Full opinion text
McCLINTIC, District Judge. This proceeding is before the Court upon application for various allowances to Committees, attorneys and others with respect of the Hamilton Gas Company. That corporation was chartered in 1927 under the laws of Delaware, and admitted to do business in the State of West Virginia, where it owned a large number of oil and gas properties. It also owned all the capital stock of certain subsidiaries. The total record embraces many thousands of pages of pleadings, exhibits and testimony, not taking into consideration the numerous petitions and briefs; statements as to certain phases of it will be found in an opinion by this Court reported in 10 F.Supp. at page 323. It is not necessary to make more than a general statement of the course of this litigation. In January, 1932, there was filed in Delaware an application in equity for a receivership of the Company; followed immediately by the filing on January 18, 1932, of the ancillary equity cause in this Court of Clarence L. Harper and Arthur Peck, partners trading as Harper & Turner, against the Hamilton Gas Company. The bill was a typical receivership proceeding, alleging that the defendant corporation had outstanding $2,325,500 of First Mortgage 6%% Sinking Fund Gold Notes, and $756,-000 of debenture bonds, and current obligations in excess of $300,000, and, while solvent, was unable to pay its debts. On January 18, 1932, the Delaware Court appointed Alex F. Crichton and William A. Larner, Receivers. On the following day, a decree was entered by this Court taking ancillary jurisdiction of the assets and property of the defendant within its jurisdiction, A. F. McCue, B. A. Wise, and William J. Maier, being appointed, Mr. Maier later resigned as Receiver, the other two named serving throughout the litigation. Ancillary proceedings were also commenced in Kentucky. All of the physical properties of the Company, except certain office furniture and tangible property of little value, are located in West Virginia and Kentucky, much the greater part being in the former state. Under date of July 29, 1932, Clarence L. Harper, Samuel McCreary, John H. Smaltz and Louis J. Groch filed a petition, setting out an agreement entered into as of February 1, 1932, whereby they agreed to act as a protective committee to represent owners of the First Mortgage bonds, the petition likewise praying for the issuance of certain Receiver’s certificates and the transfer of certain moneys to Kentucky.. On August 18, 1932, the Chase National Bank and John A. Burns, as Trustees, filed their petitions asking leave to file foreclosure bill under the First Mortgage, and, permission being given, on the same day their bill of foreclosure was filed. The pre-existing receivership was extended, and the receivej ship suit consolidated with the foreclosure suit. On September 13, 1932, a bill of complaint was also filed against the Larner Gas Company and others, the named corporation being a wholly owned subsidiary of the Hamilton Gas Company, seeking foreclosure of a mortgage in the amount of $300,000. This cause remained quiescent until after the reorganization of the Hamilton Gas Company, the notes secured by said mortgage having been acquired by the Hamilton receivers during the course of the litigation. Following the institution of these proceedings, the record discloses various parties in interest made unsuccessful efforts to agree upon a voluntary plan of financing the Hamilton Gas Company. Under date of November 13, 1933, William A. Larner and A. F. Crichton, as Delaware Receivers, filed a petition in this Court exhibiting a proceeding in Delaware, whereby, by decree entered in August, 1932, William A. Larner, as Delaware Receiver, had been allowed the sum of $8,474.91 expenses and $9,000 as allowance as Receiver; $526.59 being allowed as expenses to his attorneys. Subsequently, this Court entered an order allowing Mr. Larner $5,000 upon his petition, and such sum was paid. On December 16, 1933, the consolidated equity causes were referred to Beverley Broun, Special Master, and, after the incidence of the bankruptcy proceeding, hereinafter noted, the reference was extended to those proceedings. Proof was taken in February, 1934, showing the default of the First Mortgage and there were a large number of bonds and indebtedness prov.ed before the Special Master, and also certain proof with respect of contracts of the defendant corporation. On June 7, 1934, E. McLain Watters, Arthur Peck and Pierce Archer, Jr., as Debenture Holders Protective Committee, acting under an agreement of deposit with respect of such securities, dated January 28, 1932, and certain general creditors filed a petition for reorganization under Section 77B of the Bankruptcy Act, 11 U.S.C.A. § 207, the petition immediately following approval by the President of this statute. On the 8th day of June, 1932, similar proceedings had been instituted in New York, and thereafter the defendant company set up these proceedings as a bar to those in West Virginia. The issue presented was as to location of the principal place of business during the six months period prior to the filing of these petitions. On June 21, 1934, this Court entered its order approving the petition filed in this jurisdiction, similar order having been entered on June 9, 1934, by the United States District Court for the Southern District of New York, approving the petition filed in that Court. Subsequently, after appeal to the Circuit Court of Appeals, 4 Cir., 75 F.2d 176, and extended litigation, the venue of the proceedings was determined to be in this District. See prior opinion in this case reported in, D.C., 10 F.Supp. 323, 324. The jurisdictional litigation, however, occupied a considerable period of time, the Circuit Court of Appeals for the Second Circuit, In re Hamilton Gas. Co., 79 F.2d 97, reversing the District Court for the Southern District of New York, and the Circuit Court of Appeals for the Fourth Circuit finally sustaining the position of this Court, 79 F.2d 438. In both of these decisions, certiorari to the Supreme Court of the United States was sought and refused, Hamilton Gas. Co. v. Harper, 296 U.S. 647, 56 S.Ct. 307, 80 L.Ed. 460; Hamilton Gas Co. v. Watters, 296 U.S. 647, 56 S.Ct. 309, 80 L.Ed. 460. On June 21, 1934, decree was entered holding that petition for reorganization had been filed in good faith setting forth a plan of reorganization on behalf of the petitioning creditors in the bankrupt cause. It is unnecessary to go into the details of this plan, as it was subject to subsequent modifications. On August 16, 1934, Clarence L. Harper and his Committee associates and E. McLain Watters and his Committee associates filed petitions for the approval of the deposit agreements, under which they, respectively, acted as committee for the First Mortgage and the Debenture Holders, and on September 10, 1934, a decree was entered approving these petitions. On December 19, 1934, decree was entered, noting the appearance of counsel on behalf of Harry M. Blair, Robert Owston and Joseph Walsh, as a Stockholders Committee. On January 5, 1935, there was filed the petition of Stewart Jamieson, John K. Blair, and Ambrose C. Hindman, recited as a Committee for Protecting Debenture Holders and other unsecured creditors, counsel being recited as Tompkins, Boal & Tompkins, Samuel T. Spears and Thomas J. Barrett. In February, 1935, extensive evidence was taken here as to the