In re Osofsky, 48597.

• Decision Date: 27 May 1931
• Docket Number: No. 48597.,48597.
• Citation: 50 F.2d 925
• Parties: In re OSOFSKY et al.
• Court: U.S. District Court — Southern District of New York

50 F.2d 925 (1931)

In re OSOFSKY et al.

No. 48597.

District Court, S. D. New York.

May 27, 1931.

Krause & Hirsch, of New York City (Sydney Krause and George C. Levin, both of New York City, of counsel), for trustee, petitioners for allowances.

Tischler & Gottesman, of New York City (Jacob F. Gottesman, of New York City, of counsel), for petitioning creditors.

David Haar, of New York City, for bankrupt.

WOOLSEY, District Judge.

I grant an increased allowance to the attorneys for the trustee, for the reasons and in the amount hereinafter mentioned.

I. When this case was first submitted to me, although an oral argument was requested, I disregarded the request and wrote a short memorandum on the back of the papers confirming the report, although it seemed to me that the allowance to Messrs. Krause & Hirsch, as attorneys for the trustee, was possibly on the low side.

After my memorandum confirming the report was filed, however, a member of the firm of Krause & Hirsch, attorneys for the trustee, called on me and explained the reason why his firm had asked for an oral argument, and requested me to allow a reargument.

After sending to the clerk's office for the papers, and considering the matter again, I granted the reargument, and summoned thereon the attorneys for the trustee, the attorneys for the petitioning creditors, and the attorney for the bankrupt.

II. I am informed that this proceeding started without any assets and with claims amounting to $13,155.38. The estate has received in all $4,509.53.

Of this sum $4,500, was the result of a settlement of a suit in equity begun in pursuance of the provisions of sections 67 (e) and 70 (e) of the Bankruptcy Act, against Abe Osofsky, Harry Weisbord, Rose Serotta, and Anderson & Tarlow, to set aside a fraudulent transfer.

This suit was brought on behalf of the trustee by Messrs. Krause & Hirsch. During the course of the trial before Judge Goddard, an offer of settlement for $4,500 was made by the defendants. This offer was tentatively accepted, subject to the approval of creditors, and later was finally accepted at a special meeting of the creditors, and thereafter the amount of the settlement was paid.

The result of this suit not only brought to the estate $4,500, but as the settlement involved the waiver of an alleged claim of $2,800 by Messrs. Anderson & Tarlow against the estate, it decreased the claims against the estate by that amount.

By the further efforts of the attorneys for the trustee, $4,537.63 of the claims against the estate, including this claim of Messrs. Anderson & Tarlow, have been expunged, and the total claims have been reduced, substantially by one-third, from $13,155.38 to $8,617.75.

III. In dealing with allowances, the referee gave an adequate allowance to Messrs. Tischler & Gottesman, the attorneys for the petitioning creditors, but when he came to make his allowance to Messrs. Krause & Hirsch he gave them an amount which, on reflection, I consider quite inadequate, and, in fixing this allowance, he made a statement which, by implication at least, reflects on the initiative of Messrs. Krause & Hirsch in a way which was not justified by any circumstances shown by the papers in this proceeding or in the suit in equity above mentioned, and which was quite astonishing to me in view of their reputation for competence, activity, and diligence in caring for the interests of their clients. It has, therefore, seemed to me appropriate in justice to them to reconsider this matter, and this reconsideration has given me a long-awaited opportunity, using this case as a text, to deal in general with the question of allowances in bankruptcy matters.

IV. In approaching the question of allowances in bankruptcy the court has, of course, to consider the situation with which the receiver and trustee find themselves faced at the outset of the proceeding, and then look at the net result which has come out of that situation.

In a case, which starts without assets, any substantial estate must almost always, to a large extent, be attributable to the efforts of the attorneys involved.

It is, of course, impracticable, if not impossible, accurately to allocate the exact contribution which each set of attorneys may make to such result. Consequently the court has often to consider, I think, what would be the proper aggregate allowance for legal fees in the proceeding, and then divide that amount as fairly as may be between the firms involved.

Here, however, the only question before me is the allowance to the attorneys for the trustee.

V. At the beginning this was a case with upwards of $13,000 of claims, and without any assets.

Due to the efforts of these attorneys, this estate is now an estate with assets, after proper disbursements by the trustee, of $4,414.89, and with aggregate claims of only $8,663.36.

VI. The elements to be...