Court Opinion

ID: 8808818
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:56:34.406533+00
Date Added: 2024-06-11T17:04:12.296630
License: Public Domain

LEARNED HAND, District Judge.
[1] Judge Mayer decided (In re M. & H. Gordon [D. C.] 245 Fed. 905) that a bankrupt might not pay as part of a composition the expenses of a creditor who fiad employed a public accountant to investigate the bankrupt’s affairs. I concur in that case and in its reasoning. Courts have been extremely zealous to secure equality of distribution among creditors, quite independently of whether the added payment to any one of them came from the fund to be divided. Bell v. Leggett, 7 N. Y. 176; In re Dietz (D. C.) 97 Fed. 563; In re Palmer, 14 Nat. Bank R. 437, Fed. Cas. No. 10,678; Ex parte Briggs, 2 Lowell, 389, Fed. Cas. No. 1,868. In all these cases the payments came from sources that could not possibly have been distributed among creditors. It might seem, indeed', that the solicitude for equality was in such cases overzealous. In compositions, however, the motive is much stronger, since the bankrupt commonly procures the consideration divided, at least in part, .from sources outside the estate. Obviously the measure of the dividend he offers will in part be determined by the “cost of the proceedings” in the language of section 12b. If the court permits him to include in that amount the several expenses ■ of creditors, it diminishes pro tanto the available residue for dividends. Hence there is a stronger reason to apply the rule strictly in compositions than upon discharges, where the funds which will actually be distributed are already in the custody of the court and cannot be affected.
[2] This case may perhaps be thought to fall within an exception indicated obiter in Re M. & H. Gordon, supra; that is, the case where the efforts of the creditor have benefited the estate. In such a case, as it seems to me, the creditor so assisting establishes no claim against the estate, unless he acts at the request, express or implied, of the receiver, at least when there is a receiver. The court must look to the receiver as the adequate custodian, and the sole person who can establish any claims for administration, except such as are otherwise expressly authorized by statute. Any services rendered by those not authorized by the receiver must be deemed to be on the account of the creditors who undertake them. They are merely volunteered, and the estate, even though actually benefited, owes nothing for them. There is no hardship in this, but absolute justice. Any creditor may apply at any time to the court upon suggestion that the receiver should authorize him to assist, and the court can 'so direct. But to allow claims to be established for benefits, supposititious or actual, without some initial indication that the services upon which they are based will be the subject of a charge, is wrong in principle and mischievous in application. An estate in the custody of a court is not in heed of voluntary services; there is no room for the doctrine of salvage. It is presumably being cared for adequately, and those who seek to impose upon it the benefit of their assistance do so at their own account, unless they secure some consent at the outset.
The motion is denied, without regard to the defense of laches. I need scarcely add that the disallowance of the item did not depend in the’ least upon any disapproval of the conduct of the committee, nor did it constitute any reflection upon their integrity.

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