Document: 336 U.S. 1 69 S.Ct. 371 93 L.Ed. 453 LEIMAN et al.v.GUTTMAN al. No. 88. Argued Dec. 13, 1948. Decided Jan. 17, 1949. Mr. Samuel Marion, of New York City, for petitioner. Messrs. Barney Rosenstein and Leo Praeger, both respondent. Justice DOUGLAS delivered the opinion Court. Section 221 Ch. X Bankruptcy Act, 52 Stat. 897, 11 U.S.C. § 621, U.S.C.A. provides: 2 'The judge shall confirm a plan if satisfied that—* * 3 '(4) all payments made or promised by debtor corporation issuing securities acquiring property under any other person, services costs expenses in, in connection with, proceeding with incident to reorganization, have been fully disclosed are reasonable or, be fixed after confirmation plan, will subject approval *.' 4 The question presented this case is whether that provision gives bankruptcy court exclusive jurisdiction over petitioners' claim as attorneys reorganization Pittsburgh Terminal Coal Corp., debtor. 5 Petitioners were protective committee representing public holders preferred stock had on deposit 584 shares from four stockholders. agreed hold those escrow purpose affording petitioners 'additional compensation' their proceedings debtor.1 6 rendered valuable service reorganization. When was confirmed, they applied an allowance. That allowed them $37,500 out estate. It concluded that, while amount estate should bear, worth more than But it held no pass allowance which paid agreement. In re D.C., F.Supp. 656. 7 Since view did not claim, appeal order but brought instead present suit courts specific performance agreement delivery deposited accordance terms Court Appeals answered negative following certified question: 8 'Has Supreme State matter action recover legal stockholders compensable assets Debtor's estate, Chapter United States Act?' 297 N.Y. 201, at page 204, 78 N.E.2d 472, 473. 9 here petition certiorari we granted because importance administration Act. 10 We reviewed Woods v. City Nat. Bank & Trust Co. Chicago, 312 262, 61 493, 85 820, Brown Gerdes, 321 178, 64 487, 88 659, design insofar fees allowances concerned. There dealing payable Here Under less comprehensive language 77B leading authority latter claims well. McCrory Stores Cir., 91 F.2d 947. would unmindful history heedless statutory power respect contracted2 result X. control limited 221(4) places his 'all promised' (1) 'the debtor' (2) 'by plan' (3) person' 'in with' 'incident to' concededly met requirements; against whose lien sought asserted plainly included within words 'any person.' Moreover, these classes claimants whom empowered allow compensation.3 To lift petitioner's therefore rewrite when extended so far unconstitutional. has even intimated. former permissible. 12 aim expanded controls clear. practice fix private arrangement outside court.4 committees commonly functioned viewed contract,5 its expenses. By normally sole amount.6 This gave rise serious abuses. spectacle fiduciaries fixing own exacting often relation value rendered.7 effective received creditors determined manager committees. 13 Hence Congress instituted controls, became pervasive evolved into 211 requires file statement disclosing specified information including operates.8 scrutiny clause 212 set aside provisions such finds 'unfair consistent policy.' And written terms—it applies payments' whoever pays them.9 A statute establishing broad supervision cannot presumed niggardly grant deals others most direct impact aims protect. 14 can find exemption kind represented. fact may represented smaller intimate group conventional irrelevant. designed police return security obtain plans. net kept arrangements expressed agreements control. For excessive fee same charged directly represents proportionate interest 15 Nor answer say state supervise nature disallowed do so. happenstance litigation equivalent administrative rule adopted asked submit requests court. incidence plans great deemed indispensable court's determination confirmed. provides, indeed, one standards makes determination. integral part process exclusively entrusted court, infer delegated best position know what work done claimant, how important involved was, much benefited whole class alone, necessary, effective. already pay. remains charge escrowed determine be. Certainly where, case, holders, weigh interrelated issues make fair allocation between two. 16 These practical considerations support literal reading fees. Its exclusive. See supra. 17 District holding claims. reason apparent why apply date. advised during course argument final decree 228 entered.10 Yet though been, there special circumstances application foot decree. 18 Affirmed. 19 JACKSON, dissenting part. 20 I agree holds constituted Act disburse commit fiduciary funds hands general agreement, nor pay attorneys' except federal contract enforceable. goes beyond that. As counsel affect committee, see contracts Court, this, way effectively assert bestows upon It. 21 seems me converting prevent lawyers overreaching swindle lawyers. appear like instance man biting dog, before us actually client snaring lawyer. Court's rather abstract declaration my difficulty understood only fuller recital facts. 22 tried issue. decided motion dismiss trial intermediate appellate State. All think returned correct answer. basic case. 23 From record unsatisfactory decision bar interested reorganizations, facts appear. 