Court Opinion

ID: 9419302
Source: CourtListenerOpinion
Date Created: 2023-08-02 22:48:34.887068+00
Date Added: 2024-06-11T17:22:17.331197
License: Public Domain

Mr. Justice Roberts
delivered the opinion of the Court.
This controversy arises in a proceeding under § 77 of the Bankruptcy Act1 for the reorganization of the St. Louis-San Francisco Railway Company system, part of which is the Kansas City, Fort Scott & Memphis Railway, under a mortgage of whose property the respondent Bank*165ers Trust Company is trustee. The respondent obtained leave to intervene in the District Court and before the Interstate Commerce Commission,2 and participated in the proceedings.
The Commission approved a plan of reorganization, and the District Court, with the plan before it, directed the filing of all petitions for allowance of “compensation for services rendered or for expenses (including reasonable attorneys’ fees) incurred either under clause (12) of subsection (c) of Section 773 ... or otherwise . . .”
The respondent filed two such, petitions;, numbered respectively 266 and 267, each praying stated amounts as compensation for services as indenture trustee, for counsel fees, and for expenses. The sums named and the services recited in the two petitions were identical, but in 267 the compensation was claimed under § 77 (c) (12), and the right was reserved to object to the jurisdiction of the Commission. That petition was sent by the court to the Commission for the fixing of a maximum allowance. Prior to the Commission’s action thereon, 266 came on for hearing by the court.
In 266 the respondent alleged that the services had “not been rendered or incurred ‘in connection with the proceedings and plan’ ” for reorganization, but by respondent as trustee under the mortgage in performance of its fiduciary duties, for the benefit of the trust estate, as distinguished from the debtor’s estate;
Over opposition by petitioner, a creditor and an intervenor, the court ruled that § 77(c) (12) did not apply, that the mortgage rendered the claim a proper charge on the mortgaged property, and directed the respondent to pay itself the amounts claimed out of cash deposited with it as indenture trustee.
*166The Commission held hearings on 267 and on other claims for allowances under § 77(c) (12). In a report it held that it had jurisdiction to fix a maximum amount to cover the items embraced in respondent’s claim in 267, which it found were rendered in connection with the proceedings and the plan during the pendency of the § 77 proceeding.4 It fixed maxima below the amounts claimed for the several items of service and expense.
The court refrained from passing on this portion of the Commission’s report. The petitioner appealed from the order in 266, and the Circuit Court of Appeals affirmed the judgment.5 Due to the importance of the questions raised in the administration of the statute and a conflict of decision,6 we granted certiorari.
Section 77(c) (12), which appears in the margin7 em*167powers the Commission to fix a maximum allowance “out of the debtor’s estate” for the expenses (including attorneys’ fees) and services of “trustees under indentures,” for expenses incurred and services rendered “in connection with the proceedings and plan.” It emphasizes that the expenses, the fees, and the services must be “reasonable” and the allowance therefor “reasonable.” The court is to make the allowance “within such maximum limits as are fixed by the Commission.”
The questions presented are: (1) does the subsection apply to the respondent’s claims, and (2) if it does, is it valid? We answer both in the affirmative.
First. The respondent contends that the expenses and services for which compensation was allowed were not those referred to in § 77 (c) (12). This, notwithstanding acquiescence in the holdings of the court below, which we think correct, that the term “debtor’s estate” as used in the act embraces cash deposited with the indenture trustee and that the services and expenses in question were rendered and incurred “in connection with the proceedings and plan.” 8
The basis of the contention and of the decision below is that the services and expenses in question are “not within the meaning of” the subsection as the claim for their allowance is based upon the contract expressed in the mortgage9 and is for services required by the mortgage *168to be rendered the trust estate in fulfilment of the respondent’s obligations.
The subsection applies in terms to allowance of claims such as those here in issue. No legislative history is cited to the contrary. The statute deals with other claims arising out of contract and secured by liens fixed or inchoate, and no basis is suggested for excluding the respondent’s claim from its sweep.
Second. The main argument advanced in support of the judgment is that to apply § 77 (c) (12) to the respondent’s claims would violate the Fifth Amendment of the Constitution, by depriving the courts of power to determine whether the Commission’s decision was contrary to law or without evidence to support it; and by destroying respondent’s vested property rights. In addition, it is urged that by Art. III, § 1, the judicial power of the United States is vested exclusively in the courts and matters of private right may not be relegated to administrative bodies for trial. The statute, fairly applied, in the circumstances disclosed by the record does not contravene any constitutional provision.
Three diverse conclusions respecting the effect of § 77 (c) (12) have been expressed by the courts. It has been held that the maximum fixed by the Commission is in all circumstances binding and unalterable.10 The court below has concluded that the subsection has no application to the claims of an indenture trustee, secured by a lien on the trust estate pursuant to the mortgage contract. The District Court of Connecticut has decided that the *169court may set aside the maximum named by the Commission, if found unreasonably low, and return the matter to the Commission for a fresh determination.11 The petitioner states its view that “while the statute is not entirely clear, judicial review of the maximum is permitted.” After mentioning matters of law which are for the court’s determination on review of the Commission’s report, such as whether the services in question are to be compensated under the provisions of the Act, and others we need not mention, the petitioner refers to § 77 (e)12 which provides that the judge shall approve the plan if satisfied, inter alia, that the “amounts to be paid ... for expenses and fees incident to the reorganization . . . are reasonable, [and] are within such maximum limits as fixed by the Commission . . .” It is suggested that if the judge finds that any allowance within the maximum would be unreasonably low he may thereupon, under § 77 (e), disapprove the plan and either dismiss the proceeding or refer the cause back to the Commission for further action.
None of these views seems to us rightly to construe the statute. We think the Congress did not intend to deny the courts all power of review of Commission action in such cases. The statute plainly requires reference to the Commission of claims of the class under consideration, a hearing by that body, the setting of a maximum and action by the court on the footing of the Commission’s report. It does not contemplate a hearing de novo on the issue of the reasonable worth of the services rendered or the propriety of the expenses incurred, or a reappraisal by the court of the facts. Moreover the procedure suggested by petitioner does not comport with the evident purpose of § 77 (c) (12) which appears to treat the court’s action with respect to such claims as a matter distinct from his final action on the plan as a whole under § 77 (e).
*170Our conclusion is that the function committed by the law to the Commission is the ordinary one reposed in a fact finding body and that its findings, supported by evidence, may not be disturbed by a court. This construction of the Act leaves the court free to decide upon the basis of the Commission’s report all questions of law. With respect to the amount set as a maximum the only question of law which can arise is whether there is substantial evidence to support the Commission’s finding. If there is not the court may so hold, set aside the finding and return the matter to the Commission. Under the terms of the subsection the judge’s action upon the claim is subject to appeal independently of other issues, to the Circuit Court of Appeals.
Thus understood, we find no infirmity in the statute. The committal to the Commission of the fact finding office raises no substantial question under the Fifth Amendment. In actions at law a jury is the traditional trier of facts, whose function as such is preserved and guaranteed by the fundamental law. But courts of equity, of admiralty and of bankruptcy, by themselves and their mandatories examine and decide disputed questions of fact; and no reason is perceived why claims of the sort here involved should not be litigated, as are other claims against bankrupt estates, by such machinery and in such manner as Congress shall prescribe, saving to the claimant the right of notice and hearing, and such review as is provided by the statute as we construe it.
At law the jury’s verdict settles issues of fact and defines rights, subject only to questions of law. In administrative procedure, the findings of the administrative body may likewise be made conclusive of fact issues, and equally define rights and duties subject only to questions of law. No question is made as to the competency of the Interstate Commerce Commission to appraise evidence and to draw an informed and intelligent conclusion as to what is a *171maximum reasonable compensation for services rendered. Indeed, since most of the services are performed in connection with its activities it is probably in a better position to judge of their value to the reorganization than any court or other fact finding instrumentality.
To prescribe a method of trial of facts, subject to a court’s supervision in matters of law, is not, as respondent suggests, to destroy vested rights, but to provide a method of appraising and liquidating them. The statute awards the claim priority of payment, so that respondent is not called upon, as are some other classes of creditors, to suffer an abatement of its claim.
The judgment is reversed and the cause remanded to the District Court with instructions to proceed in conformity with this opinion.

