Many perplexities and inconsistencies have arisen in the several circuits in the measure and determination of the compensation of Referees and trustees with reference to administration of tangible property as in the case of marshaling assets or selling free of liens. The question is multiform in its aspects and we believe no case, of the many heretofore decided, has undertaken to solve many of these problems so presented in this connection. Hereinafter are suggested some of the difficulties unsettled by harmonious judicial construction.

In the first place we may ask whether the Referee and trustee are entitled to any compensation cases of marshaling assets and of selling property free of liens.

If this question be answered in the affirmative, what is the measure of that compensation? Is it determined under the provisions of §§ 40, 48 and 72 of the bankruptcy Act; or is it measured by analogy on the basis of what would be charged as costs by a court of equity for those services?

Conceding that compensation is properly chargeable and the amount is determined, from what source shall it be paid? Should the lien holders pay it, or should it be paid from the general funds of the bankrupt estate? Is the answer to this question the same whether the lien holders or general creditors petition for the sale? Is it the same whether the property brings more or less than the amount secured by the lien, or whether it sells for the identical amount with no overplus for costs? Is the answer affected by the existence or non-existence of funds in the bankrupt estate?

Various sections of the statute should be read in the consideration of these questions.

§ 67 (e) of the Act provides that properly recorded and valid liens shall not be "affected by this Act." Would the taxing of fees against property subject to such "properly recorded and valid liens" violate this provision of the Act? § 48 of the Act provides that the trustee shall receive commission on "all moneys disbursed or turned over to any person including lienholders."

§ 40 of the Act, governing Referee's compensation, provides that he shall have one per cent commission on all moneys "disbursed" to creditors by the trustee.

Do these two last sections assist in the consideration of the question here presented? Is a "turn over" a "disbursement" within the meaning of the Act? And if property is turned over by the trustee in the place of actual cash, is this a "turn over disbursement"?

The bankruptcy court collects, marshals, administers, determines priorities of the parties, and directs the distribution of the assets. Re Grante City Bank, (CCA 8th) 14 A.B.R. 404, 137 Fed. 818.

And this power to marshal liens and determine their validity and priority implies the power to require, upon due notice, lien holders to set up their alleged liens within a stated reasonable time, or forever be debarred from asserting the same. Remington, Sec. 24722.

The court has such jurisdiction both at law and in equity as will enable it to exercise original jurisdiction in bankruptcy proceedings. And to cause estates of bankrupts to be collected, reduced to money and distributed, and determine controversies in relation thereto; to bring in and substitute additional persons or parties in the proceedings when necessary for the complete determination of a matter in controversy.

And to make such orders, issue such process, and enter such judgments in addition to those specifically provided for as may be necessary for the enforcement of the provisions of the Act. § 2, Act 1898.

And it has been held that a bankruptcy court is justified in refusing compensation to a Referee where he permitted an indifferent or extravagant administration of assets. Re Stillwell, 8 A.B.R. (N.S.) 70; 12 F. (2d) 917.

And that where a Referee authorized a trustee to expend extravagant sums in caring for burdensome property and a part of such expenditures was Referee's commissions, the court will compel the Referee to account for such amount received by him. Re Cintron, 2 A.B.R. (N.S.) 893.

It would appear that the mandate is upon both the trustee and Referee in the exercise of their duties to examine into and determine by appraisement or otherwise the value of lien properties to the end that the creditors who have no security may have the benefit of the possible equity. § 39 (2). The performance of such duties might require much work and responsibility and yet nothing might be obtained for the general creditors as the result of such service. In that instance do the unsecured creditors in equity or by the terms of the Act owe the trustee and Referee out of the estate anything for their services although they failed, through the sale, to realize anything for general distribution?

And then on the other hand does the lienholder owe the officers anything for at least conveying the equity of redemption under the sale in the bankruptcy court. And if he does should it be 6% of the first $500.00; 4% of the next $1,000.00 and 2% on up to $10,000.00 and 1% thereafter on the value conveyed, to the trustee, and 1% to the Referee or should these officers be paid according to foreclosure costs in a state court?

The shades of opinions of the Judges of the United States courts on this situation almost vary with the particular Judge.

One of the first opinions directly bearing on this subject is the case of re Huggins 24 A.B.R. 715; 179 Fed. 490 (CCA 8th).

In this case the bankrupt owned a saw mill on which there was a valid lien. The lien creditor and the trustee joined in a petition to the court to sell the property free of liens. When the property was sold it lacked a few dollars bringing the amount of the debt and the high bid was made by the lien holder. And the court held that the lien holder was entitled to have the purchase price credited on his

allowed claim without deduction of the commissions of the trustee and Referee, "there being a general estate of the bankrupt out of which the commissions might be paid." The opinion further read:

Here the proceeds of the sale did not equal the admitted incumbrance, and the deficiency should not be further increased by deducting the commissions of the officers, if there is a general estate against which they can be charged. This is in analogy to the general practice in equity in foreclosure cases, if possible, the judgment lien creditors are paid in full, and if a deficiency results from deducting the costs from the proceeds it goes as a judgment against the debtor. It appears here that there was a general estate of the bankrupt out of which the commissions might be paid. Therefore we need not determine what should be done in case of a sale by a trustee in bankruptcy at the instance of or with the concurrence of a lien creditor, a deficit of proceeds, and no general estate. The creditor was entitled to have the purchase price credited on his allowed claim. It would have been a useless ceremony for him to pay the $1500.00 into court and then have it repaid to him after credit on his claim.

