In re Concentrated Products Corporation

• Decision Date: 12 February 1930
• Docket Number: No. 4116.,4116.
• Citation: 38 F.2d 745
• Parties: In re CONCENTRATED PRODUCTS CORPORATION. HARTRIDGE et al. v. JOHN MUNROE & CO. et al.
• Court: U.S. Court of Appeals — Third Circuit

38 F.2d 745 (1930)

In re CONCENTRATED PRODUCTS CORPORATION.

HARTRIDGE et al. v. JOHN MUNROE & CO. et al.

No. 4116.

Circuit Court of Appeals, Third Circuit.

February 12, 1930.

The opinion of Runyon, District Judge, was as follows:

On August 11, 1924, Julian Hartridge was appointed ancillary receiver of the estate of the above named bankrupt, and after completing his duties as such, and filing his final report and vouchers, was discharged by order of this court on May 20, 1925.

The special master, in making his report regarding the various allowances, recommended $3,500 for the ancillary receiver for his services, and $4,000 for counsel, and these recommendations were later confirmed by the order of this court.

The petitioners object to the above awards and urge as their grounds of objection:

(1) That the compensation of a receiver appointed by a court of bankruptcy exercising either primary or ancillary jurisdiction is definitely limited by the Bankruptcy Act (11 USCA), and that the allowance of $3,500, made to the receiver appointed by this court, exceeded such statutory limitations.

(2) The petitioners were given no notice of the applications of the receiver and his attorneys for compensation.

(3) The allowance of $4,000 to the attorneys for the receiver was excessive.

The ancillary receiver and his attorneys oppose the prayer of the petition on the grounds that:

(1) Sections 48 and 58 of the Bankruptcy Act (11 USCA §§ 76, 94) have no application to accountings by ancillary receivers who are subject solely to the rules and orders of the court appointing them, ancillary jurisdiction being a well-recognized branch of equity jurisprudence, and an ancillary receiver being uniformly treated as an equity receiver.

(2) Petitioners, having acquiesced in the terms of the decree with full knowledge thereof for approximately nine months, are estopped by their own laches from reopening the same, especially after respondents have changed their position in reliance thereon.

Petitioners' first claim seeks its justification in the language of section 48, subdivision (d) of the Bankruptcy Act of 1898 (11 USCA § 76(d), which provides in part that "Receivers or marshals appointed pursuant to section 11, subdivision 3, of this title" shall receive for their services certain fixed percentages.

Section 2 (11 USCA § 11) has many subdivisions, and reads in part as follows: "The district courts of the United States * * * are made courts of bankruptcy, and are invested, within their respective territorial limits, * * * with such jurisdiction at law and in equity as will enable them to exercise original jurisdiction in bankruptcy proceedings * * * to * * * (3) appoint receivers or the marshals, upon application of parties in interest, in case the courts shall find it absolutely necessary, for the preservation of the estates, to take charge of the property of bankrupts after the filing of the petition and until it is dismissed or the trustee is qualified; * * * (5) authorize the business of bankrupts to be conducted for limited periods by receivers, the marshals, or trustees, if necessary in the best interests of the estates, and allow such officers additional compensation for such services, as provided in section 76 of this title; * * * and (20) exercise ancillary jurisdiction over persons or property within their respective territorial limits in aid of a receiver or trustee appointed in any bankruptcy proceedings pending in any other court of bankruptcy."

The pertinent inquiry is, therefore, whether a receiver appointed in an ancillary jurisdiction is one appointed pursuant to section 2, subdivision 3, and consequently bound, as to fees, by the provisions of section 48, subdivision (d), and in this connection it is to be observed that both section 48, subdivision (d) and subdivision (20) of section 2, dealing with the subject of ancillary jurisdiction, are portions of the 1910 amendment to the Bankruptcy Act.

Section 48, subdivision (d) of the Bankruptcy Act, as amended by the Act of 1910 (11 USCA § 76), reads in part as follows:

"Receivers or marshals appointed pursuant to section two, subdivision 3, of this Act shall receive for their services, payable after they are rendered, compensation by way of commissions upon the moneys disbursed or turned over to any person, including lien holders, by them, and also upon the moneys turned over by them or afterwards realized by the trustees from property turned over in kind by them to the trustees, as the court may allow, not to exceed certain specified percentages * * *;

"Provided further, That before the allowance of compensation notice of application therefor, specifying the amount asked, shall be given to creditors in the manner indicated in section fifty-eight of this Act."

Subdivision (e) provides in part that "where the business is conducted by trustees, marshals, or receivers, as provided in clause five of section two of this Act, the court may allow such officers additional compensation for such services by way of commissions upon the moneys disbursed or turned over to any person; * * * such commissions not to exceed certain specified percentages."

That these percentages represent the maximum permitted by the Bankruptcy Act is seen when section 72 as amended by the Act of 1910 (11 USCA § 112) is considered, and which reads as follows: "That 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 Act."

The term "ancillary receiver" does not appear in any section of the Bankruptcy Act now under consideration. Section 2, subdivision (3), gives bankruptcy courts, among other powers, original jurisdiction to appoint receivers, and by the provisions of subdivision (20) to exercise "ancillary jurisdiction * * * in aid of a receiver or trustee appointed in any bankruptcy proceedings pending in any other court of bankruptcy."

An "ancillary receiver," so called, therefore, is not appointed by reason of any specific statutory provision authorizing the appointment of receivers in ancillary jurisdictions, but simply as an indictment, and as a means for the enforcement of such measures in the secondary jurisdiction as...