jurisdictional question, and meanwhile the litigation in the New York jurisdiction was being vigorously prosecuted. Subsequently, appearances were made of petitions filed by Ronald M. Craigmyle and his Committee associates, as Committee for the First Mortgage Bondholders (that Committee acting, until the final agreement, in opposition to the so-called Harper Committee), and W. A. Nash, Elmer E. Powell, and S. P. Woodward, members of the so-called Independent Bondholders Committee. Under date of October 31, 1935, the so-called Harper Committee and the Watters Committee, respectively, filed acceptances of the plan of June 21, 1934. The acceptance of the plan by the latter Committee lists total claims of general creditors represented of $2,194.50, and of depositing debentures from whom no dissent has been received of $518,500. It further reflects $6,-000 of nondepositing debenture-holders from whom acceptances and approvals had been received, and depositing debenture-holders who failed to dissent within fifteen days, but who later forwarded dissents, of $65,000. Acceptances filed by the Harper Committee reflected deposited bonds as to which no dissents had been received of $1,-292,000, and deposited bonds as to which dissents had been received of $251,000, and deposited bonds as to which, dissents were later received in the amount of $180,000. On November 23, 1935, there was filed the petition of the so-called Craigmyle Committee, reciting that the plan then before the Court was unsatisfactory and suggesting an alternative plan. On December 3, 1935, an order was entered by Judge William E. Baker, sitting specially, lodging the petition of the Craigmyle Committee for further consideration, but that Committee was enjoined, pending hearing, from soliciting acceptances of its plan. During this period there was extensive circularization by the respective committees for and against the pending plan. On December 12, 1935, the mandate of the Circuit Court of Appeals of the Fourth Circuit finally upheld the jurisdiction of the West Virginia court, and, thereafter, on March 19, 1936, a petition was filed by Austin Agnéw, and others, as a Committee for Common Stockholders, setting up that such Committee had been authorized to represent slightly more than 48% of the common stock outstanding. Certain other individual petitions were filed at this time. On June 19, 1936, this Court filed a memorandum opinion upon exceptions to the report of the Master, confirming that report, and holding that the Hamilton Gas Company was clearly insolvent. This Court also noted the difficulties between the various owners of the bonds, and -refused to adopt the so-called Harper plan, allowing ninety days for amendment. Cer-. tain appeals were- taken and dismissed. On September 4, 1936, various individual interveners and the so-called Craigmyle Committee filed a petition for leave to intervene and for approval of the deposit agreement dated July 1, 1936. On December 17, 1936, a motion was made by the petitioning creditors and the so-called Harper Committee that its plan be confirmed, such being resisted by various interveners. The Court denied this motion, indicating that it could not approve or confirm the amended plan, and decree was entered permitting the prosecution of the foreclosure proceeding. This amended plan had been filed on September 4, 1936, jointly by the Harper and Watters Committees, and provided for the issuance of certain bonds and stock on reorganization, the stock to be in a voting trust of which the two committees (Harper and Watters) were to name the voting trustees. On April 5, 1937, decree' was entered, reciting an amended plan of reorganization sponsored by the petitioning creditors and the Harper Committee; whereupon the Agnew Stockholders Committee objected, attempting to reopen the question of solvéncy. It appears that more than two-thirds of the creditors had accepted this plan, and, in fact, it had been worked out chiefly through negotiations between the Harper and Craigmyle Committees, the plan making no provision, however, for the stockholders. It was objected to upon their behalf, and appeal was taken. The opinion thereon (Jamieson et al. v. Watters [Blair et al. v. Watters] 4 Cir., 91 F.2d 61) reversed the holding of this Court and directed further proof on the question of insolvency. On July 20, 1937, after the mandate of the Circuit Court of Appeals, the cause was submitted to a Master to determine the question of solvency. The latter reported on September 7, 1937, that the Company was insolvent. Thereafter, on September 22, 1937, this report was confirmed with certain immaterial modifications, the decree finding that the fair market value of the properties was $1,600,000, exclusive of cash in the hands of the Receivers, then amounting to $461,709.80, exclusive of a certain claim against the Inland Gas Corporation. The Court then approved certain amendments to the plan of reorganization proposed on September 21, 1937, and ordered that the final amended plan be submitted to the security holders. The Court, by subsequent decrees, has transferred all of the properties of the Hamilton Gas Company to the reorganized company, except cash in the hands of the Receivers. Numerous petitions for allowances of the various parties in the litigation have been filed, and in 1938 a hearing was had, and subsequently briefs were filed by many applicants. At the present time, there is approximately $376,894.92 in the hands of the Receivers awaiting the determination of the Court with respect of these allowances. A part of said funds is attributable to the Thompson Gas Company, a wholly owned subsidiary of the Hamilton Gas Company, for whom the Receivers have also been acting. In the first instances, allowances were requested by the various applicants total-ling $492,850.60, and expenses totalling $149,331.94, or a total of $642,182.54. To these original requests there have been added several additional, claims. It is also noted that certain of the applicants, although claiming allowances, have not fixed the amount of such claims in terms of dollars, and, therefore, such claims are not included in the above monetary total. Likewise the record discloses a claim of the Irving Trust Company, as New York Receiver, but no oral evidence was introduced with respect of it at the hearing. Discussion. As preliminary to consideration of these petitions for allowances, it is proper to determine whether or not the so-called Chandler Act amending the bankruptcy statute be applicable. Section 243, 11 U. S.C.A. § 643, 52 Statutes at Large, 900, liberalizes, and somewhat changes, the basis for allowances in proceedings of this character. It is strongly urged by several applicants for allowances that this amendatory act is applicable to these proceedings. The Chandler Act was passed on June 22, 1938, effective on September 22, 1938. Prior to its enactment, petitions for allowance were filed, and verbal testimony with respect thereof was taken. By Section 276(c)(2) of the Act, 11 U.S.C.A. § 676(c)(2), it is provided, as to prior proceedings, that if a petition in such proceedings had been approved more than three months before the effective date of the amendatory act, the law should apply “to the extent that the judge shall deem their application practicable.” Such discretion is, of course, a matter not to be arbitrarily exercised, and counsel rely in this connection on the decision in the matter