as such. Consequently it was entirely proper for the court below to refuse to order the physical sequestration and impounding by the Debtor for the benefit of the bondholders of the income of the mortgaged property.' Certainly this language indicates that the Court understood that the issue of physical sequestration was before it and that, in affirming Judge Dickinson's order, it was ruling against the Indenture Trustee upon that specific issue. The Court noted the suggestion that the purpose of the proceeding was merely to fix the Mortgagee's rights, saying 'for this purpose, however, an adjudication by the court below was unnecessary.' From the opinion of the Circuit Court of Appeals, it seems clear that had it reversed Judge Dickinson's order, the effect of its decision, according to its own view of what was involved in the case, would have been that the Indenture Trustee was entitled to have the income physically impounded and sequestered for its benefit; and the Indenture Trustee was before the Court seeking a reversal. Had such ruling been made (albeit under a misunderstanding of the original purpose of the Trustee), it is hard to see how the Trustee could have refused to take full advantage of it for the bondholders, and the result would have been, as the Circuit Court of Appeals apprehended, the defeat of the reorganization proceedings.
In common with both Judge Dickinson and the Circuit Court of Appeals, as well as counsel for the Debtor (whose printed brief I have read), I may have misconceived the Indenture Trustee's purpose in instituting the proceeding but, in view of what the Circuit Court of Appeals said, I do not think I misunderstood what the effect would have been had it succeeded. I must take the case as I find it. At best the proceeding was useless. In re Reading Hotel Corporation, D.C., 25 F.Supp. 10 affirmed, 3 Cir., 105 F.2d 572, this Court held that services rendered in opposing a successful and confirmed plan of reorganization were not compensable out of the estate where it appeared that the only persons who could have derived any benefit from the disapproval of the plan were the stockholders, whom the claimant represented.
As to the interest and dividend petition, there is no question of misunderstanding either purpose or effect. In that petition the request was that the interest and dividends from pledged securities be paid directly to the Indenture Trustee. These items amounted to a considerable sum and it would be something of an understatement to say that their diversion to the bondholders would not have been beneficial to the estate. The only question is whether the solution of the somewhat doubtful point of law involved was a contribution meriting reward. The Trustee argues that the 'protection and assertion of claims -- by litigation if necessary -- by the representatives of each group of creditors of the interests of their own class must, therefore, be the nature of the services 'beneficial to the estate' for which allowances are to be paid.' This is true when what is involved is the adjustment of conflicting interests within the frame of the reorganization but I doubt that it holds good where the claim in litigation is an attempt to take funds needed for operating the business clear out of the proceedings and out of the jurisdiction of the Court. The Trustee also argues that it would have been remiss in the performance of its duty if it had not asserted this claim, and that may be so, but the duty in question was one that it owed to its bondholders rather than the Court or the estate in reorganization. I therefore hold to the views expressed in the opinion.
One consideration, however, was suggested by counsel for the Securities and Exchange Commission which, I think, has merit. The Indenture Trustee itself, as distinguished from counsel representing it, based its claim for compensation largely on time and cost of performing services of a more or less routine and mechanical nature. Undoubtedly the proportional part of such services chargeable to the proceedings referred to above would be very much smaller than in the case of the lawyers and therefore the fraction of the request disallowed should be correspondingly smaller. I, therefore, allow the Indenture Trustee for its services, instead of $ 10,000, the sum of $ 16,000.
The Trustee has asked that, in the event that the Court's disallowance of any portion of the fees requested by adhered to, the order of November 27, providing for the retention of $ 275,000, against possible liabilities of the Indenture Trustee, be modified to permit this fund to be charged with the disallowed balance of attorneys' fees. This fund was part of the money formerly on deposit with the Trustee as security under the mortgage, and, therefore, part of the mortgaged property to which the Trustee's general lien for compensation and expenses originally applied. The Court will entertain a petition for authorization to make such modification, upon proper notice to any parties adversely affected. In such petition it may be assumed that the Court is satisfied that the total, fair and reasonable value of the services performed by the Indenture Trustee and its counsel is as stated in the requests.