Silver State Savings and Loan Association v. James Chalmers Young, Trustee of the Estate of Carver House, Inc., Bankrupt

This corporate reorganization proceeding was terminated by an order adjudicating the debtor a bankrupt. It is provided in the order that allowances made to the trustee in reorganization and his attorney “constitute a first lien upon all the property of the Debtor. State Savings and Loan Association, the principal secured creditor, appeals. Appellant contends that the court should not have given these allowances lien priority over its first and second mortgages. Silver

The debtor, Carver House, Inc., filed a voluntary petition under chapter X of the Bankruptcy Act, on April 18, 1956. The petition was granted ex parte on that day, and Edward J. Price was appointed trustee in reorganization. On that day, Price retained Charles W. Deaner as attorney for the estate. No order authorizing such employment was entered until November 20,1956.

An exhibit attached to the petition lists as the only assets of the estate a partially-completed hotel in Las Vegas, Nevada, valued at $438,351.26, and land on which the hotel was situated, valued at $45,000. In a trustee’s report filed about seven months later, however, the then value of the hotel property was set at approximately $120,000, it being…