COMPENSATION OF TRUSTEES, RECEIVERS AND MARSHALS

§ 48. Compensation of Trustees.- a Trustees shali receive for their services, payable after they are rendered, a fee of five dollars deposited with the clerk at the time the petition is filed in each case, except when a fee is not required from a voluntary bankrupt, and with commissions on all moneys disbursed or turned over to any person, including lienholders,* by them, as may be allowed by the courts, not to exceed six per centum on the first five hundred dollars or less, four per centum on moneys in excess of five hundred dollars and less than fifteen hundred dollars, two per centum on moneys in excess of fifteen hundred dollars and less than ten thousand dollars, and one per centum on moneys in excess of ten thousand dollars. And in case of the confirmation of a composition after the trustee has qualified the court may allow him as compensation, not to exceed one-half of one per centum of the amount to be paid the creditors on such composition.

b In the event of an estate being administered by three trustees instead of one trustee or by successive trustees, the court shall apportion the fees and commissions between them according to the services actually rendered, so that there shall not be paid to trustees for the administering of any estate a greater amount than one trustee would be entitled to. c The court may, in its discretion, withhold all compensation from any trustee who has been removed for cause.

d Receivers or marshals appointed pursuant to section two, subdivision three, of this act shall receive for their services, payable after they are rendered, compensation by way of commissions upon the moneys disbursed or turned over to any person, including lienholders, by them, and also upon the moneys turned over by them or afterwards realized by the trustees from property turned over in kind by them to the trustees, as the court may allow, not to exceed six per centum on the first five hundred dollars or less, four per centum on moneys in excess of five hundred dollars and less than one

* Amendment of 1910 in italics.

thousand five hundred dollars, two per centum on moneys in excess of one thousand five hundred dollars and less than ten thousand dollars, and one per centum on moneys in excess of ten thousand dollars: Provided, That in case of the confirmation of a composition such commissions shall not exceed one-half of one per centum of the amount to be paid creditors on such composition: Provided further, That when the receiver or marshal acts as a mere custodian and does not carry on the business of the bankrupt as provided in clause five of section two of this act, he shall not receive nor be allowed in any form or guise more than two per centum on the first thousand dollars or less, and one-half of one per centum on all above one thousand dollars on moneys disbursed by him or turned over by him to the trustee and on moneys subsequently realized from property turned over by him in kind to the trustee: Provided further, That before the allowance of compensation notice of application therefor, specifying the amount asked, shall be given to creditors in the manner indicated in section fifty-eight of this act.

e Where the business is conducted by trustees, marshals, or receivers, as provided in clause five of section two of this act, the court may allow such officers additional compensation for such services by way of commissions upon the moneys disbursed or turned over to any person, including lienholders, by them, and, in cases of receivers or marshals, also upon the moneys turned over by them or afterwards realized by the trustees from property turned over in kind by them to the trustees; such commissions not to exceed six per centum on the first five hundred dollars or less, four per centum on moneys in excess of five hundred dollars and less than one thousand five hundred dollars, two per centum on moneys in excess of one thousand five hundred dollars and less than ten thousand dollars, and one per centum on moneys in excess of ten thousand dollars: Provided, That in case of the confirmation of a composition such commissions shall not exceed one-half of one per centum of the amount to be paid creditors on such composition: Provided further, That before the allowance of compensation notice of application therefor, specifying the amount asked, shall be given to creditors in the manner indicated in section fifty-eight of this act.

Analogous provisions: In U. S.: Act of 1867, §§ 28, 47, R. S., §§ 5099, 5124, 5127, 5127-a; Act of 1841, § 6; Act of 1800, § 29.

In Eng.: Act of 1883, § 72; Act of 1890, § 15; Act of 1914, § 82; General Rules, 334-336.

In Can.: Act of 1919, § 40.

Cross-references: To the law: Jurisdiction of court of bankruptcy to authorize business of bankrupt to be conducted, and allow compensation therefor, § 2 (5).

Compensation of marshals, see also § 52.

Compensation of referee, § 40.

Duty of clerks to collect fees of trustees, and pay the same within ten days after closing estate, § 51 (2) (4).

Trustee not to receive additional compensation, § 72.

To the General Orders: Compensation allowed trustees to be in full for all services performed, XXXV (3).

To the Forms: Affidavit of pauper in voluntary cases, Supplementary Forms, No. 68, Vol. III, post.

SYNOPSIS OF SECTION
COMPENSATION OF TRUSTEES

I. Compensation of Trustees, 1074.
a. Comparative legislation, 1074.
b. Amount of compensation, 1074.
c. Amount under original act, 1074.

d. Pauper cases, 1075.

e. Effect of amendatory acts of 1903 and 1910, 1075.
(1) IN GENERAL, 1075.

(2) COMMISSIONS ON DISBURSEMENTS, 1075.

(I) In general, 1075.

(II) "On all moneys disbursed," 1076.

(III) Secured and priority claims, 1076.

(IV) Property or money on which commission allowed, 1078.

(V) Partnership and undivided bankruptcy estate, 1079. (3) RATE OF COMMISSION, 1079.

(4) COMMISSION IN CASE OF COMPOSITION, 1079.
(5) COMPENSATION FOR CONTINUING BUSINESS, 1079.
(6) ALLOWANCE BY COURT, 1079.

(7) APPORTIONING COMPENSATION

TRUSTEES, 1080.

BETWEEN SEVERAL

(8) WITHHOLDING COMPENSATION WHEN TRUSTEE RE

MOVED, 1080.

