In re Burchfield

• Decision Date: 08 March 1929
• Citation: 31 F.2d 118
• Parties: In re BURCHFIELD.
• Court: U.S. District Court — Western District of New York

31 F.2d 118 (1929)

In re BURCHFIELD.

District Court, W. D. New York.

March 8, 1929.

Donnelly, O'Neil & Lindal, of Buffalo, N. Y., for bankrupt.

August Becker, of Buffalo, N. Y., for creditor.

ADLER, District Judge.

This is a motion made in behalf of the bankrupt for an order staying further proceedings on a judgment in a suit in the Supreme Court of Erie County, in which Albert E. Johnson was plaintiff, and Russell O. Burchfield, the bankrupt, was defendant. The facts in the Supreme Court action are as follows:

The bankrupt, Burchfield, was the agent and brother-in-law of the plaintiff, Johnson. Plaintiff was a hog buyer at the stockyards in the city of Buffalo. The bankrupt for a number of years acted in the capacity of his general manager and bookkeeper, and also assisted in the buying of the hogs. It appears that the bankrupt obtained the bills from the persons from whom he purchased hogs, and he would then in some instances add various amounts to the bills and collect those amounts for the customers in cash. This was done with the knowledge and approval of the plaintiff. The plaintiff contends that only so much money was to be obtained by bankrupt in this way as to pay running expenses and the agreed salary of the bankrupt. During the years 1922 to 1926, inclusive, the sum of $47,311 was added to these bills and received by the bankrupt. The plaintiff claims that by virtue of their relationship and association in business for many years he trusted the bankrupt to the extent of signing checks for the bills presented to him, with the amounts added to them, and that he did not ask the bankrupt for any statement of the account between them.

It was conceded on the trial that the procedure of adding amounts to the bills of the persons from whom hogs were purchased, and the receiving of the additional cash by the bankrupt was known to the plaintiff, and that it was by this means that the bankrupt was to receive his compensation. The dispute is as to the amount of the compensation. The bankrupt originally received a salary of $250 a month. Thereafter his compensation was increased. He says that he was to receive one-third of the profits of the company, and that the amount which he drew, and which is the amount originally sued for in the Supreme Court action, was one-third of the profits of the company. The plaintiff claims that the agreement was that he was to be paid one-third of the profits of the company up to $6,000 per year and no more. The action brought by plaintiff against defendant alleges in the complaint fraud and deceit on the part of the bankrupt in procuring this money from him. Three questions were presented by the court to the jury in writing. These questions were not objected to by either counsel on the trial. They are as follows:

First. Did the defendant receive from the plaintiff the sum of $19,941 in excess of the amount to which he was entitled during the years 1922 to 1926, inclusive? The jury answered this question, "Yes."

Second. Is the plaintiff entitled to a judgment against the defendant for that sum, including interest, making a total of $24,475.15? The jury answered this question, "Yes."

Third. If that excess was obtained, was it obtained by the defendant by fraud and deceit? The jury answered this question, "No."

The court in his charge to the jury stated to them that the main question for them to determine was whether the bankrupt had a one-third interest in the profits of the plaintiff's business, unlimited, or whether his salary, so called, was a one-third interest in the profits of the business limited to $6,000. A compilation of figures was agreed upon and the figures set forth in the questions propounded by the court to the jury represent the amount obtained by the bankrupt, by the means above described, in excess of $6,000 salary a year. A judgment in favor of the plaintiff for $24,574.15 was entered.

In determining whether this judgment is or is not dischargeable in bankruptcy, I will consider first the question, raised by the plaintiff, that the court, in determining motions of this character, will not look beyond the pleadings and the judgment; that the character of the action is determined by the complaint. I conclude that the court in order to...