instituted controls, controls which became more pervasive as § 77B was evolved into Ch. X. Section 211 requires that a committee file with the court a statement disclosing specified information including the agreement under which it operates.8 The scrutiny clause of § 212 gives the court power to set aside any of the provisions of such an agreement which it finds to be 'unfair or not consistent with public policy.' And § 221(4) is written in pervasive terms—it applies to 'all payments' for services 'in connection with' the proceeding or 'in connection with' the plan and 'incident to' the reorganization, whoever pays them.9 A statute establishing such broad supervision over committees cannot be presumed to be niggardly in its grant of authority when it deals with the matter which of all the others has the most direct impact on those whom it aims to protect.
Petitioners did not appeal from the order of the District Court holding that it had no jurisdiction over these claims. But no reason is apparent why the petitioners may not apply to the District Court for an allowance even at this date. We were advised during the course of argument that the final decree under § 228 has not been entered.10 Yet though it has been, there is no reason in view of the special circumstances of this case why application cannot be made at the foot of the decree.
'The judge may allow reasonable compensation for services rendered and reimbursement for proper costs and expenses incurred in connection with the administration of an estate in a proceeding under this chapter or in connection with a plan approved by the judge, whether or not accepted by creditors and stockholders or finally confirmed by the judge—
See Part I, Protective Committee Report, Securities and Exchange Commission (1937), pp. 642, 644, 645, 646—647: 'An examination of the 846 deposit agreements received with replies to the Commission's questionnaire reveals that 841 agreements, or 99.4 percent, provided that the committee should be entitled to fees or expenses or both. Of those 841 deposit agreements, 672 agreements, or 79.9 percent, gave the committee an express lien upon the deposited securities, for expenses or compensation, or both. 742, or 88.2 percent, clothed the committee with power to pledge deposited securities to secure loans to finance its activities. These powers commonly may be exercised by the committee in its sole discretion free from supervision by any independent agency or by the depositors.
'Upon the consummation of the plan, the judge shall enter a final decree—
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