In re Nazareth Fair Grounds & Farmers Market, Inc.

• Decision Date: 21 March 1967
• Docket Number: No. 267,Docket 30888.,267
• Citation: 374 F.2d 595
• Parties: In the Matter of NAZARETH FAIR GROUNDS & FARMERS MARKET, INC., Debtor. Arnold A. WEINSTEIN, Appellant, v. Charles SELIGSON and Melvin Lloyd Robbins, Appellees. Alex L. ROSEN, Appellant, v. Irving J. WOLF, Appellee.
• Court: U.S. Court of Appeals — Second Circuit

374 F.2d 595 (1967)

In the Matter of NAZARETH FAIR GROUNDS & FARMERS MARKET, INC., Debtor.

Arnold A. WEINSTEIN, Appellant, v. Charles SELIGSON and Melvin Lloyd Robbins, Appellees.

Alex L. ROSEN, Appellant, v. Irving J. WOLF, Appellee.

No. 267, Docket 30888.

United States Court of Appeals Second Circuit.

Argued January 5, 1967.

Decided March 21, 1967.

Arnold A. Weinstein, New York City, pro se.

Charles Seligson, New York City, pro se.

Melvin Lloyd Robbins, New York City, pro se and for Irving J. Wolf in support of order denying compensation to Alex L. Rosen.

Alex L. Rosen, New York City, pro se.

Before LUMBARD, Chief Judge, and FRIENDLY and HAYS, Circuit Judges.

LUMBARD, Chief Judge.

These appeals by various parties to this protracted Southern District Chapter X reorganization proceeding of the Nazareth Fair Grounds and Farmers Market, Inc., now in its fourteenth year, seek review of a district court order of September 12, 1966 which fixed allowances for services rendered. These applications were filed on September 20 and 21, 1965. Despite the fact that this court had, on more than one occasion, commented on the unnecessary and protracted delays in these proceedings, Wolf v. Nazareth Enterprises, Inc., 303 F.2d 152, 155 (2 Cir. 1962); Fried v. Margolis, 296 F.2d 670, 678 (2 Cir. 1961), cert. dismissed as improvidently granted sub nom. Wolf v. Weinstein, 372 U.S. 633, 636, 83 S.Ct. 969, 10 L.Ed.2d 33 (1963), it was not until August 25, 1966 that the district judge filed his opinion. Finally, on September 12, 1966, almost one year after the applications were made, the order from which these appeals are taken was entered. We granted leave to appeal on September 26, 1966 pursuant to § 250 of the Bankruptcy Act, 11 U.S.C. § 650.

For reasons set forth below, we set aside the district court's denial of any allowance for legal services to Alex Rosen, attorney for the debtor, and we allow $90,000 for these services; we reduce the allowance of Charles Seligson for compensation for services as examiner from $50,000 to $35,000; and we affirm the allowance made to Melvin Lloyd Robbins.

Services of Alex Rosen

On September 28, 1953, the same day the district court continued the debtor in possession of its property and business, the debtor was authorized to employ Rosen as its attorney in this and all other proceedings. Rosen had prepared the petition for the Chapter X reorganization, and he has played an active part in the numerous and drawn-out proceedings since then, including among other things the drafting of orders having to do with the debtor's business, the examination and settlement of claims, the validity of outstanding judgments, and litigation to determine who the debtor's stockholders were. No one can seriously question that these services were necessary and valuable, as this court itself is well aware from its review of these matters on at least six prior occasions. See Rosen v. Sugarman, 357 F.2d 794 (2 Cir. 1966); Wolf v. Nazareth Enterprises, Inc., 303 F.2d 152 (2 Cir. 1962); In re Nazareth Fairgrounds & Farmers Mkt., Inc., 296 F.2d 678 (2 Cir. 1961), rev'd sub nom. Wolf v. Weinstein, 372 U.S. 633, 83 S.Ct. 969, 10 L.Ed.2d 33 (1963); Fried v. Margolis, 296 F.2d 670 (2 Cir. 1961), cert. dismissed as improvidently granted sub nom. Wolf v. Weinstein, 372 U.S. 633, 636, 83 S.Ct. 969, 10 L.Ed.2d 33 (1963); Wolf v. Nazareth Fairgrounds & Farmers' Mkt., Inc., 280 F.2d 891 (2 Cir. 1960); Margolis v. Nazareth Fairgrounds & Farmers Mkt., Inc., 249 F.2d 221 (2 Cir. 1957). In addition, this court has suffered innumerable incidental applications in connection with these appeals.

