ber 28, 1943, to April 20, 1944, for the purpose of transferring all of the stock of the debtor held by it to the reorganization committee in order to carry out the plan. Sloss & Turner also have filed a separate petition requesting allowances of $7,000 as compensation for their services from November 28, 1941, through July 31, 1944, and $725.02 for reimbursement of their expenses during this period.

The services of counsel consisted of preparing and filing objections to the plan, and participating actively in the proceedings before the district court. Counsel perfected appeals from the order of that court approving the plan; studied and supervised the making and completion of the transcript of the record on appeal; prepared opening and reply briefs on behalf of petitioner to the circuit court of appeals; participated in oral arguments in that court; opposed the various petitions for certiorari; participated in preparing the record on appeal; studied the briefs filed by the petitioners for certiorari and prepared and filed a brief to the Supreme Court on behalf of the petitioner; and participated in the oral argument before that Court. Following the rendering of the opinion of the Supreme Court, counsel represented petitioner in the further court proceedings herein before described.

For the period prior to November 28, 1941, members of the firm of Sloss & Turner devoted a total of 16214 days to these matters, all by partners. For the period from November 28, 1941, members of the firm spent 194 hours on these matters, and associates spent 42 hours, exclusive of 10 days spent by M. C. Sloss while traveling to and from Washington and participating in the oral argument before the Supreme Court.

Reconstruction Finance Corporation.-The Finance Corporation requests allowances of $7,046.35 for reimbursement of expenses incurred during the period November 1, 1939, through July 31, 1944, and $1,000 for reimbursement of estimated expenses through December 31, 1944. No compensation is requested for the services of its regular staff. Included in the disbursements is a payment of $1,549.17 to the firm of Brobeck, Phleger & Harrison who acted as San Francisco counsel for the Finance Corporation in connection with the plan of reorganization, and a payment of $215.17 to the firm of Berle & Berle who represented the Finance Corporation in respect of the maturing of the trustees' certificates. The remainder is for travel expenses of the Finance Corporation's staff, printing, telephone charges, et cetera. The firm of Brobeck, Phleger & Harrison devoted a total of 155512 hours to these matters, of which 153512 represent time of senior counsel, and 2 hours of junior counsel. The firm of Berle & Berle devoted 2012 hours to the matters in which they

acted, of which 1914 hours represent time of senior counsel, and 14 hours of junior counsel.

Railroad Credit Corporation.-This corporation requests an allowance of $3,535.08 for reimbursement of expenses incurred and estimated to be incurred from November 1, 1939, to the termination of these proceedings. No compensation is requested for the services of the officers and counsel of the petitioner. Of the allowance requested $1,950 is for the compensation of Arthur B. Dunne who was retained. by the petitioner in June 1944 to represent it in connection with questions raised in the bankruptcy court in respect of the construction of certain language of the plan pertaining to the treatment provided for the petitioner's claim. Dunne and his associates have spent 50 hours and 15 minutes on this matter through October 27, and Dunne estimates that it will be necessary for him and his associates to spend between 15 and 20 hours in connection with the appeals that have been taken from the order of the district court. Dunne further estimates that if he is called on to prepare and file a brief in this matter, that it will require from 8 to 10 days as a maximum. The remainder of the allowance requested is for reimbursement of the travel expenses of officers of the petitioner, printing, et cetera.

Pierce & Greer and Frank C. Nicodemus, Jr.-These petitioners request an allowance of compensation at the rate of $20 per hour for services rendered as counsel for the debtor, and an allowance of $1,562.54 for reimbursement of their expenses incurred during the period November 1, 1939, through July 31, 1944. They also request an allowance as compensation at the same rate for services rendered and to be rendered from July 31, 1944, through December 31, 1944, and an allowance of $250 for expenses estimated to be incurred during that period. For the first period in question a total of 1,15734 recorded hours (later corrected by petitioners to 1,07511⁄2 hours) was devoted to this matter by counsel (practically all by Frank C. Nicodemus, Jr., a member of the firm), and for the last period in question, counsel first estimated that they would spend 750 hours on this matter, but later reduced that estimate to 375 hours. On a corrected basis, the allowance requested for compensation would amount to $29,010. Petitioners were employed to represent the debtor at the inception of the reorganization proceeding by resolution of the executive committee of the debtor's board of directors. They were allowed $35,000 for services rendered to November 1, 1939.

As previously stated herein, following the certification by the Commission of the plan to the district court, the Western Pacific Railroad Corporation, holder of a substantial unsecured claim against the debtor and the holder of all of the stock of the debtor, employed counsel to represent it directly in the proceeding. Petitioners take

the position, however, that the representation of the debtor is not limited or restricted to the representation and protection of the equity interests, but extends also to the interests of all creditors and security holders not directly represented in the proceeding, and that counsel performing such services are entitled to allowances out of the debtor's estate of compensation and expenses.

Nicodemus, testifying in support of this petition, stated that the employment of separate counsel by the Western Pacific Railroad Corporation was not intended to displace petitioners as counsel for the equity interests, but that in view of the unity of interests between the Western Pacific Railroad Corporation and the debtor, to the extent that the debtor represented junior interests, counsel for the debtor and counsel for the Western Pacific Railroad Corporation undertook a division of the work, and that division was persisted in throughout the proceedings. According to Nicodemus, he assumed the burden of presenting the case factually and counsel for the Western Pacific Railroad Corporation presented the legal aspects. From the record, however, it is difficult to discern this distinction between the activities of counsel for the debtor and counsel for the Western Pacific Corporation. Neither the petitions, nor the affidavits filed by the Western Pacific Railroad Corporation and by its counsel make this distinction, and both such petitions state definitely that the firm of Sloss & Turner acted as sole counsel for the corporation. While counsel for the debtor consumed about 1 hour and 40 minutes in his presentation of the case in the district court, counsel for the Western Pacific Railroad Corporation devoted almost 1 full day to the matter; and in the Supreme Court, counsel for the Western Pacific Railroad Corporation alone argued on behalf of the equity interests. The record does not show the amount of the time devoted to the oral presentation of the case in the circuit court of appeals by counsel.