of the Old Algiers, Inc., decided by the Circuit Court of Appeals of the Second Circuit on December 5, 1938, 100 F.2d, 374, a copy of which is appended to the brief filed by William M. Chadbourne and Price, Smith & Spilman, counsel for the Agnew Common Stockholders’ Committee. In that case, the Court lays down, as one of the tests of practicability, the possession of funds still in the hands of Trustees, and it is true that in the present instance the Trustees (formerly the equity receivers) do have funds in their hands. In the Algiers case, however, it appears that the petition was approved on April 19, 1938, whereas here such petition in reorganization was approved in the year 1934. In that case, the time for proving claims of creditors had not expired. Here prior to the enactment of the Chandler Act, the final plan of reorganization had been approved. The petitions for allowances had been filed, a hearing had, evidence transcribed, and all of the major features of the case had been finally determined, virtually the only matter remaining being the determination by the Court of the amount of allowances, and which had at the time been taken under consideration by the Court. It would be presumed that both the parties and the Court would have the matter of the allowances as fixed by the law then in effect in mind at the time the plan was approved. It is not practicable, within the meaning of that act, to apply an amendment enacted long after this status of the case had been reached. It may be added that the changes made as to standards of allowances by the Chandler Act would have very little, if any, effect upon any of the claims here made, except possibly a different basis would be established, to a limited degree, with respect of the claim of the Stockholders Committee. It is not believed that an extended discussion of the principle applicable to allowances in proceedings of this kind is necessary. It is, of course, apparent that the aggregate allowances claimed are wholly disproportionate to the amount of property involved, the physical properties of the Hamilton Gas Company having been fixed at a value of $1,600,000, and the aggregate allowances claimed being greatly in excess of any funds in the hands of the Trustees. The amount of property involved in the proceeding, as well as the value of the interests of the litigation represented by the respective applicants, are important factors in determining allowances. Generally, the amount of allowances, while determined by the particular facts and circumstances present, and while largely in the discretion of the Judge, should be moderate and not liberal. Economy is an inherent policy in the administration of the Bankruptcy Law. In re Davison Chemical Company, D.C., 14 F.Supp. 821; West v. Fradenburg, 8 Cir., 86 F.2d 318; Silver v. Scullin Steel Co., 8 Cir., 98 F.2d 503; Callaghan v. R. F. C., 297 U.S. 464, 56 S.Ct. 519, 80 L.Ed. 804. Perhaps the most important rule applicable to the situation here presented is that allowances may be made to those representing committees of creditors or stockholders for only such services as are of general benefit to the estate, and not for particularized services to such groups. In re National Lock Co., 7 Cir., 82 F.2d 600, Certiorari denied, National Lock Co. v. Rosengard, 299 U.S. 562, 57 S.Ct. 25, 81 L. Ed. 414; In re United Cigar Stores Co., D. C., 21 F.Supp. 869; Steere v. Baldwin Locomotive Works, 3 Cir., 98 F.2d 889; In re Nine North Church St., 2 Cir., 89 F.2d 13, Certiorari denied Glass & Lynch v. Nine North Church St., 302 U.S. 709, 58 S. Ct. 29, 82 L.Ed. 547; In re Middle West Utilities Co., D.C., 17 F.Supp. 359; In re Herz, 7 Cir., 81 F.2d 511. In the present proceeding, counsel have, in many instances, performed extensive services for their clients, for which such clients should pay, but because of the particular character of the services, allowance from the estate as a whole would be improper. Disallowance for services of this character rendered to a particular group represented, carries with it no implication that such services were not proper or that they should not be compensated, but, because such services are for a particular group or interest, as distinguished from the estate as a whole, they cannot properly be paid from the general funds. In order to justify allowances, services must not only directly benefit the estate as a whole, but must be constructive, both in character, and, in a measure, in result. Mere participation in hearings, offering advice, suggestions or criticism of themselves furnish no basis for allowance. In re Paramount Publix Corp., 2 Cir., 85 F. 2d 588, Certiorari denied, Palmer v. Paramount Publix Corp., 300 U.S. 655, 57 S.Ct. 432, 81 L.Ed. 865. An estate must bear no duplication or multiplication of services. If compensable services be rendered, for example, by two attorneys or by two creditor committees, it is well established that such circumstance does not permit an increase of the aggregate allowance. Any such allowances are divided between the contributing participants and not increased in the aggregate. Straus v. Baker Co., 5 Cir., 87 F. 2d 401 (Modified, 5 Cir., 89 F.2d 322, but not in this particular); Steere v. Baldwin Locomotive Works, 3 Cir., 98 F.2d 889; In re Buildings Development Company, 7 Cir., 98 F.2d 844. Services rendered prior to the institution of the corporate reorganization proceeding in this case, the receivership and foreclosure suits in equity, may be compensated as a part of the costs of reorganization, if of value in the formulation and adoption of the reorganization plan. In re Buildings Development Company, 7 Cir., 98 F.2d 844; Silver v. Scullin Steel Co., 8 Cir., 98 F.2d 503. With these principles and other principles laid down by the courts in mind, a consideration will now be had of the respective claims. Claims with Respect of First Mortgage of Hamilton Gas Company. The Chase National Bank, corporate Trustee, claims compensation in the amount of $7,500 and costs and expenses of $130.21. Steptoe & Johnson, counsel for the Trustee, ask $20,000 compensation, there being no separate account for expenses. Milbank, Tweed, Hope & Webb, counsel for the Trustees, ask $40,000 as such counsel and $613.74 expenses. The individual trustee in the corporate mortgage makes no claim for allowance. Accordingly, the amount asked as to this First Mortgage aggregates $68,243.95. The bond issue of the Hamilton Gas Company secured by First Mortgage, dated September 1, 1927 (there being a supplemental indenture dated December 1, 1927, of the Thompson Gas Company), consisted of the principal amount of $2,325,500 bonds outstanding. On August 18, 1932, there was filed in this Court by the Trustees of this Mortgage, The Chase National Bank and J. A. Burns, a bill of foreclosure, there being likewise proceedings filed in Kentucky. Proceedings in this cause were consolidated with prior equity causes, as elsewhere set forth. The mortgage provides that the trustee shall be entitled to reasonable compensation, and provides for the payment of counsel fees. It is stated in the petition of The Chase National Bank that the services of the individual Trustee were rendered in connection with his employment as corporate trustee, and he makes no separate application for allowance. The petition of The Chase National Bank describes certain services rendered prior to the receivership in connection with the retirement of some bonds, the compiling