Morse & Tyson v. Irving-Pitt Mfg. Co.

• Decision Date: 12 March 1927
• Docket Number: No. 288,288
• Citation: 18 F.2d 692
• Parties: MORSE & TYSON v. IRVING-PITT MFG. CO. et al.
• Court: U.S. Court of Appeals — Eighth Circuit

18 F.2d 692 (1927)

MORSE & TYSON v. IRVING-PITT MFG. CO. et al.

No. 288, Original.

Circuit Court of Appeals, Eighth Circuit.

March 12, 1927.

Henry G. Snyder, of Oklahoma City, Okl. (Joe D. Morse and Hugh E. Tyson, both of Oklahoma City, Okl., on the briefs, and Snyder, Owen & Lybrand, of Oklahoma City, Okl., of counsel), for petitioners.

James R. Keaton, Frank Wells, and D. I. Johnston, all of Oklahoma City, Okl., and Frank W. Yale and Ernest S. Ellis, both of Kansas City, Mo., for respondents.

Before SANBORN, Circuit Judge, and WOODROUGH and SCOTT, District Judges.

SCOTT, District Judge.

This cause comes before this court upon a petition to revise an order of the District Court of the United States for the Western District of Oklahoma, sustaining exceptions of objecting creditors to an order of a referee in bankruptcy fixing compensation of attorneys for petitioning creditors in an involuntary proceeding, and in fixing a lower sum.

The petition to revise is in eight numbered paragraphs. Paragraph 1 gives the name of the petitioners and shows that they are practicing attorneys; 2 shows the corporate capacity of the bankrupt; 3 shows that petitioners were attorneys for petitioning creditors in the involuntary proceeding. Paragraph 4 alleges the adjudication in bankruptcy; the reference to the referee; the filing of an application for allowance of $5,000, as fee for services as counsel for petitioning creditors; the filing of objections thereto by certain creditors; and the making of an order by the referee allowing $3,000 for such services. Paragraph 5 shows that petitioners excepted to the order of the referee. Paragraph 6 shows that petitioners thereafter filed petitions for review, together with the record of the evidence in said matter before the referee, and that the same was heard before Hon. John H. Cotteral, judge of the United States District Court for the Western District of Oklahoma, who upon consideration thereof reversed the order of the referee and entered an order allowing the petitioners the sum of $500 for their services. Paragraph 7 shows the petitioners duly excepted to said order of the District Court, and thereupon filed the petition to revise, together with a statement of facts and a record of the proceedings in the case, together with a transcript taken before the referee, copies of all of which are exhibited and made a part. Paragraph 8 contains an assignment of errors.

The respondents have appeared to the petition to revise, and, answering, admit paragraphs 1 to 6, inclusive, of the petition. Respondents then suggest an omission in the petition to revise (which was later supplied and need not be further noticed), and then further plead:

"III. That your respondents say that the judgment and order of the District Court was not erroneous in matters of law as alleged and set out in numerical paragraph 8 of said petition; that the exceptions to the judgment and order of the District Court do not raise questions of law, but questions of fact, and under the provisions of the Bankruptcy Act a Circuit Court of Appeals has jurisdiction to superintend and revise in matters of law the proceedings of the several inferior courts of bankruptcy within its jurisdiction; that to consider the objections raised by the petitioners the court will be required to review the evidence to determine the facts; that upon examination of the order of the District Court made and entered on September 21, 1925, it will appear that the matter was submitted upon oral-argument and upon the record, which contained all of the testimony taken before the referee; and that the court, upon being fully advised, sustained the objections and found that the sum of $500 would be a reasonable allowance for the services of the petitioners herein, and the order was made accordingly."

The order sought to be revised in this proceeding was entered and dated September 21, 1925. The petition to revise was filed November 27, 1925. Extension of time had been procured of the District Court for the filing of the petition, as well as consent of opposing parties.

The errors assigned in the petition to revise are as follows:

"(A) The court erred in refusing to make a reasonable allowance to your petitioners for their services.

"(B) The refusal of the court to make an allowance that was reasonable and commensurate with the services rendered was an abuse of discretion.

"(C) The court erred in refusing to consider evidence of attorneys on the question of what is a reasonable fee.

