IN RE WT BYRNS, INCORPORATED
| Decision Date | 14 November 1966 |
| Docket Number | No. 23208.,23208. |
| Parties | In the Matter of W. T. BYRNS, INCORPORATED, Bankrupt. |
| Court | U.S. District Court — Eastern District of Virginia |
Howard I. Legum, Norfolk, Va., for Andrew S. Fine and Louis B. Fine, Norfolk, Va.
Philip L. Russo, Norfolk, Va., for Jerrold G. Weinberg, trustee.
Jerrold G. Weinberg, Norfolk, Va., trustee.
Assuming, without deciding, that the father performed beneficial services to the estate, we do not believe that it is permissible to make an allowance under such circumstances. True, the deed of assignment authorized the trustee to employ the services of counsel where necessary, and we agree that, even absent the express written authorization, a trustee may in good faith employ counsel to advise and assist him in the discharge of his duties which may be beyond the normal duties ordinarily performed by the trustee. Cochran v. Richmond & A. R. Co., 91 Va. 339, 21 S.E. 664; Berkeley and Harrison v. Green, 102 Va. 378, 46 S.E. 387. Likewise, there are instances in which a trustee or other fiduciary is entitled to an appropriate fee, in addition to his commissions, where he renders necessary legal services clearly beyond normal duties. Joel Bailey Davis Co. v. Augustus,1 105 Va. 843, 54 S.E. 985; Swank v. Reherd, 181 Va. 943, 27 S.E.2d 191.
The deed of assignment from W. T. Byrns, Incorporated, to Andrew S. Fine, trustee, was executed and recorded on June 11, 1965. The involuntary petition in bankruptcy was filed on June 23, 1965—a matter of 12 days intervening. In the interim period an action was filed in a state court by Haycox Construction Company, Incorporated, against W. T. Byrns, Incorporated and Andrew S. Fine, trustee. The trustee, Andrew S. Fine, secured the legal services of P. B. White to represent the trustee in the state court injunction suit.2 It is significant to note that the affidavit of Andrew S. Fine states as follows: "Because of a possibility of a confliction of interests, the said trustee engaged the services of Mr. P. B. White". But if this conflict of interest existed by reason of the fact that the trustee's father and law partner represented the grantor corporation under the deed of assignment, it most assuredly existed in giving general advice to the trustee in the administration of the trust.
Counsel for the petitioner refers to a booklet entitled "Opinions on Professional Ethics" from the City of New York Bar Association, same being number 198, formerly number 245, as follows:
The foregoing opinion does not, standing alone, meet the situation here presented. It does not purport to suggest that the attorney for the assignee should be selected from the same law firm; nor does it cover the father-son relationship.
The petition for an allowance for services rendered by the father as attorney for the trustee under the deed of assignment requests the sum of $5,000.00, "or such an amount as the Court may deem proper". As a memorandum of such services rendered, there is attached to the petition a Xerox copy of the request for an allowance by the trustee under the deed of assignment.3 There is an obvious duplication of services. In fact, the trustee under the deed of assignment filed a report with the referee pursuant to 11 U.S.C. § 110(a) (8) and 11 U.S.C. § 11(a) (21) setting forth in detail his activities as assignee, and in said report nothing was said with respect to any services rendered by his father and law partner as his attorney.4
The procedure in Virginia relative to the execution and recordation of a deed of assignment is ex parte in nature, and without judicial supervision until such time as the trust is fully executed after which the trustee is required to settle his accounts with a standing commissioner of accounts. There is no court approval required for selecting the trustee or his attorney. There is no procedure available to determine the necessity of employing the services of an attorney for the trustee. Of course, the trustee is merely the agent for the grantor under the deed of assignment at the time the deed is executed and recorded, but not thereafter.
The reasons for disapproving any recognition of the alleged attorney-client relationship in this case are similar to the logic giving rise to the generally acknowledged rule that an attorney for the bankrupt is ineligible to serve as trustee in bankruptcy. As said in 2 Remington on Bankruptcy, p. 560, § 1101:
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