of data for an employee of the Bank to give testimony as to the date, as to the execution and delivery of the mortgage, the issue of the bonds, the default, the change in the mortgaged premises resulting from releases, etc. Certain other matters are set up, all obviously of a legal character, such as examination of petition, applications, etc. The petition likewise sets up examination of plans of reorganization, etc. Many of the services testified to were furnishing data, making releases, etc., that are of an incidental character to the trustee in a corporate mortgage. It is to be remembered that much the greater number of bondholders under this mortgage were represented by various committees and the bank did not have the primary obligation of representing them, except within a limited scope. It appears that, exclusive of matters peculiar to the litigation as to which counsel for the bank would perform the greater part of the services, the bank had very little work except that generally performed by a trustee in a corporate mortgage for a small fee. With respect of the claim for services of Milbank, Tweed, Hope & Webb, the principal work set forth was: (a) Investigation with respect of the proposed issue of $40,000 of prior lien Receiver’s Certificates, of which $9,000 were ultimately authorized; (b) proceeding to impound for the benefit of the bondholders income earned from the mortgaged property; (c) preparation of foreclosure proceedings in West Virginia and Kentucky; (d) certain work with respect to application for allowances to the Delaware receivers; (e) certain questions of priority; (f) preparing for testimony in support of the allegations of the foreclosure bill; and (g) keeping in touch with the general proceedings. Other services are likewise recited. It appears, furthermore, that these counsel took five trips to Philadelphia for conferences with counsel for bondholders committees, two trips to West Virginia and one trip to Asheville, North Carolina. Mr. Gammell of this firm details at length in his testimony various legal questions considered. These questions impress me as being of comparatively simple character, generally incidental to any foreclosure proceeding, although demanding a lawyer accustomed to dealing with corporate problems and problems of mortgage foreclosure, as these attorneys undoubtedly were. Steptoe & Johnson have filed a petition likewise as counsel for the Trustee, in association with Milbank, Tweed, Hope & Webb. It appears from the record that almost all of the actual court appearances made on behalf of the mortgage trustee were by Steptoe & Johnson. A considerable part of the services of this firm, as will appear later, was in representing certain committees of creditors and performing certain special services. It is a difficult matter to segregate the services performed by them that are attributable solely to the mortgage trustee, as there is necessarily a certain amount of overlapping. They filed the original bill of foreclosure in both this court and that of Kentucky; they appeared in hearings before the Special Master, both in West Virginia and Kentucky; appeared in resistance to the claim of the Delaware receivers to the intangibles of the Hamilton Gas Company; studied and considered various intervening claims for well rentals of certain Kentucky lessors; appeared in oral argument and filed briefs before the District Court of Kentucky and the Circuit Court of Appeals. They estimate a total time spent of 874% hours, as set out on page 5 of their petition, and a detailed itemization of three members of the firm showing an aggregate of 799% hours. This firm requests $20,-000, no special expenses being sought, and by supplemental petition for services since December 1, 1937, performed by Messrs. Stanley C. Morris, William E. Miller and Robert W. Lawson, Jr. The supplemental petition indicates 19% hours by Mr. Morris and 26% hours by Miller and Lawson, and no expenses. A consideration of the record leads to the conclusion that the greater part of the services of these two firms was performed by Steptoe & Johnson. In determining allowances with respect of these three petitions, it must be borne in mind that the foreclosure suit, during a large part of the litigation lay dormant, or involved only formal matters. The various bondholders, as heretofore stated, were represented by various committees. In view of the general nature of the foreclosure suit, additional representation of the bondholders secured by the mortgage, the size of the mortgage, and other factors present, allowances in the aggregate to the First Mortgage Trustee and its attorneys should not exceed $12,743.95, and that sum should be divided as follows: The Chase National Bank $2,000. Milbank, Tweed, Hope & Webb $4,000. Steptoe & Johnson $6,000. The expenses of The Chase National Bank, as claimed in the petition, of $130.21 appear to be proper and are allowed. Expenses claimed by Milbank, Tweed, Hope & Webb in the amount of $613.74 likewise appear to be proper and are allowed. The First Mortgage Bondholders’ Protective Committees and Their Counsel. In this division of the proceeding, aggregate requests for allowances and expenses were made in the total amount of $304,865.61. There have been certain additions to these original claims. It is to be noted generally in considering these claims that the value of the physical property of the Hamilton Gas Company, exclusive. of cash in the hands of the Trustees, was fixed by the Special Master in his report of September 22, 1937, at $1,600,000, and such report has been confirmed. The claims, therefore, of those representing the First Mortgage bondholders, in the aggregate, are entirely disproportionate to the value of the property. The “Harper Committee” and Its Counsel. The following claims are made with respect of the “Harper Committee”, representing a number of the First Mortgage bondholders: Committee claim for allowance..............$35,000.00 Expenses originally claimed............... 95,405.98 Supplemental claim for expenses............ 956.32 White & Clapp, counsel for Harper Committee claim for allowance................. 61,500.00 Expenses ..................................... 193.86 Steptoe & Johnson, counsel for Harper Committee (also as counsel for petitioning creditors) claim for allowance....... 45,000.00 Expenses ..................................... 1,476.71 First Supplemental petition for “further compensation”: Expenses ..................................... 172.47 Second Supplemental Petition for “further compensation”: Expenses ....... 480.92 It appears that this Committee was organized in January, 1932, at the very inception of the original receivership litigation, being composed of five members. Mr. Clarence L. Harper was Chairman.