24 Corporation, debtor, Three defendants, manner powers duties disclosed, 'Committee Preferred Stockholders.' Whether suc does Committee interests family group, heavily stock, comprised dominated Committee. originally retained 25 situation appears existence hence depended outcome lawsuit 'uncovering mismanagement malfeasance.' Remuneration who press contingent creating estate; cases properly reluctant event include allowances, compensation risk doing nothing. 26 faced slim chance proposed withdraw. induce continue, individual put 20% defendant separate contract. previously Committee, time stockholders' recited, 'This secured listed above you additional your matter. They obtained condition proceedings' terminated settlement made, conditioned faithful satisfactory 27 After created efforts lawyers, repudiated contended counsel's without resort thereupon Judge Gibson's recites among following: 28 chairman Stockholders, 'while denying could Debtor, debtor's seemed improbable, considerable award estate.' He indicates source ultimate fortunate recovery fund distribution.' he 'that named distributed Among sinking claims, Guttman's criticism Trustee's sales machinery management real rent collections repair houses property.' 29 Securities Exchange Commission joined 'contended duty determining reasonableness fees, chargeable non-compensable charged.' Gibson otherwise very properly, concluded, 'In instant sufficient credited depositing charged. judgment, entered, stockholders.' (All emphasis supplied.) thought 'seems stretch interpretative too far.' 30 Thus denied quantum meruit basis admittedly stockholders, itself enforce contract, then went Y rk it. members defendants. quite proper, 'Committee' which, agent, question. complaint judgment deliver up stakeholder hands. also parties behalf individually putting stocks enter judgment. thus individuals 31 However, Appeals, took review ignores liability asks (297 473), Act.' 32 Read literally, 'No.' organized commitments undertake, trust provided supervise. 33 read aright, person lawyer control, control.' 34 disables anybody, stockholder, employing sees fit accepting retainers. invalidate them, concerned, effect, and, understand it, intent decision. If privately retain lawyer, fee, otherwise, secure pledge company being reorganized, stock. 35 am unaware protected denial right hire one's determinable cases. good served preventing raids advanced ruling. presumably mentally competent adults, proved bargain, perform windfall not. Are people situated disabled agreeing expose bankrupt trustee here, chances doubtful? 36 recognize unfairness suggests remedied new larger tell where wrong one. Indeed, mistake, any, scattered bits about evidence previous made. ourselves once impractical today's 37 apparently either such, adequately compensated $37,500. performed neither employed Do we, seeing record, reverse finding? so, enumerated benefit individuals? Or individuals, them? suggesting paid? Would just grievance burdened paying extra-estate services? reach order? 38 What seem saying give ample improper really compels follow this. 39 mean pointed fund. Can one? suggested aware anything adjudicate controversy, essentially merely appearing Clearly valid fee. Is allowing some invalid upon? exceeds personal deficiency? not, limit lawyer's assure payment might conditions fulfilled? 40 unable law whatever employ guard unless formed involves neither, specially placed stakeholder's counsel. 41 An experienced able knew complete disclosure, approved share share, fulfill purposes Federal 42 apart certain items parties. Those what, peculiar circumstances, services. left controversy adjudicate. require compensate seeks money relief accept 43 remand further tate provides adjudication inconsistent our committed 44 CHIEF JUSTICE FRANKFURTER join opinion. relevant provided: 'These pending termination Corporation. Code Corporation finally suits settled. condtioned until proceedings.' indicated strengthen impair existing 77B, 207, established regard allowances. Sen. Rep. 1916, 75th Cong., 3d Sess. (1938); H.R. 1409, 1st 45 (1937). 242, 642, reimbursement proper incurred chapter judge, accepted confirmed judge— '(1) indentu e trustees, depositaries, managers, representatives stockholders; '(2) Commission; '(3) agents foregoing Commission.' Part VIII, Protective Report, (1940), pp. 232 seq. Habirshaw Electric Cable Co., Inc., 296 F. 875, 879, A.L.R. 1035. I, (1937), 644, 645, 646—647: 'An examination 846 replies Commission's questionnaire reveals 841 agreements, 99.4 percent, entitled both. Of 672 79.9 express securities, compensation, 742, 88.2 clothed loans finance activities. exercised discretion free independent agency depositors. provide little check amounts stated above, examined 469 unlimited. say, 55.4 per cent aggregate unit limited. 705 associated 77 having 2.13 percent balance cases, numbering 690, reserved determine, limits prescribed 403 690 limitations. fiduciaries, therefore, vast majority whereby arbiters propriety out, usually must 'reasonable.' restriction little, since alone equity depositor disallow sums 'reasonable' expense. Such necessitate Considering time, expense, questions involved, remedy furnish whatsoever extravagance members.' II, 351 noted twelve contained restricted. §§ 611, 612, 621(4). supra, note 2, 36, explains follows: 'Subsection (4) section 221, derived 77B(f)(5), full disclosure services, expenses, proceedings, succeeding 77B(f)(5) (5) corporations assets, reasonable, 228, 628, 'Upon consummation decree— discharging debts liabilities terminating rights confirming directing authorizing transfer retention property; trustee, any; making injunction equitable; closing

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