Insofar as the debtor's refunding-mortgage bonds are concerned, Nicodemus testified that he felt no responsibility for them in view of the fact that each of the three creditors whose claims were secured by all of the refunding bonds was represented by individual counsel. In respect of the debtor's first-mortage bonds, however, and despite the activities of the institutional bondholders' committee, holding approximately $17,000,000 of first-mortgage bonds, the trustees under the debtor's first mortgage, and counsel for A. C. James Co., who represented informally holders of approximately $9,000,000 of firstmortgage bonds, petitioners contend that they represented and were obligated to represent the holders of first-mortgage bonds who were not directly represented. However, one of the primary issues with which the first-mortgage bondholders were concerned was the extent

of their lien, in respect of which a serious controversy arose between the first-mortgage bondholders and the refunding-mortgage bondholders. Counsel for the debtor vigorously opposed the claims of the first-mortgage bondholders in respect of this issue in the district court, the circuit court of appeals, and the Supreme Court. Otherwise petitioners' representation of the first-mortgage bondholders consisted of contending, throughout the proceeding until the Supreme Court rendered its decision, that the debtor's stockholders should be allowed to participate in the reorganization, although the Commission had found that all of the assets of the debtor were required to satisfy the claims of secured creditors.

In addition to participating in the pretrial conference, the hearings before the district court on the plan, and in the subsequent proceedings before the circuit court of appeals and the Supreme Court, counsel also attended the further proceedings before the district court; and according to the statement of Nicodemus, he has spent a large amount of time in consultation with a group of holders of first-mortgage bonds in order to keep them advised of the progress of the reorganization and to act as a channel through which their views could be presented. Among the services listed by counsel, following the argument before the Supreme Court, is attendance on six successive Mondays in February and March 1943, at sessions of the Supreme Court for the purpose of listening to the oral rendition of decisions by the Court and in the expectation that the Western Pacific and Milwaukee cases, in which counsel was also interested, would be decided. Counsel lists 6 full days of time devoted to this purpose. It is noted that counsel also lists 24 or more days of 8 hours each while traveling to and from San Francisco during the period November 1, 1939, through July 31, 1944.

Included in the services of petitioners are two appearances before the district court subsequent to the confirmation of the plan and the appointment of the reorganization committee. These proceedings attended by counsel related solely to matters involving the consummation of the plan and were of no interest to the stockholders whose equity had been found to be without value. While the corporate entity of the debtor company is being used as the instrumentality for carrying out the plan, the work involved in this procedure is being performed by counsel for the reorganization committee, and all of the stock of the debtor has been transferred pursuant to order of the district court in the names of the reorganization committee or their nominee.

It appears that petitioners asserted representation of a specific group of first-mortgage bondholders consisted in conferring from time to time with representatives of certain arbitrage houses whose holdings of bonds were represented to counsel to exceed $20,000,000. Counsel

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defined an arbitrager as an investor or speculator who buys a firstmortgage bond of the debtor for $800 and immediately thereafter enters into a contract with an investor to sell to him for $900 the securities he will receive for the first-mortgage bond under the plan. These conferences were held after July 31, 1944, and were for the purpose of advising these parties as to the date when it was expected that the plan would be consummated and what the provisions were going to be for the distribution of cash. These bondholders have not intervened in the proceedings before us, nor do we understand that they were parties to the proceedings before the court.

The Finance Corporation takes the position that where the stockholders themselves appear in the proceedings, and particularly after their interests have been fully considered and determined not to be entitled to participate in the reorganization, the debtor company, aside from the furnishing of factual information regarding its properties and affairs, has little real responsibility in such proceedings, and that the maximum allowances fixed for its expenses, including counsel fees, should be determined with that fact in mind. While in other proceedings under section 77 for the purposes of fixing maximum allowances for services rendered, we have recognized that the debtor, as well as other interested parties, is entitled to representation, we also have made it clear that counsel should be compensated out of the estate of the debtor only for any services actually rendered which are of benefit to the estate and contribute to the reorganization and do not involve unnecessary duplications. The basic test of "benefit to the estate" applies equally to the debtor and the other interested parties. See In re Chicago, Milwaukee, St. Paul and Pacific Railroad Company, 121 Fed. (2d) 371 (C. C. A. 7th, 1941), certiorari denied, 314 U. S. 679 (1941); and same case, 138 Fed. (2d) 433 (C. C. A. 7th, 1943), certiorari denied, 321 U. S. 770 (1944). Of particular significance is the decision of the Circuit Court of Appeals for the Second Circuit in In re Porto Rican American Tobacco Co., 117 Fed. (2d) 599 (C. C. A. 2nd, 1941), wherein comparable provisions of Chapter X dealing with corporate reorganizations were construed. Among other things, the court states:

Because section 206, 11 U. S. C. A. § 606, accords the debtor the right to be heard on all matters arising in a chapter X proceeding, and section 169, 11 U. S. C. A. § 569, recognizes that the debtor may propose plans or amendments thereto, and submit objections to plans, the appellant contends that it is implicit in the statute that the debtor may be represented by an attorney who shall be compensated out of the estate whether or not his services have been necessary to the advancement of the proceeding. No such conclusion necessarily follows from the premise. The same sections likewise give stockholders and creditors a right to be heard on all such matters; nevertheless it is clear that their attorneys can be compensated from the estate only if their services contributed