Full opinion text
DAWKINS, District Judge. This matter has now to be considered on the application of a large number of committees, attorneys and other persons for payment of expenses alleged to have been incurred for the benefit of the estate, and also for fees or compensation for services claimed to have been rendered. The names of the persons and amounts claimed are as .follows: Expenses Compensation Chicago Bondholders' Committee ............................. 48,566.09 Attorneys for Chicago Com..... : 85,000.00 R. Miles Warner, Scc'y......... 6,312.50 18,750.00 Lambert & Hart, Attorneys.... 33.85 500.00 City National Bank, Depositary 8,638.58 New York-Vicksburg Com...... 25,163.17 Jos. M. Mulford, Sec'y......... 243.26 7.500.00 Attorneys for this Com.: Coudert Bros................... 180.61 30.000. 00 Fred Esch ...................... 187.97 2.950.00 Alvin T. Sappingsley........... 79.07 2.600.00 May & Bird and Lyell & Lyell 60.000. 00 F. H. Andrews, Sec’y........... 12,500.00 Members New York-V’burg Com.: C. L. Warner.................... 2,500.00 George M. Sudduth............. 6,000.00 Lloyd S. Carter.................. 174.00 4.000. 00 Robert M. Nelson.............. 4.000. 00 Milton W. Harrison............. 6.000. 00 A. W. Porter, Inc............... 385.00 Marine Midland Trust Co., Depositary ....................... 683.50 Merchants National Bank, Depositary ....................... 297.00 Independent Debentureholders* Com. of Kansas City, Mo..... 9,101.69 39,580.00 First Nat’l Bank of K. City, Depos.......................... 4,666.86 Attorneys K. C. Deb. Com...... (David M. Proctor, C. T. Munholland and Charles M. Blackmar) 60,000.00 Ryland Stinson, Mag & Thompson, Depositary Attorneys.... 2,000.00 Brady, Hanser & Thompson.... Attorneys for Brady, et al 2,266.22 15.000. 00 (Levy, Wells & Engle)....... 2,259.58 30.000. 00 Financial Adjustment Committee ............................. 4,738.53 1.175.00 Harry P. Schaub................ 690.89 2.500.00 Frank A. Dunnegan............ 205.66 Continental Illinois Bank & Trust Company, original trustee, and counsel Meyer, Meyer, Austrian & Platt and Green, Green & Jackson, Trustee counsel ............... 2,472.73 10,000.00 Counsel .......................... 25.000. 00 H. C. McCabe, Special Master 37.73 5,000.00 Thomas W. McCoy, Individual Trustee ....................... 2.500.00 R. L. Dent, local counsel for Trustee ....................... 2.500.00 Engle & Laub and Brunini & Hirsch Placing Debtor in voluntary bankruptcy............ 10.000. 00 Brunini & Hirsch............... 15,000.00 Flowers, Brown & Hester, Attorneys- for Debtor............ 8.500.00 Totals ......♦...... $117,384.49 $470,955.00 This case originated as an application by certain debenture holders for the appointment of receivers for the Vicksburg Bridge & Terminal Company, filed in the Western District of Louisiana, on January 30, 1934. Jurisdiction was claimed, first, on the theory that the debentures enjoyed a lien upon the property and revenues of the Bridge Company; and second, because the company appeared simultaneously, admitted its insolvency, inability to pay debts, and expressed its willingness that receivers be appointed on those grounds. It appeared that the Bridge Company had neither its domicile nor its place of business in the Western District of Louisiana, although about two-thirds of the bridge structure and land on which it rests were situated in said district. In those circumstances, the judge (the author of this opinion) first entertained doubt as to whether jurisdiction in said district, either of the corporation or in equity, existed, but after extended examination of the law concluded that, while the debentures carried no lien, as such, the answer of the Bridge Company created a situation equivalent to a common law lien on a return nulla bona under an ordinary judgment, which would sustain the exercise of its equity powers in appointing receivers. Accordingly, the then President of the Company, who up to that time had been unknown to the court, with Thos. S. Sholars, who had served satisfactorily in other similar matters, were appointed receivers and at the same time the court appointed as attorneys for the receivers Sholars & Gunby, a law firm in the City of Monroe, who had appeared for the petitioning debenture holders. On the next day an identical petition was filed in the Southern District of Mississippi and the same persons were appointed as receivers there. Within a few days, motions to vacate the orders appointing receivers and attorneys were filed by a group of bondholders and others, in which charges of had faith, etc., were made against the then President of the Company and his associates in bringing about said appointments. About the same time, petitions for involuntary adjudication in bankruptcy were filed on behalf of other debenture holders at the domicile of the Bridge Company in Delaware, in the Southern District of Mississippi, and in the Western District of Louisiana. Shortly thereafter, there was also filed on behalf of the Bridge Company in the Southern District of Mississippi an application for voluntary adjudication, and the referee there adjudged the Bridge Company a voluntary bankrupt. The first hearing upon any of these matters was had at Monroe, in the Western District of Louisiana, early in April, 1934. In the meantime, the co-receiver, Thos. S. Sholars, had died, and the court becoming convinced, after partial hearing and taking of testimony, that there was little difference between the parties as to the necessity for receivers, but that the principal contention was as to their personnel, and in view of the condition of a wooden trestle of some 1,100 feet forming the western approach of the bridge, which required immediate attention, the matter should be promptly acted upon, the Judge brought about an adjustment which resulted in the appointment of Kenyon D. Wells of Vicksburg as co-receiver, in place of Sholars, deceased, and steps were promptly taken for replacing the western approach with concrete and steel. This work required several months. After the amendment to the Bankruptcy Act, commonly known as Section 77B, 11 U.S.C.A. § 207, in the late spring or early summer of 1934, application was made in the name of the Bridge Company for reorganization under its provisions. In the meantime, the annual stockholders’ election had been held and control of the corporation had passed out of the hands of the former President, Harry E. Bovay and his associates, into those of John J. Shinners and associates (the latter holding about two-thirds of the common stock as against one-third by the former). There was also submitted with the petition for relief under Section 77B, a plan of reorganization, which, in substance, provided for the creation of a new corporation, the stock of which was to be divided, 75% to the bondholders and 25% to debenture holders. The bondholders were also to receive new first mortgage bonds for the full amount of their claims. It also contemplated the elimination of all stock of the old company because of insolvency. While this was going on, two committees for bondholders had been formed, one headed by the said John J. Shinners, styled "The Protective Committee for Vicksburg Bridge & Terminal Company First Mortgage 6% Sinking Fund Gold Bonds” (hereinafter called the Chicago, or Shinners Committee) and the other under the name of "Independent Bondholders’ Committee of the Vicksburg Bridge & Terminal Company” formed by Milton W. Harrison and associates (hereinafter called the New York-Vicksburg, or Harrison Committee). There had been previously formed in the latter part of 1932 a committee styled “The Financial Adjustment Committee for 7% Gold Debentures of the Vicksburg Bridge & Terminal Company”, headed by Mord M. Bogie (hereinafter called the Bogie Committee). This committee had been created at the instance of the officers of the Bridge Company (particularly Shinners and Bovay, who were managing the business) for the purpose of getting in hand and controlling the debentures upon which interest payments had or were about to be defaulted, and to prevent receivership from that source. Bogie was an employee of H. M. Byllesby & Company, of which Shinners was Vice-President, and another member, Harold W. Beacom, of the law firm of Winston, Strawn & Shaw, had acted as attorney for the Bridge Company from its formation. This committee had succeeded in collecting $1,400,000 of the original issue of $2,000,000 of debentures, and had joined the Bridge Company, or at least indicated its approval, in proposing the plan for the distribution of securities in the manner above stated; that is, the giving to debentures 25% of the common stock of the company. On the other hand, the Harrison Committee, which had registered with the Trade Commission under the Securities Act, appeared and opposed the application of the Bridge Company (which was sponsored by the same group .which represented the Chicago Bondholders’ Committee throughout) and itself submitted a plan which eliminated from participation, not only the common stock of the old company, but likewise all debentures. At the first hearing in Monroe in April, 1934, David M. Proctor, an attorney, and C. L. Fontaine, both of Kansas City, Missouri, , appeared on behalf of a group of debenture holders, who at that time held less than $100,000 of this class of securities. Later, what has been referred to as the Kansas City Debenture Holders’ Committee, with Fontaine as chairman, was formed. As previously stated, the Bogie Committee chairman and its attorney continued to appear until it subsequently dissolved under circumstances which will later be discussed. Practically all of the attorneys now seeking compensation, with a large number of individuals who were or have become members of committees, or have associated themselves with various groups seeking allowances of compensation and expenses, were likewise present from the beginning, except the law firms of Monroe & Lemann, for bondholders, Calvin Wells, III, and Dufour, St. Paul, Levy & Miceli, who later appeared and sought to represent another group of debenture holders. Hence, from the inception, there were an extraordinarily large number of persons seeking to participate in the proceedings from many different angles, and practically all of them would appear on each occasion when there was anything of consequence to be considered by the- court. None of the individuals who appeared as plaintiffs, in filing the original application for receivers and the involuntary petitions in bankruptcy, so far as the court is advised, ever became serious contenders in any of the controversies that subsequently arose; and I think the record fairly reflects the idea that they were used merely as pawns by the real parties to the litigation at its commencement. These adverse groups in the early stages were headed on the one side by John J. Shinners, and on the other by Harry E. Bovay, and while the involuntary proceedings were prepared by and filed at the instance of Harold W. Beacom, counsel for and a member of the Bogie Committee, this was simply a part of the strategy at the beginning to meet the action of Bovay in petitioning for the appointment of receivers, and the latter in turn caused the application for voluntary adjudication to be filed to checkmate what Beacom on behalf of the Chicago group had done. It became apparent to the court at the first hearing in April, 1934, that the principal controversy with which it would ultimately be confronted was one between bondholders and debenture holders. It also soon appeared that the Bridge Company was insolvent, and further, that the stock was what is usually termed bonus stock, nothing other than the original $1,000 subscribed to qualify under the Delaware law, having been paid in, and the bridge was built entirely from the proceeds of the bonds and debentures. The only possible consideration for the stock otherwise was such value as might have been due to the permit, or as it is sometimes called the franchise by Congress, to construct the bridge across the Mississippi river. The record of that hearing will show that at the time, the court called attention to this conflict of interests between the group of bondholders, headed by Shinners, Vice-President of Byllesby & Company, and the Debenture Holders’ Committee, of which Bogie, an employee of Byllesby & Company, was chairman. It also, in no uncertain terms, in the course of this first hearing, informed these groups that they would have to be divorced and proper representation provided for the debentureholders, who held no lien on the Bridge Company’s property. However, notwithstanding this clear statement by the court, Bogie and his associates persisted in their attempt to represent this large majority of the total debentures, which was more than sufficient to approve or reject any plan of reorganization, until sometime in June, 1935. In the meantime, the court had appointed a master and instructed him to make a thorough investigation of the history of the Bridge Company and the activity of its officers, with directions to go to Chicago, where the books, records, etc., were kept, and the parties composing these two interests (bond and debenture representatives) resided, to develop fully their relationships to each other. It had indicated that, unless there was a voluntary separation which would afford proper representation for this large group of debentures, it would, if the facts developed by the master justified, remove the members of the Bogie Committee. Before the hearing in Chicago was held, Mr. Beacom and Mr. Bogie came to Shreveport, where the judge was sitting, and tendered their resignations. It then became necessary that these debentures which had been collected by the Bogie Committee in a Chicago bank should be furnished effective representation. There was nothing in the deposit agreement which they had used that authorized the substitution or change of personnel of the Bogie Committee, — in fact, it did not give them the power to approve a plan of reorganization. A rather awkv ward situation was thus created. To have the depositary bank return the securities to the owners and leave them to their own resources in organizing a representative committee seemed to the court unfair and at least uncertain, in so far as prompt action was concerned. Therefore, of its own motion, the court determined to appoint an independent and experienced agent, having no previous connection with the matter, and named Charles de.B. Claiborne, Vice-President of the Whitney National Bank in New Orleans, as a special trustee, or agent to represent this group of debenture holders. There was also prepared a form of power of attorney, in general terms authorizing him to represent them in all proceedings, including the voting upon plans of reorganization, and providing that his compensation should