Mitchell v. Lay, 6760.
| Decision Date | 14 November 1932 |
| Docket Number | No. 6760.,6760. |
| Citation | 60 F.2d 941 |
| Parties | MITCHELL v. LAY et al. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Frank L. Guerena, of San Francisco, Cal., for appellant.
Marshall B. Woodworth, of San Francisco, Cal., for appellee receiver.
Walker Peddicord, of San Francisco, Cal., for appellee Helen Lay.
Before WILBUR and SAWTELLE, Circuit Judges, and NETERER, District Judge.
The prior history of this case appears in (C. C. A.) 48 F.(2d) 79, where an order appointing a receiver was reversed and the trial court was "directed to settle the accounts of the receiver and to order the receiver to turn over to the appellant all property seized under its order by the receiver as soon as the appellant has secured an appointment as receiver thereof in the action now pending in the state court." Mitchell v. Lay (C. C. A.) 48 F.(2d) 79, 85.
To reverse the order settling the account, approved December 15, 1931, made pursuant to the above direction, the case is now here for review. Objections are made to the account as a whole on jurisdictional grounds and to incumbrance of the estate with unwarranted expenses of receivership.
Instead of filing an account for settlement, the receiver and his attorney incurred further expense in presenting a petition for writ of certiorari to the Supreme Court without success. The receiver was appointed July 29, but it was not until August 6 that an appearance was entered by the appellee Lumbermen's Association admitting the award, its failure to pay, and its insolvency, and consent to the appointment of the receiver, that jurisdiction was conferred upon the court. 48 F.(2d) 79, supra, and cases there cited. The sole ground for receivership, if any, was the possible removal from the state of California, of $8592.11 on deposit in a local bank to the state of Texas, corporate home of the appellee company, and in which state a receiver was appointed at Houston, Tex., July 31. However, such act was restrained on complaint of the appellant, insurance commissioner of California, who, in pursuance of his official duty and the laws of the state of California, filed on August 1 (St. 1919, p. 265), in the state court, praying that he be appointed receiver under the provisions of the state law to carry out his official obligations.
It is obvious that the state insurance commissioner moved promptly and no loss to the creditors of the state of California was probable, all of which was obvious to the receiver, a lawyer, and his attorney. The duty to preserve the estate to save the fund for creditors at a minimum expense moves the arm of the chancellor, and before the appellee Lay was a qualified litigant on jurisdictional grounds, made so by the appearance of appellee company August 6 and its answer August 8, the state court had exclusive jurisdiction, and had restrained removal of funds, but continued the hearing of appointment of receiver until the show cause order issued by the trial court herein enjoining the state insurance commissioner from doing certain acts in relation to the subject-matter.
In Mitchell v. Lay, supra, we held that, although the receiver was erroneously appointed, the court had jurisdiction of the property after appearance and answer of defendant corporation. Objections to many items in the receiver's reports are made, but, in view of our conclusion, only the hereinafter items will be considered: The fees allowed the receiver and his attorney; an allowance of $750 for expenses of a trip to Washington, D. C., by the attorney, and costs in the Supreme Court, which the court will judicially notice.
Worthwhile and necessary services were rendered by the persons who had been on the regular staff of employees of the insolvent corporation in the state of California, and employed by the receiver, and reasonable compensation for services of competent persons of ordinary ability is properly allowed. Walton N. Moore Dry Goods Co. v. Lieurance (C. C. A.) 38 F.(2d) 186, 191. No reason appears to disallowance of any specific item other than the items mentioned.
The reports of the receiver and his attorney are prolix, and accomplishment much magnified. Culled from the record, we find income reported in the amount of $44,726.76 and disbursements, $30,677.74, of which $12,000 is an allowance to the receiver and his attorney, $6,000 each, and $1,092.75 to Bronson, Bronson & Slaven for special services rendered in the case of Noble v. Bacon, and other matters. The total allowance for attorneys' fees is $7,092.75, not including a claim for $2,000 filed by J. L. Kearney, special attorney, employed for services in an ancillary receivership in Los Angeles where $9,019.71 was collected.
Nine hundred and six claims, aggregating $211,039, were filed, and after being investigated, claims amounting to $136,099 were rejected. All of the claims were investigated and disposed of. The reasons for rejection were either improper verification, want of notice by the policy holders, or insufficient merit; also, some of a miscellaneous nature, and others because filed by nonresidents.
Nineteen suits were commenced and reduced to judgment, $14,091 being collected. Twenty-one other actions were commenced, aggregating $10,611. These cases are pending. Six other cases are reported, involving $129,068. One of these was settled for $100. In another, judgment for $899 was recovered. Included is the case of Noble v. Bacon, and statement is made: "Judgment of $10,000 recovered; now on appeal." But the judgment was unfavorable to appellee, and the case was handled by a special firm of attorneys. The report states: "Although the attorney for the receiver did not participate in the trial, he followed it closely and strongly advised taking an appeal." The receiver testified: * * *"
The Pacific Coast manager of the defendant from November 1, 1924, a resident in the city, who had "entire control of all the affairs of the Pacific Coast, including underwriting, accounting and adjustment of claims arising out of policy contracts," was retained in the administrative force during the receivership. And from the report, as well as from the argument at bar, it is reasonably to be deduced that his judgment was controlling in all matters pertaining to administrative functions. His...
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