Reversed.

 March 3, 1933, c. 204, 47 Stat. 1474, as amended; 11 U. S. C. § 205.

 Pursuant to § 77 (c) (13); 11 U. S. C. § 205 (c) (13).

 11 U. S. C. § 205 (e) (12).

 St. Louis-San Francisco Ry. Co. Reorganization, 249 I. C.. C. 195, 218.

 129 F. 2d 122.

 In re New York, N. H. & H. R. Co., 46 F. Supp. 236.

 “Within such maximum limits as are fixed by the Commission, the judge may make an allowance, to be paid out of the debtor’s estate, for the actual and reasonable expenses (including reasonable attorney’s fees) incurred in connection with the proceedings and plan by parties in interest and by reorganization managers and committees or other representatives of creditors and stockholders, and within such limits may make an allowance to be paid out of the debtor’s estate for the actual and reasonable expenses incurred in connection with the proceedings and plan and reasonable compensation for services in connection therewith by trustees under indentures, depositaries and such assistants as the Commission with the approval of the judge may especially employ. Appeals from orders of the court fixing such allowances may be taken to the circuit court of appeals independently of other appeals in the proceeding and shall be heard summarily. The Commission shall, at such time or times as it may deem appropriate, after hearing, fix the maximum allowances which may be allowed by the court pursuant to the provisions of paragraph (12) of this subsection (c) and, after hearing if the Commission shall deem it necessary, the maximum compensation which may be allowed by the court pursuant to the provisions of paragraph (2) of this subsection (c).”

 None of the services were routine administrative services currently rendered by the trustee; none were of non-routine character- rendered prior to the inception of the reorganization proceeding. If they had been of these descriptions the petitioner concedes allowance for them would be a matter for the court under § 77 (e), 11 U. S. C. 205 (e).

 Article Twenty-third of the Indenture: “The Trustees shall be entitled to reasonable compensation for all services rendered by them in the execution of the trusts hereby created, which compensation as well as all reasonable expenses necessarily incurred and actually disbursed hereunder, the Railway Company agrees to pay and hereby charges on the trust estate.”

 In re Chicago, M., St. P. & P. R. Co., 121 F. 2d 371; In re Chicago & N. W. Ry. Co., 35 F. Supp. 230; In re Chicago G. W. R. Co., 29 F. Supp. 149. It is suggested this view is sustained by the legislative history of the section. But the changes made by amendment in another section (77 (e)) are not helpful; and the testimony before the Judiciary Committee of the House is neither the sort of legislative material this court holds relevant to the construction of a statute, nor is it clear or definite upon the point at issue.

 In re New York, N. H. & H. R. Co., supra, note 6.

 11 U. S. C. 205 (e).