IN RE PITTSBURGH TERMINAL COAL CORPORATION
| Decision Date | 22 January 1947 |
| Docket Number | No. 20716.,20716. |
| Citation | 69 F. Supp. 656 |
| Parties | In re PITTSBURGH TERMINAL COAL CORPORATION. |
| Court | U.S. District Court — Western District of Pennsylvania |
James I. Marsh, Samuel Kaufman and Marsh & Kaufman, all of Pittsburgh, Pa., for trustee.
William M. Kilcullen, of New York City, and James A. Nugent, of Pittsburgh, Pa., for Pittsburgh Terminal Realization Corporation and another.
Allen H. Berkman, of Pittsburgh, Pa., and Samuel Marion and Nathan D. Leiman, both of New York City, for Preferred Stockholders Committee.
George Zolotar, of New York City, for Securities and Exchange Comm.
The present matter involves the claim of Samuel Marion, Allen H. Berkman and Nathan D. Leiman, attorneys for the Preferred Stockholders' Protective Committee. Their claim is for "additional compensation" under the agreement in a letter signed by Alexander Guttmann, chairman of the committee, which declared that 584 shares of preferred stock were held in escrow for the claimants as additional compensation for their services.
On November 16, 1945, the court allowed the claimants $37,500.00 out of the debtor's estate. Their claim for compensation was evidently misconstrued by the court, which qualified the allowance by stating that it That misconception of the claim of counsel for the Preferred Stockholders Committee was perhaps due to the fact that they joined plainly non-compensable services with the compensable in their claim against the debtor's estate. Later the court, upon being satisfied that counsel had not intended to waive additional compensation under the deposit agreement by their claim for compensation from the estate, made an order which held, in part, that the allowance of $37,500.00 was made: "without prejudice * * * to any rights which said claimants have in an agreement, whereby certain stockholders deposited 584 shares of debtor's preferred stock in escrow with the Protective Committee for Preferred Stockholders of Pittsburgh Terminal Coal Corporation, Debtor, as additional compensation to said claimants for their services."
This order, having been made without notice to the reorganized company and the Stockholders Committee, was later vacated as inadvertently made. The Pittsburgh Terminal Coal Corporation and the debtor's committee, and with them the Securities and Exchange Commission, have contended that in a Chapter X proceeding, 11 U.S.C.A. § 501 et seq., the court has the duty of determining the reasonableness of all fees, whether compensable fees chargeable to the estate or for those which are noncompensable and which cannot be so charged. The claimants, on the other hand, have contended that the court is without jurisdiction except as to claims chargeable to the debtor's estate.
These conflicting contentions having been made by the parties in interest, the court ordered that a hearing be had and testimony be introduced in order that the validity and scope of the claims of Messrs. Marion, Berkman and Leiman might be determined. At the hearing on September 10, 1946, the claimants alleged that, in addition to the services rendered by them to the Preferred Stockholders Protective Committee for which compensation had been allowed to the amount of $37,500.00, they had given other considerable legal services to the Preferred stockholders on whose behalf the 584 shares of stock had been deposited in escrow and were entitled to "additional compensation" from them.
Alexander Guttmann, chairman of the Preferred Stockholders' Protective Committee, while not denying that claimants had rendered services which could not be charged against the Debtor, and which were rendered at a time when any such compensation from the debtor's estate seemed improbable, asserted that the deposit of stock in escrow was to be effective only in case no considerable award should be made from the debtor's estate. He also contended that of the 584 shares mentioned in the agreement 146 shares were to be returned to certain of his relatives. His counsel puts great stress upon an action brought in behalf of Rita Crepeau, et al. and treats it as though it were the foundation of the Trustee's action against the North American Coal Corporation et al., which was the source of the ultimate fortunate recovery of the fund for distribution. As a matter of fact the earliest efforts of the claimants were hostile to, and not of benefit to the Trustee's action.
The court has had no difficulty in determining that the claimants rendered services to the preferred stockholders named in the escrow agreement which were not compensable from the fund distributed by order of the court. Among such services were those rendered in connection with the sinking fund claims, Guttmann's criticism of the Trustee's sales of machinery and his management of the real estate, his rent collections and the repair of the debtor's houses and other property.
That such services to the Preferred Stockholders Committee, at the request of its members, are entitled to a reasonable recompense seems unquestionable if the escrow agreement is to be reasonably interpreted. As to the method of recompense, however, considerable controversy has arisen.
The claimants contend that this court is without jurisdiction to determine the amount. The present counsel for the preferred stockholders who have deposited the stock asserts that the court has power to pass upon the claim, but should deny any recovery to claimants in view of the testimony of Alexander Guttmann. The Securities and Exchange Commission, on the other hand, contends that the court not only may pass upon the claim, but has the duty of so doing, and that the testimony entitles claimants to a determination of the amount to which claimants are entitled and to an order awarding that amount to them.
The Securities and Exchange Commission bases its contention upon its interpretation of Section 221(4) of Chapter X of the Bankruptcy Act, 11 U.S.C.A. § 621(4), which provides:
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Leiman v. Guttman
...that it had no jurisdiction to pass on the amount of the allowance which should be paid under the escrow agreement. In re Pittsburgh Terminal Coal Corp., D.C., 69 F.Supp. 656. Since in their view that court did not have jurisdiction of the claim, petitioners did not appeal from that order b......
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Leiman v. Guttman
...was ‘without prejudice to such rights as said Marion, Berkman and Leiman may have’ in the escrow agreement. (Matter of Pittsburgh Terminal Coal Corp., D.C., 69 F.Supp. 656, 659.) It seems clear that the district judge misapprehended the duty imposed upon him by section 221 of the act, which......