be whatever the court found reasonable. Byllesby & Company held in its possession the only list of. these security holders and their addresses, and were required to furnish that information to Claiborne. However, after more than a year’s efforts, he succeeded in obtaining powers of attorney from less than $400,000 of the $1,400,000 thus situated. This condition continued, notwithstanding the court finally had sent to this group of security holders, over the signature of the clerk of court, a statement confirming Claiborne’s official status, and the authority under which he was acting. Unfortunately, Mr. Claiborne died with that condition remaining. The court, naturally, experienced difficulty in understanding this inertia on the part of debenture holders, and suspected possible interference. But it must be remembered that when the property was taken in hand about the first of February, 1934, the bonds were quoted on the market at from $18 to $20 on the $100 and the debentures from $1 to $3, so that these circumstances may have had something to do with the matter. There is also the fact that Byllesby & Company had floated both classes of securities and there was, at least at that time, a tendency on the part of investors to look to the banking concerns, from whom they had bought, for advice in a situation of this kind, and in justice to Byllesby & Company it is well to note that the court had, by special order, prohibited all committees and others from seeking to represent either class or communicating with them until it had approved the deposit agreements which had been submitted early in 1935. While Claiborne was attempting to act for debenture holders, conferences were held between him and the representatives of the Shinners’ Committee, principally Mr. Shinners and his counsel, Mr. Oates and Mr. Hudson at that time, but nothing was accomplished. Concurrently, Messrs. Fontaine and Proctor had been appearing for their group of debenture holders on each occasion when matters of importance were to be considered by the court. This was also true of members of the Harrison Committee or New York-Vicksburg Committee and their counsel both from Mississippi and New York, as well as the attorneys from Chicago and Mississippi, appearing for the original bond trustees. Attorneys for stockholders, the debtor and one individual claimant for legal services, likewise appeared. The result was a small convention each time there was a hearing. The master, who had been appointed in the spring of 1935, went to Chicago in the late summer or early fall, and spent some three weeks taking testimony covering all phases of the matter, and at which hearing most of the same groups appeared. The master died shortly after his return, before having an opportunity to prepare a report, and the court was compelled, with the aid of one of the attorneys for the trustees in reorganization who had prepared an extensive summary with page reference, to study this evidence to acquaint itself with the material facts developed in Chicago. However, its examination was of considerable assistance in dealing with the problems of the estate which subsequently arose. Early in February, 1936, the Judge became ill and was unable for several months to give any attention to business, but after recovering sufficiently to do so, summoned the attorneys representing the various groups to his chambers in Monroe, with the express suggestion that the numerous other persons, such as members of committees and individuals who had uniformly attended', need not be present. At this conference, which was attended by the attorneys for the two bondholders’ committees (Shinners and Harrison), the Kansas City Debenture Committee, attorneys for the trustees, etc., the court requested that serious effort be made to reach a basis of adjustment between the two classes of security holders, bonds and debentures, and indicated that this might be accomplished through a cash settlement, which would entirely eliminate the latter and permit a reorganization, in which the bondholders would receive substantial amounts of money, new bonds and all the stock of a new corporation. Negotiations were carried on for some two days, at the end of which time the court was informed that substantial progress had been made, but that it had become necessary for counsel to consult further with their clients, after which report would be made back to the court. The attorneys returned to their homes, and several weeks passed without further information. Upon inquiry, the court was advised that a stalemate had been reached, the causes for which and attitudes of the parties in respect thereto it is unnecessary to detail here. As soon as a convenient time could be found, in view of the heavy demands in the judge’s own district, he sent out notice to all persons and their attorneys of record up to that time, that on January 20, 1937, a hearing would be held in Vicksburg, at which, if the parties were unable to agree upon the basis of a plan to be submitted, the court would itself attempt to suggest a formula. In the meantime, the court had purposely refused to release the committees and others from the effects of an order which had prohibited everyone from soliciting deposits of securities until something tangible had been worked out. There were several reasons for this, but it is only necessary to mention the more important ones. The members of the Shinners or Chicago Committee had under their control a substantial block of bonds, and also the very great advantage of its relationship with Byllesby & Company, who had sold both classes of securities originally, which, it was believed, would enable them to get control and more or less dictate terms. The judge felt that this group had not evidenced an intention to award what he believed was fair treatment to debentures. Besides, the Kansas City or Fontaine Committee represented only a small amount of this latter class, and as previously stated, very unsatisfactory results had been had in attempting to provide representation for the great majority which still reposed in the hands of the depositary bank, selected by the Bogie Committee. At the hearing in January, 1937, the court again urged the representatives of bond and debenture holders to get together upon a plan, and there was finally proposed a plan which contemplated the payment to debenture holders of $20 on the $100, in full discharge of their claims, and the turning over to bondholders, after payment of costs of administration, all remaining cash and securities of the new corporation. The court consented to permit all groups to submit this proposal to their respective interests, but clearly indicated that it was not bound by the terms, should it ultimate-ly be convinced that the plan should be modified in either direction. In other-words, it was felt that such a proposal furnished at least the basis for consideration by the security holders, and all committees were simultaneously released to solicit acceptances. The bondholders’ committees, principally through the activities of the Shinners’ Committee, soon obtained approval of the necessary two-thirds, but after several months the Kansas City Debenture Committee had gotten slightly less than half of the $2,000,000 of debentures to approve. Trading had been going on in debentures, principally in St. Louis, at figures ranging higher than $25 on the $100. This had been done largely through J. W. Brady, Harold