Callaghan v. Reconstruction Finance Corp., 297 U.S. 464 (1936)

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Callaghan v. Reconstruction Finance Corp.

No. 539

Argued February 13, 14, 1936
Decided March 2, 1936 *
297 U.S. 464

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE SECOND CIRCUIT

Syllabus

1. Where a bankruptcy proceeding is superseded by a reorganization proceeding under § 77B of the Bankruptcy Act, the allowances to trustees for services in the bankruptcy proceeding are nevertheless limited by § 48 of the Act. P. 466.

2. This limitation is not removed by § 77B(i), which authorizes the judge in the reorganization proceeding to order payment of "such reasonable administrative expenses and allowances in the prior proceeding as may be fixed by the court appointing" the prior trustee. P. 467.

3. Trustees in bankruptcy are officers of a court, and, like public officers generally, must show clear warrant of law before compensation will be owing to them for the performance of their public duties. P. 468.

4. In recognition of the policy of Congress that proceedings in bankruptcy and under § 77B be economically administered, the limitations upon expenses prescribed by §§ 40 and 48 have been strictly construed, even when the compensation allowed in the particular case was materially less than that which otherwise might have been considered reasonable. P. 468.

5. A reorganization under § 77B is not a confirmation of a composition, and a referee in a proceeding in bankruptcy which was superseded by a reorganization proceeding is not entitled to have his compensation computed according to § 40(a) as in the case of a confirmation of a composition. P. 470.

6. Section 40(c) of the Bankruptcy Act, relating to the allocation of fees allowed under § 40(a) in the event that the reference is revoked or the case is specially referred, held inapplicable. P. 471.

79 F.2d 187 affirmed.

Certiorari, 296 U.S. 570, to review a judgment modifying and reversing orders of the District Court.