On January 4, 1934, the State Bank Commissioner took over the affairs of the *Page 358 Interstate Trust and Banking Company for liquidation. The firm of Marcus and Corkern and Flanders, attorneys-at-law, was employed to handle the legal phases of the liquidation. This firm performed the legal duties in connection with the liquidation until May 15, 1941, at which time the Bank Commissioner gave notice that he desired to change attorneys and requested the resignation of this firm as counsel for the liquidation. In pursuance to this request, counsel tendered its resignation with full reservation of and without prejudice to any fees due. The resignation was accepted. After lengthy negotiations, the parties at interest failed to reach an agreement on the amount of attorneys' fees due.
Thereafter, the Bank Commissioner petitioned the court to grant him authority in pursuance to Section 6 of Act 300 of 1910 to pay the firm of attorneys $10,150.00 as a final and complete payment for all of the services rendered the liquidation. The lower court refused to grant the commissioner this authority on the ground that the attorneys were entitled to a hearing as to the amount due them. Marcus and Corkern and Flanders then brought suit against the Bank Commissioner, claiming a balance of $165,000 as attorneys' fees. The matter was taken up by way of rule, and the lower court gave judgment awarding the plaintiff the amount of $35,000 as a final settlement of all attorneys' fees. Both plaintiff and defendant have appealed.
The sole and only question presented for consideration is the amount of attorneys' fees due the plaintiff. *Page 359
The comparative statement, made at the instance of the liquidator, shows that the assets of the bank amounted to $17,843,472.46 on January 4, 1934, at the inception of the liquidation.
The record discloses that the assets of the bank, through process of liquidation, had been reduced on May 15, 1941, to $7,443,286.36. In other words, $10,400,186.10 of the assets were liquidated during the period of time the plaintiff was serving the liquidation.
There seems to be some dispute as to the amount of cash receipts collected for distribution. The plaintiff contends that a loan obtained from the Reconstruction Finance Corporation of $619,716.05 should be included in the total amount of cash receipts. The defendant takes the position that the amount of the loan should not be included for the reason that the funds were never used for the purpose for which the loan was made.
I gather from the record that this loan was returned shortly after it was made without any of the funds being used for the purpose for which the loan was granted. Under such circumstances, I do not believe that the funds derived from the loan would form a part of the cash receipts collected for distribution. The record shows and it is conceded in plaintiff and defendant's briefs that if the amount of funds derived from the loan are deducted, the cash receipts received through this period of the liquidation amount to $11,096,563.34.
On June 1, 1934, the Bank Commissioner secured an order from the lower court authorizing *Page 360 him to pay the plaintiff $800 monthly, beginning as of January, 1934, to be taken into consideration at such time as the fees for professional services are approved by the court. The plaintiff admits that it has received fees monthly from the liquidator since the date of the order in the amount of $68,600.
On January 19, 1937, the Bank Commissioner, authorized by an order of court, paid the plaintiff $46,250 on account of services rendered.
On December 22, 1938, the lower court entered the following order:
"Let Jasper S. Brock, State Bank Commissioner, be and he is hereby authorized to compensate the attorneys he has employed to handle the legal phases of this liquidation in amounts, the aggregate of which is not at any time to exceed the minimum amounts that a member of the New Orleans Bar Association should charge under the general provisions contained in the association's schedule of minimum charges for the administration of successions, payments thereof to be made from time to time as the bank commissioner or his proper representatives in his or their discretion may see fit."
In pursuance to this order, on January 3, 1939, the plaintiff was paid $75,000 for legal services.
The minimum fee fixed by the rules of the New Orleans Bar Association for the administration of successions is as follows: Up to $10,000, 3%; beginning at $10,000 and in excess thereof, 2 1/2%.
The record shows that the plaintiff was paid notarial fees in the amount of $2,862; *Page 361 $3,869.81 as attorneys' fees in certain collections for the liquidation; and $13,432.84 for legal services in certain trust matters connected with the liquidation.
The plaintiff admits receiving $17,818.19 from forwarding attorneys who were employed in connection with the liquidation. Just how much the efforts of the forwarding attorneys contributed to the cash receipts of the bank in liquidation is not shown by the record. However, the forwarding attorneys must have received at least an amount equal to and in addition to the $17,818.19. Such being the case, the liquidation undoubtedly had to pay $35,636.38 for these legal services. This amount would necessarily have to be credited as a payment on the attorneys' fees.
From the above figures, showing the amounts paid for legal services, the defendant has previously paid $245,651.03 for legal services in connection with the liquidation.
Sometime prior to the filing of this suit, when the plaintiff and the defendant were attempting to negotiate an amicable settlement, the Attorney General was called in to assist them in determining the amount due the plaintiff. Thereafter on February 27, 1942, the plaintiff addressed a lengthy letter to the Attorney General reciting the various services rendered by it and stating:
"We submit that the nearest analogy to a recognized standard on which to base our charge is that adopted by the New Orleans Bar Association as the proper fee for administering successions under administration. That sets as a minimum 2 1/2% of the gross estate. If some allowance be made by *Page 362 virtue of the fact that the administration was not finished by us, then it would seem fair to say that the cash distribution is the lowest possible valuation on which this minimum should be figured."