Hanser and Frank A. Dunnegan, or the brokerage firms with whom they were connected. These gentlemen became very active in opposing the acceptance .of the proposal of January 21, 1937, by debenture holders, and later, with Harry G. Thompson, liquidator of the Canal Bank & Trust Company of New Orleans, which held some of the debentures, applied to the court for permission to form another debenture committee, with the avowed purpose of soliciting deposits in opposition to said plan. The court declined to grant this authority ex parte but referred it to the master and directed him to hold a hearing thereon concurrently with the one on the question- of solvency. It was at this juncture that Calvin Wells, III, of Jackson, Mississippi, and the firm of Dufour, St. Paul, Levy & Miceli of New Orleans came into the case, mainly for Thompson, liquidator, and the Reconstruction Finance Corporation, and Charles F, Engle, who had appeared in other capacities from the' inception, appeared as attorneys for the Brady, Hanser and Dunnegan group of St. Louis. The court had appointed experts or engineers who examined and appraised the bridge property. This was necessary to determine the solvency of the debtor. Their reports were filed, the referee for the Vicksburg Division of the Southern District of Mississippi was named as master and full hearing was had upon that issue, at which the experts attended, testified and were cross-examined at length by attorneys representing all classes, consuming about two weeks. However, the principal labors of the trial of the issue of solvency and of whether a new debenture' committee should be formed were borne by the attorneys for the Shinners’ Committee (which had been augmented by the appearance of Mr. Monroe of Monroe & Lemann of New Orleans, in the spring of 1936), by Messrs. Proctor of Kansas City and Munholland of Monroe for the Kansas City or Fontaine Committee on the one side; and by Brunini & Hirsch of Vicksburg, Mississippi, on behalf of the stockholders, and by Engle, Wells and Levy, upon behalf of the proposed new debenture committee. The engineers had indicated a valuation of from $5,500,000 to “upwards of $6,000,000” for the bridge property. The master was not in good health, and after finishing these hearings went to a health resort for recuperation. The court, not knowing this, and because of a critical condition which had been created by proceedings on behalf of the R1 F. C. and Canal Bank & Trust Company in Liquidation, represented by Engle, Levy and Wells, in the absence of the Judge from the Fifth Circuit, directed that the reports and recommendations of the master be filed in time for a hearing before the Judge on June 15, 1937. The master returned and did his best to comply with this request, but was unable to do so effectively, and, at the hearing, the court amended its order so as to constitute the master a mere commissioner for taking testimony, and itself took over, both the issues of solvency and of the right to form a committee, for decision. Arguments were heard, extensive briefs filed on behalf of all sides and after study of the voluminous record made up at these hearings, a value, for purposes of insolvency, was placed upon the property of the Bridge Company of $6,500,000, and authority to form another debenture committee by the St. Louis and New Orleans applicants was denied. Following the hearing of January 21, 1937, approval of deposit agreements and the entry of the order permitting committees to submit the proposal to pay debenture holders cash in full satisfaction of their claims, a “broad-side” attack was made upon the lien of the bond mortgage by the R. F. C., liquidator of the Canal Bank, and some of the debenture holders in the dissenting group which Brady et al. were seeking to represent. This attack was waged by the firms of Engle & Laub, Wells, and Dufour, St. Paul, Levy & Miceli, and as vigorously defended by the attorneys for the Shinners’ Committee and for the bond trustees, with those of the Harrison Committee present, giving “moral support”. Much time and study was required, but on October 18, 1937, the court sustained the prior rights of the first mortgage bonds in an extended opinion handed down on that date, D. C., 22 F.Supp. 490. Orders of appeal were taken, first on behalf of the intervenors, who had made the attack, but because of the fact the court had set a substantial bond for supersedeas, all of the parties abandoned the appeal except the R. F. G, which it was thought did not have to give bond under the law. Extensions of the period for filing the transcript were made from time to time until the plan of reorganization was finally accepted by the requisite percentages of security holders and approved by the court, when the appeal was dismissed by the appellants. Thus, a condition of stalemate had again arisen, after the plan of January 21 was submitted, due undoubtedly to the activities of Brady et al., and their attorneys, who, notwithstanding the court had not passed upon their application to form a committee and had specifically prohibited anyone from so acting until specially authorized, had prepared proofs of claims, etc., for those debenture holders whom they had controlled and had sent them in to the master, voting against the proposal of January 21, 1937. When this was discovered, an order was entered directing the master to return these claims and securities, and the owners were advised that Brady et al. had not been authorized to pursue this course, and the proofs would not be accepted in the forms which had thus been prepared by one of the attorneys representing that group. It, therefore, became necessary for the court to again convoke a hearing at Vicksburg, which it did on November 29, 1937. Counsel for the Chicago Bondholders’ Committee had presented and the court had signed an order, giving notice that it would determine at a hearing on November 29th whether any additional time would be allowed and how much longer the proposal of January 21st would be kept open, or whether it would consider dismissing the proceedings as impossible of completion under section 77B, or take such action as might be deemed proper under the circumstances. As previously stated, the parties had been permitted to submit to the creditors the proposal of January 21, 1937, for their consideration, but with the clear understanding that the court was not bound thereby and would be governed by what it should determine to be just between the two classes, when confronted with an application to formally approve a plan. At the meeting on November 29th, the controversy was mainly between this group from St. Louis and the liquidator of the Canal Bank, with their attorneys heretofore named, on one side, and the Bondholders, actively represented by the Shinners’ Committee and its counsel, which as stated, had grown to include the firm of Monroe & Lemann, on the other. Besides, the attorneys and some of the members of the Harrison Committee were present, advising and assisting bondholders in defense of the contentions of this new group of debenture holders, as were also the Chicago and Jackson attorneys of the bond trustees. The court again advised and urged the parties to attempt an amicable adjustment of their differences, in order that some concrete plan might be submitted with reasonable expectation of acceptance, but without success. At this juncture, the court thought it necessary to exercise the extreme