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filled in by the court. It is conceded on all hands that defendants' attorneys, as well as Messrs. McPherson and Taylor, observed that agreement. It appears, however, that appellant Burns, on being applied to by a person supposedly in Kelly's interest for information in connection with the raising of the money required to carry out the compromise) as to the amount of the receiver's compensation, attorney's fees, and costs which Kelly would probably be called upon to pay, stated that it would be impossible for him to give an idea upon that subject, but that, if the court asked for suggestions as to the amount of such fees, he would say that “a fair and reasonable fee would be 5 per cent. of the amount agreed upon in settlement to the attorneys and 5 per cent, to the receiver.” Appellant Burns disclosed to Judge Sater the fact of this interview. Judge Sater, in his opinion, states in substance that in appointing appellants as counsel for the receiver he did not expect that they would receive compensation, other than their regular salaries, unless they should be continued as attorneys after their terms of office expired, and then only for services thereafter rendered, and that “trustworthy persons inform me, and the evidence conclusively shows, that it was announced by me at one of the hearings that he was not otherwise to be paid";' that appellant Burns, in relating his conversation with Kelly's representative, stated that the latter said that the amount suggested (5 per cent, to the attorneys and 5 per cent, to the receiver) "was about right and would be satisfactory"; and that appellants' compensation was fixed in the belief that the Attorney General had assented to the payment of compensation and that the defendants were satisfied with the amount which the court fixed. The compensation was fixed by filling in the blanks in the order drafted by counsel.

It is undisputed that appellant McPherson, as well as the receiver and defendants' counsel, were ignorant of Burns' statement to the court. It should be said that Burns made his disclosure to the District Judge on being told that the "court could not act intelligently without information,” and that he denies telling Judge Sater that defendants or their counsel had expressed themselves as satisfied to pay the attorneys $20,000. The fact, however, that Kelly's supposed representative made no objection to Burns' statement of his attitude, would naturally tend to raise at least an inference of his acquiescence. There is no doubt that the sum allowed was highly extravagant compensation for services rendered, at least after the appointment of the receiver.

1. Appellants challenge the right of the United States to intervene by motion to vacate the award of compensation. We have no doubt,

2 The affidavit of one of defendants' counsel states that in the conference between appellants, the receiver and defendants' counsel, in connection with the settling of the entry of appointment, Judge Sater said, in substance: “Of course Mr. McPherson and Mr. Burns will not be entitled to receive any compensation while they occupy their present positions, they shall continue as counsel for the receiver while they occupy their present official positions, but my intention is that, if this litigation be pending when they cease to occupy their present positions, they shall continue as counsel for the receiver, and, in that event, they would be entitled to reasonable compensation for services rendered by them after that time." This statement was not, upon the hearing below (so far as shown by the record), denied by any one. The brief of counsel in this court, however, contains such denial.

however, that the Department of Justice, which represents the government of the United States, has a very proper interest in seeing to it that the rights of litigants in cases to which the government is a party are in every way respected, and that the officers of the department are not remiss in their duty, and is especially interested in those regards when criminal proceedings are pending, as here. We see no element of estoppel against the United States to complain. But, more than this, the court which appointed the receiver and his counsel, and awarded compensation, clearly had the right, upon its own motion or at the instance of a party to the suit, to reconsider its action in that regard. However, all question of jurisdiction to so reconsider is foreclosed by appellants' consent thereto.

The important and meritorious questions are: First, whether appellants were eligible to appointment as counsel for the receiver; and, second, whether they could lawfully receive any compensation whatever as such counsel.s

[2, 3] 2. Questions of compensation apart, the mere fact that appellants were counsel for the United States in the original suit filed in its name did not make their appointment as counsel for the receiver necessarily improper. The general rule that a receiver should not employ counsel of either party is limited to cases of adverse interest (In re Smith (C. C. A. 6) 203 Fed. 369, 372, 121 C. C. A. 485; Alderson on Receivers, $ 233), and has no application to proceedings, such as taken here, to recover property fraudulently conveyed. Appellants' representation of the receiver in the ancillary suit involved no necessary conflict of interest between the United States and the receiver (High on Receivers (4th Ed.] $ 217, pp. 259, 260; Daniel v. Insurance Co. 149 Mich. 626, 629, 113 N. W. 17). Should counsel's duty to the United States and to the receiver be in actual experience found to conflict, the receiver should, of course, employ other counsel. Nor (still apart from questions of compensation) did the fact that appellants were respectively United States Attorney and Assistant United States Attorney disqualify them from acting as counsel for the receiver in the prosecution of the suit to recover from stockholders. The receiver's action in that regard was merely ancillary to, and in effect a continuation of, the original suit for the appointment of a receiver. The United States was the party beneficially interested; and there was, in our opinion, no more impropriety in appellants representing the receiver, so far as concerns the prosecution of the suit to reach specific assets for the benefit of the United States, than in filing the original bill for the receivership had for the purpose of such suit. Indeed, as we shall see, it was appellants' duty, as between themselves and the United States, to represent the interests of the United States therein, so far as the government should request.

