Straus v. Baker Co., 8152.

• Decision Date: 06 April 1937
• Docket Number: No. 8152.,8152.
• Citation: 89 F.2d 322
• Parties: STRAUS et al. v. BAKER CO. et al.
• Court: U.S. Court of Appeals — Fifth Circuit

89 F.2d 322 (1937)

STRAUS et al. v. BAKER CO. et al.

No. 8152.

Circuit Court of Appeals, Fifth Circuit.

April 6, 1937.

Allen Wight and Robert Allan Ritchie, both of Dallas, Tex., and Ulysses S. Schwartz and Claude A. Roth, both of Chicago, Ill., for appellants.

Alfred McKnight, of Fort Worth, Tex., Carl B. Callaway, of Dallas, Tex., and Sylvan Lang, of San Antonio, Tex., for appellees.

Before SIBLEY and HUTCHESON, Circuit Judges, and STRUM, District Judge.

PER CURIAM.

In their motion for rehearing, Callaway and Reed vigorously attack our conclusion that no allowance should have been made them for services as attorneys for Baker Hotel Company and for Fenton J. Baker as operating cotrustee. A careful re-examination of the record confirms and strengthens us in our former conclusion. As to the Baker Company, and for services rendered to it before the reorganization proceeding, Callaway and Reed stood as any others of its creditors. If they had a claim against it, they should have proven it and taken in regard to it under the reorganization plan as its other creditors did. As to their claim for services to the company in the reorganization proceeding, not they, but Messrs. Lang et al., represented the company. Callaway and Reed represented, not the company, but Fenton J. Baker individually. Lang et al., in their statement in support of their claim, filed September 11, 1935, for a fee allowance for services as counsel for the Baker Company debtor, make this very plain. They say, and no one disputes it, indeed the whole record confirms it:

"The conflicting interests and claims of the unsecured creditors of the Debtor, the holders of the balance of the preferred stock of the Debtor, the holders of liens against certain non-hotel property, Fenton J. Baker, Dallas Rupe and Son, certain individual bondholders, as Mr. Hoblitzelle, had to be considered and ironed out before a plan of reorganization could be effected. All of this combined to make the task of securing a satisfactory and fair plan of reorganization an extremely difficult one.

"In August of 1934, petitioners initiated proceedings with Mr. Fenton J. Baker and his attorney, Mr. Carl Callaway, and agreed upon the general outline of a plan of reorganization which would be satisfactory to Mr. Baker and to their client, which would insure the continued operation of the hotel under his management, and which would afford fair and just protection and security to the other interested parties."

They say, further: "Innumerable matters and questions relative to the operation of The Baker Company consumed a great amount of time of your Petitioners. Questions were presented whether or not improvements should be made; correspondence was had with H. W. Dolf, Auditor of Baker Hotel; with Lawrence Stern and Co.; with Ritchie; with Horace Towner; with the Corporation Trust Company; with Ernst and Ernst; with Frank Scofield, Collector of Internal Revenue; with Mr. Robert H. Jackson, Assistant General Counsel for the Bureau of Internal Revenue; and others, over a period of several months relative to questions on income tax liens against the property of the Baker Company, and with regard to franchise taxes and capital stock taxes of The Baker Company."

It is true that Callaway and Reed continued during the reorganization proceeding to draw $100 a month, as they had theretofore done, but this money was paid them, not by the company, but by the permanent trustee, under a generally understood arrangement in which Callaway and Reed, though paid by the trustee, were understood not to be personal counsel for him. In the injunction proceeding brought by the debtor in connection with the National Hotels Cash Plan, the following appears, at page 802 et seq. of the record:

"McKnight and Lang appeared in behalf of the debtor, and Callaway in behalf of Baker. Mr. Callaway testified: `I state that I am attorney for Mr. Fenton Baker. * * * Second, the statement which I shall make is not to be interpreted as being either authorized by or made for the benefit of Debtor; it is made solely upon behalf of Mr. Baker and his counsel. * * * During all of these negotiations I had been faced with four difficulties. * * * First, that in representing Mr. Baker's interests, I could not find out whom I was dealing with and who had authority to talk. Mr. Ritchie had originally represented the Trustee under the...