limit of such powers as it possessed under the law, and frankly informed those attending the hearing that, in as much as their efforts of the past had failed, and the matter had been so long delayed, it thought that a fair basis of settlement between bonds and debentures would be the payment to the latter of 20% cash, and the giving to them also %ths of the stock in the new company; while the bondholders should receive the remaining cash, after payment of costs of these proceedings, a first mortgage upon the bridge property for the balance of principal and interest, without compounding, and the remaining %ths of the common stock; that if the then representatives of the two classes before the court were not willing to submit and recommend the acceptance by the creditors of this proposal, it (the court) would seriously consider entering an order suspending the authority of all of them to further solicit or advise the actual owners of the securities, and would have the reorganization trustees, under the immediate supervision of the court, submit the suggested plan to the security holders direct, for the reason that, in its judgment, if no adverse influence was allowed, it was believed the proposal would be accepted by the requisite percentages of both classes necessary to carry it through. All of those representing debentures promptly agreed to recommend the idea, but those for the bondholders asked for time to discuss it with the members of their committees, etc., and within a few weeks, the court was advised that the plan would be recommended by the bondholders’ committees. In view, however, of the previous failure of debenture representatives to get approval of the necessary %rds, the bondholders’ committees requested, and debenture representatives were required to do this before bondholders were asked to approve. The plan was shortly approved by more than the necessary percentages of both classes. In pursuing this course, the court -felt, in view of the experience with revenues over the period of its administration, there was a possibility that the property might eventually work out more than enough to pay the principal and interest on the bonds, and if so, then since debentures were giving up 80% of their claims, they should be allowed to participate in this eventual equity, if it materialized, in the proportion which they had contributed the money for building the bridge. Although authority to form another committee for debentures had been denied, with the indication of the approval of the court’s suggestion by this group, they were formally authorized to submit it to theii clients, and attorneys representing them joined in the final work of bringing it to conclusion. They had taken the position, in seeking to provide further representation for this class, that the Fontaine Committee had committed itself to the proposal of January 21, 1937, which contemplated the payment to these claimants of only 20% cash in full settlement, and were not free to urge better treatment which the applicants thought debentures should receive. This was in a measure true, but as previously stated, the court had advised it would only approve such terms as it thought fair after full consideration, regardless of whether the proposal was accepted by the necessary percentages or not. Its decision, in the course finally pursued, was influenced more by .the facts developed on the solvency hearing, values and estimates, together with its knowledge of earnings, etc., during the time of its administration, than anything else. After the matter had reached the stage of submitting the plan suggested by the court, it was handled, from the bondholders’ standpoint, largely by the Shinners’ Committee and its counsel, and for the debentures by the Fontaine Committee and its counsel. However, all of the St. Louis group, the liquidator of the Canal Bank, and their counsel, and those of the Vicksburg-New York Committee, joined in the efforts to have it approved. It was agreed between the Shinners’ Committee and the Harrison Committee that the putting into execution of the plan, depositing of old and distribution of new securities, to bondholders, except as to those deposited by the latter committee in Banks at Vicksburg and New York, should be conducted by the former. It was also thought advisable to have a single depositary and committee to discharge the same functions for debentures, and accordingly the Fontaine Committee and the First National Bank of Kansas City did the work for that class. This, of course, has entailed much labor and care on the part of these groups, particularly of counsel in putting the approved plan into execution. At the time receivers were appointed, revenues of the bridge from all sources had dwindled to less than $24,000 a month, and the court felt that k reasonable test period should be afforded from which a fair estimate of future earnings could be made. It had been completed and opened to traffic in April, 1930, after the depression had set in, and which made figures for the first 3% years an unsafe guide. 'The court stated, several times in the course of its handling of the matter, that for this reason it would not act hurriedly. This policy was thought to be justified also by a road-paving program in Mississippi, and improving business conditions. Revenues increased substantially and to the point where, in the best months of the fall of 1937, they had reached approximately $50,000. After expending some $350,000 upon the bridge structure, payment of current taxes, insurance and the allowance of compensation and expenses to the trustees and their attorneys, hearings, etc.,' there was on hand, when the plan was finally approved, in excess of $1,100,000 in cash, for distribution to the security holders and the payment of costs of these proceedings. The above recital at length of the history and principal points .or “high spots”, so to speak, of this case, has been made to. show the extent of the activities, labors and positions of the several groups in the handling of the estate. It was not a complicated matter, in the sense that an industrial plant, requiring large working capital, and employing many persons, would have been, and should have been worked out more expeditiously than was done, but for the wide differences of opinion among those appearing for creditors and others. However, the conflicting contentions of those who had promoted, sold its securities and managed its affairs from the inception and preceding its coming into court; the voluntary association of large numbers in each group, both of counsel and individuals, attempting to participate, with consequent conflict of ideas; prolonged hearings, at which much unnecessary time was taken with immaterial matters; and the unfortunate deaths of some of those to whom the court had endeavored to delegate some of the responsibilities of handling the matter, created a condition which was both expensive and disappointing. It, therefore, becomes the duty of the court to sift and analyze the huge claims for expenses and allowances which have been made by some forty firms, committees, individuals and institutions, amounting to nearly $600,000, to see which and to what extent they have contributed to or benefited this estate in the handling of its affairs and solving the troubles which had to be overcome before an acceptable reorganization could be accomplished. I may add that, in addition to this large total of claims, there