Rosen's petition for an allowance of $150,000 for services covers 282 pages, consisting in large part of itemized accounts of hours spent preparing and analyzing various documents and memoranda of law, and includes a lengthy summary of proceedings before the district court and the referee in which he participated. The petition was assembled from the voluminous papers and records accumulated by Rosen over 13 years and by reference to court records and minutes. As no detailed daily record was kept, the petitioner in most instances resorted to estimates for a particular activity or class of activities. He claims a total of 6,138 hours, of which all but 100 hours was his own time.

Although the district court would have been much better advised if Rosen had made a more accurate record at the time of the events in question, we have no doubt that the net result presents a substantially correct summary of the petitioner's activities and that the estimate of time spent is an approximation sufficiently accurate to allow the district court to pass upon his application.

As we pointed out in In re Hudson & Manhattan R. R., 339 F.2d 114 (2 Cir. 1964), an attorney acting by court appointment and expecting to be paid from the estate is under a duty to keep accurate daily records so far as possible. We realize that this is not always an easy matter for single practitioners or those operating relatively small law offices. Moreover, as appears from all of the applications before us, a busy office is almost never able to keep track of a multitude of small matters such as telephone calls and the sending and receipt of letters. We did not mean to imply by anything we said in Hudson & Manhattan that the failure to keep complete records for all the work an attorney does should result in a total disallowance of any claim for services; we merely meant that the failure to keep current and accurate records from day to day is a factor to be considered in evaluating the services and in accepting estimates which the attorney makes at some later date merely on his own recollection at a time when he is looking forward to compensation. Thus the district court erroneously and unjustifiedly applied Hudson & Manhattan to Rosen's application in holding that no allowance should be made to him.

The district court, although of the view that no allowance should be made to Rosen, apart from $249.63 for reimbursement of expenses, nevertheless stated its opinion that were it not for the failure to keep the kind of records which the district court thought he should have kept, the services would be worth only $25,000. We do not agree. Such an allowance would be grossly insufficient. It seems to us that the district judge would have been well advised had he referred to another member of the court the matter of passing upon Rosen's application.

In our view, reasonable compensation should be allowed Rosen in the sum of $90,000, together with disbursements in the sum of $249.63, for a total of $90,249.63. In view of the nature and quality of Rosen's services and the long time which he has had to wait for compensation, we regret that the size of the estate precludes a more generous allowance.

Claim of the Examiner, Charles Seligson

On October 3, 1956, Judge Sugarman appointed Charles Seligson to be an examiner in this proceeding pursuant to section 168 of the Bankruptcy Act, 11 U.S.C. § 568. The apparent reason for this was that the debtor had suffered a fire at Nazareth, Pennsylvania, on August 28, 1956 which had destroyed almost all the structures belonging to the debtor and located on its property, and an offer was then pending to purchase all the debtor's real estate and the remaining structures. The order recited that the examiner was to "prepare and file a plan for the reorganization of the Nazareth Fair Grounds and Farmers Market, Inc., * * * and to perform the duties imposed upon a trustee under paragraphs (1) to (5) inclusive of § 167,"¹ and he was further

"directed to investigate the acts, conduct, property, liabilities and financial condition of said debtor, the operation of its business and the desirability of the continuance thereof, and the rebuilding of said fire-destroyed structures, and the status of its shareholders, and any other matter relative to the proceeding or to the formulation of a plan; and said examiner shall make and deliver a report thereon to the judge not later than sixty (60) days from the date hereof. * * *"

Whatever hopes there may have been in 1956 for an early termination of the business or for its reorganization almost nine more years were to pass before the court approved a plan of reorganization on July 27, 1965. Meanwhile, the examiner advised with all the parties and claimants, attended lengthy hearings before the district judge (who meanwhile had taken over from the referee the hearing and determination of the claims of stockholders and almost all the business a referee usually performs), and rendered a lengthy report thereon. He also advised counsel with respect to the drafting of numerous orders and apparently advised the district judge with respect to all matters regarding the reorganization. As Judge Sugarman stated:

"Professor Charles Seligson as the examiner was required by me, inter alia, to submit proposed orders, findings and conclusions; to review all proposed orders, findings and conclusions submitted by others and make recommendations thereon; to read and comment upon my drafts of decisions and opinions before they were filed."²

The examiner estimates that he and his associates spent a total of 1281½ hours, of which all but 300 was his own time. Although daily summaries are stated for 966 hours, the remainder consists of estimates, as the examiner states that it was impossible to render a complete, detailed account in his application, filed in September 1965. The examiner pointed out that all the...