amount to no more than a mere ad-
visory act, and the administrator
who pays money to himself in
pursuance thereof must do so
knowing that the matter can not
be finally and judicially determined
until all interested persons are be-
fore the court, or until they have
been duly notified," and the mat-
ter being an appeal from an order
fixing fees on an ex parte appli-
cation, it was held that the ap-
pellate court could not, on hearing
the appeal, fix the fees because
that would be to do so without giv-
ing all parties proper notice and
an opportunity to be heard: Col-
kett V. Hammond, 101 Wash. 416,
172 Pac. 548.
5 Burrows v. Merrifield, 148 111.
App. 594; judgment affirmed, 243
111. 362, 90 N. E. 750; Heffron v.
Rice, 40 111. App. 244.
In re Magner, 173 Iowa 299, 155
N. W. 317. The court may take
into consideration its own personal
knowledge of the services ren-
dered and their reasonable value.
The receiver having submitted
the question of fees for decision
and decision having been ren-
dered, it is a matter of discretion
with the court to reopen the hear-
ing for the purpose of giving the
receiver opportunity to offer addi-
tional evidence. Wilder v. Co-
operative Distilling & Rectifying
Co., 136 111. App. 359; Goodman v.
Wilder, 234 111. 362, 84 N. E. 1025.
Under a Kentucky statute pro-
viding that a receiver should file
an affidavit setting forth the num-
ber of days he had acted before
an order could be made allowing
him compensation, it was held that
while an order made before such
filing was erroneous, it was not
void. Stockholders' First Nat.
Bank v. First State Bank's Re-
ceiver, 163 Ky. 790, 174 S. W. 473.
On appeal, the court can not
determine that the amount al-
lowed is improper in the absence
of the evidence from the record.
Shannon v. Shepard Mfg. Co., 230
Mass. 224, 119 N. E. 768.
6 In re Magner, 173 Iowa 299, 155
N. W. 317; Commonwealth v,
Monongahela Valley Bank of Du-
quesne, 239 Pa. 254, 86 Atl. 719.
I
FEES AND EXPENSES OF THE RECEIVERSHIP. 1729
any otlier judicial decision.'^ A final order fixing the
receiver's compensation is appealable. Speaking on tliis
point the Supreme Court of Ohio said :^
''We hold that the term 'trial,' as used in the consti-
tution, is broad enough to include any judgment, final
order, or decree, not interlocutory in its nature, affecting
the substantial rights of a party to a chancery suit. In
the instant case, the order was made, it is true, after
judgment had been rendered on the issues defined by the
original pleadings in the case; but it was of such char-
acter as to affect substantially the interests of all parties
to the record, and especially those creditors, large in
number, with claims totaling over a million dollars, who,
while not formal parties, were in fact the real parties in
interest. We ascertain that, in the matter of making
the order fixing the receiver's compensation, a regular
hearing was had, testimony pro and con was offered,
arguments of counsel were heard, and the entry of allow-
ance states as a fact that the court 'after due considera-
tion' made the order in question. This order certainly
had all the elements of a judgment. We feel that we are
not doing violence to the root-meaning of the term ' trial '
by holding that the proceedings so had would constitute
a judicial investigation and determination of an issue
that arose during the progress of the administration of
tlie trust, ancillary, it is true, to the main issues, but im-
portant and indeed necessary to finally determine the
rights of the interested parties. It must be conceded that
the order of the court finally disposed of a particular in-
dependent issue that arose in the case. It is the peculiar
function and attribute of an equitable proceeding that by
it the chancellor is enabled to deal with the entire sub-
ject-matter and to ascertain and determine the riglits of
parties which relate to and concern it, but which arc
7 Robinson v. Ruprecht, 147 111. "* Thompson v. Denton, 95 Ohio
App. 646. St. 333, 116 N. E. 452.
n Rec— 109
1730 LAW OF RECEIVERS.
wliolly independent of other matters and issues involved
in the proceedings.
''The order so made was in no sense interlocutory in
its nature, and consequently the judgment that is to be
entered in this case will in no wise sanction interminable
appeals of questions arising in the course of the hearing
of a chancery case of this or any other character.
