Voltz v. Treadway & Marlatt

Appellees were attorneys for the bankrupt for a number of years prior to bankruptcy. They were to be compensated by a monthly retainer, with additional fees for collections and court work. In 1928, about two years before adjudication, the bankrupt placed with the appellees a collection against a firm of contractors involving a mechanics lien. At that time the bankrupt owed appellees about $300 for professional services. Subsequently foreclosure was instituted in the name of the bankrupt and the suit was pending at the time of adjudication. In December, 1930, after the election of a trustee, appellees collected therein the amount of $1,460.30. In the meanwhile, and before adjudication, they had performed other services for the bankrupt, and it is conceded that the total owing to them at the time of adjudication exceeded the amount collected in the foreclosure suit. Appellees claim a lien in the sum of $350 for the reasonable value of their services in collecting the amount now in their hands, but also claim the balance of the fund under an alleged parol assignment made to them in 1928. The appellant trustee resists the claim. The referee in bankruptcy found the appellees entitled to a lien on the fund in their possession in the sum of $350 for services performed in its collection, but directed the balance to be paid over to the trustee. On petition to review the order of the referee, the District Court found the appellees entitled to the entire amount collected on the basis of an equitable assignment or lien, and from the order of the District Judge reversing the referee, the trustee appeals.