- He was a member of the firm of Harper & Turner, investment brokers, who owned a considerable amount of the First Mortgage bonds, with customers owning “upwards” of $500,000 of this issue. Mr. Samuel McCreary, a member of the Committee, was likewise an investment dealer and broker, and customers of his firm were owners of a considerable amount of the bonds. While such ownership of securities prior to the initiation of the proceedings (the rule may be different for those acquired thereafter) is not a disqualification, nevertheless in such case, personal interest of committeemen, with the natural impulse to protect such securities, is one of the factors recognized in limitation of allowances in such cases. In re Consolidation Coal Co., D.C., 14 F.Supp. 845. This Committee undoubtedly performed a great amount of work. The petition alleges a voluminous correspondence, many conferences, etc. On June 21, 1934, a plan of reorganization was submitted by the Reorganization Committee, of which Mr. Harper was Chairman, four of said Committee being members of the Harper Committee, and three being members of the Watters Committee. Opposition developed to this plan, the “Craigmyle Committee” leading that opposition. This first plan provided for a voting trust to extend ten years, the voting trustees to be named by the Harper-Watters Reorganization Committee, the final plan providing that the stock of the new company should be in a voting trust for a period of five years, with the privilege in the majority of outstanding certificate holders to terminate it at the end of two years, the Trustees to be appointed one from the Harper Committee, one from the Craigmyle Committee and the third to be appointed by the Court. This issue of control through the voting trust was what possibly caused the greatest dissension among the First Mortgage bondholders. Considerable activity, apparent in the record, is attributable to this issue, as to the voting control. Both the Harper Committee and the Craigmyle Committee circularized bondholders. The Craigmyle Committee did not seek the deposit of securities with it, but did seek most actively dissents from the Harper plan. The Harper Committee took the position that no depositing bondholder would be permitted to withdraw his bonds without paying a proportionate contribution toward the expenses of the Committee. It is testified to by Mr. Larner, and, in fact, by Mr. Craigmyle and Mr. Marshall, counsel for the Craigmyle Committee, that the opposition to the original plan of the Harper and Watters Reorganization Committee bore largely upon the matter of control through the voting trustees. Another change from ; the original Harper-Watters plan was the reduction of interest rate. The original plan provided that all indebtedness secured by collateral should be paid in full in the reorganization. The final plan provided that as to such debts the collateral should be appraised, and the claims paid in full only to the extent of the value of the collateral. Mr. Harper had a personal interest in this clause, as his firm held a debt in the principal sum of $25,000, secured by $35,000 par value, the actual value of the bonds at the time being less than the debt; but the record shows that he willingly acquiesced in this change when it was called to his attention. There were certain other minor changes in the plan, but the foregoing represent the major departures in the final plan of reorganization from that originally submitted on June 21, 1934, except that the latter provided for a limited participation by the stockholders in the reorganized corporation, such participation being eliminated because of the finding by the court of insolvency. It appears from the record that a considerable part of the services of the Harper Committee was brought about by conflicting opinions among the bondholders chiefly represented by the Craigmyle Committee. Little actual discussion of the plan ensued, so far as the record discloses, until the matter of jurisdiction, hereinafter discussed, was determined. Then followed a period of active circularization, opposition and disputes among the bondholders and the Committees ending as above noted. At all times the Harper Committee and its counsel were actively urging the consummation of the plan, and, in the course of the litigation, it has been said that opposition to this plan was brought about through activities of committees that were, in a sense, volunteer committees. However, regardless of the source or motives of this opposition, it resulted in modifications included in the plan that was finally adopted. In this phase of the matter, while the Harper Committee was. undoubtedly furthering a plan, a large part of which was accepted finally, nevertheless, a considerable part of its services, perhaps the greater part, was rendered in the course of maintaining its position as between the disputant bondholders, rather than in furtherance of the general benefit of the estate. Such position as the Harper Committee took may have been entirely correct and for the benefit of the group of bondholders which it represented, but those are group services and are not services to the estate as a whole. Another major activity of the Harper Committee was with respect to the jurisdictional litigation, involving the question of whether or not venue was in New York or in West Virginia. Such question, of course, was primarily a legal one, and its consideration will be deferred until the consideration of attorneys’ fees. Any allowance, therefore, to the Harper Committee must: ' (a) Differentiate between services ren-dered for the benefit of the estate; and, (b) Services to the group of bondholders represented; and, (c) It should be determined to what extent the aggregate amount allowable for services to the estate on behalf of the First Mortgage bondholders should be allowed to other committees. Under the authorities heretofore cited, it is the duty of the Court in proceedings of this character to determine a reasonable fee for the services rendered in furtherance of the reorganization plan and for the benefit of the estate by any representatives of security holders, where such representatives are entitled to allowance, and such aggregate should be apportioned among those contributing those services. It will appear from the discussion elsewhere set out that the Craigmyle Committee, while not performing services to the extent of the Harper Committee, nevertheless, did contribute to the final plan, and, accordingly, the allowance to the Harper Committee must be proportionately reduced from what it would have been, had that Committee been sole author and sponsor of the plan. Mr. Harper, representing his Committee, very frankly testified: “Q. Was that not the major issue between you and the Craigmyle Committee, the question of control as between you? A. No, because we felt, as original nursemaids of this proposition, and having a majority of the bonds, we were entitled to at least, you might not say control, but a dominant interest. “Q. Your assertion of that dominant control and the Craigmyle opposition to it furnished the major part of the delay and dispute during the last year and a half ? A. The major dispute, you mean? "Q. Yes? A. Yes. “Q. The residue of the dispute was chiefly between you and the stockholders of the Debtor as to the question of insolvency? A. I think the record will show that is just it.” (R. p. 144.) It may be that the group of bondholders represented by Mr. Harper’s Committee desired this dominant control and that such may have been beneficial to such group, but, certainly, under the limitations with respect of which allowance may be made, compensation for the furtherance of such group interest cannot be allowed by this Court. It is difficult to separate those services of the Harper Committee which were directly for the benefit of the estate from those which were with respect to collateral matters. The latter, such as the furtherance of the desire for control, etc., may be proper subjects for compensation by the bondholders concerned. As to this the Court is not called upon to pass, but certainly they are not proper subjects for compensation from the estate as a whole. Under all the circumstances, and bearing in mind these factors, an allowance to the Harper Committee for compensation is made in the sum of $16,000. Expenses of the “Harper Committee.” Examining the expenses of the Harper Committee, the first item requested is one for printing and advertising of $2,119.