Counsel for the plaintiff wrote the Attorney General on April 6, 1942, to the effect that the plaintiff was entitled to 2 1/2% of the actual cash collections, and in event an amicable adjustment could not be reached the plaintiff was entitled to this percentage of the full value of the assets at the time of the commencement of the liquidation.
The order of the lower court of December 22, 1938, has become final and in my opinion controlling of the issues herein involved. No appeal was ever taken from this order, and the time for appeal therefrom has elapsed. Shortly after this order was signed, the Bank Commissioner, on January 3, 1939, paid the plaintiff $75,000. The prior orders of the lower court, authorizing payments to be made to the plaintiff for legal services, did not attempt to fix the amount of or rate of compensation to be paid for the legal services for the liquidation. A careful analysis of the order of December 22, 1938, leads me to the conclusion that the compensation for legal services in connection with the liquidation is based on the cash receipts or collections, and the aggregate payments shall at no time exceed the certain maximum percentage fixed therein.
Plaintiff's letter to the Attorney General of February 27, 1942, and the letter from its counsel to the Attorney General of April 6, 1942, both written sometime prior to the filing of this suit, are indicative of the fact *Page 363 that the plaintiff was of the opinion that the compensation was to be based on the cash receipts or collections.
The order under consideration definitely places a limitation on the maximum amount of compensation to be paid for the legal services and places no restriction on compensation for a lesser amount. I cannot in the face of this final order agree to award compensation in excess of the maximum amount fixed in this order. However, this does not preclude the awarding of compensation in a lesser amount if the facts justify it.
The cash receipts, covering the period of time during which the plaintiff was connected with the liquidation, amount to $11,096,563.34. The minimum compensation fixed by the rules of the New Orleans Bar Association for the administration of successions is 3% on the first $10,000 and 2 1/2% on the remainder. Applying this rule to the cash receipts, I arrive at the amount of $277,464.08. After deducting the $245,651.03, previously paid, there is a balance of $31,813.05.
The defendant concedes that the plaintiff is due a balance of $10,150 for legal services. The maximum amount that the plaintiff could receive under the order of December 22, 1938, after deducting previous payments, would be $31,813.05. Such being the case, the balance of compensation due for the legal services would be some amount between these last two named figures.
From my appreciation of the testimony of the three attorneys called by the plaintiff, the plaintiff would be entitled to the maximum amount of compensation fixed by *Page 364 the order of December 22, 1938. The only expert called by the defendant was of the opinion that the plaintiff was entitled to a balance of only $10,150. There seems to be no dispute that the services rendered by the plaintiff to the liquidation required approximately all of its time over a period of more than seven years. The plaintiff was engaged in an unusual amount of litigation for the liquidation. Unquestionably the most serious problems requiring legal services arose during the first seven years of the liquidation. Thereafter there would not be a need for such extensive legal services. Consideration should also be given to the fact that the plaintiff was not permitted to complete the liquidation.
From a preponderance of the evidence and the surrounding circumstances, the plaintiff is entitled to the maximum rate of compensation fixed by the order of the lower court of December 22, 1938. After deducting the amounts previously paid, the defendant is due the plaintiff a balance of $31,813.05 as a full and final settlement of the attorneys' fees.
I cannot agree that the purport of the order of the lower court was to fix the fees on the basis of the gross assets listed in the comparative statement. The inventory of a succession reflects an appraised value of its assets. There was no appraisal of the assets listed in the comparative statement. However, if it be conceded that the order bases the compensation on the gross assets listed in the comparative statement, the plaintiff could not recover compensation based on the entire gross assets for the reason that the liquidation has not been *Page 365 completed. In fact, at the time the plaintiff tendered its resignation, there remained $7,443,286.36 of the listed assets unliquidated. The liquidation of the bank has not as yet been completed. If the plaintiff was awarded compensation on the basis of the liquidated assets, the compensation would be less than it would be if it were based on the cash receipts.
The defendant contends that the compensation fixed by the Bank Commissioner cannot be increased by the courts. In support of this contention, he cites Section 6 of Act 300 of 1910, which reads as follows:
"Be it further enacted, etc., That the compensation of the Special Agent, counsel, clerical assistance and all other necessary expenses of liquidation and distribution, shall be fixed by the State Examiner of State Banks subject to the approval of the District Court of the Judicial District in which the corporation under liquidation is domiciled, (provided that the court shall not have power to increase said compensation) and after such approval they shall be paid, on the certificate of the said Examiner as privileged claims, out of the funds of such corporation in his hands, before applying the same to any other liabilities of said corporation. It is provided that the State Examiner of State Banks shall not receive any fees or other emoluments for special services, or otherwise, out of the funds of any corporation liquidated as provided for herein; and no assistant in the pay of the State Banking Department except such Special Agent as may be appointed as herein provided for, shall receive *Page 366 any such fee or emolument for special services or otherwise out of the funds of a corporation so liquidated."
The answer to this contention is stated in the case of Liquidation of Hibernia Bank Trust Company, 203 La. 195,13 So.2d 833, 837, opinion handed down on April 12, 1943, in which we said:
"We can not agree with the proposition that the state banking act authorizes the courts of this State to act merely in administrative capacities in the liquidation of insolvent banking institutions. The affirmance of the proposition would necessarily imply that the courts are nothing more than rubber stamp courts whose only duty is to place the stamp of approval on the action or nonaction of the bank commissioner."
For the reasons assigned, I respectfully dissent.