
    IN THE MATTER OF JOSÉ VILLA ESPITERY, Bankrupt.
    San Juan,
    Bankruptcy,
    No. 83.
    Attorneys’ Fees in Bankruptcy.
    Bankruptcy — Payment of Fees.
    1. The order found in Collier on Bankruptcy relative to paying fees at the end of the bankruptcy proceeding is not one required by the bankruptcy law.
    Bankruptcy Law — Fees at End of Case.
    2. An attorney’s fee is allowed in proportion to the benefit to the estate, not in proportion necessarily to the exertions of the attorney, and therefore should not be allowed in full until it is certain what is the result of the service to the estate.
    Attorneys’ Fees — Appeal to the Supreme Court.
    3. Where a case is appealed it cannot be known whether the amount recovered below will be sustained or not, and therefore it is impossible to tell the amount of fee which should go to the attorney. It is the duty of the parties to know what proceedings are had before the referee.
    
      Note.- — -As to allowance of attorneys’ fees in bankruptcy cases, see note in 54 L.R.A. S26.
    
      Attorneys’ Pees — Fart Payment.
    4. A referee may under some circumstances authorize the payment of part of an attorney’s fee before the end of a case. Postponement, to the end of a case may dull the edge of energy.
    Opinion filed May 21, 1914.
    
      Mr. Henry G. Molina for petitioner.
    
      Messrs. Savage & Francis for creditors.
    
      Mr. Salvador Suau, referee, pro se.
    
   HamiltoN, Judge,

delivered tbe following opinion:

This case comes up on petition for a review of an order of tbe referee refusing allowance of claim of Henry G. Molina for bis professional services rendered as attorney for tbe trustee in tbe case of tbe .trustee versus Calderón. It seems that an order was made by tbe referee at an early period of tbe administration, not, as in tbe Collier form, appointing Mr. Molina attorney for tbe trustee, but authorizing tbe trustee to appoint Mr. Molina as bis attorney. That is tbe only difference I observe between tbe form and tbe order entered. Tbe order is. evidently based upon tbe form. There seems to be a difference-of recollection as to bow tbe action came about. That is a matter, though, that tbe court need not enter into. There is m> question that tbe statements on each side are made with perfect honesty and according to tbe recollection of tbe parties.

1. Tbe contention is made that that order was not necessary, .and that tbe last part as to payment of fees at tbe end of tbe case is void; that tbe referee was not authorized to make sncb a limitation. Attention was called to tbe fact that tbis was not .among tbe forms prescribed by. tbe general orders of tbe Supreme Court, but a voluntary form drawn possibly by Mr. Collier, certainly in bis book.

2. Tbe theory of tbe order seems to tbe court to be correct, that is to say, that attorneys’ fees should not be paid in full until it is certain what is tbe result of tbe service to tbe estate. It is possible that an attorney may render great services and render them with all tbe devotion an attorney can give to bis case, and yet there not be enough funds in tbe administration to pay a full fee. As I understand tbe proper practice, a fee is allowed in proportion to tbe benefit to tbe estate, not proportioned necessarily to tbe exertions of tbe attorney.

3. ITow would that work out in tbis case? The amount claimed, $500, does not seem to be unreasonable, if it can be properly paid at tbis time. Here is a case which was bard fought, and is now in some form sought to be taken to tbe Supreme Court of tbe United States. If that should be successfully done and that court should reverse tbis court, there would be no benefit to tbe estate; there would not be a cent more in tbe bands of tbe trustee than there was before, in fact, somewhat less because tbe expenses would have to be met in some shape. So i-t looks as if tbe theory of tbe order is not incorrect, so far as relates to matters which are undisposed of. If there be a case — and it may have been so in tbe Sola Case, I do not know about that — where money has been finally recovered, and there is no question of any appeal or change of tbe result, where the money is forever a part of the estate, that kind of an order would appear to be unnecessary. As a rule it would seem as if the theory of the order is correct, that as to open matters there can be no final payment for services until they are disposed of. That seems to be only right. It, of course, is questionable whether such an order should be entered absolutely in the case because there may be matters which are settled in the course of the case. Where the order is broad enough to postpone everything, whether settled or not settled, the court questions the propriety of such an order in the way in which it is expressed. It will not go so far as to say that the order is of that character. The theory of it, as I said before, may possibly be correct. The matter of appeal I will not enter into. What is done before the referee is the same as if done before this court, except where there is a petition filed for review, and it is the business of parties to a bankruptcy suit to keep posted as to what is put on the docket or order book, or whatever minutes are kept by the referee. There is no way of avoiding .that duty. A rule which has just been adopted will possibly make that easier. Thirty days are allowed for an appeal from all orders, and, that point being now definitely known, there will possibly be no trouble in the future.

4. As to the order, the court is inclined to construe it' this way!, that the amount and payment of the fees cannot be compelled until the end of the administration or last meeting of creditors, so far as relates to anything that is open, anything which is not finally adjusted. It would be perfectly proper for the order to be upheld in all respects in such cases, and, not being appealed from, it may be binding in all cases, but I am going to construe tbe order in a way which I think will do justice in this particular case.

The order says in effect that the amount cannot be liquidated and payment cannot be compelled until the last meeting of the. .creditors. I will construe this form as meaning that it does not prevent a payment on account meantime, if the referee thinks that the condition of the estate will admit of a payment on account. The referee is the only one who can decide that, because, while there are $2,000 in the trustee’s hands, the court cannot possibly tell what liens there may be, or anything about the situation. It simply knows the bare fact that so much money is there at present.

The court will do this, — it will grant the petition for review to the extent of directing the referee to ascertain what would be a proper fee for this particular case which is spoken of, and if in his judgment the condition of the estate admits of it, for him to order the payment of not less than half that amount on account. The rest of it will come up after the appeal has been settled in the Supreme Court one way or the other. I think that is as close as I can .come to doing justice to both sides. It is a difficult proposition, but I am taking a middle course, and I think it is about right.

It is not right to expect attorneys to go through litigation of this character, which the court happens to know of judicially, without any compensation for years. If nothing is paid at all in cash in cases of this sort, it dulls the edge of energy, and the result would be that the matter of recovering assets for the estate would not be properly worked up. And the court thinks that in a case like this there should be something paid on account, but the amount is at the discretion very largely of the referee, subject always to review if tbe discretion is not properly exercised.

So this petition is granted without any reflection upon the referee at all, with instructions to pursue the above course. •Of course, if he does not do what the parties think the state •of the trust justifies, that is another matter. There are thirty days for an appeal in a ease of that sort.  