Cohn v. Edler

Decision Date14 June 1937
Docket NumberNo. 8303.,8303.
Citation90 F.2d 823
PartiesCOHN v. EDLER.
CourtU.S. Court of Appeals — Ninth Circuit

Walter Rowson, of Reno, Nev., for appellant.

Thatcher & Woodburn, Geo. B. Thatcher, Wm. Woodburn, and Wm. J. Forman, all of Reno, Nev., and Clarence A. Shuey and Grant H. Wren, both of San Francisco, Cal., for appellee.

Before WILBUR, GARRECHT, and HANEY, Circuit Judges.

HANEY, Circuit Judge.

A referee in bankruptcy has appealed from an order disallowing items claimed by her in an account submitted to the bankruptcy court in a bankruptcy matter.

The Owl Drug Company, a Nevada corporation, was adjudicated a bankrupt on October 10, 1932, on its voluntary petition. Its assets consisted of 120 retail drug stores, located in several states, warehouses for such stores, and stock in two other corporations. On the same date the courts below made a general reference order, referring the bankruptcy matter to appellant, as referee in bankruptcy, and appointed a receiver. Appellant called the first meeting of creditors to be held on October 29, 1932. At that meeting the creditors failed to appoint a trustee, and the meeting was continued. Appellant thereafter appointed one Richard Kirman trustee who accepted the appointment and qualified on November 4, 1932. He resigned the following day.

Thereafter a petition was filed asking that the order of reference be revoked. After hearing on November 7, 1932, the court below said: "The Court is impressed that this case is one very much out of the ordinary in so far as bankruptcy proceedings in this court are concerned. It is a case in which very large interests are represented, all located entirely without this district * * * in view of what has transpired and the importance of this case, and because it is a matter that is liable at any time to involve serious questions of law as well as facts, and that this Court of itself must eventually determine all of those questions, the Court will feel better satisfied if all important hearings hereafter are directed before the Court * * *"

The court below thereupon entered an order setting aside the order of general reference, "until, and subject to, the further order of this Court." The order further provided: "* * * that, subject to the further order of this Court, all proceedings in the matter of said Bankrupt be had in this Court, excepting that the Referee shall retain power to, and she is hereby authorized and directed to, issue and serve all notice or notices to creditors required by law for a meeting of creditors to be held before this Court * * * for the election of a Trustee or Trustees, or to issue and serve any other notice or notices to creditors as may be required for the hearing of any matter before this Court, as the Court may direct."

Thereafter, on December 20, 1932, an order of the lower court directed appellant to give notice of hearing report and account of the receiver. On April 10, 1933, a nunc pro tunc order was entered authorizing appellant to receive, file, act upon, and transmit to the clerk of the lower court, all claims of creditors of the bankrupt. On June 3, 1933, an order was entered, by which the bankruptcy matter was, as stated therein,

"* * * specially referred to appellant * * * with limited authority only for the following purposes:

"(1) To pass upon any and all claims of creditors filed against bankrupt corporation in the above entitled matter.

"(2) To issue and serve any notice or notices to creditors as may be required for the hearing of any matter before this Court, as the Court may direct.

"(3) To declare all dividends and to enter appropriate orders for the disbursing of moneys to creditors by the Trustee.

"It is Further Ordered that the Court reserves the right to determine what part of the fees and commissions allowed to referees under section 68 11 U.S.C.A. of the Bankruptcy Act shall be paid to the referee herein."

On February 15, 1934, appellant was directed by order to give notice of a hearing upon the trustee's report, upon applications for allowances of compensation, and upon application for the payment of a dividend. On September 14, 1935, appellant was directed by order to give notice of a hearing upon a report, and upon a petition asking authority to compromise certain controversies and to pay a dividend. On July 14, 1936, appellant was directed by order to give notice of a hearing of a trustee's report, the question of payment of final dividend and application for allowances of compensation.

On August 3, 1936, appellant filed her account. In that account she claimed a total of $20,009.99. The account included the following items:

                    1. Notices to creditors
                           27,615 notices @ 15¢ ..... $4,142.25
                            1,495 notices @ 25¢ .....    373.25
                                                                      $ 4,515.50
                    2. Indemnity expenses for stenographic
                           services, office rent, and janitor
                           service .................................  $ 6,035.00
                    3. Traveling expenses — 35 trips @ $10
                           each ....................................  $   350.00
                    4. Commissions on disbursements to
                           creditors ...............................  $12,615.38

11 U.S.C.A. § 68(a) provides that: "Referees shall receive as full compensation for their services, payable after they are rendered, a fee of $15 deposited with the clerk at the time the petition is filed in each case, except when a fee is not required from a voluntary bankrupt, and 25 cents for every proof of claim filed for allowance, to be paid from the estate, if any, as a part of the cost of administration, and from estates which have been administered before them 1 per centum commissions on all moneys disbursed to creditors by the trustee, or one-half of 1 per centum on the amount to be paid to creditors upon the confirmation of a composition."

Subdivision (c) provides: "In the event of the reference of a case being revoked before it is concluded, and when the case is specially referred, the judge shall determine what part of the fee and commissions shall be paid to the referee."

11 U.S.C.A. § 112 provides: "Neither the referee, receiver, marshal, nor trustee shall in any form or guise receive, nor shall the court allow him, any other or further compensation for his services than that expressly authorized and prescribed in this title."

Pursuant to 11 U.S.C.A. § 53, which authorizes the Supreme Court to make all necessary rules and orders for carrying out the provisions of the Bankruptcy Act, that court promulgated General Order 35, of which subdivision 2 (11 U.S.C.A. following section 53) provides: "The compensation of referees, prescribed by the act, shall be in full compensation for all services performed by them under the act, or under these general orders; but shall not include expenses necessarily incurred by them in publishing or mailing notices, in traveling, or in perpetuating testimony, or other expenses necessarily incurred in the performance of their duties under the act and allowed by special order of the judge."

Neither party questions the power of the District Court to make rules in bankruptcy matters. 28 U.S.C.A. § 731 authorizes such court generally to make rules, but bankruptcy matters are included, if at all, by implication. No specific part of the Bankruptcy Act confers such power on such court. Without expressing an opinion as to the...

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    ... ... 350 (S.D.N.Y.1943); In re Moskowitz, 25 F.Supp. 341 (E.D.N.Y.1938); In re Owl Drug Co., 16 F.Supp. 139 (D.Nev. 1936), aff'd sub nom. Cohn v. Edler, 90 F.2d 823 (9th Cir.1937); In re Pologe, 13 F.Supp. 1010 (S.D.N.Y.1935); In re Natural Dry Ginger Ale Corporation, 9 F.Supp. 1003 ... ...
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