Court Opinion

ID: 8753217
Source: CourtListenerOpinion
Date Created: 2022-11-26 11:35:42.361278+00
Date Added: 2024-06-11T17:01:05.139059
License: Public Domain

LOWELL, District Judge.
Receivers were appointed on an involuntary petition, and for some time carried on the business of the bankrupt with skill and success. They have been allowed by the referee compensation based upon the theory that the aggregate-compensation of receivers and trustees is in no case to exceed the maximum- allowed the trustee under section 48, Act July 1, 1898, c. 541, 30 Stat. 557 [U. S. Comp. St. 1901, p. 3439]. The reasoning in support of the theory is this: The duties of the trustee may require him to carry on the bankrupt’s business, as well as ’ to distribute the estate. If he does both, he cannot, under the amendment made by the Ray bill (Act Feb. 5, 1903, c. 487, § 1, 32 Stat. 797 [U. S. Comp. St. Supp. 1903, p. 409]) to section 2, cl. 5, of the original bankrupt act, obtain a larger compensation than that allowed by section 48. A receiver is not to be paid upon more liberal scale than is a trustee. If a receiver performs part of a trustee’s duties, the aggregate compensation should not exceed that which would be paid to the trustee if he did everything himself. Therefore only a suitable proportion of the maximum compensation allowed by section 48 can in any case be paid to the receiver. What the receiver gets must be taken from the trustee’s maximum.
The provisions of section 2, cl. 5, of the act, as amended by the Ray bill, are not altogether clear in meaning; and the construction thus stated, which .was adopted by the referee after informal conference with the judge, has something to recommend it. In re Carolina Co. (D. C.) 96 Fed. 950. Upon reconsideration, however, I think the construction is too strict. The receiver is not, strictly speaking, performing a part of the duties of a trustee. The management of the estate before the appointment of a trustee differs in important respects from the management thereafter. Under an involuntary petition, in particular, the receiver’s duty is often t© maintain as far as possible the continuity of the respondent’s affairs, so that, if no adjudication is made, his property and business' may *773be redelivered to bim damaged as little as possible by the proceedings in bankruptcy. I think, therefore, that the court is permitted,to allow as maximum compensation to receivers who have carried on the business, the maximum compensation allowed to trustees by section 48; this receivers’ allowance not necessarily to be deducted from the trustees’ maximum, but in some cases reckoned in addition to the latter. Referees will understand that this is the maxi-: mum, • not the minimum or the normal, compensation of receivers. Sometimes the receiver’s duties are merely formal, and so his compensation should be small. Sometimes he has so far settled the bankrupt’s estate that the trustee’s duties are little more than formal, and so the trustee’s compensation should be small. In many cases the rule hitherto adopted by the referee may well be proper, but I do not think it is absolutely binding in all cases. Its universal adoption would so limit the compensation of receivers as to make a suitable appointment difficult in some cases. An efficient administration of the bankrupt act calls for a reasonable liberality in this matter. The opinion just expressed applies only to receivers who have carried on the business. The compensation allowable to other receivers is not here in question.
The judgment of the referee is reversed, and the case is remanded to him for further proceedings not inconsistent with this opinion!