Summary
In Silvers v. Merchants' Saving Fund & Building Association, 56 Atl. 294 (not officially reported), Vice Chancellor Grey gave to a withdrawal notice the effect of constituting the owner of the stock a general creditor of the association and entitling himto preferment at final distribution by a receiver in insolvency.
Summary of this case from Fitzgerald v. State Mut. Bldg. & Loan Ass'nOpinion
10-20-1903
SILVERS v. MERCHANTS' & MERCHANTS' SAV. FUND & BLDG. ASS'N.
W. H. Bacon, for receiver.
Proceedings for final settlement of accounts, of Harry N. Silvers, receiver of The Merchants' & Merchants' Saving Fund & Building Association. Accounts approved.
W. H. Bacon, for receiver.
GREY, V. C. (orally). This is an Important final settlement, in which many persons are interested. Public and personal notices have invited them to attend, but no one appears. This deprives the court of the advantage of the opinion of the distributees on the question of the allowance of fees to the receiver and his counsel. Very possibly they may be heard from when these matters have been already adjudicated. The settlement must, however, be made now, in accordance with the notices given.
The receiver asks an allowance of 5 per cent. upon the amounts which have come to his hands. This would be over $5,000. I am not willing to allow the receiver so large a sum, for the reason that it is apparent that much the larger portion of the work has been done, not by the receiver, but by his counsel. That may have been caused by the situation of insolvent company's affairs, but, whatever the reason, it is quite obvious that a very considerable part of the work, which the receiver might have done, has been performed by his counsel. For that reason I think if I allow the receiver a commission of about 3 1/2 per cent. he will be paid a fair compensation for his work. I will allow him the sum of $3,500 as his full compensation for services as receiver.
The receiver's counsel suggests that he ought to have a fee of $10,000. The quantity of the work done by the receiver's counsel in this case was, it is readily seen, very large. The association's affairs, when it came into the receiver's hands, were in a disgraceful condition of confusion, the result of reckless management and neglect Mortgaged premises could not be located, some of them had been abandoned, and no care taken of them. The condition of the titles, the amount paid and due, the names of many parties owing debts to the association and of the owners of property mortgaged to it were unknown, and only ascertainable after extended searching in the county offices, and examination and comparison of the association's imperfect books. The services of several clerks for some months, and of counsel over practically the whole period of the receivership, were required to adjust these matters and prepare the assets for distribution. These services justify the allowance of a fee which shall be fairly compensatory for the work done, although it may not be so large as counsel might have demanded for like services done upon application for clients in the ordinary course of business. In matters of this kind the fact that the work was all submitted at one time, and could be arranged to be done at opportune intervals, has made its performance much more convenient. I think also that I am bound to consider the interests of the nonappearing beneficiaries whose respective claims are so small that they naturally do not feel justified in appearing here to oppose large allowances of fees. The amount passing through the receiver's hands is somewhat in excess of $100,000. The total of fees allowed in this transaction, although the situation was extraordinary, and the results satisfactory, should, I think, not exceed $10,000. I will therefore allow the receiver's counsel as his fee for all his services in this matter the sum of $6,500.
There is a petition on file touching this settlement, for the allowance to the Independent Lodge of Odd Fellows of Bridgeton of a preference on the claim they filed in this case before the receiver. This claim is based on the fact that the lodge in January, 1899, served upon the officers of the association notice for the withdrawal by the lodge of the value of 15 shares of the stock of the association held by the lodge. By the terms of the constitutionand by-laws of the association the stockholder who desired to withdraw was entitled to do so upon giving the notice prescribed by the rules of the association. The giving of this notice entitled him to be paid a computed sum as the value of his shares then existed. The only limitation upon the stockholder's right to withdraw was that not more than one-third of the funds in the treasury should be applicable to pay out withdrawals. On the same day that the Bridgeton Lodge served its notice of withdrawal, nine other notices were served. It is now disclosed that at that time, if a marshaling of the association's assets had taken place, the total would not have been equal to the payment of all the withdrawals which all the stockholders might have required if all had withdrawn. In short, the association was on the edge of insolvency. There is no allegation in the petition, nor does anything show, that either the lodge or any other member who gave notice of withdrawal was in any way cognizant of the possible insolvency of the association. Neither is there any evidence or indication before me that the association had then arrived at such a condition of financial demoralization that it could be said to have failed, or that it was generally not meeting its financial obligations as they came due. Of the 10 notices of withdrawal filed at the same time with that of the Bridgeton Lodge the association regularly paid out six of them. The four others were not paid. None of these except the Bridgeton Lodge has persistently and continuously maintained its place as entitled to preference, and so proved its claim before the receiver. The others have abandoned their claims, and have been cut off by the decree in this case. The lodge appears to have done all that under the constitution of the association was required of it, and to have acted without having in contemplation the probability of the insolvency of the association. The association was not at that time insolvent, for there was then no general failure to meet its financial obligations as they came to be due in the usual course of business. The lodge is entitled to the position of a creditor, and to be paid in full in preference to the distribution of the surplus pro rata among the shareholders. The order approving the accounts may so specify.