''It is claimed that 'proceedings in relation to the ap-
pointment and removal of receivers are special proceed-
ings under the code, from which no appeal lies.'
"This contention can not be held to be sound in view
of the holding of this court in the case of Wagner v.
Armstrong, et al., supra. This court denied the conten-
tion made in that case that since partition was a special
statutory proceeding it no longer retained its chancery
nature and was therefore not appealable under the new
constitution.
"It is claimed that there v^ere no proper parties before
the court of appeals, the particular point raised being
that the appellee [receiver] was not a party to the action
in the common pleas court, and is not a party to the
proceedings on appeal. . . . The appeal here was
prosecuted by parties to the action, that is, parties orig-
inally, or made so on application to the court before the
order complained of was entered.
"While it is true that the appellee was never formally
made a party to the suit, we hold, however, that for the
purposes of this proceeding the entry of June 26, 1914,
appointing appellee receiver of the assets of the corpo-
ration, made him a party to the action. The distinction
between such an officer of the court, on the one hand, and
an attorney, witness, or a master commissioner, on the
other, is too marked to call for elaboration. If the re-
ceiver was not, in the larger sense, a party to the action,
then the creditors had no representative in court. It is
the more rational view, we think, that he was very much
FEES AND EXPENSES OF THE RECEIVERSHIP.
1731
in court, the very arm of the court, and the representative
of creditors, the alter ego of the company itself.''
Pursuant to this reasoning, an order of the Court of
Appeal dismissing an appeal from an order fixing a re-
ceiver's compensation, on the ground that such an order
was not appealable was reversed and the Court of Ap-
peals was instructed to entertain the appeal.^ An appeal
from an order made after hearing and on notice, the ap-
pellate court may, if it considers that the lower court
has erred in assessing the compensation, itself direct the
amount to be allowed. ^*^
§619. When to Be Paid— Right of Court to Award Partial
Allowances on Account.
When receivers should be paid is within the discretion
of the court. ^ If the condition of the estate is sufficiently
9 In Grant v. Superior Court, 106
Cal. 324, 39 Pac. 604, the Supreme
Court refused a writ of prohibi-
tion restraining the trial court
from maliing an order fixing the
compensation of a receiver in an
action pending before it. The
court said: "Such an order can
not by itself injure any one; but
if, in addition to the order fixing
the amount, the court should or-
der it paid out of funds in the re-
ceiver's hands, such order, under
whatever name it might be des-
ignated, would be a final judg-
ment upon a collateral matter
arising out of the action, and,
would be appealable by any party
interested in the fund."
See, also. Shannon v. Shepard
Mfg. Co., 230 Mass. 224, 119 N. E.
768; Martin v. Martin, 14 Or. 165,
12 Pac. 234.
An order made on an ex parte
hearing fixing the compensation
of a receiver upon his resignation
is appealable at the instance of his
successor. Calkett v. Hammond,
172 Pac. 548. The court, in this
matter, said: "The orders are
entered in the form of solemn
judgments of the court. They
show that testimony was heard;
that the court made findings that
the amounts were reasonable, and
unqualifiedly commanded their
payment. They bear no evidence
that they were entered as mere
interlocutory orders, subject to fu-
ture review by the court upon a
full hearing when all parties
should be before it."
1" Finlay v. Louisiana Irriga-
tion, etc., Co., 141 La. 1069, 76 So.
202; Face v. Hall, 183 Mich. 22,
148 N. W. 777; Butte Miner Co. v.
M. J. Connell Co., 54 Mont. 78, 166
Pac. 296; Crawford v. Seattle, etc.,
R. Co., 102 Wash. 386, 173 Pac. 32.
1 Northrup Nat. Bank v. Varner,
82 Kan. 691, 109 Pac. 394.
17G2 LAW OF RECEIVERS.
known at the time of the appointment to warrant it a
provisional monthly, or other periodic, allowance may
then be made.- Interlocutory orders may be made from
time to time allowing partial payments for services
already rendered.^ The matter of fixing- the full com-
pensation belongs with the settlement of the final account*
and at that time all interlocutory orders for partial pay-
ments are reviewable.^
§ 620. Amount of Receiver's Fee Largely a Matter of Dis-
cretion.