-85. It is impossible for the Court, in the absence of a breakdown of these expenses, to determine what part is beneficial to the estate as a whole and what part is attributable to thfe group activities of this Committee. In the absence of a breakdown of this character, the Court might be justified in disallowing all of these expenses. See In re Middle West Utilities Co., D.C., 17 F.Supp. 359. But as some of these printing expenses were doubtless attributable generally to the estate, the Court will allow forty percent thereof, or $847.94. The same situation is presented with respect of the item of traveling expenses in the amount of $2,494.26, of which forty per cent, or $997.70, is allowed. The third item of expense is depository charges in the amount of $2,307.07. This is not itemized, but doubtless related to the deposit of securities, and is allowed. This Committee also presents a claim of $14,580.47, engineering services. Mr. Harper testifies on page 135 of the record that there were four reports — a report of Day & Zimmerman, a supplemental report by them, and the La Peire reports, made, respectively, in December, 1935, and July, 1937. The first of these reports was obtained by the Committee for negotiations with the Manufacturers Trust Company, looking to a private loan to refinance the Company. In this report there was what Mr. White, of counsel for the Committee, testified to as “a very provisional valuation” of $4,000,000, being primarily made for the Manufacturers Trust Company. The first La Peire report showed a valuation of approximately one-half, and the second report showed a further reduction (see transcript of testimony offered at the hearings on applications for allowances, page 135). On page 137 of the transcript, Mr. Harper testified: “Q. The La Peire report was for the purpose of ascertaining what the purchaser would pay at a foreclosure? A. Yes. “Q. But not on this plan? A. No. “Q. The Day & Zimmerman report had no relation to that but was to show that the Manufacturers Trust Company could loan $600,000 on it ? A. It had no relation to the loan. “Q. It had no relation to the court plan? A. It was an adjustment. “Q. For financing by the Manufacturers Trust Company? A. Yes. “Q. The La Peire report had to do with finding out what a buyer would pay on foreclosure? A. Yes. “Q. You were dealing-with a cash purchaser at a foreclosure in the La Peire report? A. Yes, we tried to establish the company’s value as to whether or not it was insolvent.” It is, therefore, apparent that these engineering reports were for purposes other than the furtherance of the plan of reorganization, but they were used and were of some value in connection with the consummation of the plan. The La Peire report was used and was of value in the determination of the question of insolvency. Mr. White testifies (on page 135) that approximately $5,000 was paid for the La Peire report. These reports were made without prior knowledge or authorization of the Court, but, as they were used and undoubtedly in some phases of the litigation were beneficial to the estate as a whole, forty per cent or the amount of $5,-832.19 of this item will be allowed. The next item of expense of the Harper Committee is one of interest on bank loans, amounting to $13,711.83. This has been increased by some additional expense, making a total of somewhat more than $14,000. With respect of this item, Mr. Harper testifies on page 133 of the transcript: “A. It is very necessary to provide for the expenses of this proposition and from time to time, we borrowed money from the Philadelphia National Bank upon the security of the deposit of bonds, which we were permitted to do by the Deposit Agreement. It is the interest running over a period of six years. “Q. In other words, you borrowed money from the Philadelphia National Bank to pay these various items of expense and paid interest on the current notes ? A. Yes, sir. “Q. And the interest charge is really a mounting charge over and above the other charges by reason of the use of the money. Did you call on any bondholders for contributions at the time of deposit or otherwise? A. We did not. “Q. You are asking that the court repay that interest as part of the administrative costs? A. We are.” Counsel for the Trustees take the position in their brief that allowance of this interest on bank loans will involve a fundamental favoritism to those bondholders represented by the Harper Committee and that, if contributions for expenses from the bondholders interested had been solicited and received, it would be apparent that such bondholders could not claim interest for the contributions they made to the expense of enforcing their own bonds. Counsel further call attention to the fact that the Craigmyle Committee and other committees (except the Watters Committee) are making no claim for interest on money expended. It seems to me that there is no part of this case where the line of demarcation between estate-expenses and groups expenses more clearly appears. The protective agreement dated February 1, 1932, in paragraph 3(1) thereof specifically gave the Committee the right to borrow money. Such borrowing provision saved the bondholders from making advances for expenses of the committee, as otherwise would have been necessary. Nevertheless, however beneficial this course of the committee may have been to the particular group of bondholders represented, certainly it would be manifestly unfair to require other bondholders to contribute to these carrying charges of the Harper group, and yet such would be the result if an allowance for interest were made. The same considerations apply to the other item of expense of $189 taxes on deposited bonds. So far as the record shows, these appear to be entirely proper charges against deposited bonds, but they are not the proper subject of general allowance from the estate. The largest item of expense claimed by the Harper Committee is a fee of $17,-500 to Cook, Nathan, Lehman & Greenman, Attorneys, and out-of-pocket expenses paid to these attorneys of $3,153.07. It is stated in the petition that the services of this firm were secured for the purpose of “defending the jurisdiction of the United States District Court for the Southern District of West Virginia,” against the attempt of the Debtor to establish jurisdiction in the New York Court. The jurisdictional litigation was involved and the record voluminous. It was prosecuted both in New York and in West Virginia, but, of course, Cook, Nathan, Lehman & Greenman took part only in the New York litigation. On July 22, 1935, the Circuit Court of Appeals for the Second Circuit, reversing the lower court, held that West Virginia, and not New York, was the principal place of business during the period in question. On October 8, 1935, the Circuit Court of Appeals for the Fourth Circuit reached the same conclusion. On December 9, 1935, the Supreme Court of the United States denied application for certiorari from the foregoing decisions. However desirable from the viewpoint of the Harper Committee and perhaps of its