Court Opinion

ID: 9637569
Source: CourtListenerOpinion
Date Created: 2023-08-22 15:10:31.342836+00
Date Added: 2024-06-11T18:09:57.840510
License: Public Domain

WALTER H. SANBORN, Circuit Judge
(dissenting). .The petitioners in this ease, Joe D. Morse and Hugh E. Tyson, are lawyers, who, in the matter of the bankruptcy of the Western Bank Supply Company, a corporation, having outstanding $150,000 of common and $150,000 of preferred stock and property worth more than $200,000, engaged in operating two stores, one in Olkahoma City and one in Tulsa, was adjudged a bankrupt on June 16, 1925, on a petition of some of its creditors, prepared and prosecuted to the adjudication and the taking by the court of the possession and administration of the property of the corporation by these petitioners as attorneys for those who petitioned for the adjudication in bankruptcy.
A few days after this adjudication the receiver appointed by the court, pursuant to the order of the referee, sold the entire property of the bankrupt, subject to a secured indebtedness of $134,500, for $142,000, and, at the time of the sale, the receiver had in his possession about $6,000 more which he had derived from the operation of the business above the expenses of that operation. Thereupon Morse & Tyson filed an application with the referee in bankruptcy for an allowance of $5,-000 for their services in preparing and prosecuting to an adjudication the petition of the creditors therefor. Certain creditors objected to the allowance of this fee, and there were two hearings before the referee as to the amount of the fee which should be allowed at which witnesses were sworn and testified upon that issue. The result was that the referee made an order allowing a fee of $3,000. Thereupon the objecting creditors filed a petition with the District Court for a review of this order. There was a final hearing upon this issue by the District Court, at which both parties were represented. At that hearing no evidence or testimony was offered or received, except that which had been taken by the referee, upon which- he had acted, and which that referee had certified to the District Court. That court upon consideration made an order that the fee of MorSe & Tyson be reduced to $500. They have filed in this court their petition to revise in matter of law this order reducing the fee allowed by the referee from $3,000 to $500, and have made all the testimony and evidence presented to the referee and to the court a part of their petition, and the objecting creditors in their response to the petition have admitted and averred that this was all the testimony and evidence before the court below.
The only issue in this case, therefore, under this petition to revise, is whether the District Court erred in reducing the fee allowed by the referee from $3,000 to $500. This issue was presented here by petition to revise under section 24b of the Bankruptcy Act (section 9608, Comp. St.). While the general rule is that petitions to revise involving decisions of disputed questions of fact, conditioned by conflicting evidence, are not reviewable by the appellate court, it is equally well settled that the question of-law whether or not there was any substantial evidence to sustain a decision or order may be considered and determined, and must be so considered *697and determined, if presented, under such a petition. Good v. Kane (8 C. C. A.), 211 F. 956; In re Ruskay (2 C. C. A.) 5 F.(2d) 143, 146; In re Hoyne (7 C. C. A.), 277 F. 668, 671; Swift & Co. v. Licklider (4 C. C. A.) 7 F.(2d) 19; In re Kuhn Bros. (7 C. C. A.) 234 F. 277, 280.
In this ease there was no substantial evidence — in fact, there was no evidence whatever — before the District Court below or before the referee that the $3,000 allowed by him was excessive, unreasonable, or unjust. There was before the referee and before the District Court the testimony of six lawyers who were in general practice in the state of Oklahoma, who by their oaths qualified themselves to testify to the value of the services of Morse & Tyson here in controversy: Morse, who testified that their services in question were worth $10,000; Tyson, who testified that they were worth $5,000; W. F. Wilson, who testified that they were worth from $3,500 to $4,000; and W. C. Melnnis, who testified that they were worth $5,000. These witnesses had been called by the petitioners. The objecting creditors called two witnesses: Bruce McClelland, who testified that the petitioners’ services were worth from $3,000 to $4,000; and Phillip Pierce, who testified that $5,000 was a reasonable fee for their services. No one testified that their services were worth less than $3,000, and all of them testified that they knew the nature of the case, the proceedings, and the services rendered by Morse & Tyson.
The Bankruptcy Act granted to these petitioners “one reasonable attorney’s fee, for the professional services actually rendered” to the petitioning creditors in securing the adjudication. They were entitled to that reasonable fee under the act of Congress as of right. “Its allowance or disallowance is not matter of discretion. So, also, the amount to be allowed does not rest in mere discretion. The amount must in all eases be reasonable, to be determined upon evidence of the service performed and of its value, and, in the ab- , sence of evidence of its value, by the court from knowledge of its worth. The amount to be allowed rests in legal judgment and judicial discretion, but not in unrestrained discretion, and that judgment and judicial discretion are subject to review.” Opinion of Judge Jenkins of the Circuit Court of Appeals of the Seventh Circuit, In re Curtis et al., 100 F. 784, 785; In re Diamond Fuel Co. (C. C. A.) 6 F.(2d) 773, 775; In re Marcuse & Co. (C. C. A.) 11 F.(2d) 513, 514.
The only issue before the District Court was whether, upon the evidence before1 it, it was its judicial duty to reduce the fee of $3,-000 whieh the referee had allowed. There was before it the positive testimony of six competent witnesses, two of whom were called by the objecting creditors, to the effect that the fee ought not to be reduced, and there was not only no substantial evidence, but no evidence whatever, before it that it ought to be reduced. In this state of the case it was, in my opinion, the judicial duty of that court to adjudge as a matter of law that there was no evidence to sustain any reduction of the fee ordered by the referee, and its refusal so to do and its reduction of the fee was a pure error of law, which this court has jurisdiction to, and it is its judicial duty to, reverse under this petition to revise in matter of law.