In many, if not most, jurisdictions there is no statute
to direct or aid the court in fixing the amount of the fee,
or compensation, to be allowed a receiver. In some in-
stances there is a statute to the effect that the compen-
sation shall be such reasonable sum as the nature of the
case justifies.^ It is evident that such a statute is not of
much aid to a court and is nothing more than a codifi-
cation of what any court w^ould say without reference to
any statute.- When thus left to their own resources in
2 Butte Miner Co. v. M. J. Con- 4 People v. Oriental Bank, 129
nell Co., 54 Mont. 78, 166 Pac. 296; App. Div. 865, 114 N. Y. Supp. 440.
Cutter V. Pollock, 4 N. D. 205, 50 5 Hume v. Mvers, 242 Fed. 827;
Am. St. Rep. 644, 25 L. R. A. 377, R^^inson v. Ruprecht. 147 111. App.
59 N. W. 1062
Payments may be allowed to the
receiver at regular intervals pend
646; St. Louis Union Trust Co. v.
Texas Southern Ry. Co., 59 Tex.
Taka Co.), 92 Wash. 203, 158 Pac.
1003.
■^u • 1- T> .^ ,, r.„.i. Civ. 157, 126 S. W. 296; Pacific
ing the receivership. Battery Park '
„ , TTT .. ^1- TD 1, Coast Coal Co. v. Esary (Lak-A-
Eank v. Western Carolina Bank, •'
126 N. C. 531, 36 S. E. 39.
In Easton v. Houston, etc., Ry.
Co., 189 Fed. 440, a receiver was ^ Finlay v. Louisiana Irrigation,
paid $4500 per year. In Central ^tc, Co., 141 La. 1069, 76 So. 202.
Trust Co. V. Cincinnati, etc., Ry., 2 Eames v. H. B. Claflln Co., 231
58 Fed. 500, $2500 a year was al- Fed. 693, 145 C. C. A. 597; Robin-
lowed a receiver who performed son v. Ruprecht, 147 111. App. 646;
no active duties. Hickey v. Parrot Silver & C. Co.,
3 Pacific Coast Coal Co. v. Esary 32 Mont. 143, 108 Am. St. Rep. 510,
(Lak-A-Taka Co.), 92 Wash. 203, 79 Pac. 698; Bailey v. Glormine, 88
158 Pac. 1003; Riordan v. Horton, N. J. Eq. 254, 102 Atl. 634; United
16 Wyo. 363, 94 Pac. 448. States v. Church of Jesus Christ
I
FEES AND EXPENSES OF THE RECEIVERSHIP.
1733
tlie matter, courts have found it impossible to establish
any rule, or formula, that might be serviceable, in any
general way, as a method of computing the amount to
be allowed. The situation in that regard is revealed
by the fact that courts have frequently said, and no
court seems to have denied, that the compensation must
be fixed in each case on its merits as it arises.^ As is very
natural under these circumstances, the statement most
commonly made is that the determination of the allow-
ance is very largely in the discretion of the receivership
court,^ and that the conclusion of that court will not be
disturbed on appeal except in a very strong and clear
case of abuse of discretion.^ However, as in all other
instances of ' ' discretion, ' ' the discretion of the court here
is judicial, not arbitrary, and is, therefore, subject to the
usual review for abuse of it.^ The respect due to the
of L. D. S., 6 Utah 9, 43, 21 Pac.
503, 524.
The amount of allowances to be
made to a receiver, in the ab-
sence of a statute fixing them,
should be determined on the basis
of what is reasonable in view of
the services rendered and to be
rendered. Kilpatrick v. Horton,
15 Wyo. 501, 89 Pac. 1035.
3 Deputy v. Delmar L. M. Co.,
10 Del. Ch. 101, 85 Atl. 669; Hazen
V. Stevens, 60 Fla. 460, 53 So. 716;
Heffron v. Rice, 149 111. 216, 41
Am. St. Rep. 271, 36 N. E. 562;
McArthur v. Montclair R. Co., 27
N. J. Eq. 77; Gardiner v. Tyler, 2
Abb. Dec. (N. Y.) 247.
