ficiaries in the product of the sale.

No provision of the Bankruptcy Act even squints at an allowance against the estate for such service."

[4] 2. The next exception is directed to the allowance of $500 to the attorney of the bankrupt. The act, by section 64 (3), provides for the payment of

"one reasonable attorney's fee to the bankrupt, in involuntary cases, while performing the duties herein prescribed, * as the court may allow."

What has been said in regard to the principle by which the court should be guided in the exercise of its legal discretion, in regard to allowances to attorneys for petitioning creditors, is equally applicable here. The further limitation is imposed that an allowance can be made only for such service as is rendered to the bankrupt "while performing the duties imposed upon him by the act." This excludes compensation for service rendered the bankrupt prior to filing the petition, resisting the adjudication, or in proposing or urging the acceptance or confirmation of a composition. The statute, by section 7, imposes the duty upon the bankrupt to attend the first meeting of the creditors and to file schedules of his debts and property. For necessary assistance in discharging these duties he is entitled to one reasonable counsel fee. In Re Mayer (D. C.) 101 Fed. 695, Seaman, Judge, says that the power to make the allowance is

*

"limited in strict accord with the general tenor and spirit of the enactment, and neither express nor intend an allowance for the defense of the bankrupt through the course of the proceedings in matters involving his personal liability. The duties to be performed by the bankrupt in the proceedings are prescribed in section 7, and all relate to attendance and service of presumptive benefit to the estate, with the possible exception of attending at 'the hearing upon his application for a discharge.' The preparation of schedules by the bankrupt in involuntary cases, and his attendance on compulsory examinations before the referee, are matters in discharge of his duty, for the benefit of the estate, and each may require the services of an attorney, for which the estate thus receiving the benefit is chargeable for reasonable compensation; but, in conformity with the purposes of the act, the allowance must be made 'sparingly and with great caution.' The test for compensation out of the estate is whether the service is rendered in the performance of the bankrupt's duty in aid of the estate and its administration, and not whether the bankrupt stands in need of the service of counsel for his personal benefit and protection in any of the proceedings. No sanction appears in any of the provisions for an allowance in the last-mentioned view, and its adoption would violate the general consistency of the act for securing economy in administration."

*

The judge states that the allowance usually made in the district (E. D. Wisconsin) for service in drafting schedules is from $25 to $50, according to the extent-the work is mainly clerical.

In the Goldville Mfg. Co. Case, supra, the attorney for the bankrupt was allowed $200. I do not find that, in any case reported, an allowance of $500 to the attorney for the bankrupt has been made. No such allowance has been made in this district. The special master says, and in this I concur, that $500

"would poorly compensate the attorney for the time, study, and attention that he has given the matter, and for the time that he has had to be away from his office attending to different phases as they arose."

He also calls

"special attention to the schedules prepared by him. and most accurate that I have seen."

They are the neatest

Conceding all of this, as is done, it is manifest that there was no duty imposed upon the bankrupt by the law or the orders of the court. in the course of administration, requiring the aid or service of an attorney for which an allowance of $500 should be made. No charges of fraud or concealment of assets, or other improper conduct, have been made. No opposition was made to his discharge. The property scheduled consisted of tracts of land and town lots, a stock of goods, and a few choses in action of small value. The lands were sold by those who held mortgages, and the goods by the trustees. The adjudication was made without opposition. The only meeting had before the court was to hear the report of the referee upon the proposition for a composition; the only question presented was whether a majority in number and amount of the creditors had accepted. The schedules were not complicated or difficult of preparation, and, although skillfully and well done, required no study or large professional learning.

A number of complications, giving trouble to the trustees and creditors, arose in the course of administration, growing out of claims made by the bankrupt and his wife. Without criticizing the course pursued, it is apparent that much of the work imposed upon the trustees and the attorneys for creditors for the bankrupt and the trustees was caused by these complications. They pertained to the administration of the estate, did not involve or result in litigation, and cannot be considered in fixing the allowance to the attorney for the bankrupt. For services rendered the bankrupt and his wife, which were valuable, the attorney should be paid by them, and not the creditors. In view of the scale of allowances made for such services as were rendered, within the provisions of the act, in this and other districts, an allowance of $200 is made.

3. The next exception relates to the allowance of $500 as made to the attorney for the trustee. The authority for making this allowance is found in section 62, as of "the actual and necessary expenses incurred by officers in the administration of estates." The special master reports:

"For the multitude of papers that he has had to draw, and the sales and resales that he has had to attend, and the time and attention that he has had to give, this is a small allowance."

It appears that two tracts of land and three town lots scheduled by the bankrupt were under mortgage. They were sold for $83,740.10. Some of them were resold, upon advanced bids. Mrs. Munford had mortgaged her separate property for $10,000 to secure her husband's debt, and he executed to her for indemnity a second mortgage on a portion of his real estate. The crops on the farms were also mortgaged. These conditions, with other questions arising during the administration of the estate, required the services of a skilled attorney. It is conceded that the counsel retained by them, with the approval of the court, has rendered valuable and efficient service.

