In re Public Leasing Corporation

• Decision Date: 14 December 1973
• Docket Number: No. 73-1324.,73-1324.
• Parties: In the Matter of PUBLIC LEASING CORPORATION (two cases). COMMUNITY NATIONAL BANK OF WARR ACRES, Appellant, v. C. C. VICTORY, Receiver of Public Leasing Corporation, Appellee. HOBBS DIVISION OF FRUEHAUF CORPORATION, Appellant, v. C. C. VICTORY, Receiver of Public Leasing Corporation, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

488 F.2d 1369 (1973)

In the Matter of PUBLIC LEASING CORPORATION (two cases).

COMMUNITY NATIONAL BANK OF WARR ACRES, Appellant, v. C. C. VICTORY, Receiver of Public Leasing Corporation, Appellee.

HOBBS DIVISION OF FRUEHAUF CORPORATION, Appellant, v. C. C. VICTORY, Receiver of Public Leasing Corporation, Appellee.

No. 73-1324.

United States Court of Appeals, Tenth Circuit.

Argued and Submitted September 14, 1973.

Decided December 14, 1973.

Charles W. Mooney, Jr., Oklahoma City, Okl. (Monty L. Bratcher and Crowe, Dunlevy, Thweatt, Swinford, Johnson & Burdick, Oklahoma City, Okl., on the briefs), for appellant, Fruehauf Corp.

James R. Eagleton, Oklahoma City, Okl. (Don R. Nicholson II and Eagleton, Nicholson & Pate, Oklahoma City, Okl., on the briefs), for appellant, Community Nat. Bank.

Hal D. Leaming, Oklahoma City, Okl. (Smith, Leaming & Swan, Oklahoma City, Okl., on the briefs), for appellee.

Before PHILLIPS, HILL and DOYLE, Circuit Judges.

PHILLIPS, Circuit Judge.

While bearing the same number, appeals from two separate judgments against two different parties, and presenting different issues, are involved in this case. Such judgments were entered in the United States District Court for the Western District of Oklahoma, in a bankruptcy proceeding entitled, "In the Matter of Public Leasing Corporation,¹ Bankrupt (In Bankruptcy No. 72-286)."

One appeal is from a judgment entered against Hobbs Division of Fruehauf Corporation,² and the other is from a judgment asserted to have been entered against Community National Bank of Warr Acres.³

There was filed in the Court of Appeals a "Record on Appeal" as Volume I. It embraces a duly authenticated copy of an agreed statement on appeal, entered into between counsel for Fruehauf-Hobbs and counsel for the Receiver of Public Leasing. Such agreed statement was approved by such District Court on May 11, 1973, and filed in the office of the Clerk of such District Court on that day. To it are attached Exhibits "A" to "K", inclusive, and a duly certified copy of the docket entries in such District Court in No. 72-286. Exhibit "K" is a duly authenticated copy of the judgment against Fruehauf-Hobbs, entered in the office of the Clerk of such District Court on April 4, 1973, and from which Fruehauf-Hobbs has appealed.

There was also filed in the Court of Appeals Volume II of the Record on Appeal, which is a duly authenticated transcript of the "Hearing and Decision of the Court in the Matter of the Report of Secured Creditors: Hobbs Division of Fruehauf Trailer Corporation; Community National Bank, * * *." At the close of the hearing, the court stated: "It will be the order and judgment of the Court that the Receiver have and receive judgment as against Hobbs for the amount of $12,400.50, * * * (and) that the Receiver have judgment against the Bank in the amount * * *." The court did not state the amount, but the parties agreed it was $2,057.64.

The record does not contain a copy of a judgment against the Bank. However, the certified copy of such District Court docket entries recites the following:

"4-4-73 Filed and entered Order and Judgment — THAT judg. is ent\'d against Community National Bank and in favor of debtor corp for $2,057.64 * * *

"4-6-73 Filed Fruehauf Corp\'s and Community Ntl Bk of Warr Acres Notice of Appeal from final order & judg. ent\'d 4-4-73, granting judg. against Community Ntl Bk of Warr Acres in favor of Debtor Corp. for $2,050 w/int at 10% from 3-30-73 * * *"

The record is entirely adequate for the court to determine the issues presented by the appeal of Fruehauf-Hobbs. But the record does not reflect sufficient facts for us to decide all the issues presented by the Bank's appeal, as we will hereinafter show when we consider the Bank's appeal.

On March 2, 1972, Public Leasing filed in the United States District Court for the Western District of Oklahoma its petition for reorganization under Chapter 10 of the Bankruptcy Act, and on that date an order was entered in such District Court approving the petition and appointing a trustee. Thereafter, and prior to August 7, 1972, Fruehauf-Hobbs, the Bank, and other secured creditors each filed a petition for reclamation, seeking the return to it of property described in an agreement or agreements securing an unpaid indebtedness owing from Public Leasing to it. On May 19, 1972, the court entered an order denying all of such petitions for reclamation.