4 In re Union, etc., Works, 8
Hawaiian Rep. 740; Herrick v.
Davidson, 164 Iowa 462, 145 N. W.
907; Northrup Nat. Bank v. Var-
ner, 82 Kan. 691, 109 Pac. 394;
Mann v. Poole, 48 S. C. 154, 26
S. E. 229; In re Spokane-Columbia
River, etc., Co., 70 Wash. 142, 126
Pac. 418; Sample v. Burke (X. D.),
157 N. W. 978.
5 Morgan v. Hardee, 71 Ga. 736;
Heffron v. Rice, 149 111. 216, 41
Am. St. Rep. 271, 36 N. E. 562;
McBride v. Coleman (Ind. App.),
119 N. E. 152; Hilliard v. Sterling-
worth Ry. Supply Co., 236 Pa. 82,
Ann. Cas. 1913D, 1115, 84 Atl. 680.
The matter of responsibility as-
sumed and the results accomp-
lished are elements to be consid-
ered, and the discretion exercised
by the court in fixing the compen-
sation of the receiver will not be
disturbed without clear proof of
error. York Trust Co, v. Pullman
Mfg. Co., 237 Pa. 261, 85 Atl. 143;
Campbell v. Charleston St. Ry. Co.,
73 W. Va. 493, SO S. E. 809.
6 Hazen v. Stevens, 60 Fla. 460,
53 So. 716.
Finlay v. Louisiana I. & M. Co.,
141 La. 1069, 76 So. 202. The above
was an instance where the appel-
late court reduced the fee of the
1734 LAW OF RECEIVERS.
discretion of the lower court will not lead the appellate
court to forget that 'Hrust estates" are not "to be re-
garded as common prey,"" nor to assume the doctrine
that there is a ** profession of receivers,"'^ nor to fall
into the error of being "more liberal when dealing with
the funds of others than when dealing with funds which
we may be called upon to furnish."^ And an appellate
court may reduce a fee from $115,000 plus a private car
to $15,000 without the car and not assign any reason
for its action.^*^
But regardless of the popular criticism that courts have
been extremely liberal in fixing the fees of receivers and
their attorneys, it may be said that an examination of
the cases discloses but few cases of abuse of discretion
in fixing extravagant fees. In some cases the fees have
seemed to be large but an examination of the record will
show that the amounts involved in the receivership were
not only large also but that the services of the receivers
required the exercise of a high class of business judg-
ment and resulted in either preserving an estate which
was in a very precarious and hazardous condition at the
time of going into receivership or that by his efforts and
that of his attorney large portions of the estate were
added to the original estate by judicious handling or suc-
cessful litigation.
§ 621. Controlling Elements in Fixing the Receiver's Com-
pensation.
The inability of the courts to establish a regular rule
of method of computation, for fixing the receiver's com-
pensation is not due to the fact that they do not consider
receiver but increased that of his gation, etc., Co., 141 La. 1069, 76
attorney. So. 202.
T Butte Miner Co. v. M. J. Con- 9 Finlay v. Louisiana Irrigation,
nell Co., 54 Mont. 78, 166 Pac. 296. etc., Co., supra.
s Robinson v. Ruprecht, 147 111. lo Gardiner v. Railroad Co., 65
App. 646; Finlay v. Louisiana Irri- Ohio St. 608, 63 N. E. 1128.
