Court Opinion

ID: 9636052
Source: CourtListenerOpinion
Date Created: 2023-08-22 14:14:30.999709+00
Date Added: 2024-06-11T12:04:46.477401
License: Public Domain

*195SWAN, Circuit Judge
(dissenting in part).
The referee divided the appellees’ services into the three subdivisions mentioned in the majority opinion: (a) Obtaining adjudication ; (b) opposing the appointment of a receiver; and (c) protecting and liquidating assets during the interim between the filing of the petition and tho election of trustees. He found the value of services classified as (a) to be $950, and the disbursements connected with such services to bo $103.14. This item for disbursements the referee allowed, but he re-fused to allow a fee for the (a) services because of a supposed violation of General Order XLII (11 TTSCA § 53). No appraisal of the value of the (b) and (c) services was made by the referee because he conceived that section 64b (3) of the Bankruptcy Act as amended (44 Stat. 667, 11 USCA § 104 (b) (3) precluded any allowance for them. Disbursements in connection with tho (b) and (c) services were the following:
Services of special master under section 21a............. .$165.00
Stenographer for taking minutes under section 21a ...... 404.10
Services of subpoenas, subpoena fees, photostatie copies of records..... 34.98
$604.08
None of these was allowed, although the ref creo found that the minutes of these examinations were turned over to the trustees and their attorneys and used by them to tho advantage of the estate. The District Court modified tho referee’s order- by allowing the appellees “for all services prior to the election of the trustees” the sum of $7,500, and their disbursements of $707.22.
I agree with the majority of the court that it was error to make an allowance for the (b) and (e) services. However meritorious the appellees’ conduct in avoiding for the estate the expense of a receiver, and however beneficial their services in performing work for which tho attorney for a receiver might have received an allowance, the Bankruptcy Act precludes an allowance for such services to tho attorneys of the petitioning creditors.
But I cannot agree that General Order XLII (11 USCA § 53) should bo so interpreted as to forfeit their allowance for services of class (a). The agreement with Mr. Dannenberg was made on May 31, 1930, long before he,became one of the Irastees in bankruptcy. It provided that “If, as and when there shall be allowed out of the estate in bankruptcy to Murray, Aldrich & Webb as attorneys for the petitioning creditors, an allowance or compensation for the work involved in the examinations under Section 21a conducted by them or in their name before the election of the trustees in bankruptcy, then out of such allowance made on such basis, Mr. Dannenberg will receive from Murray, Aldrich & Webb, so much thereof as in the entire discretion of Murray, Aldrich & Webb seems proper in compensation for such services as Mr. Dannenberg may have rendered to the estate in conducting examinations under 21a before the election of the trustees in bankruptcy. In the making of any application- for any such allowance, the provisions of this paragraph shall be fully disclosed to the Court.”
Mr. Dannenberg’s services covered the period from April 29 to Juno 10, 1930. They were completed before the adjudication and more than a month before he was elected a trustee on July 15th. When the agreement was made, Mr. Dannenberg was not a trustee, nor did the appellees know he would become a trustee. It was a lawful agreement when made, and disclosure of it to the court was agreed upon. Ha,d the appellees filed their application for compensation for obtaining adjudication at the time when theses services were completed, they could have made an affidavit in full conformity with the General Order. The accidental circumstance that thereafter Mr. Dannenberg became a trustee might conceivably preclude him from receiving any allowance out of the estate other than his fees as trustee [see Holland v. Mellwaine, 223 F. 777 (C. C. A. 4)], but how his acceptance of the trusteeship can render the appel-lees’ conduct reprehensible, or why it should result in a forfeiture of their right already accrued, I fail to see. If Mr. Dannenberg must forego fees for his prior services (which is merely suggested without expressing an opinion that either Order XLII [11 USCA § 53] or section 72 of the act [11 USCA § 112] so requires), this fact might reduce the amount of compensation allowable to the appellees, since perhaps they could claim nothing for work he had done on their behalf; but to hold that they cannot recover anything, even for their own services rendered wholly independently of Mr. Dan-nenberg, seems to mei a harsh and unreasonable interpretation of the order. I cannot believe it was intended to accomplish such a result, nor is any purpose suggested which would be served by the establishment of such an interpretation. In my opinion the order *196is aimed at preventing an agreement for a division of fees with one. who is a trustee at the time when the agreement is made.
The disbursements incurred in the examinations under section 21a (11 USCA § 44 (a) have inured to the benefit of the estate. The trustees have taken and used these minutes. Therefore I think these disbursements may properly be allowed as a cost of administration.
For the foregoing reasons I think the order should be reversed and the cause remanded, with instructions to allow all of ap-pellees’ disbursements and a reasonable fee for their services as attorneys for the petitioning creditors in obtaining adjudication.