I. COMPENSATION OF TRUSTEES1

a. Comparative legislation. In England, the fees of trustees are fixed by resolution of the creditors, subject io a review, under certain conditions, by the Board of Trade.2 In Canada the trustee receives such remuneration as shall be voted to him by the creditors, but in no event more than five per cent of the cash receipts.3 Prior to the present law, assignees' fees in this country have been "in the discretion of the court. The amendatory act of 1874 reduced the customary fees then paid by one-half.5 The present method is doubtless an adaptation of the State systems for compensating executors, administrators, receivers, and the like. The changes made by the amendatory acts of 1903 and 1910 are thought to strike a fair mean between the loose methods of the old law and the niggardly rigidity of the present statute as originally passed.

b. Amount of compensation.- Three general considerations as to trustees' compensation should be noted: (1) that fixed by this section is "full compensation for their services," [save that which may be allowed under § 2 (5) as now amended], (2) the exact percentage, not greater than the prescribed upward limit, is fixed by the court, there being in this a difference between the fees of referees and those of trustees, and (3) no compensation is payable until after the services are rendered, i. e., when the administration is closed. The compensation is of two kinds, a filing fee and certain commissions, fixed and determined by the amounts which pass through the hands of the trustee. A trustee who is also an attorney may not receive, in addition to the trustee's fees, compensation for legal services performed."

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c. Amount under original act.- Before the amendatory act of 1903 the commissions to be paid to trustees could only be reckoned on "sums to be paid as dividends and commissions, 10 and the rate was but about half that customarily allowed corresponding officers even 9. See section 62, post, subtitle, "For trustees."

1. See also Am. B. R. Dig., §§ 328331.

2. English Act of 1914, § 82. General Rules 334-336; Williams on Bankruptcy (12th ed.), pp. 357, 558.

3. Can. Bankr. Act of 1919, § 40; Duncan on Bankruptcy, p. 396.

4. See "Analogous Provisions,” ante. 5. R. S., § 5127-a.

6. Compare pp. 23-25, Report of Ex. Com. of Nat. Assn. of Referees in Bankruptcy, March, 1900.

7. See General Order XXXV (3). 8. See Bankr. Act, § 40-a.

10. In re Utt (C. C. A., 7th Cir.), 5 Am. B. R. 383, 105 Fed. 754; In re Smith (D. C., N. Car.), 5 Am. B. R. 559, 108 Fed. 39; In re Kaiser (D. C., Mont.), 8 Am. B. R. 108, 112 Fed. 955; In re Mammoth Pine Lumber Co. (D. C., Ark.), 8 Am. B. R. 651, 116 Fed. 731; In re Goldville Mfg. Co. (D. C., S. C.), 10 Am. B. R. 552, 123 Fed. 579. Contra: In re Barber (D. C., Minn.), 3 Am. B. R. 306, 97 Fed. 547. Under the act prior to the amendment it was

fifty years ago.11 The result was that few competent men would serve as trustee the second time, thus crippling the administration of the law. Efforts were made to meet the difficulty in various ways, as by appointing attorneys to be trustees and allowing them compensation for legal services as an expense of administration;12 by appointing attorneys for trustees in asset cases, with a tacit understanding that the attorney's allowance should be shared with the trustee, or by allowing trustees extra compensation as agents of the creditors when they did more than perform the regular duties required by the law.13 Each of these methods was of doubtful legality and subject to abuse. Since § 72, added by the amendatory act, they are no longer possible.

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d. Pauper cases.— In certain cases, the trustee may serve without pay. It has been thought, however, that, unlike the referee, a trustee cannot be compelled to serve in a pauper case, but, if the creditors desire him to do so, they must furnish his fee.15

e. Effect of amendatory acts of 1903 and 1910.-(1) IN GENERAL. -The amendatory act of 1903 has modified the original law as to trustees' fees in four particulars, all intended to make them more adequate.16

(2) COMMISSIONS ON DISBURSEMENTS.—(I) In general.— Commissions are to be computed on "all moneys disbursed or turned over to any person, including lien-holders 17 by them as may be allowed by the courts," and cannot be otherwise fixed by agreement with the

held that trustees were entitled to commissions on funds arising from sales of mortgaged property and distributable to mortgage creditors. In re Muhlhauser (Ref., Ohio), 9 Am. B. R. 80.

11. Compare Rule 59, So. District of New York, under law of 1841, Owen on Bankruptcy, Appendix, p. 13.

12. In re Mitchell (Ref., Pa.), 1 Am. B. R. 687. Contra: In re Muldauer, Fed. Cas. 9,905.

13. In re Plummer (Ref., N. Y.), 3 Am. B. R. 320; In re Dimm & Co. (D. C., Pa.), 17 Am. B. R. 110, 146 Fed. 731, permitting an allowance for the trustee's personal services rendered in connection with sales of the goods belonging to the estate. Contra: In re Epstein (D. C., Ark.), 6 Am. B. R. 191, 109 Fed. 878. See also In re Mammoth

Pine Lumber Co. (D. C., Ark.), 8 Am.
B. R. 651, 116 Fed. 731.

14. See Bankr. Act, § 51-a (2).
15. In re Levy (D. C., Wis.), 4 Am.
B. R. 108, 101 Fed. 247.

16. See Bankr. Act, § 51-a (2) (4). Gugel v. New Orleans Bank (C. C. A., 5th Cir.), 39 Am. B. R. 160, 239 Fed. 676.

Congress intended by the amendments to sections 40-a and 48-a to provide what it considered ample compensation for services to be rendered by trustees, and by section 72 to relieve the courts of the necessity of determining what constitutes legal compen sation for such officers. American Surety Co. v. Freed & Hoffman (C. C. A., 3d Cir.), 35 Am. B. R. 103, 224 Fed. 333.

17. Amendatory Act of 1910, § 9.