FEES AND EXPENSES OF THE RECEIVERSHIP. 1735
that there are not regularly and generally present in the
situation certain elements upon which the reckoning may
be based. They do recognize, and with a considerable
degree of unanimity of opinion as to what they are, that
there are such elements. The difficulty is that these well
recognized elements are not in all cases, nor perhaps in
any two cases, to be given the same relative weight,
while the amount of money or property received and dis-
bursed by the receiver is~ always an element to be con-
sidered, the fee can not always be made on a commis-
sion based on this amount nor could the commission be
at the same rate in all cases. Some courts have con-
sidered that, in respect to compensation, there is an
analogy between receivers and executors or administra-
tors,^ though in some jurisdictions this idea is considered
''obsolete."- The results attained by the receiver are
taken into account. However, failure to accomplish a
certain purpose is not to be counted against him,^ nor is
he to be credited with unusual success due to economic or
natural causes which operated in a like degree in favor
of others doing a business similar to that carried on by
the receiver.^ The compensation given in the same local-
ity for similar services, either in private or official life, is
considered as a helpful criterion.^ The responsibility
placed upon the receiver, his attitude toward this respon-
sibility, the amount of time he devotes to his duties, the
skill and speed with which the affairs of the estate are
worked out are all factors bearing upon the issue as to
1 Sullivan Timber Co. v. Black, 33 Ky. Law Rep. 716, 110 S. W.
159 Ala. 570, 48 So. 870; Tome v. 893.
King, 64 Md. 166, 21 Atl. 279. 5 Deputy v. Delmar Lumber Mfg.
2 Tompson V. Huron Lumber Co., Co., 10 Del. Ch. 101, 85 Atl. 669;
5 Wash. 527, 32 Pac. 536. Finlay v. Louisiana Irrigation, etc.,
3 Holbrook, etc., v. American Co., 141 La. 1069, 76 So. 202; Butte
Fire Ins. Co., 6 Paige (N. Y.) 220. Miner Co. v. M. J. Connell Co., 54
4 Wilson V. Murphy's Admr.. 33 Mont. 78, 166 Pac. 296; Special
Ky. Law Rep. 716, 110 S. W. 893; Bank Comrs. v. Franklin Savings
Murphy's Admr. v. Wilson & Muir, Inst., 11 R. I. 557.
1736 LAW OF RECEIVERS.
what the reasonable return to the receiver should be ;
and the receiver is heir to the biblical recognition ac-
corded to the faithful steward.*' All of these matters are
weighed with reference to the ability of the estate to
meet all of the obligations against it and in the light of
fairness to all others interested as well as to the receiver.
Expert testimony is commonly offered as an aid to the
court and quite commonly discounted.'^
No one judicial decision on this subject can be said
to be of superior authority. In fact it can not accurately
be said that there is any divergence of opinion among
the decisions. As interesting and instructive a decision
as any other is, perhaps, the decision of the Federal Cir-
cuit Court of Appeals of the second circuit in a case grow-
ing out of w^hat the court said was thought to be the
greatest mercantile failure that had, up to that time
(1916), ever occurred in the United States, the failure of
the H. B. Claflin Company. There were two receivers,
both of high standing in the business world and of ''the
highest reputation for integrity and business acumen."
One of the interesting points about the case seems to be
the fact that the district judge and the members of the
Circuit Court of Appeals were in accord in the opinion
that the fee should be less than the receivers thought
they were entitled to and less than even the creditors were
-willing the receivers should be allowed. The Circuit
Court of Appeals said :^
Butte Miner Co. v. M. J. Con- the responsibility heavy, the fee
nell Co., 54 Mont. 78, 166 Pac. 296. should be fixed accordingly. Farm-
7 Wilson V. Murphy's Admr., 33 ers' L. & T. Co. v. Central R. Co.,
Ky. Law Rep. 716, 110 S. W. 893; 2 McCrary, 318, 8 Fed. 60.
Crawford v. Seattle R. & S. Ry. Disbursement of money in pay-
Co., 102 Wash. 386, 173 Pac. 32. ment of debts contracted by his
s Eames v. H. B. Claflin Co., 231 predecessor is not an item of
Fed. 693, 145 C. C. A. 597. The weight in fixing the compensation
above cases illustrates the applica- of a receiver. Farmers' L. & T.
tion of the principles above stated. Co. v. Central R. Co., supra.
Where the amount of the bond is The responsibilities assumed by
high, the disbursements large, and the receiver are usually considered
FEES AND EXPENSES OF THE RECEIVERSHIP.