bondholders it may have been to maintain jurisdiction in West Virginia and however proper this item of expense may be as a charge against depositing bondholders, as to which, of course, the Court does not pass, it seems clear that in order for such a payment to be a proper subject for allowance from the estate as a whole, the incurring of such expense should have been previously submitted to this court. Differing opinions, understandings, beliefs and policies may have been and doubtless were present in the minds of the various security holders. In such case, if it were permitted for one group of security holders, acting through one Committee, privately to intervene without court authorization and prosecute jurisdictional litigation of this kind, it would seem to follow that the same right would adhere in other groups. It seems to me that before such litigation should be undertaken and large expenses incurred that the matter should have been submitted to this Court for its prior authorization and determination. In such case if the Court had determined upon the prosecution of the litigation, it doubtless would have been through the Trustees appointed by this Court. As it is, the Court is asked to provide for large expenses incurred in the prosecution of the litigation in New York by attorneys not under the jurisdiction or control of this Court, and whose fees are only before the Court as an item of expense filed by a committee of bondholders about three years after the services were performed. If the litigation had been authorized and prosecuted under the authority of the Court, the fees would have been subject to the Court’s scrutiny and the provisions of the Bankruptcy Law, all of which is avoided by the course taken of prosecuting this litigation through a committee. There is not attributed to the Committee any improper intention of avoiding the ordinary procedure, but it would seem to me contrary to public policy and the intention of the law that allowance could be made under such circumstances. See In re Middle West Utilities Co., D.C., 17 F.Supp. 359; In re Celotex Co., D.C., 13 F.Supp. 1011, 1018; In re Mercantile Arcade Realty Corp., D. C., 20 F.Supp. 397. These items of fee and expenses claimed must be disallowed. The next item of expense claimed by the Harper Committee is the payment to Goodwin, Smith & Ely, Attorneys of Washington, D. C., of $1,800 for services, and out-of-pocket expenses of $25.97, such expenses being recited as for services rendered in connection with obtaining an amendment to the bill then pending in Congress, afterwards known as Section 77B of the Bankruptcy Act. This is frankly a payment to attorneys for influencing legislation in Congress. An allowance under-such circumstances is obviously improper. In re Chicago Rapid Transit Co., 7 Cir., 93 F.2d 832. There is an item in the expense account of the Committee of Marvel, Morford, Ward & Logan, Attorneys of Wilmington, Delaware, recited as for “advisory service” in the sum of $50 and $3.76 expenses. The exact character of these services is not apparent. However, the items are small, and, as the debtor was incorporated under the laws of the State of Delaware, it is quite possible that they were for advice in the line of the general duties of the Committee, and the $53:76 will be allowed. There is an item of $750 paid to Price, Smith & Spilman for legal services rendered in the ancillary receivership suit of Harper and Turner against Hamilton Gas Company, in this District and in the United States District Court for the Eastern District of Kentucky. These services were rendered in the receivership proceedings antedating the petition in bankruptcy for reorganization. Under some circumstances, matters arising from such prior receivership proceedings are proper if they contributed generally to the benefit of the estate. The prior receivership proceeding was instituted for the purpose of protecting the property, and the debtor corporation doubtless received benefits, as property protection was concerned. However, the Court is confronted with the rule laid down In re Middle West Utilities Co., D.C., 17 F.Supp. 359, 375, and In re Celotex Co., D. C., 13 F.Supp. 1011, 1018, and this item must be disallowed. There are two items, respectively, as to White & Clapp for services and expenses in the amount of $5,844.49, and to Steptoe & Johnson in the amount of $11,496.74. The record discloses that both of these attorneys have rendered services properly attributable to the activities of this Committee, for which allowance should be made in sums greater than these. Technically, these items should properly be allowed directly to the attorneys, but, to avoid circumlocution, they will be allowed as an item of expense of this Committee, and as such will be taken into consideration as hereinafter set out in making allowances to the attorneys. Included in the expenses of the Harper Committee is an item of $2,625, compensation for “specific services” of William A. Larner, also an item of “sundries” of $836.97 and $11,416.67 advances made to him directly or disbursed for his benefit. It is not clear just what the “sundries” are - — presumably, from their position in the account they are attributable to Mr. Larner. As to at least a part of these services, Mr. Larner apparently assigned, or attempted to assign, his compensation as Delaware Receiver, but it appears that the previous allowance made to him as such Receiver was not so applied. This employment of Mr. Larner was in the early stages of the litigation prior to the bankruptcy proceedings. Mr. Harper testified that for a year up until September, 1933, “we thought Mr. Larner’s assistance very important in the reorganization of the company.” Mr. Harper further states that he does not “think” the Committee ever employed Mr. Larner for the purpose of soliciting depositors, but that the Committee was paying him something “in order that he might live and bring us continued and definite reports of the progress of the company and whether the leases were to be continued, disposed of, etc..” Mr. Harper likewise testifies that his services were attributable to efforts to induce the Manufacturers Trust Company to assist in refinancing the company. Mr. Larner testifies that the item of “$2,250.00” (probably intended for the item of $2,625) “was a payment for salary, and the residue of the account was a loan.” The character of Mr. Larner’s activities is considered later with respect of his application for allowance. Evidently the payments to him were either for so-called salary or as a loan during the period in which he was receiver of the Delaware Court. His activities, in their very nature, were either as such receiver, as president of the debtor, or because of his personal interest in the debtor corporation. If a Protective Committee of Bondholders employed a Receiver of the Court, certainly their payments to him would not be a proper subject of allowance. The Court itself would make any proper allowance to him in his capacity as such Receiver, and allowance has been made in the sum of $5,-000 to Mr. Larner as Delaware Receiver, and, whether such be regarded as upon his expenses or for compensation, it represents what the Court considered a proper allowance at that time. It is obvious that it would be highly improper for a court to make allowance to a protective committee for a payment which that committee made to a receiver appointed by the court of another