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First Nat. Bank of Cincinnati v. Waters

January 28, 1936

FIRST NAT. BANK OF CINCINNATI ET AL.
v.
WATERS ET AL.; NORRIS V. SAME



Appeal from the District Court of the United States for the Western District of Pennsylvania; R. M. Gibson, Judge.

Author: Kirkpatrick

Before DAVIS and THOMPSON, Circuit Judges, and KIRKPATRICK, District Judge.

KIRKPATRICK, District Judge.

No. 5869.

On October 9, 1931, equity receivers were appointed by the District Court for National Radiator Corporation, and a reorganization of its affairs, already undertaken, was proceeded with, through the medium of a judicial sale of all its assets. After taking testimony, the court fixed an upset price of $2,500,000. The sale was consummated August 8, 1932, the purchasers assigned their rights to a new company, and the plan of reorganization was carried out and substantially completed.

Meanwhile, certain debenture holders who had not assented to the plan of reorganization appealed to the Circuit Court of Appeals [Flershem v. National Radiator Corp., 64 F.2d 847], and thereafter obtained a review of the order of that court by the Supreme Court of the United States (First Nat. Bank v. Flershem, 290 U.S. 504, 54 S. Ct. 298, 78 L. Ed. 465, 90 A.L.R. 391). Two of these objectors were First National Bank of Cincinnati and International Heater Company who are the appellants here. They did not challenge the jurisdiction of the court nor its right to order a sale. Their position was that the upset price fixed by the court and the price at which the sale was confirmed were grossly inadequate.

The Supreme Court sustained this contention and reversed the decree, ruling that these two appellants were entitled to receive their distributive share of the fair selling value of the assets, and to this end directed that a new detailed appraisal be made.

The mandate was received on February 19, 1934, and an appraisal ordered in accordance therewith.

On February 9, 1935, and while the appraisal was still in process, two receivers' accounts were filed; a first and final account of Heiner and Waters, receivers to June 1, 1934, on which date Waters resigned, and an interim account of Heiner, the remaining receiver, for the period beginning June 2, 1934. Counsel fees and allowances to the receiver were asked for.

On March 22, 1935, the District Court entered an order dismissing exceptions filed by these appellants, confirmed the accounts, and ordered the payment of certain counsel fees and allowances to the receivers.

The appellants seek a reversal of the order on the ground, broadly speaking, that it was prematurely made. Their contention is that the court should have waited until the completion of the appraisal before confirming the account and fixing fees and allowances. No exception was taken to any specific item of discharge claimed by the receivers, nor to any item of disbursement for compensation or expenses.

The confirmation of an ad interim account and the time at which compensation, counsel fees, and allowances to receivers should be fixed is a matter largely within the discretion of the court which has the receivership under its charge. Unless there has been a clear abuse of the discretion vested in the court, an order of this nature should be allowed to stand.

The District Court felt that it had before it sufficient evidence upon which the value of the services and the propriety of the allowances could properly be determined, without waiting for the appraisers to report. We cannot say that the report of the appraisers was an indispensable element. The court, of course, was thoroughly apprised of the physical character and description of the assets, of the extent of the business and the character of the services rendered by the receivers and their counsel. The receivership had continued upwards of three years during which period the receivers had taken a partial payment on account, and counsel had received nothing. The allowances made were for services actually rendered, and no future services were considered. The appellants have not suggested that they were excessive nor that improper payments of any kind were made.

On the whole, we think that there was no abuse of discretion on the part of the District Court, ...


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