Western Dry Goods Co. v. Baxter

MORROW, Circuit Judge (after stating the facts as above). [1] The respondents (not including John Anisfield Company) have filed their motion to dismiss the petition on the ground that the questions .are reviewable only by appeal, and because the determination of this case involves a consideration of evidence and a determination of disputed questions of fact. Section 24b of the Bankruptcy Act provides as follows: “The several Circuit Courts of Appeal shall have jurisdiction in equity, either interlocutory or final, to superintend and revise in matter of law the proceedings of the several inferior courts of bankruptcy within their jurisdiction. Such power shall be exercised on due notice and petition by any party aggrieved.” The effect of bringing the proceedings of the District Court to this court for revision under this section is to limit the review to matters of law. Where facts are to be reviewed the proceedings must be brought here by appeal or writ of error. The facts recited in these proceedings ana material to the question at issue do not appear to be in doubt,' or, at most, they are not a subject of controversy upon this .petition for review. The only controversy is as to their legal import in the bankruptcy proceedings. • Such questions may be reviewed upon a petition for revision. In re Lee, 182 Fed. 579, 105 C. C. A. 117; In re Frank, 182 Fed. 794, 105 C. C. A. 226; Coder, Trustee, v. Arts, 213 U. S. 223, 29 Sup. Ct. 436, 53 L. Ed. 772, 16 Ann. Cas. 1008. In Schuler v. Hassinger, 177 Fed. 119, 100 C. C. A. 539, the Circuit Court of Appeals for the Fifth Circuit had before it appeals and petitions for revision involving, among other questions, the objection that the property of the bankrupt had been sold for a grossly inadequate sum, and the objection that the sale was collusive, and was absolutely unfair, illegal, and void. The appeals were dismissed, and the questions reviewed upon the petition for revision. The same construction of .the statute applied in that case sanctions the review of the questions presented by the petition for revision in this case. The motion for the dismissal of the petition is therefore denied. [2] The first question to be considered upon this review of the proceedings is the sufficiency of the amended petition filed with the referee in bankruptcy by the Western Dry Goods Company, and other creditors, praying that the appraisement, order of sale, and sale of .the stock of goods of the bankrupt estate be set aside, .and that John Anisfield Company be required to pay into the registry of the. court the money received by them out of the estate of the bankrupt, and that the stock remaining on hand and unsold be returned to the possession of the receiver. The objection to this petition was in the nature of a demurrer, raising the question as to its sufficiency. No improper conduct is charged in the petition against Baxter, the receiver, or agaitist Baxter, afterwards the trustee, or against his attorneys. It is not alleged that demand was ever made by the complaining creditors upon the trustee to recover the property of the [141] bankrupt estate, or its value from John Anisfield Company. It appears that at the time the amended petition was filed the sale of the bankrupt property had been made by the bankruptcy court, and the sale had been confirmed; that the purchaser had gone into possession of the property, had disposed of about one-half of the stock purchased, together with new stock mixed with the bankrupt stock; that the purchase price had been paid, and about one-half of the purchase money had been distributed by the trustee to the creditors as dividends, and for the expenses of administration; that no tender had been made to the purchaser of the purchase price, and no tender appears to have been practicable under the circumstances, and no surety or indemnity had been offered the purchaser. It is clear that, if the creditors of the bankrupt were entitled to any relief by reason of the alleged inadequacy of the price received for the stock of goods, it was not by summary proceedings, but should have been obtained through the trustee in an action against John Anisfield Company for an accounting, and if the trustee and his attorneys were hostile to the proceeding, as intimated, but not established, he could have been required' by order of the bankruptcy court to permit the use of his name in such an action with new attorneys, or, failing in that, the trustee could have been removed and a new trustee appointed with new attorneys instructed to proceed by proper action to determine the rights of the bankrupt estate in a plenary action. We think the petition and amended petition were insufficient and properly dismissed by the referee. [3] It is next objected that the allowance of compensation to the receiver and trustee and to his attorneys were in excess of the compensation provided by the statute. Section 48a of the Bankruptcy Act, as amended by Act June 25, 1910 (36 Slat. 838, 840), provides: “See. 48. Compensation of trustees, receivers and. marshals. “(a) Trustees shall receive for their services, payable after they are rendered, a fee of live dollars deposited with the clerk at the time the petition is filed in each ease, - !i * as may he allowed by the courts, not to exceed six per centum on the first five hundred dollars or less, four per centum on moneys in excess of five hundred dollars and less than fifteen hundred dollars, two per centum on moneys in excess of fifteen hundred dollars and less than ten thousand dollars. * * * "(d) Receivers or marshals appointed pursuant to section two, subdivision three, of this act shall receive for their services, payable after they are rendered, compensations by way of commissions upon the moneys disbursed or turned over to any person, * * * as the court may allow, not to exceed six per centum on the first five hundred dollars or less, four per centum on moneys in excess of five hundred dollars and loss than one thousand five hundred dollars, two per centum on moneys in excess of one thousand five hundred dollars and less than ten thousand dollars: Provided * * * that when the receiver or marshal acts as a mere custodian and does not carry on the business of the bankrupt as provided in clause five of section two of this act he shall not receive or be allowed in any form or guise more than two per centum on the first thousand dollars or less, and one-half of one per centum on all above one thousand dollars on moneys disbursed by him. * * * “(e) Where the business is conducted by trustees, marshals, or receivers, as