remains the matter of final allowance to the reorganization trustees and their counsel. Before taking up the several claims in detail, it is well to say that from the beginning the Chicago or Shinners’ Committee asserted that its members would ask no compensation for their services but only expenses for itself and counsel and compensation for the latter. Thereafter, the Vicksburg-New York, or Harrison Bondholders’ Committee, executed and distributed literature, assuring those who would deposit with it that it, too, would not seek compensation for its services, but only expenses and fees for its counsel. Ordinarily, the court would have referred the claims for expenses and compensation to a master, but Mr. H. C. Mc-Cabe, referee in bankruptcy for the Vicksburg Division of the Southern District of Mississippi, to whom the issue of solvency and application of the St. Louis and New Orleans groups to form a second debenture committee, as well as other incidental matters, had been referred, continued in bad health and has since died. It was believed, in view of past experience, that such a reference would probably have entailed days, if not weeks, of hearing, with consequent accumulations of additional heavy expenses to the estate and to claimants, with the necessity for reports, exceptions and •arguments before the court thereafter. Instead, it was decided to appoint an experienced accountant, with directions to •audit all claims for expenses and to exact of everyone vouchers and receipts where available, affidavits and explanations in detail, so that he, the accountant,' could compute, after investigation, as to railroad and Pullman fares, hotel rates, etc., reasonable charges for these items and recommend such reductions, if any, as might be justified, in the amounts so claimed. At the same time, it was definitely understood that the audit was intended to establish, as near as possible, the actual expenditures for expenses claimed and their. reasonableness as such, but was not to be binding upon the court, either as to amounts, the necessity for their incurrence, or their benefit to the estate, and that all these questions would be passed upon by the court, who would determine what should be allowed, both as expenses and for compensation. The court in thus acting, in effect, has become its own master, and will take up the claims in the order stated at the beginning •of this opinion, make tentative findings of fact, announce conclusions of law and distribute copies of this opinion to the several parties at interest. They will then be allowed to file exceptions or objections thereto and to furnish additional affidavits, either in support of their respective claims •or in opposition to those of each other, within a time to be announced at the conclusion hereof, and thereafter a day certain will be set for a hearing at Vicksburg, when everyone will be heard as to any issue of fact or law that may be desired. CLAIMS FOR EXPENSES. Claim of the Chicago or Shinners’ Committee. (Auditor’s Report, “Section A — 1”). The Chicago Bondholders’ Committee lias included the expenses of its members, •officers (other than 'those of R. Miles Warner, Secretary) and employees with those of its attorneys. The total thus claimed is the sum of $48,566.09, and the accountant has recommended the allowance of $43,276.17, as disclosed by his report, “Sec. A — 1”. This committee was composed of seven members, who reported traveling expenses for themselves of $3,-989.56, the major item of which was one of $2,029.53, claimed by the chairman, John J. Shinners, as to which a reduction to $1,778.94 has been recommended; small reductions as to three other members have been made, aggregating $154, or a total of $404.59. The accountant states that these deductions were made because the amounts claimed exceeded first class travel by rail, including Pullman fare, and a reasonable allowance for living expenses, which in the Cities of Vicksburg and Monroe was considered to be $7.50 per day, and in Cities like New Orleans and Chicago, $10 per day. Of course, one accustomed to travel in more expensive style, including the use of airplanes, may do so, but when a court is called upon to determine the reasonableness of such charges in matters of this kind, it must be governed by what is deemed fair for the average man, in view of the fact that other people’s money is involved, and that the major purpose of these proceedings is to realize for the creditors as much as possible from the estate, without unnecessary or unfair expenditures by those who have volunteered to assist in accomplishing that result. If the purpose in flying was to conserve the claimant’s time, then it must have been for the benefit of some other interest, and the additional expense incident thereto should be borne by that interest. It contributed nothing to this estate. Applying these rules, it would seem that the accountant has adopted a just criterion as the basis for computing these expenses. Mr. Shinners’ expenses were incurred in traveling to and from Vicksburg and other places in connection with the Bridge Company’s affairs, both before and after it was placed under Section 77B, while those of the other members of his committee were mainly for attending meetings in Chicago. Mr. Shinners, as the controlling influence, had seen fit, with the acquiescence of others connected with the Company, before it got into financial trouble, to keep its books and records in Chicago, and the members of his committee were selected from widely separated communities, and in numbers which were quite ample, to say the least. The vast majority of the security holders, other than those of his committee who either held bonds or represented some of the holders, had nothing to say at the beginning as to these matters, and I repeat again that the claimants must remember that they were volunteers, without power to bind others in joining at that time in the movement, and the latter can be held only for such expenditures as the court may find reasonable, since they thereafter came into the matter with the right to expect that the court would limit expenses within those bounds. The items of the committee’s expense, as it applies to the members thereof, Messrs. Shinners, Scattergood, Allworth, Congdon, Baxter, Howard and Warner, will be passed for allowance in the aggregate sum recommended by the accountant, to-wit $3,584.97, instead of the amount claimed. Claim for the Expenses of the Attorneys for This Committee. What has been said above with respect to the committee members, of course, applies with equal force to the attorneys employed to handle the legal end of their fiduciary responsibilities. The law contemplates but one fee for attorneys to such a group, and if large numbers are employed, widely separated, and expenses are multiplied thereby, the court must answer the pertinent question of whether, in the first place, more than one firm was necessary; and secondly, whether the expenses incurred by the number functioning were likewise necessary. In doing so, it must assume the attitude of a prudent administrator, and ask what he would have done under the circumstances. Naturally, having organized his committee for operation in Chicago, Mr. Shinners sought counsel there, and in coming into either the Western District of Louisiana or the Southern District of Mississippi, he was justified in associating local attorneys in the case; but this simply meant