In re Trans-State Oil Co.

24 F. Supp. 454, 1938 U.S. Dist. LEXIS 1964
CourtDistrict Court, S.D. Texas
DecidedJuly 20, 1938
DocketNo. 1890
StatusPublished
Cited by4 cases

This text of 24 F. Supp. 454 (In re Trans-State Oil Co.) is published on Counsel Stack Legal Research, covering District Court, S.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Trans-State Oil Co., 24 F. Supp. 454, 1938 U.S. Dist. LEXIS 1964 (S.D. Tex. 1938).

Opinion

KENNERLY, District Judge.

This is a proceeding under section 77B of the Bankruptcy Act, 11 U.S.C.A. § 207, originally filed July 31, 1936, in the United States Court for the Northern District of Texas, before Judge Wilson. It was transferred by Judge Wilson to this District August 31, 1936, and filed here September 3, 1936. Soon thereafter, the writer (Kennedy) found that he was disqualified in the case, and Judge Wilson continued in charge.

About September, 1937, it was called to the writer's attention that in the administration of the Estate, his disqualification had been removed, and thereupon he (Judge Wilson consenting) took charge of the case. A meeting of Creditors was called, held October 22, 1937, and a Trustee appointed. During the absence of the writer on account of illness, a Plan of Reorganization was approved by Circuit Judge Hutcheson.

This is a hearing on the application of Zweifel, Tuohy & Crager and Cole, Patterson & Cole (for convenience called Applicants), for an allowance of compensation and expenses as attorneys for the Debtor. Their application is for an allowance of compensation here of $4,500, making their total compensation $14,500 (in addition to $500 which it appears has already been paid them) as attorneys for the Debtor for a period beginning a short time before the filing of Debtor’s Petition and continuing throughout this entire proceeding, the last named firm, however, having come into the case at or about the time it was transferred to this District. They also ask for $852.11 expenses, of which $100 has been paid.

In their application, they say in part:

"Applicants further state and allege that a reasonable fee for the services performed would be in the sum of $14,500.00. The Plan of Reorganization provides that attorneys’ fees for the Debtor and for other attorneys for services rendered during the reorganization proceedings shall be paid up to $5,000.00 as a preferred claim before Class A, B and C Certificates are paid. That any other amount allowed as attorneys’ fees for services rendered in this proceeding shall be paid after Class A, B and C Certificates are paid in full.
“Your applicants further state that a reasonable fee to be paid as provided by the Plan, before the Certificates A, B and C are paid, would be in the sum of $4,500.00. That the Trans-State Oil Company has executed a contract with your applicants herein whereby the Debtor Corporation agrees to pay $10,000.00 as attorneys’ fees after the Certificates A, B and C are paid, in addition to what the Court allows to be paid as a fee before the certificates are retired, which sum does not necessarily have to be considered by this Court, as it is not being paid out of the general estate belonging to the creditors, but that this counsel wishes to advise the Court of the full amount to be received; ultimately for all the work performed in this proceeding. * * *
“Your applicants further represent to the Court and make affidavit that no agreement has been made directly or indirectly and that no understanding exists for a division of the fees between the applicants, trustee, creditors or the attorneys for any of them, or the Bankrupt.
“Your applicants further represent to the Court he has not been promised any attorneys’ fees, and no agreement has been made relative to attorneys’ fees to be paid out of the Estate.
"Wherefore, your applicants pray that upon final hearing they be allowed a fee of $4,500.00 plus expenses in the sum of $752.11 to be paid forthwith after the expenses of the trusteeship are paid, and to be paid proportionately according to the amount allowed to any other attorneys; and that the balance of $10,000.00 be paid after Class A, B and C Certificates are fully paid and retired.”

The facts are substantially as follows:

(a) This is an Estate with assets of approximately $300,000, with an income of approximately $4,500 per month from oil wells, and with a cost of operation of from $1,200 to $1,500 per month. It is reasonable to expect that under the approved Plan of Reorganization, the Creditors, whose claims amount to approximately $136,000, will in time be paid.
(b) Applicants have performed services substantially as set forth in their application (filed June 1, 1938), which services I find to be of the reasonable value of between $3,000 and $5,000. I do not find such services to be of the value of $14,500, and the payment of $14,500, or any sum in excess of $5,000, to Applicants either by this Estate or by the Debtor, or by both, would not be reasonable.
(c) The following Agreement between Debtor and Applicants, dated March 29, 1938, was offered in evidence by Applicants :
“March 29th, 1938.
“This is a memorandum of an agreement between Trans-State Oil Company and its [456]*456attorneys, Zweifel, Gregor and Tuohy, and their associates, Cole, Patterson & Cole, that for and in consideration of the work done in reorganizing said company the Trans-State Oil Company has agreed to compensate said above mentioned attorneys, besides the money allowed 'by the Court which will be paid before the creditors are paid, an additional sum of $10,000.00, to be paid after the various classes of creditors are paid as set out in the plan.
“Trans-State Oil Company,
“(sgd) Claude Kavanaugh
“President.”
(d) Applicants have incurred expenses in this case amounting to $852.11, of which $100 has been paid to them.' Such expenses are reasonable and appear to have been necessary.

1. In cases under Section 77B of the Bankruptcy Act, allowances of compensation and expenses may be made to the Debt- or’s Attorneys (subdivision 9 of subsection (c) of section 207, title 11, U.S.C.A.). In this Circuit, the nature and character of such allowances and the circumstances under which they may be made are made plain by the Opinion in Straus v. Baker Co., 5 Cir., 87 F.2d 401, and 5 Cir., 89 F.2d 322, and the cases there cited and reviewed. The services rendered by Applicants are well within the rule laid down in that case and would support an allowance to Applicants of $4,500, as prayed for, if the Court was not required to consider other matters in connection therewith.

2. Since the Opinion in Straus v. Baker Co., supra, Cougress has passed the so-called Borah Act (section 572a, title 28, U.S.C.A.), the pertinent part of which is as follows (italics mine) :—

“§ 572a. Fees in receivership, bankruptcy, or reorganization proceedings — Agreement fixing fee unlawful.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
24 F. Supp. 454, 1938 U.S. Dist. LEXIS 1964, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-trans-state-oil-co-txsd-1938.