provided, in clause five of section two of this act, the court may allow such [142] officers additional compensation for such services by way of commissions upon the moneys disbursed or turned over to any person, * * * such commissions not to exceed six per centum on the first five hundred dollars or less, four per centum on moneys in excess of five hundred dollars and less than one thousand five hundred dollars, two per centum on moneys in excess of one thousand five hundred dollars and less than ten thousand dollars, and one per centum on moneys in excess of ten thousand dollars.” Under this statute the court allowed the receiver under section 48d on the stipulated amount disbursed by him from February 27th tot March 20th, namely, on $61,312.87, the following amounts: Deposit ......................................................... $ 5 00 $500 at 6 per cent................................................ 30 00 $1,000 at 4 per cent.............................................. 40 00 $8,500 at 2 per cent............................................... 170 00 $51,312.87 at 1 per cent........................................... 513 12 Making a total of.......................................... $758 12 The court also allowed the receiver under section 48e an additional compensation for conducting the business on the percentages, as above (excluding deposit of $5) the sum of $753.12, making a total of $1,511.24. The court also allowed the trustee under section 48a on the stipulated amount of cash received,’ and the amount then being disbursed by him, from March 20th to date of final submission, namely, $54,496, as follows: Deposit ........................................................$ 5 00 $500 at 6 per cent............................................... 30 00 $1,000 at 4 per cent............................................. 40 00 $8,500 at 2 per cent............................................. 170 00 $44,496 at 1 per cent............................................ 444 96 Making a total of......................................... $ 689 96 Total compensation for receiver................................. $1,511 24 Total compensation for trustee................................... 689 96 Total amount allowed receiver and trustee.................$2,201 20 The court also allowed the attorneys for the receiver and trustee as part of the cost and expense of administration a like amount, namely, $2,201.20. The objection urged against these allowances is that the evidence does not support the conclusions reached as to the legal compensation to which the receiver and trustee and his attorneys were entitled under the law. There is no question as to the service rendered by the receiver. The question is as to the compensation which the receiver was entitled to receive for the service rendered. In the receiver’s report to the court, dated March 20, 1911, as to his administration of the estate, he stated, among other things: “The alleged bankrupt turned over the premises to me, and gave me complete charge thereof. I found that the bankrupt was a corporation engaged [143] in the operation of a department store at the time I took possession of said premises. The store was iilled with customers who were attending a sale which had previously been extensively advertised. I thought it advisable to permit the business to remain open and the sale to go on for the balance of the day, and accordingly permitted the said store to remain open. During the day I consulted witli numerous creditors and representatives as to the advisability of continuing the business at retail, and, after such consultation, it was agreed by all parties, and it was also my own judgment, that it would be best to close the store at the conclusion of the day’s business, and proceed at once to take an inventory of all the property.” In Mr. Baxter’s affidavit, filed in the District Court on June 19, 1911, he sets, forth the same facts as to the closing of the store on the day of his appointment as receiver. It does not appear from this report that the receiver conducted the business of the bankrupt even for the part of one day. What he did was to permit the employes of the bankrupt concern to go on with the business during the remainder of that day. The store was then dosed, and was not again opened, except to deliver the stock in bulk to John Anisfield Company. Clause 5 of section 2 of the Bankruptcy Act provides that the courts of bankruptcy are invested with jurisdiction to “authorize the business of bankrupts to be conducted for limited periods by receivers, the marshals or trustees, if necessary in the best interests of the estates and allow such officers additional compensation for such services as provided in section forty-eight of this act.” We do not think that the continuing of the business of the bankrupt by his employés for the remainder of one day constituted the carrying on of the business by the receiver within the meaning of the statute. On the other hand, we think the receiver was something more than a custodian, and that he was entitled to compensation as receiver under section 48d. We shall, therefore, disallow the additional compensation to the receiver of $753.12 for conducting the business of the bankrupt. Deducting this amount from the amount allowed, $2,201.20, the allowance for the receiver and trustee will then be $1,448.08. The petitioners contend that no allowance should be made to the attorneys employed by the receiver and trustee for the bankrupt estate for the reason that no showing is made as to the value of their services. The employment of attorneys for a bankrupt estate is largely a matter of discretion in the court, and the value of the services is a matter generally known to the court. The showing made in opposition to the allowance would call upon this court to consider and determine facts which as we have stated we cannot do on this petition for revision. We are limited to questions of law. The court appears, however, to have been of the opinion that the attorneys for the receiver and trustee were entitled to receive the same compensation as the receiver and trustee. Treating that as a finding of fact, it follows that the attorneys are entitled to receive for their services a sum the equivalent of the sum allowed! the receiver and trustee, to wit, the sum here allowed of $1,448.08 in full for their services for the en [144] tire period from the appointment of the receiver up t'o the period of the submission of their claim to the court. The orders of the District Court will be modified as indicated, and, as thus modified, will be affirmed.