"Formerly, the idea prevailed that attorneys were entitled to greater compensation when employed in a receivership or bankruptcy case than when serving private interests. In reality, receivers and attorneys are officers of the court. As public servants, their compensation should never be as large as the compensation of those engaged in private employment. By such considerations, debtors may be relieved and creditors and stockholders served." In re National Department Stores, Inc., supra [11 F.Supp. 637]. See, also, Standard Gas & Electric Co., 3 Cir., 106 F.2d 215. Applying these principles to the services rendered by the petitioners, it is readily apparent that the allowances prayed for are not only excessive but some claims are exorbitant. The court in Re National Department Stores, Inc., supra, 11 F.Supp. at page 638, writes: "Where numerous persons participate in rendering one service susceptible of being rendered by one person, needless duplication results which should not form the basis of compensation."
Sub-section 9 of paragraph 1 of Section 77B, 11 U.S.C.A. § 207(c) (9), provides that the court may allow reasonable compensation for services rendered and reimbursement for actual and necessary expenses incurred in connection with the proceedings and the plan by officers, parties in interest, depositories, reorganization managers and committees or other representatives of creditors or stockholders and the attorneys or agents of any of them or of the debtor. Silver et al. v. Scullin Steel Co. et al., 8 Cir., 98 F.2d 503, 508.
The only compensation which should be allowed out of the debtor's estate is for substantial and meritorious services rendered in the advancement of the reorganization proceedings and for the benefit of the estate. No stockholder or creditor or group of stockholders or creditors can retain counsel and bind the court to pay such counsel the full value of the services rendered under such retainer out of the estate of the debtor. The determination of what part of services rendered by counsel employed by stockholders or creditors may with propriety be charged to the trust estate, is primarily for the determination of the court. Silver et al. v. Scullin Steel Co., supra. The question of what services were actually rendered, the question of the benefit which inured to the estate because of the services rendered and the question of what proportion of the total services performed can be and should be paid for by the estate, are mainly questions of fact. Silver et al. v. Scullin Steel Co., supra.
Messrs. Garey & Garey, William St. John Tozer, Esq., David Sprung, Esq., Messrs. Boston & Gillis, and the Members of the Stockholders' Protective Committee for Capital Stock, from December 3, 1937 (date of filing petition), down to February, 1940, expended most of their efforts in an attempt to reorganize Arcturus. These efforts went for naught. It was not until February, 1940, that the thought of reorganizing was abandoned and a method of liquidating seriously considered. It is only necessary to refer to the losses hereinbefore set forth, to realize that only a small percentage of the considerable work performed can be classified as substantial and meritorious services rendered in the advancement of the reorganization proceedings and for the benefit of the estate. An examination of the entire record discloses the estate was not benefited to any great extent until each and every one of the parties interested began to cooperate on the question of how and in what manner liquidation could be accomplished. The result of these combined efforts was liquidation under a so-called Plan of Reorganization. (Chapter X) The Bankruptcy Act of 1938, 11 U.S.C.A. § 501 et seq.
Messrs. Bilder, Bilder & Kaufman were retained by certain stockholders; said stockholders cannot retain counsel and bind this court to pay such counsel the full value of the services rendered under such retainer, out of the estate of the debtor; therefore, they must look to their clients for their main compensation and the amount hereinafter allowed is the amount which, in the opinion of the court, can with propriety be charged to the trust estate.
Messrs. Brady & Daly by Robert Daly, Esq., were one of the first to object to reorganization and urge liquidation, and a persistent attitude called the attention of the court to many of the problems presented by the plans and assisted in the formation of the plan which was finally approved. They, however, had been retained by certain creditors and the full value of the services rendered cannot be paid out of the estate of the debtor; therefore, they must look to their clients for the main compensation and the amount hereinafter allowed is the amount which, in the opinion of the court, can with propriety be charged to the trust estate.
The court finds that the claimants hereinafter identified are entitled to the following fees and disbursements:
Amount Requested Amount Allowed
Claimant Fees Disb. Fees Disb.
Messrs. Garey & Garey and
William St. John Tozer $40,000.00 $175.12 $12,500.00 $175.12
Messrs. Bilder, Bilder & Kaufman 3,500.00 52.82 1,000.00 52.82
David Sprung, Esq 10,000.00 7.04 3,500.00 7.04
Messrs. Boston & Gillis 17,500.00 367.76 5,000.00 367.76
Messrs. Brady & Daly 7,500.00 1,500.00
Mr. Edward McGuirk 100.00 100.00
Mr. Arthur J. Cale 100.00 100.00
Samuel S. Bloom, Esq., Secretary
of the Creditors' Committee 1,500.00 180.22 500.00 180.22
Hulbert A. Yerkes, Lewis Lathan
Clarke and Leslie G. Weldon,
Members of Stockholders
Protective Committee for Capital
Stock 4,500.00 None
John Grimshaw, Jr., Referee and
Special Master 2,000.00 2,000.00
Joel Schlesinger, Appraiser 450.00 450.00
Messrs. Puder and Puder, Certified
Public Accountants 907.50 907.50
Mr. David C. Wilner, Appraiser 250.00 250.00
$88,307.50 $782.96 $27,807.50 $782.96
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