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June 8, 1954

In re PITTSBURGH RYS. CO. et al.

The opinion of the court was delivered by: GOURLEY

This involved and intricate reorganization proceeding has been pending since 1938. The problem is now posed as to whether or not an agreement between attorneys representing interested parties was considered by my late associate, the Honorable Owen M. Burns, at the time approval was given and allowances made for services rendered by said attorneys to the estate.

I am confronted with the delicate problem of adjudicating a matter which relates to a proceeding about whose multiplicity of ramifications I have had little, if any, knowledge during the sixteen years that the estate was in reorganization.

 I am compelled, therefore, to render my determination on the basis of the records of this court as well as the intimate knowledge which I feel that I possess as to the mind and temperament which Judge Burns exercised in the administration of his trust, more particularly at the time his approval of said allowances was entered.

 Rule 34 of the Canons of Professional Ethics adopted by the American Bar Association provides, 'no division of fees for legal services is proper, except with another lawyer, based upon his division of service or responsibility.'

 A review of the terms of the agreement providing for a specified division of the aggregate allowances to be awarded to counsel involved in this proceeding clearly establishes such to be proper and in accord with practice frequently followed by members of the bar. Nor does the record evince any conclusion other than that prior to the execution of the agreement, it was understood and reasonably anticipated that each of the attorneys would assume various responsibilities in order that the interests of their clients would be fully and thoroughly represented.

 I find it most difficult to comprehend why reputable members of the bar would not comply with such an agreement in the event that each of the participants performed or caused to be performed that which was reasonably required in the consideration of the many problems which arose in advancing the interests of their claim.

 I believe that the sanctity of contract must remain untrammelled, and that any legitimate agreement, spoken or written, between lawyers is sacrosanct and should be observed without equivocation.

 Unless circumstances of a most glaring and extenuating nature were presented to require me to reasonably conclude that one of the parties to the agreement had failed or neglected to perform the responsibilities which were assigned to him, or which he knew it was his duty to perform on behalf of his client, I would be inclined to give such agreement complete and unreserved effect. If the members of the legal profession cannot rely on and trust each other, through either an oral or written agreement, in representing the interests of a mutual client, the practice of law would degenerate to the era of the Neanderthal man.

 Knowing my late associate, Judge Burns, as I did and being cognizant of the high regard which he held for members of the bar, the deep sense of sincerity and humility that he always carried with an almost religious fervor, his unfaltering conviction that every laborer is worthy of his hire, I cannot but help conclude that a sound, substantial and most thoroughly reasoned basis existed in his own mind not to honor the agreement executed by the attorneys; or, undoubtedly, the award which he entered would have specifically provided for a division of compensation on the basis of the agreement.

 It is strikingly apparent that the information provided Judge Burns by counsel for the Securities and Exchange Commission, George Zolotar, in whose judgment and acumen Judge Burns frequently expressed the profoundest praise, convinced him that, contrary to the terms of the agreement, individual allowances should be made.

 This viewpoint is given added impetus when the fact is recognized that Judge Burns adhered, almost without exception to the allowances recommended by the Securities and Exchange Commission. The only striking deviation from these recommendations was the instance when Judge Burns deducted $ 10,000 from the amount which the Securities and Exchange Commission had recommended for respondent Dix and added this to the amount recommended for Nemerov, in behalf of whose estate the present petition is now advanced.

 In an effort to upset the ruling of Judge Burns, a petition for leave to appeal was filed in the United States Court of Appeals for the Third Circuit, in which petitioner's present contention was specifically urged for the allowance of an appeal --

 The Court of Appeals for the Third Circuit entered an order denying petitioner's application for leave to appeal. ...

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