From the reasoning in that case and that in the case of re Crammond, 17 A.B.R. 22 it would seem, that, as the trustee and Referee, performing in an equitable capacity, services required in looking after property on which there is a valid lien, their purpose being to ascertain the real value to the end that if there is an apparent equity, and these officers sell such property free of such liens and it eventually turns out that there is no equity for the general creditors, the bankrupt estate must, nevertheless, pay these officers for their services. In the Huggins case it must be noted that there should be "some reasonable probability that there will be realized from the incumbered property some surplus for distribution to the general creditors." In other words, if after a careful investigation and an appraisement, the property shows an apparent equity, and the sale is conducted, yet the property falls short of bringing the amount of the lien, that case indicates that the general estate owes the officers for such services.

It was the purpose of this article at the outset to classify, where possible, the divergent views expressed in approximately two hundred and twenty opinions touching the subject. But as that became apparently impossible there will be quotations of the two cases that seem to contain the most widely diverging view points.

In the case of Re Crammond, supra (1906) 145 Fed. 966; 17 A.B.R., 22, Judge Ray of New York voiced the most favorable view to the Referee's and trustee's compensation being based upon the bankruptcy statute on the sale of property free of liens, rather than the opposite view that the fees of the officers should only be in an amount that the lien holder might be expected to pay for like action in a

it shall be determined that the liens on the funds of the estate, assuming that all that are subject to liens are equal to or greater than such assets. Such a rule would require the officers of the court to spend time and money in caring for, protecting, and preserving the funds of the estate, subject to liens, for the benefit and profit of the lienors without compensation or reimbursement.

There is no suggestion that these commissions, etc., are confined to and must be computed on moneys disbursed to the general creditors by the trustee. In § 40, the language is 'all moneys disbursed to creditors by the trustee and in section 48 'all moneys disbursed by them as may be allowed by the courts.' This pre-supposes, of course, that money disbursed belonged to the estate of the bankrupt and was rightfully in the hands of the trustee for disbursement. Such funds may come into the possession of the court for this purpose in two ways: (1) By operation of law, and (2) by the consent or acquiescence of those interested therein. This position is founded in common sense and reason, and is supported not only by the express language of the Act, but by authority. Re Sanford Furniture Mfg. Co., 126, Fed. 888; 11 A.B.R. 414. By the amendatory act of 1903 the words 'all moneys disbursed to creditors by the trustee' were substituted for sums to be paid as dividends and commissions' in section 40 of the original Act, which provides for commissions to referees. By the same amendatory Act, the words 'all moneys disbursed by them' were substituted for the words 'sums to be paid as dividends and commissions' in section 48 of the original Act, which provides for commissions to trustees. Here, as to trustees, there is no limitation to 'moneys disbursed to creditors'. The language covers, and evidently was intended to include, all moneys lawfully disbursed by the trustee, and held by him as such, whether to creditors secured or unsecured or having priority, or to other persons. If to creditors it is immaterial whether the amounts lawfully paid them from the funds in court are paid as dividends or in satisfaction of a lien or liens on the fund.

. It was not intended to prohibit the court in bankruptcy from determining the validity and amount of a lien on the funds lawfully in the hands of the court and trustee, as such, or to deprive the referee and trustee of their commissions fixed and allowed by the law, or by the court, as the case may be, when they respectively adjudicate upon, care for, protect, and preserve and distributed a fund in court.

The syllabus of the Sanford case, cited above, reads:

When property subject to liens is sold with the consent of the lien holders the referee and trustee are entitled to commissions on the purchase price in full, even when the lien holder is the purchaser. And this opinion further reads:

The referee, under the law, is entitled to commissions on all moneys which were disbursed to creditors by the trustee. This means all sums which should be paid through the trustee but for outside agreement between parties and attorneys. When property subject to liens is sold by consent of parties holding such liens, the referee and trustee are entitled to commissions, under the act, on the full purchase price. When sold free from incumbrances, the money is constructively paid to the trustee, even when purchased by the party holding the incumbrance, and they are entitled to commissions as if actually paid. Having used the process of the court to accomplish their purpose, to-wit, to sell and purchase the property by a trustee of this court, which they probably could not have done under the deed of trust, they have received benefits and services for which the officers of the court are entitled to pay.

Under the circumstances of this case, it is held that the referee and trustee are entitled to their commissions