690 F.2d 35 (2nd Cir. 1982), 1230, In re Fidelity Mortg. Investors

Docket Nº:1230, Docket 82-5005.
Citation:690 F.2d 35
Party Name:In re FIDELITY MORTGAGE INVESTORS, Debtor. LIFETIME COMMUNITIES, INC., Appellant, v. The ADMINISTRATIVE OFFICE OF the UNITED STATES COURTS, Appellee.
Case Date:August 23, 1982
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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690 F.2d 35 (2nd Cir. 1982)

In re FIDELITY MORTGAGE INVESTORS, Debtor.

LIFETIME COMMUNITIES, INC., Appellant,

v.

The ADMINISTRATIVE OFFICE OF the UNITED STATES COURTS, Appellee.

No. 1230, Docket 82-5005.

United States Court of Appeals, Second Circuit

August 23, 1982

Argued May 21, 1982.

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Theodore L. Freedman, Chicago, Ill. (James M. Lawniczak, Levy & Erens, Chicago, Ill., Kenneth H. Singer, Gen. Counsel, Lifetime Communities, Inc., Jacksonville, Fla., Eliot Lumbard, Lumbard & Phelan, New York City, on the brief), for appellant.

Stuart M. Bernstein, Asst. U. S. Atty., New York City (John S. Martin, Jr., U. S. Atty., S.D. N. Y., Richard N. Papper, Asst. U. S. Atty., New York City, on the brief), for appellee.

Before TIMBERS, VAN GRAAFEILAND and KEARSE, Circuit Judges.

VAN GRAAFEILAND, Circuit Judge:

Lifetime Communities, Inc., the successor by merger to the rights and obligations of Fidelity Mortgage Investors, a rehabilitated Chapter XI debtor, appeals from an order of the United States District Court for the Southern District of New York, 16 B.R. 477, Duffy, J., which affirmed an order of the bankruptcy court, Babitt, J. Judge Babitt's order had denied Lifetime's application for a reduction in fees totaling $1.65 million, which Lifetime is required to pay to the Referees' Salary and Expense Fund pursuant to section 40c(2)(b) of the Bankruptcy Act of 1898, ch. 541, 30 Stat. 544, as amended by Referees' Salary Act of 1946, ch. 512, 60 Stat. 323, 327 (repealed 1978). In seeking to avoid payment of this substantial amount, appellant argues that the promulgation of the fee schedule did not comply with the rulemaking provisions of the Administrative Procedure Act, ch. 324, 60 Stat. 237 (1946), recodified by Act of September 6, 1966, Pub.L.No.89-554, 80 Stat. 378, 381-88, 5 U.S.C. §§ 551-59, and that the fee was so unexpectedly large as to be inequitable.

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For the reasons hereafter discussed, we affirm.

Beginning with the short-lived Bankruptcy Act of 1800, ch. 19, 2 Stat. 19 (repealed 1803), and up to the Bankruptcy Act of 1978, Pub.L.No.95-598, 92 Stat. 2549 (codified at 11 U.S.C. §§ 101-1330) district judges were assigned the task of appointing bankruptcy referees or their counterparts. The 1898 Bankruptcy Act as originally enacted provided that "(s)uch number of referees shall be appointed as may be necessary to assist in expeditiously transacting the bankruptcy business pending in the various courts of bankruptcy." § 37, 30 Stat. at 555. However, nothing in the 1898 Act prescribed how the determination of necessity was to be made. This lack was remedied with the enactment of the Referees' Salary Act of 1946, ch. 512, 60 Stat. 323 (repealed 1978). That Act provided that the Director of the Administrative Office of the United States Courts, after making appropriate local and national surveys of pertinent conditions, should recommend to the district judges, the various circuit councils and the Judicial Conference the number of referees to be approved and the territory which each should serve. Id. § 37b(1), 60 Stat. at 325. The district judges were directed to make recommendations thereafter to their respective circuit councils, which in turn would make recommendations to the Judicial Conference. Id. "(I)n the light of the recommendations of the Director and of the councils", the Conference was to determine the number of referees to be appointed and the territories they were to serve. Id.

The primary aim of the Referees' Salary Act, was the replacement of the then-existing fee system for compensating referees with a salary system. S.Rep.No.959, 79th Cong., 2d Sess. 2, reprinted in 1946 U.S.Code Cong. Service 1231, 1232. The method prescribed for fixing referees' salaries was the same as that used in determining the need for referees. The Administrator reported to the district judges, the circuit councils, and the Judicial Conference. The district judges advised the councils, the councils made recommendations to the Judicial Conference and "in the light of the recommendations of the councils", the Conference determined the salaries. Referees' Salary Act § 37b(1), 60 Stat. at 325 & § 40c(2), 60 Stat. at 327.

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