The estate has been wisely managed by the trustees, litigation avoided, and the interests of the creditors in all respects conserved and promoted. To March 12, 1918, the trustees had received $29,669.49 and paid out $10,659.52. Their report was submitted to the creditors and approved. I am of the opinion that, taking into consideration the conditions found by the special master, the allowance to the attorney for the trustees is just and reasonable. The report in that respect is confirmed.

An order will be signed directing the trustees to pay the attorneys for the petitioning creditors $750, the attorney for the bankrupt $200, and the attorney for the trustees $500. I concur with the special master in regard to the high character, business ability, and experience of the trustees, and their wise management of this estate. The statutory commissions, paid them jointly, of $466.69, are totally inadequate compensation for the time consumed and responsibility imposed by their office; but, as said by the special master, they will find their compensation in the consciousness that they have discharged a difficult responsibility with intelligence and fidelity. The compensation to the special master was fixed by the parties. His report discloses careful consideration, intelligent comprehension, power of analysis, and clarity of expression.

[5] The purpose of the Bankruptcy Act is: (1) To apply the property of the insolvent person or corporation to the payment of the debts with as little expense and delay as is consistent with their interests. (2) To relieve the honest and unfortunate debtor from his debts and give him another opportunity in the industrial life of the community.

ADAMS v. OSLEY et al.

(District Court, N. D. Georgia, E. D. January 9, 1919.)

No. 37.

1. BANKRUPTCY ~303(3)-CONVEYANCES TO WIFE THROUGH SON-SUFFICIENCY OF EVIDENCE.

Bankrupt's conveyances to wife through son held fraudulent under evidence in his trustee's suit to cancel them.

2. APPEAL AND ERROR 1044-MASTER'S REPORT-EXCEPTIONS-IMMATERIALITY.

Exceptions to master's report, going to his ruling as to burden of proof on defendants, and as to effect of certain evidence, are immaterial, where evidence absolutely required master to hold, as he did, adversely to defendants.

In Equity. Petition for cancellation of conveyances by A. C. Adams, trustee in bankruptcy, against Patrick Osley and others. On defendants' exceptions to the master's report for petitioner. Exceptions overruled, and report confirmed.

Scott Berryman, of Bowman, Ga., and Horace & Frank Holden, of Athens, Ga., for plaintiff.

Stephen C. Upson, of Athens, Ga., for defendants.

For other cases see same topic & KEY-NUMBER in all Key-Numbered Digests & Indexes

Equitable Petition for Cancellation of Certain Conveyances.

NEWMAN, District Judge. This case was referred to Austin Bell, Esq., as special master, and his report is as follows:

"I, the undersigned, to whom as special master the issues in the above matter were referred, to ascertain and report the facts, respectfully report as follows:

"That said issues were brought on for hearing, and I was attended upon said hearing by counsel for the plaintiff and counsel for the defendants, and that testimony was adduced in said matter, the stenographic minutes of which are herewith filed.

"This is a case brought by A. C. Adams, trustee of J. J. Osley, a bankrupt. The plaintiff by his petition seeks to cancel certain deeds and transfers of bond for title, to wit:

"Deed from J. J. Osley to Patrick Osley, bearing date of December 8, 1913, to 31% acres of land, consideration $3,500, recorded February 12, 1917, in the clerk's office of Hart county, Georgia.

"Deed from Patrick Osley to Mrs. Emma Osley, bearing date of December 19, 1913, reciting a consideration of $3,500, describing the same land, recorded February 12, 1917, in the clerk's office of Hart county, Georgia.

"Transfer by J. J. Osley to Patrick Osley of a bond for title from C. C. Boise to J. J. Osley, bond for title covering 380 acres of land in Madison and Hart counties, Georgia, the consideration expressed in the transfer being $10,000, the transfer bearing date of December 8, 1913.

"The transfer of the same bond for title, reciting the same consideration, from Patrick Osley to Mrs. Emma Osley, the transfer bearing date of December 19, 1913.

"Conclusions of Law.

"It is contended by the defendants in this case that the trustee cannot maintain this suit because, say the defendants, he did not represent creditors who were creditors prior to December 8, 1913, the date the deed and transfer of bond for title from J. J. Osley to Patrick Osley bear. This proposition is not sound. A moment's reflection will suffice. The deeds and transfers of the bond for title were recorded on February 12, 1917. Under the evidence the physical possession of the properties was never changed at any time. There is no question but that some of the creditors represented by the trustee, notably Denny & Son and the Bank of Bowman and others, were creditors prior to that time. Suppose Denny & Son, or the Bank of Bowman, had reduced their claim to judgment, and had sought to enforce same by levy and sale of this property, and a claim had been filed by Mrs. Emma Osley, claiming under the deeds now sought to be established in this case, would she have been heard to say that those creditors could not attack her deed as fraudulent on the ground that it was not actually executed in 1913, and on the ground that it was a voluntary conveyance, without consideration, made for the purpose of hindering, delaying, and defrauding them? Most certainly not. "Then the trustee stands in their shoes, and then this contention of the defendants is disposed of.

