In re Medina Quarry Co.

• Court: U.S. Court of Appeals — Second Circuit
• Citation: In re Medina Quarry Co., 191 F. 815 (2nd Cir. 1911)
• Decision Date: 13 November 1911
• Docket Number: 17.
• Parties: In re MEDINA QUARRY CO.

191 F. 815

In re MEDINA QUARRY CO.

No. 17.

United States Court of Appeals, Second Circuit.

November 13, 1911

Martin Conboy, for petitioners.

Wilber E. Haupt, Herbert T. Reed, and John J. Ryan, for respondents.

Lincoln A. Groat, pro se.

Before LACOMBE, WARD, and NOYES, Circuit Judges.

PER CURIAM.

Irrespective of any general equity power, there is authority under section 64b of the bankruptcy act, as amended in 1903, to allow the reasonable expenses of one or more creditors, where property transferred or concealed by a bankrupt has been, through their efforts, recovered for the benefit of the estate. And in our opinion, if the allowances in question cannot be sustained under this statute, they cannot be sustained under any other provision or general power. None is broader.

The property recovered in this case was that which was covered by the lease and bill of sale to the Orleans Company. The setting aside of the Kessler mortgage added nothing to the estate. It merely settled a question as to priority among creditors in distribution.

On a record concededly incomplete we must accept the finding of the District Court that the facts which were ascertained by Messrs. Houpt and Ryan in the New York examination prior to the appointment of the trustee contributed materially to the successful issue of the subsequent proceedings to set aside the lease and bill of sale. In our opinion the District Court, under the statute referred to, had the right to make allowances in payment for the services and expenses of such examination. As the District Judge says, such evidence tended to secure the recovery of property fraudulently transferred. Moreover, as we understand it, the testimony in question was actually used in the subsequent litigation which resulted in the recovery of the property, and the estate was saved thereby the expense of taking it over again, even if it had been available.

But while this ruling would justify certain allowances to Messrs Houpt and Ryan, it would not, as we view the record, justify us in permitting the allowances as made to stand. Evidently the District Judge, in making allowances to these attorneys took into consideration services which were helpful in rejecting claims, setting aside claimed priorities, and in securing the appointment of a proper trustee. But it cannot be said that these were services which resulted in the recovery of any property, within the meaning of the...