[4] 3. The more important question concerns appellants' right to compensation for the services rendered. As we have already said, we have no doubt that it would have been the duty of appellants to repre

8 It is assumed by all parties that, if appellants are entitled to any compensation, the case will be remanded to the District Court for hearing as to amount.

sent the United States in the receiver's suit, if requested by the government, and without compensation other than their official salaries. The original bill was in effect as well as in name that of the United States, and showed on its face that it was filed by direction of the Attorney General, and by authority and sanction of the Commissioner of Internal Revenue. The United States Attorneys represented the plaintiff therein, as was made their duty, not only by section 838 of the Revised Statutes (Comp. St. 1916, $ 1297), which relates to revenue fraud cases, but by section 771 (section 1296), which makes it the duty of every district attorney to prosecute in his district "all civil actions in which the United States are concerned.” The receiver's bill was, as already said, purely an ancillary or dependent proceeding,* throughout which the United States was treated as the sole beneficiary, as in fact it turned out to be. It is unnecessary to decide whether this ancillary proceeding should be classified as a revenue fraud case, under section 838, for we think it clear that it was a “civil action in which the United States are concerned," within the meaning of section 771, which is not limited to cases in which the United States is a party of record. In Smith v. United States, 158 U. S. 346, 353, 15 Sup. Ct. 846, 848, 39 L. Ed. 1011, it is said:

"By section 771 it is not only the duty of the district attorney to prosecute all delinquents for crimes and offenses against the federal laws, but 'all civil actions in which the United States are concerned,' and there is a finding that the claimant was not only directed by the Attorney General to appear, but that the government was interested either in the prosecution or defense of such suits, although the direct nature of such interests does not fully appear."

And again (158 U. S. 355, 15 Sup. Ct. 849, 39 L. Ed. 1011):

"It can hardly be supposed that Congress could have intended that the Attorney General should not be at liberty to call upon the official representative of the United States in each district to defend, as a part of his official duty, the interests of the government, in any suit in which it was interested.” (Italics ours.)

In Hillborn v. United States, 163 U. S. 342, 345, 16 Sup. Ct. 1017, 1018, 41 L. Ed. 183, the doctrine of Smith v. United States was reaffirmed, to the extent that the words, “ 'prosecute all civil actions' were not to be interpreted in any technical sense, but should be construed as covering any case in which the district attorneys are employed to prosecute the interests of the goverument, whether such interests be the subject of attack or defense."

In United States v. Ady (C. C. A. 8) 76 Fed. 359, 22 C. C. A. 223, a district attorney was held not entitled to extra compensation for services rendered by direction of the Attorney General for defending officers of the army in suits against them for acts done in the line of their duties.

While appellants were not directed by the Attorney General to appear in the receiver's suit as attorneys for that officer, and while it

4 See White v. Ewing, 159 U. S. 36, 15 Sup. Ct. 1018, 40 L. Ed. 67; Compton v. Jesup (C, C. A. 6) 68 Fed. 263, 279, 15 C. C. A. 397, and cases cited; Robertson v. Conway (C. C. A. 6) 188 Fed. 579, 584, 110 C. C. A. 377; Cobb v. Sertic (C. C. A. 0) 218 Fed. 320, 134 C. C. A. 116, and cases cited.

would have been entirely competent for the receiver to employ wholly disinterested counsel, we think appellants were throughout the litigation recognized by the court, the receiver and the Department of Justice as representing the United States. The department was, at the time the bill was filed, notified that the court had appointed appellants as attorneys for the receiver; it continuously treated appellants, both by correspondence and by personal interviews with appellant McPherson, as representing the interests of the United States in that suit. The dominating character of appellants' relations toward the receiver's suit and its compromise was that of attorneys for the United States. As was well said by Judge Sater:

"The receiver was appointed to collect, if possible, the government's claim. The circumstances were such that the district attorney could not aid the receiver without acting for the United States. In the performance of his duty he could of course avail himself of the services of his assistants, but the purpose in his appointment was, as heretofore stated, to secure as far as possible his individual attention to the case.”