Fruehauf-Hobbs, the Bank, and other secured creditors each filed a motion in the reorganization proceeding that the court adjudge Public Leasing a bankrupt, pursuant to 11 U.S.C.A. § 636(2). On August 3, 1972, there came on "for continued hearing * * * certain petitions for reclamation, * * * and motions to adjudicate the debtor corporation (Public Leasing) a bankrupt, * * *." From the evidence adduced at such hearing on such petitions and motions, such District Court found Public Leasing was "hopelessly insolvent"; that its reorganization was impossible; and concluded that it should be "adjudged a bankrupt" and that each of the applications for reclamation of Fruehauf-Hobbs, the Bank, and other secured creditors, theretofore denied, should be granted; that the property described in the agreement or agreements securing an indebtedness from Public Leasing should be returned to the petitioner to whom such agreement or agreements ran from Public Leasing and to whom such indebtedness was owing by it; that C. C. Victory should be appointed Receiver of Public Leasing, and that it should be his duty "to gain possession of all equipment and property" of Public Leasing, "including encumbered and unencumbered assets and to distribute to the reclaiming creditors the equipment and property covered by their respective reclamation petitions on file herein, * * *." The order concluded: "It is therefore ordered, adjudged and decreed that the above findings of the Court * * * be and the same are hereby made the order and judgment of the Court."

On August 18, 1972, the court entered a clarifying order, in pertinent part reading:

"1 Certain petitioners for reclamation have heretofore, and will be hereafter reclaiming certain equipment and collateral, * * * of a value greater than the balances of the notes and security agreements securing same, * * *. All reclaiming secured creditors should, therefore, account for their sale, disposal, or value of such reclaimed equipment and collateral, listing the amounts of money received from, or value of each separate item of equipment and the note and security agreement balance due on August 7, 1972, and applicable thereto. Such accountings should be filed with the Court Clerk * * *."

The judgments from which Fruehauf-Hobbs and the Bank appealed were entered after Public Leasing was adjudged a bankrupt.

I

The Bank's Appeal

The brief of the Bank states:

That on January 23, 1970, Public Leasing, as maker, executed and delivered to the Bank, as payee, a note for $14,763.60; that on the same date Public Leasing, to secure the payment of such note, entered into a security agreement with the Bank, by which it gave the Bank a lien on "Five (5) — 1970 Ford Econoline Vans," the serial numbers of which were set out in such agreement; that such note provided that Public Leasing "further agrees to pay (10%) of principal and twenty-five dollars ($25.00) in addition to the amount due as attorneys fees if collected by an attorney with or without suit"; and that the surety agreement provided: "Expenses of retaking, holding, preparing for sale, selling and the like shall include Bank's reasonable attorneys fees and legal expenses."

Neither the note nor the security agreement nor the substance thereof are set out in the record on appeal filed in this court.

Such brief further states that the Receiver, appointed when Public Leasing was adjudged a bankrupt, took possession of the property described in such agreement, and that pursuant to the order of the District Court, the Bank reclaimed such property and received it from the Receiver; that thereafter the Bank sold such property and made a report and accounting to the court, in accordance with the court's orders, setting forth the amount received for such property at the sale and the amount due it on the note, and asserted a claim for attorney's fees in the sum of $2,050, as provided for in the note and security agreement; that the excess of the amount received by it from the sale of such property over the amount due on the note and the amount claimed as attorney's fees was $7.64; that it tendered such excess to the Receiver; and that the court denied the claim for attorney's fees and awarded the Receiver judgment against the Bank for $2,057.64.

The only question presented by the Bank's appeal is whether the Bank was entitled to deduct attorney's fees from the amount received by it at the sale.

Counsel for the Receiver in his brief states: "Appellee-Receiver takes no issue with the Bank's statement that attorney fees were provided in the notes and security agreements, nor that the amount of $2,050.00 is reasonable, if allowable." But, counsel for the Receiver asserts that while a creditor has a provable claim for legal services rendered prior to the filing of the petition in bankruptcy, he has not for those rendered thereafter, and cites in support of that contention the decision of this court in American National Bank v. Bartlett, 10 Cir., 40 F.2d 21. We agree that such is the established law of this circuit. But, counsel for the Receiver also contends that an application of that rule in the instant case precludes the allowance of attorney's fees for legal services rendered after the filing of the petition for reorganization of Public Leasing under Chapter 10 of the Bankruptcy Act. With that contention we disagree.

Bankruptcy contemplates the taking of possession by the trustee of the property of the bankrupt actually or constructively in his possession at the time of the filing of...