In re David Bell Scarves

• Decision Date: 25 September 1931
• Parties: In re DAVID BELL SCARVES, Inc.
• Court: U.S. District Court — Southern District of New York

52 F.2d 755 (1931)

In re DAVID BELL SCARVES, Inc.

District Court, S. D. New York.

September 25, 1931.

Krause & Hirsch, of New York City (George C. Levin, of New York City, of counsel), for trustee.

Conrad, Rubin & Lesser, of New York City, pro se.

CAFFEY, District Judge.

It is clear, and I believe it is without dispute, that the words "in contemplation of the filing of a petition by or against him," contained in section 60d of the Bankruptcy Act (11 USCA § 96(d), relate only to the state of mind of the debtor, and not to what his lawyer thinks about. Tripp v. Mitschrich (C. C. A.) 211 F. 424, 427; Quinn v. Union Nat. Bank (C. C. A.) 32 F.(2d) 762, 767.

With respect to compensation of lawyers, the courts are in irreconcilable conflict upon the question as to whether or not sections 60d and 64b(3) of the act, 11 USCA §§ 96(d), 104(b) (3), are completely correlative — the one applying preceding, and the other applying subsequent to, the filing of the petition. So far as I can discover, the Supreme Court has not settled the dispute. For the present purpose it would be useless to discuss all the cases. The authorities seem to agree, however, that services, the determination of whose value is within the summary jurisdiction conferred by section 60d, must be of a type which renders them germane to the general aims of the Bankruptcy Act. See In re Rolnick (C. C. A.) 294 F. 817, 819, 820; In re Falk (C. C. A.) 30 F.(2d) 607, 609. The problem is to ascertain in each instance whether the particular services involved are, in the sense of this expression, germane to the general aims of the statute.

The testimony of one of the respondents himself is to the effect that his firm was retained a few days before the filing of the bankruptcy petition (after serious financial difficulties of the debtor had intervened); also that the services were to consist of negotiating for a settlement with creditors, and, in event of settlement, of attempting to arrange for raising the money needed to carry it out. While the line of demarcation is drawn between the two sections, so far as concerns the time element, at the date of bankruptcy In re Rolnick (C. C. A.) 294 F. 817, 819, 820; In re Klein-Moffett Co. (D. C.) 27 F.(2d) 444, and to that extent the two provisions of law are correlative, nevertheless under section 60d the question persists: Were the services germane to the general aims of the Bankruptcy Act? Whatever other tests there may be, if the services were germane, summary jurisdiction is conferred by section 60d.

In in Re Cummins (D. C.) 196 F. 224, 226, and in Re Klein-Moffett Co. (D. C.) 27 F.(2d) 444, 445, it was said, in substance, that services to bring about a settlement so as to avoid bankruptcy, and services in obtaining fresh money to enable a failing debtor to continue in business, were germane to the general aims of the Bankruptcy Act. If this be true, then the value of the services may be adjudicated under section 60d.

The inclusion in section 60d of various narrative words to describe lawyers — e. g., solicitor in equity, proctor in admiralty, etc. — seems to me to negative the notion that the character of services covered by it are identical with services covered by section 64b(3), differing only as to date of rendition; the former dealing with those preceding filing of the petition, and the latter with those following filing of the petition. It is hardly to be conceived that Congress contemplated that solicitors in equity or proctors in admiralty should be...