Matters of Browy, No. 75--1641

CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)
Writing for the CourtBefore FAIRCHILD, Chief Judge, CUMMINGS; PER CURIAM
Citation527 F.2d 799
PartiesIn the Matter of Richard C. BROWY et al., Bankrupts. James S. BRANNON, as Trustee in Bankruptcy, Plaintiff-Appellee, v. Stephen D. GAY, Attorney, Defendant-Appellant.
Docket NumberNo. 75--1641
Decision Date06 January 1976

Page 799

527 F.2d 799
In the Matter of Richard C. BROWY et al., Bankrupts.
James S. BRANNON, as Trustee in Bankruptcy, Plaintiff-Appellee,
v.
Stephen D. GAY, Attorney, Defendant-Appellant.
No. 75--1641.
United States Court of Appeals,
Seventh Circuit.
Jan. 6, 1976.

Page 800

Bret S. Babcock, Peoria, Ill., for defendant-appellant.

James S. Brannon, Peoria, Ill., for plaintiff-appellee.

Before FAIRCHILD, Chief Judge, CUMMINGS, Circuit Judge, and CHRISTENSEN, * Senior District Judge.

PER CURIAM.

Attorney Stephen D. Gay appeals from the decision of the district court confirming a bankruptcy judge's order to produce certain corporate records in Gay's possession. Gay had been the pre-bankruptcy attorney for Richard C. Browy and three companies in which Browy owned a controlling interest. On September 30, 1974, Receiver James S. Brannon filed a complaint for the turnover of corporate records of the three companies; in the alternative, the complaint prayed for an order permitting examination of the corporate records. In response Gay filed a motion to dismiss the complaint supported by an affidavit claiming an attorney's retaining lien upon the corporate books and records. The lien, Gay asserts, permits him to retain possession of the records until he is fully paid for the legal services he had rendered to Browy and the three corporations.

On November 21, 1974, the bankruptcy judge entered an order dismissing the complaint. On the following day, Brannon, who in the meantime had become Trustee in bankruptcy for Browy and the three bankrupt corporations, applied for an order under Bankruptcy Rule 205 requiring Gay to be examined in Bankruptcy Court regarding 'acts, conduct, and property of the bankrupts.' As a result, the bankruptcy judge ordered Gay to appear to testify on January 7, 1975. An accompanying subpoena duces tecum required him to bring with him the aforesaid corporate minutes. The bankruptcy judge denied the ensuing motion to quash the subpoena on January 31, 1975, stating:

'It is necessary for the proper administration of the bankruptcy estates that the Trustee examine the said books, papers, and records of the bankrupt(s) and that this need of the Trustee has priority over the claimed retaining lien of Stephen D. Gay.'

The bankruptcy judge therefore ordered Gay to permit the bankruptcy trustee to examine the corporate books and records within 20 days. On appeal to the district court, the order was affirmed.

The sole question before us is whether the bankruptcy trustee, without paying Gay's fee, may examine the books and records of the bankrupts where there is an attorney's retaining lien on them. This Court must balance Gay's rights to payment of his fee, evidenced by the lien, against the needs of the judicially supervised bankruptcy proceeding to inquire into the transactions of the bankrupt. We believe these two interests can be accommodated by requiring Gay to

Page 801

surrender the records subject to an order of the bankruptcy court preserving the attorney's priority afforded by his lien.

It is well settled that an attorney's retaining lien survives bankruptcy. In re San Juan Gold, Inc., 96 F.2d 60 (2d Cir. 1938); 4A Collier on Bankruptcy (14th ed.) P70.87(2) and cases cited at 1003--1004. Gay's retaining lien, cognizable under Illinois law, 1 is a passive or possessory one and may not be foreclosed. 2 The attorney simply has the right to hold the client's papers until the legal fees are paid. This right is enforceable against the client (McCracken v. City of Joliet, 271 Ill. 270, 111 N.E. 131 (1915)), third parties (In re Professional Hockey Antitrust Litigation (Multidist, Lit.), 371 F.Supp. 742...

