Havemeyer v. Loeb

Allowances to Assignee for Benefit of Creditors, for Expenses and Counsel Pees, when Assignment HAS BEEN SET ASIDE, AS IN PRAUD OF the Bankrupt Act. The principles governing allowances for services of counsel to State assignees, laid down in Platt «. Archer (13 Blatehf. 351), approved. Where a voluntary assignment is set aside, because made in violation of the bankruptcy statute, the expense incurred in caring for the property prior to the bringing of the suit, which was proper and reasonable in amount, should be allowed. The expense was incurred for the property within this rule, if the services were properly or necessarily rendered to the State assignee and those services were properly rendered, so far as they benefited and preserved the property assigned, and were not hostile to the suit in bankruptcy. Where the voluntary assignee acts in good faith in accepting the assignment, his disbursements for services of counsel, made in good faith, which are necessarily and properly incurred down to the time that he received notice of an intention to attack the assignment as in violation of the bankrupt law, are to be allowed.

Exceptions to a master’s report granting allowances for counsel fee. This action was brought by James Havemeyer, assignee of Daniel Prey, Isidor Prey and Jacob L. Haas, bankrupts, against Charles Loeb, their assignee for the benefit of creditors under the general assignment law of the State of New York. The said Daniel Frey, Isidor Frey and Jacob L. Haas made a general assignment for the benefit of creditors to the defendant on April 28, 1876. On August 1, 1876, they were adjudicated bankrupts, and the plaintiff qualified as assignee in bankruptcy on February 19, 1877, and began this action on April 2, 1877. I. December, 1877. An interlocutory decree was made by the district judge on June 2, 1877, declaring that the said general assignment was adjudged void and of no legal force as against the plaintiff as such assignee, because made in fraud and violation of the provisions of the bankruptcy statute of the United States ; and referred to a special master to report to the court an account of the payments, expenses and charges of the defendant as such assignee; including his own fees for his services. The said special master reported, among other things, that the defendant produced an account from May 3 to December 20,1876, showing receipts $3,073.32, and disbursements $2,154.92, leaving a balance on hand of $918.40; that two of the disbursements were for counsel fees, each of $500, which were paid, one on July 18, and the other on August 1, 1876, for services, without specification ; that as the payment of this $1,000 for counsel fee was made subsequent to the filing of the petition in bankruptcy, and the net balance in the hands of the defendant was only $918.40, and the assignment to him was void, it should not be allowed; that the defendant’s attorney conducted no suits and defended none but this one ; that the sum of $244.70, paid by the defendant to one Haas, should be disallowed; and that the defendant should be charged with interest at 6 per cent, per annum on the two sums of $500 each, and on the $244.70, from the times respectively when they were paid. The defendant excepted to this report, 1. For disallowing $1,000 for counsel fee, and claimed that he should have found that the plaintiff in this action qualified as assignee in bankruptcy on February 19, 1877 ; that no steps or proceedings were taken by any creditor or other person until the service of the subpoena in this action on April 2, 1877, notifying the defendant that any proceedings had been begun or that any demand would be made upon him for the return to any person of the assets of the estate originally assigned to him ; that the defendant from April 28, 1876, to the commencement of this action, acted in good faith in the administration of the trust under the assignment, and had accounted for all the property assigned to him ; that in the execution of said trust he was obliged to employ counsel, and that the counsel fee of $1,000 paid was reasonable and fair; that a large part of said business was rendered necessary by the laches and neglect of the creditors of said assignors, and who remained idle and did not proceed to adjudicate said assignors bankrupts, nor to elect an assignee in bankruptcy until many months after the defendant had realized upon the assignors’ estate. 2. For charging interest on the counsel fee and the $244.70, and claimed that he should have found that the said sums were paid out by the defendant in the exercise of his judgment prudently exercised, and that he did not have or enjoy the use thereof. 8. For neglecting and failing to rule upon or dispose of a large number of objections raised during the pendency of the examination before him, so that defendant could not ascertain from, the report what amount of testimony so objected to the master relied upon in forming his judgment, and what he excluded.