that such reasonable fee as might be found sufficient for the services should be divided between the counsel, either according to their own arrangements, or if unable to agree, by the court. The total “out of pocket” expenses claimed by the attorneys is the sum of $13,-876.62, which the accountant, on the same basis used as to the members of the committee, ha.s recommended be reduced by the sum of $837.53 to $13,039.09. Of the amount thus claimed, the firm of Sidley, McPherson, Austin & Burgess asks $5,-952.16, Hudson, Potts, Bernstein & Snellings $5,655.13 and Monroe & Lemann (who came into the case in the spring of 1936) $1,539.89. These firms were represented in practically all instances by Messrs. Oates, Hudson and Monroe, respectively. The wide separation of their residences, — Chicago, Monroe and New Orleans, — brought about the use quite extensively of the long-distance telephone, telegraph and traveling for conferences, during the first two years between Mr. Oates and Mr. Hudson, and the last two between all three. Mr. Hudson, of course, in so far as the location of the company’s property and the place where formal hearings were had in Vicksburg and Monroe, was much nearer than the other two, and his expenses for traveling should have been proportionately less. However, there appear in the itemized list of these expenditures several amounts which cover hotel expenses of the three, paid by Mr. Hudson, which to some extent accounts for an increase in his claim, and correspondingly less in those of the other two. Mr. Hudson has also included expenses of his secretary in most •instances of his trips to other places, where, no doubt, he could have had the facilities of his associates or the services of a public stenographer at much less cost. In private business, one is entitled to use his own judgment in such matters, but in a trust estate where, as here, the creditors to whom the money belongs are compelled to forego a considerable portion of their investment, it is the duty of the court and all concerned to apply the rules of reasonable economy. It also appears that on the bill of Mr. Hudson, as well as the other attorneys and committee personnel, are included large sums for telephone and telegraph messages, aggregating $6,117.18. Being- familiar with the nature of this proceeding as it progressed, the court is of the view that most of these matters could have been handled by mail at a considerable saving to the estate, and in only rare instances was it necessary to use the telephone in such sizable figures. There are also included charges for services of private stenographers in making copies of documents for the" use of the claimants • and their various associates. The auditor has eliminated them in his recommenda'tions. He has also, for the benefit of the court, culled the expenses of Mr. Hudson’s secretary from the various items for traveling and the amount thus found is $432.85, which will be disallowed. I am also of the view that not more than one-third of the expenditures for telephone and telegraph was reasonably necessary. The amount for these items will, therefore, be reduced to $2,039.06. The accountant has, as to Mr. Oates, applied the same rule to travel and living expenses as he did to everyone, and the figure which he recommends for this firm of $5,393.71 will be passed accordingly, as well as $1,476.92 for Monroe & Lemann. A goodly portion of the expenses of the attorneys is attributable to the fact that there were three firms and they thought it necessary to do a considerable amount of traveling for conferences and to use long-distance telephone and telegraph to an extent which I believe could have been greatly minimized. Much of these expenses was incurred prior to the court’s approval of the deposit agreements of the three committees seeking to represent the security holders, two for bondholders and one for debentures. It was also at a time when the Chicago Committee actually represented less than one-fifth of the bonds outstanding, due, to some extent, to the fact that the court had not permitted it to solicit further deposits. This committee has also claimed the sum of $21,262.63 for printing and stationery, $14,207.95 of which preceded the approval of the plan finally adopted, and the balance of $7,054.68 is covered by a supplemental claim and was occasioned in the execution of the approved plan. The accountant has recommended a reduction of $2,731.05 as overtime in the claim for printing, thereby reducing it to $18,531.58. The sum of $566 of this overtime was paid to the Twentieth Century Press (which did most of the printing for this committee) on bills dated in August and December, 1934, and covered the printing of the original plan of reorganization, etc., which was tendered by the debtor, and which the court would never allow to be submitted. It was before the order was entered in January, 1935, prohibiting the soliciting of deposits by any persons or committees, and was done, no doubt, in an effort to gain control of as many bonds as possible in competition with the other committee. There does not appear to have been any emergency, certainly none beneficial to the estate, requiring the rushing of this work and the committee must have taken the responsibility therefor upon itself. The accountant’s recommendation for its disallowance will be adopted to that extent. The next item is under date of February 24, 1937, and was in the sum of $3,466.39, for printing 7,500 copies of the plan of reorganization (the submission of which was permitted by an order in January of that year), which contemplated the payment of 20% cash in full settlement to debentures. Of the amount so expended, $1,164.18 was for overtime, or approximately one-third. Here again, although the committee and its counsel were desirous of haying the proposal submitted as promptly as possible, I do not think the situation justified this rather reckless expenditure of the creditors’ money, and the recommended disallowance will be adopted. The remainder of the overtime was in connection with the submission of the plan, as amended, which the court indicated it would approve. These items were incurred in December, 1937, and February and April, 1938. The total claim was $5,140.61, of which $1,000.87 was for overtime. At this stage of the matter, it had reached the point where there was every reason to believe the plan would be accepted, since all committees and representatives of security holders had agreed and undertaken to recommend its approval, and, in my opinion, the estate was benefitted by the course pursued. The Chicago Committee agreed to and did arrange for the printing of enough copies of the plan, order, etc., for the use of all the others, and duplication of work was thereby avoided. Therefore, these items, aggregating $5,140.61, appearing on “Schedule B” attached to the report of the accountant on the claims for expenses of the Chicago Committee, under dates of December 27, 1937, $383.10, February 12, 1938, $2,982.88, April 1, 1938, $959, and April 1, 1938, $815.63 will be passed for approval. Included in the printing bill are two items for printing two separate briefs by Hauser Printing Company of New Orleans, one of 69 pages, costing $171.60, and the other of 273 pages, $1,095, of which 100 copies were printed in each instance. This was an unwarranted expense as there was no necessity for printing these briefs for the use of the district court. In most