"This being a transaction between husband and wife and son, and attacked by creditors as fraudulent, the wife now seeking to hold the property in question under the deeds so attacked, the burden is on the defendants to show valid consideration and good faith of the transaction.

"Conclusions of Fact.

"This is a case where a father undertook to deed all of his property through his son to his wife. The creditors attack the conveyances as fraudulent. The burden was thereby shifted to the defendants, and the defendants have not only failed to carry this burden, but the evidence in the case carries this case far beyond that of suspicion, and establishes by a preponderance of the evidence that the entire transaction was a fraudulent scheme on the part of all the defendants to put the property of J. J. Osley beyond the reach of his creditors.

"In the first place, J. J. Osley testified that he sold all of his property to his son, and his son, in turn, sold it to J. J. Osley's wife. The fact that a man sells out everything he has in a lump is a suspicious circumstance within itself.

"J. J. Osley testified on one occasion that the deed was made to secure a debt of $3,500, as recited in the deed. He testified on another occasion that it was an absolute conveyance. J. J. Osley testified that his son, Patrick Osley, let him have about $7,000 in money prior to the execution of the deed, and that on the delivery of the deed and transfer of the bond for title Patrick Osley paid him some $400 or $500. In the next breath he testified that he paid him $7,000. He then stuck to the $7,000, and swore that he paid it to him in cash money in the office of Alex S. Johnson, an attorney, at Royston, Georgia; that he paid him in actual cash. Patrick Osley contradicted him on this proposition. Patrick Osley swore that he paid him $7,000 in cash, but he was just as positive that it was not paid in Alex Johnson's office. J. J. Osley and Patrick Osley both swore that Mrs. Emma Osley paid over to Patrick Osley, at the time the deed and transfer from Patrick Osley to Mrs. Emma Osley bear date, the sum of $13,500 in actual cash money; that Mrs. Osley had saved up that much cash money over in Madison county on a farm, and yet prior to that time, when J. J. Osley needed some cash, to the amount of $3,500, he executed a security deed to C. C. Boise in order to obtain money, his wife having at that time, according to the evidence of these witnesses, some $13,000 in cash money in the house (the evidence is she did not keep it in bank). J. J. Osley testified that in 1913, when he received this $7,000 from his son, he did not owe a dollar in the world. He further testified that he tried to make his own bread and meat on his farm, and that his annual expenses were not over $300 to $500, and yet inside of five years we find this same man a voluntary bankrupt. He offered no explanation as to the disposition of this $7,000.

"Patrick Osley's testimony was equally as far-fetched as that of J. J. Osley. He did not undertake to explain how he came by $13,000 in actual cash. "Mrs. Emma Osley was not put on the stand by either side.

"The above extracts from the evidence of J. J. Osley and Patrick Osley are but an index to their entire testimony, the whole of which is so improbable and unnatural as to be rendered unbelievable.

"The deeds from J. J. Osley to Patrick Osley and from Patrick Osley to Mrs. Emma Osley appear to have been written on forms printed by Bennett Printing & Stamp Company, Atlanta, Georgia. They bear a water mark, to wit, 'Courier Bond.' The plaintiff introduced Mr. W. C. Bennett as a witness. Mr. Bennett testified that he is president of the Bennett Printing & Stamp Company, of Atlanta, Georgia; that he has been connected with the concern twenty-four years. He swore that the Bennett Printing & Stamp Company did not use 'Courier Bond' paper for printing blank forms prior to August 1916; that prior to that time they used a paper known as the 'Purchase Bond.'

"In describing the 312 acres of land the following language is used: 'On the south by lands of L. S. Strickland and Mrs. Lillie McGarity.' According to the evidence, Mrs. Lillie McGarity is the widow of John McGarity. John McGarity owned the land referred to as bounding the 311⁄2-acre tract on the south in his lifetime. John McGarity died, according to the evidence, in 1915.

"The evidence further shows that this 311⁄2-acre tract deeded by J. J. Osley to Patrick Osley was part of a 561⁄2-acre tract of land bought by J. J. Osley from Mrs. M. V. Brewer and J. J. Osley testified that, when he made the deed to the 311⁄2 acres to Patrick Osley and transferred the bond for title to the 380 acres, he sold to Patrick Osley every foot of land that he owned, and yet we find J. J. Osley, on the 27th day of November, 1915, deeding to L. W. Dorough the balance of this 562-acre tract, off of which the 311⁄2 acres was deeded to Patrick Osley, to wit, 25 acres. J. J. Osley offered no reasonable explanation as to why, in 1913, he deeded only 311⁄2 acres to Pat, reserving 25 acres that two years later he was to deed to L. W. Dorough. The only explanation is that the 25 acres was already deeded to Dorough, and that the