Court Opinion

ID: 6883107
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:20:54.592228+00
Date Added: 2024-06-11T16:05:38.350609
License: Public Domain

HEALY, Circuit Judge
(concurring in part and dissenting in part).
I agree that the expenses and compensation properly allowable should be paid only in due course of administration. I agree also with the court’s interpretation of the statutes relating to the measure of the compensation of receivers, but think the receiver’s compensation in this instance should be computed under subdivision (a) (2) of section 48, 11 U.S.C.A. § 76(a) (2).
On the matter of the entire disallowance of compensation for the attorneys I am not able to go along with my associates. If counsel had undertaken to represent interests substantially adverse and had failed to disclose that fact to the court, their claim for fees ought to be disallowed; but such is not the case here. The lawyers represented a creditor, Heiser, whose claim against the bankrupt had been reduced to judgment prior to bankruptcy. While the bankrupt and the Oklahoma trustee were entitled to contend, and did contend unsuccessfully, that Heiser’s judgment should be set aside, the receiver appointed merely to conserve assets had no duty in that respect and was not empowered by the court to pass on the validity of claims. In representing both the creditor and the receiver the attorneys did not, I think, act for substantially conflicting interests. Indeed the fact that they already had some knowledge of the bankrupt’s property and affairs might well be thought to make them the logical choice as attorneys for a receiver whose business it was to forestall removal or other disposition by the bankrupt of his local assets.
It seems to me hardly just to question the statement of the trial court that the facts were disclosed to it; and I believe it to be wholly unfair to the attorneys to assume that there was any concealment on their part or any real failure to disclose their connection with Heiser. The record is replete with evidence of the disclosure. It was on the petition of Heiser that the involuntary adjudication was made by the trial court, and the attorneys Meyberg and Turnbull signed the petition as attorneys for Heiser. Likewise it was this creditor who petitioned for the appointment of the receiver, and his petition is signed by these attorneys as counsel for Heiser. The order of the court appointing the receiver recites that it was made “upon motion of Rupert B. Turnbull, attorney for said petitioner”. Indeed, from first to last the record discloses on its face that these attorneys were counsel for Heiser, and the court could not but have been aWare of that fact.
Order 44 of the General Orders in Bankruptcy does not require the denial of fees to an attorney where the true facts are not disclosed in the petition for his appointment. It merely permits such denial. The spirit of the rule should be strictly enforced, but there is no justification for a purely mechanical application of it. Here, although the disclosure was not made in the precise manner required by the rule, there was an actual and complete disclosure of the facts. Ordinarily, it would be only in the petition itself that opportunity would be given to make the disclosure, but here the situation was different
*157Where the trial court has authorized its receiver to employ counsel, I think an appellate court would rarely be justified in rejecting entirely the allowance of compensation because of its belief, after the fact, that an attorney was not necessary. I do not believe there is justification for that course here.