E. W. Johnson, J. Hertz Brown, and C. C. Moore, Petitioning v. Carolina Scenic Stages, in The Matter of Carolina Scenic Stages, Debtor, 242 F.2d 263, 4th Cir. (1957)

242 F.
2d 263
E. W. JOHNSON, J. Hertz Brown, and C. C. Moore,

Petitioning
Claimants, Appellants,
v.
CAROLINA SCENIC STAGES, Respondent, Appellee.
In the Matter of CAROLINA SCENIC STAGES, Debtor.
No. 7359.
United States Court of Appeals Fourth Circuit.

Argued Jan. 25, 1957.
Decided March 7, 1957.
1
Howard Carlisle Bean, Spartanburg, S.C. (Carlisle, Brown & Carlisle, E. W.

Johnson and Charles C. Moore, Spartanburg, S.C., on the brief), for appellants.
J. Nat Hamrick, Rutherfordton, N.C. (Thomas A. Wofford, Greenville, S.C., on

the brief), for appellee.
Before PARKER, Chief Judge, SOBELOFF, Circuit Judge, and GILLIAM,

District Judge.
GILLIAM, District Judge.
This appeal was taken by petitioners from an order of the District Judge,
allowing them only $1,250 for services in filing a petition in bankruptcy against
the Debtor under Chapter 10, 11 U.S.C.A. 501 et seq. They filed petitions for
an allowance of $15,000, and the Referee recommended an allowance of
$6,000. Judge Timmerman's order concludes: 'The recommended fee is
excessive. However, claimants are entitled to something from the estate. In the
light of all the circumstances, considering the size of the estate and the number
of creditors, a reasonable fee would be $1,250. Let claimants be paid $1,250.'
Claimants here insist that the District Judge erred in 'holding that a reasonable
fee is $1,250, and in failing to hold that the sum of $15,000, is a reasonable
fee;' and in the alternative, that he erred 'in failing to approve the fee of $6,000,
recommended by the Referee.' It is conceded that under Title 11 U.S.C.A.
641(5), the District Judge was authorized to allow petitioners a reasonable fee
for filing the petition and necessarily the amount of such fee had to be left to
his discretion. We come then to the question of whether we should in effect
ignore the opinion of Judge Timmerman and substitute our own. In answering,
we obviously should bear in mind that he presided over the entire rather lengthy
litigation involved in the Chapter 10 proceedings.
6
There are numerous cases holding that in such a situation the compensation
found by the trial Judge to be reasonable should not be disturbed unless it is
made to appear that he abused his discretion or that he arrived at his conclusion
by way of an erroneous view of the applicable legal principles.
In Calhoun v. Stratton, 6 Cir., 61 F.2d 302, at page 303, the opinion sets forth:
'Attorney fees cannot be fixed with mathematical certainty. They are to be
determined in the exercise of judicial discretion. We cannot interfere unless
there has been a clear abuse of discretion or an obvious mistake of law * * *' at
page 304. 'The statement of evidence embraces the opinion of eminent
attorneys that the allowance to attorneys should have been larger, but it is not
our province to pass upon the weight of the opinion testimony.' In re Iron Clad
Manufacturing Co., 2 Cir., 215 F. 877; In re Sovereign Corporation, 7 Cir., 114
F.2d 1013.
The fee to which petitioners were entitled was to cover only services in
'preparing and filing the petition and prosecuting it to an adjudication of
bankruptcy * * * 'When an adjudication has been obtained, the bankrupt estate
passes under the control and jurisdiction of the court and its officers." In re
Consolidated Factors Corporation, 2 Cir., 59 F.2d 193, 194. The petition
prepared and filed by petitioners consisted of formal allegations, stating facts
already known to petitioners before entering upon the preparation. One of the
petitioners, Mr. Brown, at the time of preparing the petition under Chapter 10
and before, was employed by the B. F. Goodrich Company, a large creditor
which has paid him $9,200 for services rendered; he also represented several
small creditors and received pay from them. Another of the petitioners, Mr.
Johnson, was representing A.C.F. Brill Motors, a creditor, and was
compensated for services rendered up to the time he was named as one of the
attorneys for the Trustee under the Chapter 10 proceeding. For services to the
Trustee, Mr. Johnson was paid a fee of $6,000. The third petitioner, Mr. Moore,
represented one creditor but gave no testimony at any of the hearings about his
services.
It is probably true that no two judges would have arrived at the same amount as
a reasonable fee for preparing and filing the petition, but here we have the
honest judgment of an experienced Judge who had been face to face from the
outset with all the problems involved-- the one best qualified to determine
impartially a fee which would do justice to all concerned. This Court would
hesitate to hold that the compensation is inadequate and is of the definite
opinion that no abuse of discretion has been made to appear.
10
The petitioners, however, insist that the trial Judge fell into error by the manner
in which he reached his conclusion, that is: (1) In holding that some of the
services rendered in filing the petition were performed in the sole interests of
their clients, and (2) In holding that no extensive study of the bankruptcy law is
necessary to perform the task of filing a petition under Chapter 10. In his order
fixing the fee at $1,250, the Judge had this to say: 'Claimants received some
compensation from their clients, and to the extent that they performed services
in the sole interests of their clients, they are not entitled to compensation from
the estate. On the other hand, to the extent that they performed services for the
estate, above and beyond the individual interests of their clients, they should
receive compensation from the estate. This situation is a difficult one, but in the
instant case claimants' work may be divided into three categories. First, there
were conferences between claimants and their clients in which was discussed
the advisability of filing the petition. Claimants' services in this connection
were primarily for their clients and not for the estate. Second, there was the
drafting and filing of the petition in accordance with applicable statutes and
decisions. A normal or routine amount of research was necessary in this
connection, but not an extensive study of the laws of bankruptcy in general.
While the clients may be expected to bear some of this cost, such services
probably should be compensated by the estate. Third, in instances where
lawyers are not familiar with the bankruptcy laws or procedures, a study of
them may become necessary in order for them to properly represent their
clients. Such study may properly be classified as a part of a lawyers' education
for which neither their clients nor the estate should have to pay. Their
compensation should be reckoned on the basis of the time that would be
required by a competent lawyer to perform the service, the extent of the
responsibility assumed, and the direct results of the action taken.' We agree
with these observations as a general statement applicable to the facts of this
case, and surely it cannot be successfully argued that there was an 'obvious
mistake of law.' The order of the District Judge should stand.
11
Accordingly, the order is affirmed.
12
Affirmed.

E. W. Johnson, J. Hertz Brown, and C. C. Moore, Petitioning v. Carolina Scenic Stages, in The Matter of Carolina Scenic Stages, Debtor, 242 F.2d 263, 4th Cir. (1957)

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E. W. Johnson, J. Hertz Brown, and C. C. Moore, Petitioning v. Carolina Scenic Stages, in The Matter of Carolina Scenic Stages, Debtor, 242 F.2d 263, 4th Cir. (1957)

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242 F.

E. W. JOHNSON, J. Hertz Brown, and C. C. Moore,

United States Court of Appeals Fourth Circuit.

Howard Carlisle Bean, Spartanburg, S.C. (Carlisle, Brown & Carlisle, E. W.

J. Nat Hamrick, Rutherfordton, N.C. (Thomas A. Wofford, Greenville, S.C., on

Before PARKER, Chief Judge, SOBELOFF, Circuit Judge, and GILLIAM,

GILLIAM, District Judge.

Accordingly, the order is affirmed.

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