The opinion of the court was delivered by: BARD
This matter came before the court on the petition of a member of a bondholders' protective committee and on a rule granted on the chairman of the committee and the Baldwin Locomotive Works to show cause why an order of this Court, entered August 17, 1938, in proceedings for the reorganization of the Baldwin Company should not be executed in a specified manner.
By the order of August 17, 1938, the Baldwin Company was required to pay to the committee the sum of $31,213.33. Of this, $30,000 was for compensation and the balance for expenses. The order was in response to a petition for allowance to the committee of compensation and expenses. In the order all five of the committee members were named. The Baldwin Company issued a check for the full amount to Arnold Bernhard, as chairman of the committee, who deposited it in that capacity.
By agreement of a majority of the committee members during the petitioner's absence and without his consent, a certain distribution of the $30,000 fund was decided upon. The chairman was to receive $18,000, the secretary $7,500, and each of the three remaining members $1,500. The petitioner refused to accept $1,500 as his share, contending that, in the absence of a contrary court provision, he was entitled to a one-fifth share or $6,000.
In my opinion of December 2, 1940, D.C., 35 F.Supp. 773, I stated that it was my conclusion that an equitable distribution of the compensation was intended and that, to determine such distribution, both sides should be allowed to present evidence at a stated time. A hearing was subsequently held, during which the contributions of the members of the committee, particularly the petitioner and the chairman, to its work were gone into in considerable detail. Upon the basis of the evidence then adduced, I make the following findings of fact:
1. That Baldwin Locomotive Works filed petition for reorganization under 77B, 11 U.S.C.A. § 207, on February 25, 1935, and on the same day an order was entered, and later affirmed, continuing debtor in possession.
2. On or about April 5, 1935, an independent protective committee for the holders of the Baldwin Locomotive Works 6% Consolidated Mortgage Bonds due 1938 was formed with Arnold Bernhard as chairman, Samuel Wieder as secretary, both residents of the state of New York, and the Honorable A. Demorest Del Mar, a resident of New Jersey, Hugh W. MacNair, a resident of New York, and J. W. Woodruff, a resident of Georgia, as other members.
3. This committee began regular meetings in New York City on May 8, 1935, and functioned until early in August of 1935 when the final plan of reorganization was approved, after which no further meetings of a majority of the committee were held.
4. Records of the proceedings at the various meetings were destroyed by the secretary some time after the committee's work was completed and meetings were discontinued.
5. The petitioner's prominence in his community and consequent facilitation of the acquisition of support of the numerous holders of the bonds in that area was an important consideration in selection of him for membership in the committee.
6. It was agreed among the members that the majority should determine matters arising in the committee's work.
7. The petitioner was not aware of and did not participate in any agreement that the majority should determine the division of any compensation awarded.
8. The petitioner stated, during the course of the committee's work, that he felt the chairman's compensation should be commensurate with the proportion of work done by the latter.
9. The committee met approximately twelve times.
11. The committee meetings were for the purposes of considering and acting upon matters pertaining to the reorganization and of considering and acting upon reports and proposals of the chairman, who was actively engaged in tasks ...