The opinion of the court was delivered by: BARD
Various petitions for the allowance of fees are before the Court in the above captioned case. Petitions for that purpose were filed by Thomas C. Buchanan and Robert C. Sproul, Jr., the two Receivers and Trustees, by their counsel, Bernard Goodman and John T. Duff, Jr., and by Adrian Block and Isador Setel, attorneys in Buffalo, New York, who performed legal services in that state for the Receivers.
I. History of Case Since November, 1945.
On November 29, 1945, Thomas C. Buchanan, Esquire, and Robert C. Sproul, Jr., were appointed equity Receivers of The Pittsburg, Shawmut & Northern Railroad Company, the Shawmut Mining Company and The Kersey Mining Company, as successors to Receiver John D. Dickson, in the proceeding pending at No. 14, November Term, 1905, and thereupon duly qualified. At the time of the appointment of the Receivers, the receivership proceeding had been pending for 40 years, and there had been much public criticism of its extraordinary prolongation. At the time I appointed Mr. Buchanan and Mr. Sproul, I directed them to wind up the receiver ship as soon as possible, and to liquidate the property of the various defendant corporations with the utmost expedition.
The Receivers found it advisable and highly advantageous to lease the mines of the Shawmut Mining Company by lease dated February 1, 1946, to the New Shawmut Mining Company by lease dated February 1, 1946, to the New Shawmut Mining Company for a term of years. Upon their recommendation, the Court approved such a lease.
After consideration of the complex problems involved, the Receivers and their counsel recommended to the Court that, insofar as the railroad properties were concerned, the only practical method of preserving the estate, or realizing its full value, was to resort to reorganization proceedings, under which it was expected that a substantial portion of the railroad might be preserved as a going concern and the unprofitable portions abandoned. If such a plan could not be effected, then the entire properties should be abandoned and sold.
Accordingly, the railroad corporation, on July 29, 1946, filed its petition in this Court at No. 21600 for the reorganization of the railroad corporation under the provisions of Section 77 of the Acts of Congress relating to Bankruptcy, 11 U.S.C.A. § 205. Thomas C. Buchanan and Robert C. Sproul, Jr., were appointed Trustees of The Pittsburg, Shawmut and Northern Railroad Company on August 12, 1946, and their appointment as Trustees was ratified by order entered October 8, 1946, by the Interstate Commerce Commission. On October 25, 1946, the Interstate Commerce Commission entered an order fixing the maximum compensation to be paid to the Trustees from the estate of the debtor or any of its subsidiary corporations during the period of their service. The provisions of this order have been examined and will be adverted to later in this opinion, and the effect, if any, of this order upon the application of the Receivers and Trustees for the allowance of compensation will be considered.
While the petitioners acted as Trustees of the railroad corporation, they continued to function as Receivers of the other properties involved in the equity receivership at No. 14, November Term, 1905.
On February 7, 1947, petitioners as Receivers in the equity proceeding and as Trustees of the railroad under Section 77 of the Acts of Congress relating to bankruptcy, filed their joint petition, setting forth that they had received from Harry W. Findley an offer, dated February 4, 1947, for the purchase of substantially all the assets of the railroad company and all the assets of the Shawmut Mining Company and of its subsidiary companies for the aggregate sum of $ 1,200,000. The Court directed that the petition be filed of record, both in the reorganization proceedings and in the equity proceedings, and that a hearing thereon be held on March 3, 1947. On the day of the hearing, as a result of competitive bidding, Mr. Findley increased his offer to $ 1,505,000, and the properties covered by the bid were sold to him for this sum pursuant to order of Court entered March 3, 1947. The order of Court confirming the sale directed the Trustees to continue to operate the lines of the railroad south of Bolivar, New York, until March 31, 1947.
Thereafter, on July 11, 1947 after the sale to Mr. Findley had been consummated, the Trustees filed their petition for an order dismissing the reorganization proceeding. A hearing on this petition was held after due notice on July 31, 1947, on which date the Court entered an order dismissing the reorganization proceeding and directing the Trustees of the debtor to transfer possession of the debtor's assets and properties to themselves as Receivers in the equity proceedings. The order further directed that the claims filed in the reorganization proceeding be transferred to the receivership proceeding with the same force and effect as though filed therein. The Interstate Commerce Commission by its letter dated July 23, 1947, had consented to the dismissal of the reorganization proceeding in view of the fact that the debtor railroad was not longer engaged in interstate commerce, having abandoned the remainder of its operations as of March 31, 1947.
The Receivers and Trustees filed their First and Final Accounts on August 7, 1947, together with petitions for the allowance of compensation, and an order was entered on the same day setting August 28, 1947, as the date for a hearing to pass upon the respective accounts and upon the applications for allowances.
The order of the Interstate Commerce Commission dated October 25, 1946, reads as follows: 'It is ordered, That maximum compensation of the said Thomas C. Buchanan at the rate of seven hundred and fifty dollars ($ 750) a month for his services as such trustee, and maximum compensation of the said Robert C. Sproul, Jr., at the rate of seven hundred and fifty dollars ($ 750) a month for his services as such trustee, to be paid from the estate of the debtor, beginning as of the effective date of their appointments, be, and they are hereby, approved as reasonable; provided, that while each of them serves as trustee the only compensation he shall receive from the estate of the debtor or any of its subsidiary corporations shall be that allowed him by the court as such trustee within the maximum limits so fixed by this Commission.'
Messrs. Buchanan and Sproul acted as Trustees of the debtor railroad from October 8, 1946, when their appointment as Trustees was ratified by the Commission, until July 31, 1947, when the reorganization petition was dismissed by order of Court.
In their capacity as Trustees of the debtor railroad during the period October 8, 1946, until July 31, 1947, I think that the petitioners are well entitled to be paid at the rate of $ 750 a month. I will accordingly allow to Messrs. Buchanan and Sproul the sum of $ 7330 each for their services as Trustees.
III. Compensation of the Petitioners as Receivers
Prior to October 8, 1946, and subsequent to July 31, 2947, as well as during the period of the trusteeship, petitioners Buchanan and Sproul acted as Receivers in equity of the Shawmut Mining Company and of The Kersey Mining Company, and operated as Receivers all other properties of the defendant companies in the ...