In re Starks

282 F. Supp. 25, 1968 U.S. Dist. LEXIS 8489
CourtDistrict Court, N.D. Illinois
DecidedJanuary 18, 1968
DocketNo. 63 B 8068
StatusPublished

This text of 282 F. Supp. 25 (In re Starks) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Starks, 282 F. Supp. 25, 1968 U.S. Dist. LEXIS 8489 (N.D. Ill. 1968).

Opinion

MEMORANDUM OPINION

DECKER, District Judge.

This is a petition for review of an order entered by a referee in bankruptcy in connection with a wage earner’s plan under Chapter XIII of the Bankruptcy Act, 11 U.S.C. §§ 1001-1086. Petitioner, Leonard M. Groupe, was attorney for the debtor in the above-named cause. Petitioner claims that he is aggrieved by an order entered by Referee Robert Tieken on June 22, 1967 pertaining to that case.

Before examining the alleged legal basis of the petition, a brief summary of the relevant facts is necessary. On August 22, 1963 John Starks filed a petition in this court under Chapter XIII. Petitioner was attorney for debtor at that time and throughout the succeeding events leading up to the order of June 22, 1967. Schedules were filed with the petition which indicated that the debtor had outstanding secured debts of $1350.00 and unsecured debts of $402.21, for a total of $1752.21. His personal property was valued at $100, consisting of personal clothing and an equity interest in certain household furniture. The debtor was married and employed as a conveyer attendant. His yearly income was in the area of $5500 to $6000.

On September 30, 1963 the Referee entered an order of confirmation of the debtor’s plan under Chapter XIII. Prior to this order there had been the requi[27]*27site notice to creditors and a meeting of creditors at which the necessary acceptance of the plan was obtained. The plan as confirmed provided for the eventual payment of one hundred per cent of the principal amounts due the creditors. Most important for consideration here are the following paragraphs of the plan:

“2. This Plan contemplates the payment by the debtor, under the supervision of his attorney, out of his future earnings, a sum sufficient to cover the fees and expenses of these proceedings, distributions made through the Trustee to creditors participating in the Plan and distributions made independently to creditors not participating in the Plan.
“3. The debtor will pay monthly to the Trustee appointed by the Court a sum equal to three per cent or more of the total of the reasonably anticipated participating claims, which sum is estimated to be approximately $25.-00. In the event that a greater amount in claims is allowed than anticipated so that the sums paid will not be at least the equivalent of three per cent per month, the debtor will, upon notification of such deficiency, pay to the Trustee within thirty days of such notification a sum sufficient to bring the past payments up to the required amount and will increase the monthly deposits to a sum equal to at least three per cent of the new total of actual or reasonably anticipated claims.”
“8. The Court may, from time to time during the period of extension, increase or decrease the amount of any of the installment payments provided for by this Plan or extend or shorten the time for any such payment where it shall be made to appear, after hearing upon such notice as the Court may require, that the circumstances of the debtor so warrant or require.
“9. The future earnings or wages of the debtor shall remain under the supervision and control of the Court for the purpose of enforcing this Plan.”

At the same time that the order of confirmation was entered, another order was entered which declared that petitioner was entitled to an attorney’s fee of $300 for fifteen hours of valuable services he had performed in the Chapter XIII proceeding. The petition for this attorney’s fee had recited that the attorney and debtor had previously entered into an agreement for a $300 fee, and the Referee apparently found that this was a reasonable sum. The Referee’s order recited that $75 of this fee had been paid and that no part of the unpaid balance of $225 could be

“paid out of the estate other than by the further Order of this Court, which order may be requested on ex parte motion by petitioner at any time hereafter while any portion of such fee shall appear to remain unpaid.”

It should be mentioned that this order was drafted by petitioner himself and then submitted to the Referee.

The sequence of events following the confirmation of the plan and entry of the order for attorney’s fees is not fully detailed in the documents before me, nor was it presented completely in oral argument, but the main developments are clear. Petitioner continued to serve the debtor and collected regular amounts of money from him for the purpose of carrying out the plan and for the purpose of paying the secured creditors, which were not included in the plan. Petitioner issued a “Remittance Book” to the debtor to evidence the payments made by him to petitioner. By May 8, 1967 the payments totalled $2140.

The following disbursement of the $2140 appears to have been made by petitioner: The two secured creditors, neither of which had approved the plan, were paid a total of $700. The trustee under the plan was paid $676. $20 was paid as court fees in connection with the Chapter XIII proceeding itself and $4 as an appearance fee in a separate suit filed against the debtor in the Municipal Court in 1964. Petitioner paid to himself the $300 for attorney’s fees allowed by the Referee’s order of September 30, 1963; presumably this amount includes the $75 paid before the order [28]*28was entered. Finally, petitioner received $440 for himself “as attorney’s fees for professional services rendered subsequent to confirmation of the Plan.” This last amount was paid to him on the basis of $10 per month for forty-four months.

The debtor’s total payments to petitioner thus were disbursed as follows:

Secured creditors $ 700.00
Trustee 676.00
Court fees 24.00
Petitioner 740.00
$2140.00

It is apparent from this that the total liabilities of $1,752.21 were not paid in full. Furthermore, the amount paid to the trustee is far short of what was called for by the plan; the trustee received only $676 over a period of 44 months, whereas according to the figure of $25 per month called for by Paragraph 3 of the plan, the trustee should have been paid $1100 for this period. It is significant that during these 44 months petitioner was receiving a regular $10 per month, even though the trustee was receiving,, via petitioner, far less than the plan required. As petitioner indicated in a letter to the debtor’s wife on June 10, 1967, creditors have not yet been fully paid. $230.24 remains to be paid to creditors under the plan, and an estimated $177.40 is due for trustee’s expenses and fees. Also, $242.78 is due to an outside, secured creditor whom petitioner apparently has undertaken to deal with on the debtor’s behalf. In total, petitioner’s letter indicates $650.42 of debt remaining as of June 1, 1967. Subsequent payment of $16 to the trustee reduced this to $634.42.

Sometime in the first few months of 1967 the debtor orally complained to the Referee that he had made sufficient payments under the plan to entitle him to a discharge. On the Referee’s own motion a rule was issued against the trustee and the debtor’s attorney, petitioner, to produce their records of account.

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Cite This Page — Counsel Stack

Bluebook (online)
282 F. Supp. 25, 1968 U.S. Dist. LEXIS 8489, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-starks-ilnd-1968.