Jackson v. Lynch

This appeal is from an order approving the accounts of a receiver in bankruptcy, allowing reimbursement of certain expenses incurred by the receiver, and allowing compensation to the receiver and his attorneys.

On July 5, 1939, Leonard J. Woodruff filed a voluntary petition in bankruptcy in the District Court of the United States for the Eastern District of Oklahoma (hereafter called the Oklahoma court) and, on the same day, was by that court adjudged a voluntary bankrupt.

On July 13, 1939, M. E. Heiser filed in the District Court of the United States for the Southern District of California (hereafter called the California court) an involuntary petition against Woodruff and, with it, a petition for the appointment of a receiver to take charge of Woodruff’s property and to conduct his business; and, on the same day, the California court appointed E. A. Lynch as such receiver.

On July 20, 1939, the Oklahoma court caused a meeting of Woodruff’s creditors to be held, at which meeting appellant, P. M. Jackson, was appointed as trustee in bankruptcy.

On July 27, 1939, upon an order granted by the California court upon the verified petition of the receiver, Leonard J. Meyberg and…

(concurring in part and dissenting in part).

I agree that the expenses and compensation properly allowable should be paid only in due course of administration. I agree also with the court’s interpretation of the statutes relating to the measure of the compensation of receivers, but think the receiver’s compensation in this instance should be computed under subdivision (a) (2) of section 48, 11 U.S.C.A. § 76 (a) (2).

On the matter of the entire disallowance of compensation for the attorneys I am not able to go along with my associates. If counsel had undertaken to represent interests substantially adverse and had failed to disclose that fact to the court, their claim for fees ought to be disallowed; but such is not the case here. The lawyers represented a creditor, Heiser, whose claim against the bankrupt had been reduced to judgment prior to bankruptcy. While the bankrupt and the Oklahoma trustee were entitled to contend, and did contend unsuccessfully, that Heiser’s judgment should be set aside, the receiver appointed merely to conserve assets had no duty in that respect and was not empowered by the court to pass on the validity of claims. In representing both the creditor and…