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27 practice notes
  • In re Peninsula Roofing & Sheet Metal, Inc., Bankruptcy No. HT 79-01871.
    • United States
    • United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Western District of Michigan
    • February 23, 1981
    ...Corp. v. D.M. Liquidating Co., 11 Mich.App. 438, 161 N.W.2d 452 (1968). This attorneys' lien survives bankruptcy. Browy v. Brannon, 527 F.2d 799 (1976); In re Prudence Co., Inc., 96 F.2d 157 (2d Cir., 1938); In re San Juan Gold, Inc., 96 F.2d 60 (2d Cir., But, the attorneys retaining lien d......
  • Commodity Futures Trading Commission v. Weintraub, No. 84-261
    • United States
    • United States Supreme Court
    • April 29, 1985
    ...retain the one management power that might effectively thwart an investigation into their own Page 354 conduct. See generally In re Browy, 527 F.2d 799, 802 (CA7 1976) (per curiam). Respondents contend that the trustee can adequately investigate fraud without controlling the corporation's a......
  • In re Federal Copper of Tennessee, Inc., Bankruptcy No. 79-10069.
    • United States
    • United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Middle District of Tennessee
    • February 19, 1982
    ...latitude to utilize discovery to obtain any documentation pertaining to the bankrupt's conduct or property. See, e.g., Brannon v. Gay, 527 F.2d 799, 802 (7th Cir. 1976); Freeman v. Seligson, 405 F.2d 1326, 1333 (D.C.Cir. 1968); Chereton v. United States, 286 F.2d 409, 413 (6th Cir.), cert. ......
  • Johnson v. Cherry, No. 04-3562.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • September 6, 2005
    ...client has either satisfied her claim for fees and expenses or supplied security adequate to protect the attorney's interest. In re Browy, 527 F.2d 799, 801 (7th Cir.1976) (per curiam) (applying Illinois law); Twin Sewer & Water, 242 Ill.Dec. 15, 720 N.E.2d at 640; Upgrade, 43 Ill.Dec. 159,......
  • Request a trial to view additional results
27 cases
  • In re Peninsula Roofing & Sheet Metal, Inc., Bankruptcy No. HT 79-01871.
    • United States
    • United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Western District of Michigan
    • February 23, 1981
    ...Corp. v. D.M. Liquidating Co., 11 Mich.App. 438, 161 N.W.2d 452 (1968). This attorneys' lien survives bankruptcy. Browy v. Brannon, 527 F.2d 799 (1976); In re Prudence Co., Inc., 96 F.2d 157 (2d Cir., 1938); In re San Juan Gold, Inc., 96 F.2d 60 (2d Cir., But, the attorneys retaining lien d......
  • Commodity Futures Trading Commission v. Weintraub, No. 84-261
    • United States
    • United States Supreme Court
    • April 29, 1985
    ...retain the one management power that might effectively thwart an investigation into their own Page 354 conduct. See generally In re Browy, 527 F.2d 799, 802 (CA7 1976) (per curiam). Respondents contend that the trustee can adequately investigate fraud without controlling the corporation's a......
  • In re Federal Copper of Tennessee, Inc., Bankruptcy No. 79-10069.
    • United States
    • United States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Middle District of Tennessee
    • February 19, 1982
    ...latitude to utilize discovery to obtain any documentation pertaining to the bankrupt's conduct or property. See, e.g., Brannon v. Gay, 527 F.2d 799, 802 (7th Cir. 1976); Freeman v. Seligson, 405 F.2d 1326, 1333 (D.C.Cir. 1968); Chereton v. United States, 286 F.2d 409, 413 (6th Cir.), cert. ......
  • Johnson v. Cherry, No. 04-3562.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • September 6, 2005
    ...client has either satisfied her claim for fees and expenses or supplied security adequate to protect the attorney's interest. In re Browy, 527 F.2d 799, 801 (7th Cir.1976) (per curiam) (applying Illinois law); Twin Sewer & Water, 242 Ill.Dec. 15, 720 N.E.2d at 640; Upgrade, 43 Ill.Dec. 159,......
  • Request a trial to view additional results

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