Devries v. Orem

Briscoe, J., delivered the opinion of the Court. This case is brought here on appeal, from a judgment in favor of the defendant, sustaining a demurrer to the plantiff’s declaration. It is a suit on an agreement under seal to recover extra compensation under a contract for services rendered the appellee by the appellant as trustee in bankruptcy of the estate of W. Morris Orem, the husband of the appellee. The facts of the case as evidenced by the agreement and as stated in the declaration are these : On the 20th of October, 1899, W. Morris Orem filed a petition in the United States District Court of Maryland, in Bankruptcy, asking for the ⁶⁴⁹ benefit of the Acts of Congress relating to bankruptcy, and was by the Court adjudicated a bankrupt.

Subsequently on the 9th of November, 1899, the appellant was duly elected trustee and thereafter accepted and qualified as trustee, and administered the estate. The appellee was an unsecured creditor of the estate, to the extent of two hundred thousand dollars, and requested the appellant to accept the appointment, under the terms of the contract, set out in the record. The substance of the agreement is “that Helen E, Orem, in consideration of the acceptance by Christian Devries of the appointment, as trustee of the estate and of the performance by him of the duties of the office, agrees to pay to him, a sum which shall equal the difference between five per cent on the entire proceeds of the sale or sales of the entire assets, including the mortgage portion of the property, whether the mortgaged property be sold by him or another, and the compensation, which in the event of his appointment as trustee, he will receive under the Acts of Congress.” In payment of the compensation she pledged the dividend or dividends which she should receive on account of her claims. The declaration states and the demurrer admits that the trustee fully administered and distributed the bankrupt’s estate, under the orders of Court, to wit, the sum of $130,194.70, to the payment of the expenses of the administration of the estate and the claims of the secured creditors, and the sum of $17,543-93 to the unsecured creditors of the bankrupt, in the proportions to which they were entitled.

According to the report of sale, and the accounts ratified by the Court, the trustee was allowed the sum of $325.44-100, at the rate prescribed by the Acts of Congress upon the assets of the estate, for distribution to the unsecured creditors of the bankrupt, and not any further sum. And this suit is brought on the basis of the agreement set out in the record to recover a sum equal to the difference between five per cent on the entire proceeds of sales of the estate, including the amount of the secured claims and the compensation which the trustee received under the Act of Congress. ⁶⁵⁰ The questions for us to determine in the case are, what is the true construction of section 48, of chapter 541, of the Act of 1898, entitled an act to establish a uniform system of bankruptcy, throughout the United States ; and whether the agreement in question, is null and void as being against public policy. The Act.is a long one, consisting of seventy sections, but the section applicable here is as follows : Trustees shall receive, as full compensation, 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 from estates which they have administered, such a commission on sums to be paid as dividends and commissions as may be allowed by the Courts, not to exceed three per centum, on the first five thousand dollars or less, two per centum on the second five thousand dollars or part' thereof, and one per centum on such sums in excess of ten thousand dollars. Under this section, .we think, it is clear that the compensation to be allowed trustees, is limited to the charges and commissions, prescribed by the Act.

The language of the Act is plain and unambiguous, for it provides that the compensation to be received by the trustees, as mentioned therein, shall be as full compensation for their services. And to hold otherwise would allow them to receive a larger compensation than allowed by law, and would defeat the plain and manifest intention of Congress in fixing the commissions. This identical section of-the Act has received a similar construction on appeal to the Federal District Courts. In re Epstein, 109 Federal Reporter, p. 878, decided, June 24th, 1901, it was held that a Court of bankruptcy is without authority to allow compensation to a trustee in excess of that fixed by the Bankruptcy Act 1898, sec. 48A, notwithstanding the fact that such trustee has given his personal time and attention to the business of the estate, and by reason of his business ability has realized from the bankrupt’s assets far more than would ordinarily have been obtained.