1737
''The receivers are entitled to a reasonable compen-
sation for the services they have performed. The court
which appointed them has the right to determine what
of great weight in determining the
fees of a railroad receiver. Central
T. Co. V. Wabash, etc., Co., 32 Fed.
187; Hinckley v. Oilman, etc., Co.,
100 U. S. 153, 25 L. Ed. 591; Inter-
nal I. F. v. Greenough, 105 U. S.
527, 26 L. Ed. 1157.
The fees were fixed on a com-
mission basis, but the rate deter-
mined by consideration of the du-
ration of the receivership, the
need of personal attention on the
part of the receiver and the amount
of responsibility assumed by him.
Calhoun v. Di-agon Motor Co., 166
Fed. 980.
The fact that the receivership
was of short duration was held
not to affect the receiver's right
to compensation based upon the
effectiveness of his services. Bur-
roughs v. Toxaway Co., 185 Fed.
435, 107 C. C. A. 505 (reversing 182
Fed. 129).
Fees may be fixed according to
services that prove beneficial,
even though they are not strictly
within his authority. Burroughs
V. Toxaway Co., 185 Fed. 435, 107
C. C. A. 505 (reversing 182 Fed.
129).
The fact that there was little
actual expenditure and little per-
sonal attention were considered
of weight in In re Bausch Picture
Frame & Moulding Co., 211 Fed.
347.
Various elements are consid-
ered in fixing the compensation
such as the amount and character
of the time and responsibility de-
voted to his duties, including the
kind of labor necessarily bestowed
by him upon the trust, the respon-
sibility assumed, the character
and extent of the property com-
mitted to his care, and the bene-
ficial results of his management.
Hazen v. Stevens, 60 Fla. 460, 53
So. 716.
The fact that the duties of the
receiver called for little skill on
his part, and were not of an oner-
ous character, and that the estate
was able to pay but a small divi-
dend to creditors, were influential
in Goodman v. Wilder, 234 111. 362,
84 N. E. 1025.
The property of a receivership
should not be dissipated by fees
and expenses. Goodman v. Wilder,
234 111. 362, 84 N. E. 1025.
"That the functions which he
assumed required no special knowl-
edge or experience of the business
of which he took charge is best
shown by the fact that his admin-
istration was successful, though
the record contains no suggestion
that he possessed either; and that
they required but little of his
time is to be inferred from his
devoting but little of it to them
and being able to discharge similar
functions elsewhere.
"Save for the fact that he pos-
sessed the confidence of the bank
and, no doubt, kept himself and it
posted in regard to the progress of
events, the necessity for the dis-
bursements that were being made,
etc., we can discover no reason
why the receivership should not
have progressed as smoothly and
as successfully without the re-
ceiver as with him." Finlav v.
1738
LAW OF RECEIVERS.
that reasonable compensation is. In doing so it must
exercise its discretion. But while the matter is left to
its discretion, it is not at liberty to fix the allowance at
Louisiana Irrigation, etc., Co., 141
La. 1069, 76 So. 202.
"Does the mere fact that such
a profit was earned, regardless of
all other circumstances, entitle the
receiver to take therefrom $17,200
as his compensation for such con-
nection as he had v^ath the earn-
ing during the eleven months of
his administration, and, if so, why?
Our answer is that he is not so
entitled; that the unusual profit
was not at all of his earning, but
was the result of unusually favor-
able weather conditions; that for
aught that he or the other appel-
lants did, or could have done, the
rice crop might have failed, and
the defendant company have sus-
tained a loss; that the work of
irrigation was successfully con-
ducted, but no more successfully
than that of other irrigation com-
panies in the same belt; that what
would be a reasonable compensa-
tion for an individual, heavily in
debt, to pay for the conduct of his
business, with average success,
during a given period, is a fair
criterion by which to determine
the amount that should be paid for
like conduct, by a receiver, of the
business of a corporation similarly
situated; and, finally, that the re-
ceiver, in our opinion, contributed
less to that which has been done