Both appellants had, in December preceding the filing of the government's original bill, attended a conference in the office of the Commissioner of Internal Revenue, in which procedure for recovery from stockholders was considered. Such proceeding was naturally a part of the government's plan when its bill was filed, and one or both of appellants had presumably been actively considering the subject prior to their appointment as counsel for the receiver. The arrangements for the compromise conference, including appellant McPherson's call to Washington for the purpose, were official in form. The Attorney General alone, on the part of the plaintiff in that suit, determined whether the proposition of compromise should be accepted. The order confirming the compromise directed the payment to the collector of internal revenue of the entire sum of $400,000 recovered, and the receiver paid directly to that officer the cash paid down on the compromise, as well as the avails of the note maturing June 1st thereafter.

Without deciding that the district attorney may not properly receive compensation for representing a receiver in the prosecution of a creditors' suit in which there are substantial beneficiaries aside from the United States, or that an attorney for the United States, as counsel for a receiver in a suit in which the United States is interested, may in no case, even by express consent of the government, receive from a defendant, under a compromise of litigation, compensation for special and unusual services, although rendered to the United States as the sole party beneficially interested on which questions we express no opinion), it is plain to our minds that under the circumstances existing here such recovery was not permissible, at least in the absence of such consent. It is immaterial that the fees in question were paid by defendants, rather than out of the fund recovered. Recovery of such fees from a defendant, if had without the government's consent, would naturally belong to the United States. As said by the late Judge Thayer:

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"The law does not allow an attorney to stipulate with an opposing party for the payment of his fees, in whole or in part, unless he acts with the knowledge and consent of his client.” Bliss v. United States (C. C.) 37 Fed. 191, 195.

And, as said by Judge (later Mr. Justice) Brewer, in affirming the judgment in that case:

“Public policy requires the strictest adherence to the rule that when a counsel receives from the defendant in a case in which he is prosecuting money above the fees which by law he is entitled to, the money which is received belongs to his client.” Bliss v. United States (C. C.) 38 Fed. 230.

The principles so stated apply with equal force under the existing statute, which provides salaries to the United States Attorneys for the district in question in full for official services. Act May 28, 1896, c. 252, $$ 6, 7, 29 Stat. 179, 180 (Comp. St. 1916, $$ 1418, 1419). We think recovery by appeilants for services in effect rendered the United States forbidden by sound public policy, under the circumstances presented here, including the facts that the United States were the only beneficiaries, the reason for appellants' appointment as already stated, the intention of the court (whether communicated or not) that appellants should receive no compensation while holding their official positions, the actual relations between appellants and the government toward the litigation and in the effecting of the compromise, the fact of the pendency of the criminal cases and appellants' relations thereto, lack of authoritative consent on the part of the United States to such recovery, and the fact that the United States were not represented in the making of the actual order allowing compensation.

We think public policy, as declared by the statutes and the decisions of the courts of the United States, opposed generally to the receipt by United States Attorneys of private compensation for the performance of statutory duties. Previous to the act of 1896 (29 Stat. 179, supra), providing a salary in full for official services, the Supreme Court, in Gibson v. Peters, 150 U. S. 342, 347, 14 Sup. Ct. 134, 136, 37 L. Ed. 1104, in denying recovery by a United States district attorney for services rendered to the receiver of a national bank, said:

"Nor can the expenses of the receivership be held to include compensation to the district attorney for conducting a suit in which the receiver is a party, for the obvious reason that the statute does not expressly provide compensation for such services. Congress evidently intended to require the performance by a district attorney of all the duties imposed upon him by law, without any other remuneration than that coming from his salary, from compensation or fees authorized to be taxed and allowed, and from such other compensation as is expressly allowed by law specifically on account of the services named.”

This proposition was reaffirmed in United States v. Johnson, 173 U. S. 363, 372, 19 Sup. Ct. 427, 43 L. Ed. 731 et seq. And see Garter v. United States, 31 Ct. Cl. 344. The force of these decisions is strengthened, rather than impaired, by the act of 1896. Except as indicating the policy of the law, we attach no special importance to section 3170 of the Revised Statutes (Comp. St. 1916, § 5893), which makes it an offense for a district attorney to receive anything for compromising a violation of the internal revenue laws (assuming that the compromise in question was a revenue law violation) or to section 18 of the act of

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