Waterall v. Strayer

10 P.R. Fed. 410

Opinion

HamiltoN, Judge,

delivered the following opinion:

Special Master Savage was appointed January 22, 1917, and the first claim apparently referred to him was in the succeeding March. The assets handled by the receiver amount to about $70,000, which, after deducting expenses and preferred claims, will net to common creditors probably not over 30 per cent. Tbe defendant, Strayer, left Porto Eieo, and tbe receiver and master have bad to find out facts and pass upon matters without’ tbe assistance usually rendered by tbe insolvent defendant in receivership cases. Several claims have been very complicated, and tbe master has throughout been very •efficient in the discharge of bis duties.

Tbe matter of compensation was referred to Special Master Brown, and he reported an allowance of $3,400 as a reasonable fee in tbe premises* to include all future work, of which, however, little remains to be done. In recommending this compensation, Master Brown reports that be has taken into consideration tbe amount of the fund realized by the receiver and tbe amounts and nature of tbe claims examined by tbe special master. While this report does not come before tbe court as agreed to, no exceptions are filed to it.

1. Tbe principle upon which compensation of masters is fixed is tbe analogy of judicial salaries. “He is called to assist tbe court in discharging its judicial functions, and bis compensation may and should, I think, be measured by tbe standard of judicial salaries.” Middleton v. Banker’s & M. Teleg. Co. 32 Fed. 524; (C. C.); Foster, Fed. Pr. § 395. Special conditions may call for variation of this rule, but it would seem to ■express the~~correet principle. Tbe judge is supposed to pass upon judicial matters; and if, from press of business or otherwise, it is necessary to refer tbe matter to someone to act pro hac vice, it would be anomalous to have tbe compensation of tbe appointee fixed at a materially higher rate than that of tbe judge. This cannot be an inflexible rule, however, because tbe judge receives a stated salary, while tbe lawyer who is ■called upon to act as master has to take time from other business in order to act as assistant to tbe judge. A somewhat higher scale might be used for such short-time service.

2. The appointment of the master in this case was over a year ago, and before all work is finished he will probably have served about eighteen months. He, of course, cannot be paid for the time on the basis of the annual salary of the judge, because a special master acts only for a short time and can fix hearings and divide up his work to suit his other occupations. The time actually consumed in hearings, therefore, is the basis upon which the allowance should be made. The court is not furnished with data in this regard, but from examination of the work would come to the conclusion that here were between fifty and eighty actual hearings, and that the time consumed would amount to about three months. A conclusion can be reached even apart from the basis of judicial salary. Taking the basis of hearings, there would be no difficulty getting most members of this bar to serve at the rate., of $25 a day. This is almost twice the daily compensation of the judge of this court. Taking the outside number of hearings, therefore, the compensation could not exceed $2,000.

Taking into account the special difficulties due to the absence of the defendant, the court is willing to increase the amount somewhat and allow a compensation of $2,500 in all.

3. There has been no exception in this case, and it might be said that the court judicially knows there is a reluctance on the part of members of the bar to oppose claims of other members, but this does not change the duty of the court. This is but the first of several allowances which must be made in this case. There is yet to be allowed compensation to the receiver and compensation to the receiver’s attorney, and possibly other matters will need special attention. The fees of court are fixed by law and cannot well be varied. The object of a receivership is to administer assets economically, and theji when this is accomplished to turn the property over to whom it may belong. In the case at bar there will be nothing to turn over, and the actual result will be the winding up of the business, and practically the creditors will receive nothing more than what comes to them in this proceeding. This, therefore, differs somewhat from former receiverships. In the Borin-quen, San Cristobal, and Carmen receiverships, there was either reorganization or a sale connected with a reorganization, and expenses were agreed upon by the purchasers, who took them into account in readjustments. Here there will be no readjustment. Moreover in those cases the master’s compensations, while larger than in the case at bar, were based upon hundreds of thousands of dollars of assets, and the cases, therefore, are not at all analogous.

In order to effect its objects the expenses of a receivership must be reasonable. This will apply to the compensation of attorneys and receivers also, although perhaps not to be figured on so close a basis as in bankruptcy. Re Pico, 7 Porto Rico Fed. Rep. 423. Certainly the expense of the master, however, should be kept within close limits, because the law has seen fit to fix a small compensation for judicial officers, and the master is merely acting as the assistant to the judge in such cases as the one at bar.

Upon the whole, therefore, it seems that a compensation of $2,500 would be adequate, and the report of Master Brown is modified to that extent, and as so amended is confirmed.

It is so ordered.