jurisdiction. As to that part of the Committee’s expenses designated by Mr. Larner as a loan, the same reasons obtain with even greater force. Certainly no proper allowance could be predicated upon a loan by a protective committee to the receiver of a court in faith of future allowances that might be made to him as receiver. Any activities that Mr. Larner performed in his capacity as president of the debtor would, of course, not be subject to what would amount to an allowance to him through channel of the protective committee, and the same would be true as to any activities because of his personal interest. Mr. Larner has testified at length as to the services he gave with respect to property in assistance to the West Virginia receivers, in matters of contract, etc. Without going into the question of such services at this time, if they were of general benefit to the estate, they would be within the purview of any allowances that would be made to him as Receiver, and it would not be within the proper function of any Committee of security holders to pay them and look to the Court for reimbursement. If these services were peculiarly for the benefit of the Committee, then, of course, they would fall within the classification of group services and not services for the general benefit of the estate. It seems to me that under no possible conception of the character of the services of Mr. Larner could reimbursement to the Committee be allowed for amounts paid to him. Mr. Larner has characterized “the major” portion of his services as a loan, and the Committee must look to him for the repayment of the loan. There is included in the expenses of the Harper Committee, certain obligations, for which no disbursements up to the time of the filing of the petition had been made, of $1,500 to the secretary of the Committee and $3,000 for secretarial and clerical services rendered by the employees of the Chairman. Doubtless the secretarial services were necessary. Undoubtedly a portion of such services were for activities of the Committee as to which allowance could properly be made, and undoubtedly a portion would be for so-called Committee services as distinguished from services for the general benefit of the estate. While unable accurately to draw a line of discrimination, the Court will, in this instance, follow the policy above with reference to traveling and printing items, and will allow forty per cent, or $1,800, of this item for secretarial services. Relative to the item of $3,000, this is in the nature of an “over-head” expense, as to which there is discussion elsewhere, and has been taken into consideration in fixing allowance of compensation to the Committee, but should not be specially allowed as a separate item. The interest item in the supplemental petition is not allowed for reasons hereinbefore given, but the other items totaling $103.82 are allowed. The expenses allowed the Harper Committee aggregate $29,283.72. Petition of White & Clapp, Counsel for the “Harper Committee.” There is claimed by these attorneys $61,500 compensation in addition to the sum of $5,000 previously received from their clients and $193.86 expenses. This firm, in association with Step-toe & Johnson, was counsel for the “Harper Committee” throughout the litigation. The original petition recites that the actual record of time spent in connection with the case by this firm totalled 4,041 hours, of which 2,646 hours were spent by the senior member of the firm, that petitioners also have written or received and considered 2,216 letters, of which 145 of the letters transmitted by petitioners were formal opinions, and in addition 20 circular letters to bondholders. The senior member participated in 343 conferences in his own offices, exclusive of numerous conferences in other cities and innumerable telephone calls. It may be stated in passing that records of time devoted to the matter in hand by attorneys, while indicative of their activity, are of little value in gauging allowances in proceedings of this character, although a factor to be considered. In re United Railways & Electric Co., D.C., 15 F.Supp. 195; In re 211 East Delaware Place Bldg. Corp., D.C., 13 F.Supp. 473; In re Middle West Utilities Co., D.C., 17 F. Supp. 359. It may also be noted that correspondence, conferences and the like are increased by the fact that other attorneys are interested in the litigation, and, of course, duplication of attorneys is not a ground for increase of allowance. Straus v. Baker Co., 5 Cir., 87 F.2d 401. It is very clear, however, that these attorneys have been actively engaged during the several years during which this litigation has been pending. Mr. T. R. White, senior member of this firm, in his testimony calls attention to the fact that the claim is as counsel, not only for the bondholders, but also for the Reorganization Committee under the plan of reorganization of June 21, 1934, and as later changed. He first had the duty to prepare the protective agreement of February 1, 1932. He makes reference to negotiations with the Manufacturers Trust Company which, in October, 1933, declined to advance funds. These and similar negotiations, which formed so great a part of the earlier activities of Mr. Larner, were private attempts to refinance antedating the bankruptcy proceedings. At that time, the receivership might be designated as somewhat of a “caretaking” receivership. Such efforts were unsuccessful, and it seems to me those services would not be a proper subject of allowance here— (a) Because they were not sufficiently connected with the administration of the receivership estate, and, of course, with the bankrupt estate, and (b) However commendable their purpose may have been from the viewpoint of the debtor corporation and its security holders, they did not contribute anything of benefit to the reorganization, unsuccessful as they were. Mr. White next testifies that in view of the failure of the plan of refinancing in the fall of 1933, it became necessary to go forward with the plan of reorganization originally scheduled; that litigation resulted also in opposition from the former president of the company who was dissatisfied with the plan, and that in the spring of 1934 it became apparent that Section 77B would be passed. He then details activities looking to the amendment of the bill in Congress. For reasons set out in disallowing the expenses of the Harper Committee for attorneys in Washington, these services are not the proper subject of allowance. Mr. White then refers to the plan of reorganization, dated June 21, 1934. This was the original plan and was, as it were, the point of departure for the various steps in reorganization. This service and those with relation to the filing of the petition in bankruptcy are proper subjects for allowance. Mr. White then testifies of the litigation ensuing relating to the so-called conflict of jurisdiction between New York and West Virginia, stating that the burden was principally borne here by Steptoe & Johnson. For reasons givén in denial of the claim of the Harper Committee for reimbursement of fees paid to New York attorneys, no allowance can be made to this firm for these services. Mr. White also speaks of services in connection with the Securities Act, and the approval of the bondholders protective agreement by the Court. A protective committee is a proper function in reorganization proceedings of this character, and I believe proper allowance should be ma