"(D) That the court, in fixing the allowance, considered only the element of time spent by your petitioners in prosecuting the involuntary petition, and refused to consider other proper elements such as time spent in making investigations prior to filing the petition, responsibility assumed, the amount involved, and the results achieved.

"(E) The refusal of the court to allow your petitioners the sum asked for in their application for compensation, said sum being the reasonable value of the services rendered according to the weight of evidence.

"(F) The court erred in fixing the allowance of $500, the same being inadequate, unreasonable, and an abuse of discretion.

"(G) The court erred in reducing the allowance made by the referee, the evidence showing that a larger allowance than that made by the referee would be reasonable.

"(H) The refusal of the court to consider the evidence was an abuse of discretion.

"(I) In reducing the allowance to $500, the court was governed either by prejudice or the lack of a proper conception of what constitutes a reasonable fee."

Two contentions apparently pervade these assignments. First, that the District Court refused to allow reasonable compensation for the services rendered; and, second, that the District Court in passing upon the order then under review, erroneously refused to consider any element other than that of time expended, in judging the reasonableness of the fee to which petitioners were entitled. That the first contention presents a question of fact, and not of law, has been too often decided by this court and other federal courts to admit of serious controversy. Hall v. Reynolds (C. C. A.) 224 F. 103; Id. (C. C. A.) 231 F. 946.

The second contention would present a question of law, and an appropriate matter for revision, if the assignments of error in this respect are found supported by the record. Paragraph 7 of the petition to revise by reference draws in the entire "record of the proceedings in the case, together with a transcript of the testimony taken before the referee." The petition by exhibits carries the order sought to be revised, and all of such proceedings and testimony. Paragraph III of the response directly challenges the truth of the assignments in this respect, and is an appeal to the record in justification of the action of the District Court. This necessitates an examination of the proceedings in the District Court so far as shown by the petition and record. The order of the District Court, set out at large, is as follows:

"In the District Court of the United States for the Western District of Oklahoma.

"In the Matter of Western Bank Supply Company, a Corporation, Bankrupt.

"In Bankruptcy. No. 3080.

"Now on this 21st day of September, 1925, there came on for hearing the petition of certain objecting creditors of the bankrupt and also the petition of Morse & Tyson for a review of an order made on the 9th day of September, 1925, by Isaac D. Taylor, referee in bankruptcy, allowing Morse & Tyson the sum of $3,000 as attorney's fees for petitioning creditors; the objecting creditors appearing by their attorneys, Keaton, Wells & Johnston, and Morse & Tyson appearing in their own behalf.

"Thereupon oral argument was had before the court and said matter submitted on the record, and the court, being duly advised, finds that the exceptions of objecting creditors to the order of the referee allowing the attorneys for petitioning creditors the sum of $3,000 should be sustained. The court further finds, after taking into consideration the time spent by the attorneys for petitioning creditors in filing the involuntary petition in bankruptcy herein and in procuring an adjudication thereon, that the sum of $500 would be a reasonable allowance to said attorneys for their services rendered herein as attorneys for petitioning creditors.

"It is therefore ordered, adjudged, and decreed by the court that the exceptions of the objecting creditors to the order of the referee be and they are hereby sustained, and Morse & Tyson, attorneys for petitioning creditors herein, are hereby allowed a fee of $500 for all services rendered by them as attorneys for petitioning creditors in said bankruptcy matter as set forth in their claim on file in this cause. It is ordered that all costs be taxed against the bankrupt and the trustee of said bankrupt estate shall pay said costs upon proper claim being made therefor.

"To the findings and judgment of the court rendered herein Morse & Tyson, attorneys, except in open court, and their exceptions are allowed, and thereupon said attorneys gave notice of their intention to appeal and to file a petition to revise said order in the United States Circuit Court of Appeals for the Eighth Circuit, and, said attorneys praying for an extension of time in which to prepare, record, and file said petition to revise, it is, for good cause shown, ordered that an extension of 30 days be granted to said attorneys within which time to make up the record and to file said petition to revise. John H. Cotteral, Judge of the United States District Court for the Western District of Oklahoma."

Counsel for petitioners in brief and in argument stress a single expression of the District Court in support of the contention that that court considered only the element of time in fixing the compensation. The order does recite: "The court further finds, after taking into consideration the time...