instances, counsel typed their briefs, which served every purpose. There certainly was no necessity for one hundred copies of each. I am inclined to believe that much of the large and unusual expenses of this committee would not have been incurred but for the fact that Byllesby & Company were advancing funds, for if the parties had been put to the necessity of taking the money out of their own pockets, or looking to the court before they were paid, I feel sure a great deal of it would have been avoided. This printing bill will be reduced to the sum of $200 and the difference of $1,066.60 will be disallowed. The items embraced in the supplemental petition for the sum of $7,054.68 were for the printing of the bonds and other securities, the trust indenture under the approved plan, etc., and will be allowed, as recommended by the accountant. This committee also claimed the sum of $2,-742.35, for postage over the entire period, which the auditor indicates is proper and the same will be passed for allowance. It has also claimed for its members (as distinguished from the attorneys) the sum of $967.68, for long-distance telephone calls, but this has been considered in the gross bill for telephone and telegraph above, and will be eliminated. Claim is also made for a total of $2,600.50, for extra copies, three in some instances and two in others, of testimony taken before the masters appointed in this case, mainly because each of the three firms of attorneys wished a copy. This was an unnecessary multiplication of expenses and the accountant’s recommendation that it be reduced to the price of one copy of each hearing, or the sum of $1,295.75, will be adopted. The court had itself required the reporters to file three or more copies with the record in each instance. This Committee has also claimed the sum of $1,000 paid to Coverdale & Colpitts, for services in connection with the valuation of the bridge on the issue of solvency. The court had already appointed engineers for the purpose of valuing the property, who had made examinations and reports at great expense to the estate, and this committee was not authorized to incur the additional expense of employing experts of its own. If it could do so, without first obtaining authority from the court, then the persons representing other claimants could have done likewise, with the consequent large increase of expenses to the estate. Of course any necessary witness could be summoned, if he' resided within the required distance, to the hearing, otherwise his testimony could be taken by commission, but none of them had the authority to employ experts at the expense of the estate, without first showing the necessity therefor and obtaining an order from the court. This item will, therefore, be disallowed. The sum of $473.58 was paid to the Corporate Trust Company of Connecticut, in connection with the organization, etc., of the new company, including an attorney’s fee of $50 to Henry Jamerson. This expenditure appears to have been proper and reasonable and the same will be passed for allowance. Flowers, Brown & Hester. The law firm of Flowers, Brown & Hester of Jackson, Mississippi, in the beginning of these proceedings, in February, 1934, were employed by the same group of bondholders who had first employed the firms of Mr. Oates and Mr. Hudson in resisting the receivership proceedings in Mississippi and in Louisiana. About the same time, Mr. W. H. Watkins, of Jackson, Mississippi, had been employed to represent the old corporation, and when the issue of receivership, bankruptcy, etc., were settled, and Mr. Watkins became one of the attorneys for the receivers, later for the trustees, the firm of Flowers, Brown & Hester became attorneys for the corporation. They have claimed expenses in the sum of $606.72, incurred in attending hearings in Vicksburg and Monroe, or otherwise in connection with this employment. The auditor has carefully checked the claim, applying the same rules as to all others, and the amount recommended will be passed, as will also the item of $78.43, incurred by Mr. Watkins before he became attorney for the receivers. Similar items of $28.14 of Winston, Strawn & Shaw, and $15.15 of Henry Jamerson, have been checked and, as recommended by the auditor, will be passed. To recapitulate: The items of expense of the Chicago Bondholders’ Committee, which are tentatively passed, are as follows : Committee Members: $ 3,584.97 Attorneys: Hudson, Potts, Bernstein & Snellings .............................. $5,006.17 Sidley, McPherson, Austin & Burgess ................................ 5,393.71 Monroe & Lemann.................. 1,476.92 Flowers, Brown & Hester.......... 606.72 Watkins & Eager.................. 78.43 Winston, Strawn & Shaw.......... 28.14 Henry Jamerson ................ 16.15 12,606.24 Printing and Stationery........... ^ 18,465.85 Postage ............................. 2,742.35 Legal Service Organization new Co................................ 473.58 Henry Jamerson, Fee.............. 50.00 Court Reporting ................... 1,295.75 Sundry ............................. 1,591.17 $40,809.91 Less excess tel. and tel. bills...... 4,078.12 (disallowed) Total Net .................. $36,731.79 R. Miles Warner, Secretary. (Auditor’s Report, Sec. A-2). In addition to the amount claimed by members of the Chicago committee and its attorneys, Mr. R. Miles Warner, a member of the committee (whose expenses as such in the sum of $131.57 have been passed for allowance above), acted as secretary and has filed an additional claim for expenses in the sum of $6,312.50, which the auditor has recommended for allowance. This is made up entirely of a charge at the fate of $125 a month, for fifty and one-half months, in handling the clerical work of the committee, including its correspondence, mailing of literature, etc., performed by the regular employees of Byllesby & Company. For two years .of this time (January, 1935 to January, 1937) by express order of the court, this committee and all others were prohibited from soliciting deposits or carrying on communications with the security holders and I do not believe there was such volume of work as to justify a full-time employee at this price. No doubt letters were written occasionally, to answer inquiries of restless security holders, but not enough to warrant the allowance of the amount claimed for the full time, and the claim will, therefore, be passed for the sum only of $3,312.50. These employees apparently lost nothing from their regular work. Lambert & Hart. (Auditor’s Report, Sec. A-3). Lambert & Hart, attorneys of Washington, D. C., have claimed expenses consisting of telephone, telegraph and taxi fares, in rendering services to the Chicago Committee, in Washington, amounting to $33.85, which the auditor has recommended for payment. This item appears to have been justified and will be passed. City National Bank of Chicago. (Auditor’s Report, Sec. A-4). The Chicago Bondholders’ Committee employed the City National Bank of Chicago as its depositary on February 24, 1937, following the court’s action approving deposit agreements and releasing all committees for the submission of the plan of January, 1937, which contemplated the payment to debentures of 20% cash in full settlement. This bank has made claim in the sum of $8,638.58, of whifch amount the auditor has recommended the allowance of only $3,946.85. He has calculated the amount due on the basis of fifty cents apiece for acceptin