Professional Documents
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In The Matter of Laurence Semel, Bankrupt. Laurence Semel, 411 F.2d 195, 3rd Cir. (1969)
In The Matter of Laurence Semel, Bankrupt. Laurence Semel, 411 F.2d 195, 3rd Cir. (1969)
2d 195
This case involves a bankrupt's appeal from an order of the District Court
denying his petition for review of an order of the referee. In the statement of all
the property of the bankrupt accompanying his voluntary petition in
bankruptcy, Laurence Semel, Esquire, licensed to practice law in New Jersey,
stated that no debts were due him on open account, but that an amount
estimated at $100 is due him for "Possible claims for professional services
rendered, damages, possible contingent fees on legal matters heretofore
handled, costs and disbursements advanced for clients."
At the first meeting of creditors, 1 held twenty days after the petition was filed,
the bankrupt, who acted as his own counsel, testified that many people owed
him money, probably in excess of a quarter of a million dollars. When asked
why he did not list that amount in the schedules, he replied that the sum
represented miscellaneous claims for prior legal services and monies that he
loaned to a number of people over the past thirty-eight years. And in response
to the question why he did not list the names of these people in his schedules,
he stated that the $100 item covered those amounts. At a Section 21a hearing
(11 U.S.C.A. 44(a)), held twenty-eight days later, the bankrupt gave as his
reason for writing "None" under the heading "Debts due petitioner on open
account", his belief that the amounts, estimated by him at more than a quarter
of a million dollars, owed him had no value to the bankrupt's estate. He also
said that he did not have a list of the names, but that he had files going back for
many years. When the attorney for the trustee advised him that he was going to
ask him to make a list of the people who owed him that money, the bankrupt
said that he would refuse because it was not his duty to do so. The referee then
orally directed him to furnish a list.
3
The following day the referee issued a written order. The order, after stating
that the bankrupt had testified concerning "accounts receivable", directed the
bankrupt to "prepare a list of accounts which total, in accordance with the
bankrupt's testimony, $250,000.00, said list to include name, address, amount
and how said debt arose", to "prepare a list of all pending cases which he may
have in his law practice and set forth the fees which were due from said cases
at the time of the petition in bankruptcy", and that he furnish the lists within
thirty days from the making of the order.
The bankrupt's first complaint that the referee's order is unlawful because he
was not given notice of the application for the order is without merit. The
informing him by the attorney for the trustee that he was going to request him
to make a list was sufficient notice to him of the written order which followed.
He is not harmed by the fact that it omitted to recite that he was given notice of
the application for the order as required by General Order 23.
He claims that he is not required to set forth in the schedules the debts owed to
him for two reasons: (1) the costs of the effort to recover them will exceed their
worth, and (2) the trustee's contact of the people, some of whom were or are
clients of his, as a result of his revealing their names and addresses, will harm
his reputation as a lawyer, and that the practice of law is the only asset he has
left.
204 F.2d 788, 794 (C.A.8, 1953); Hudson v. Wylie, 242 F.2d 435, 452 (C.A.9,
1957). And it is not unusual to require a report of certain items even though
they cannot be used by the trustee. The requirement of full reporting in good
faith of all assets of the bankrupt is not the equivalent, as the bankrupt
maintains, of shifting from the trustee to him the duty to collect, care for and
preserve the property of the bankrupt's estate. The responsibility for
determining whether "property interests" or "choses in action" are of value to
the bankrupt's estate is placed upon the trustee and not the petitioner. In re
Hannan, 127 F.2d 894, 897 (7 Cir. 1942).
7
Whether his reputation will be harmed is problematic. But even if it will be,
aside from the fact that this is a consideration which the bankrupt should have
weighed in the balance before he decided to file his petition, embarrassment or
loss of reputation from publicity of the bankruptcy proceedings will not excuse
full disclosure.
There is nothing in the record to support his contention that he was not given an
opportunity during or after his examination at the hearings to explain or clarify,
in lieu of cross-examination, any testimony given by him about the quarter-ofa-million-dollar item.
The bankrupt also urges that he is not required to list cases pending in his office
because information about such matters involves privileged communications
between him and his clients. All fees and commissions earned and accrued
prior to bankruptcy, or relating to services already performed, even though they
may be paid thereafter, are assets of the bankrupt estate. Parkford v. C. I.R.,
133 F.2d 249, 146 A.L.R. 57 (9 Cir.1943), cert. denied 319 U.S. 741; In re
Austin, 42 F.Supp. 889 (E.D. N.Y., 1942); 4A Collier on Bankruptcy (14 Ed.)
70.34. In the absence of unusual circumstances, the fact of a retainer, the
identity of the client, the conditions of employment and the amount of the fee
do not come within the privilege of the attorney-client relationship. Mauch v.
C. I. R., 113 F.2d 555 (3 Cir.1940); United States v. Pape, 144 F.2d 778, 782783 (2 Cir. 1944); Colton v. United States, 306 F.2d 633 (C.A.2, 1962); Wirtz
v. Fowler, 372 F.2d 315, 332-333 (C.A.5, 1966); In re Wasserman, 198 F.Supp.
564 (D.C.D.C.1961). The determination that the facts relating to a particular
retainer comes within the privilege is to be made by the referee in the first
instance. Presently, there is nothing in the record upon which such a
determination can be made. The mere assertion of an attorney-client
relationship is not enough. It may turn out that in some of the cases the
bankrupt has earned nothing at the time of the filing of his petition. See, for
example, In re Coleman, 87 F.2d 753 (2 Cir. 1937). But here again the
responsibility for that determination is upon the trustee. The bankrupt must
We have considered the other points raised by the bankrupt and do not think
they merit discussion here.
11
The District Court had jurisdiction over the petition for review. It was timely
filed and there were no procedural irregularities. Therefore, we interpret the
Court's dismissal of the petition as confirming the order of the referee.2 As
interpreted, the order will be affirmed.
Notes:
1