Woods v. City Nat’l Bank & Trust Co., 312 U.S. 262 (1941)

Woods v. City National Bank & Trust Co. of Chicago

Nos. 281 and 282

Argued January 13, 1941
Decided February 3, 1941
312 U.S. 262

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

Syllabus

1. Under Chapter X of the Bankruptcy Act, the bankruptcy court has plenary power to review all fees and expenses in connection with the reorganization from whatever source they may be payable. Reasonable compensation for services rendered may be allowed. The claimant has the burden of proving their worth. P. 267.

2. "Reasonable compensation for services rendered" necessarily implies loyal and disinterested service in the interest of those for whom the claimant purported to act. P. 268.

3. No compensation should be allowed for services rendered in connection with a reorganization by a claimant who represented not only members of the investing public, but also other and conflicting interests, and this although no fraud or unfairness is shown to have resulted from the conflict. P. 268.

4. In corporate reorganizations, protective committees, as well as indenture trustees, are fiduciaries. P. 268.

5. Expenditures incurred in connection with the administration of the estate are not "proper," within the meaning of § 242 of the Act, and should not be allowed, where the claimant cannot show that they were made in furtherance of a project exclusively devoted to the interests of those whom the claimant purported to represent. On the other hand, those expenditures normally should be allowed which have clearly benefited the estate. P. 269.

111 F.2d 834 reversed.