In re White, 366.

• Court: U.S. Court of Appeals — Second Circuit
• Writing for the Court: MANTON, SWAN, and AUGUSTUS N. HAND, Circuit
• Citation: In re White, 58 F.2d 203 (2nd Cir. 1932)
• Decision Date: 02 May 1932
• Docket Number: No. 366.,366.
• Parties: In re WHITE.

58 F.2d 203 (1932)

In re WHITE.

No. 366.

Circuit Court of Appeals, Second Circuit.

May 2, 1932.

Max Rockmore, of New York City (Louis Jersawit, of New York City, of counsel), for appellant.

Yankauer, Davidson & Mann, of New York City, for appellee.

Before MANTON, SWAN, and AUGUSTUS N. HAND, Circuit Judges.

MANTON, Circuit Judge.

Joseph White, doing business as J. White Co., was adjudicated a bankrupt. Prior thereto the appellant had negotiated with White's creditors in an attempt to make a settlement with them. It was demanded by the creditors that there be an examination of the books of the bankrupt and a deposit by him of his assets, which consisted of money in his possession. This sum, amounting to $4,316.69, was delivered to the appellant, who deposited it in a special account for the express benefit of the creditors. Accountants audited the books, but before their report a banking institution commenced a state court action against the bankrupt, obtained a judgment, and proceeded to attempt to recover from appellant the moneys turned over to him by the bankrupt for the purposes stated. This effort to collect was resisted by the appellant, who suffered a direction against him to deliver over the accounts in his possession to the receiver appointed in proceedings supplementary to execution upon the judgment obtained by the bank. He was adjudged in contempt for failure to pay over the money. About this time, the petition in bankruptcy was filed; a receiver was appointed who demanded that the appellant pay the moneys to it, and upon order of the District Court, the moneys were paid to the bankruptcy receiver. Before complying with this order, however, the appellant moved in the state court to vacate its turn-over order. An order to that effect was entered, and, on appeal by the bank, was affirmed by the appellate court. After bankruptcy, appellant made an application for payment for his services out of the funds in the hands of the bankruptcy receiver, claiming that he had rendered valuable and beneficial services to the creditors of the bankrupt, in that he had preserved for them what proved to be the entire estate and saved for them and the estate the expense which would necessarily have been incurred by the trustee in recovering the money if it had been paid out on the state court judgment. The court below allowed for services which were rendered after the filing of the petition in bankruptcy, but disallowed for services performed theretofore, and this for the reason that such services by the appellant in preserving the property of the bankrupt prior to bankruptcy were merely those of an employee of the bankrupt and that they were legal services rendered by the appellant as attorney for the bankrupt. The appellant had rendered services in retaining possession of the fund. This, beyond question, was beneficial to the estate, for he preserved the fund for the trustee in bankruptcy. He successfully resisted the efforts of the state court to compel the payment of the judgment obtained by the bank. If he had not done so, the trustee in bankruptcy would have been obliged to sue in a plenary suit to set aside the unlawful preference obtained by that...