In re Burg

• Decision Date: 13 August 1917
• Docket Number: 1345.
• Citation: 245 F. 173
• Parties: In re BURG.
• Court: U.S. District Court — Northern District of Texas

245 F. 173

In re BURG.

No. 1345.

United States District Court, N.D. Texas, Dallas Division.

August 13, 1917

Etheridge McCormick & Bromberg, of Dallas, Tex., for petitioning creditors.

Crane &amp Crane, of Dallas, Tex., for bankrupt.

JACK District Judge.

The Waterloo Gasoline Engine Company, alleging that it was a creditor of Burg in an amount in excess of $500, and that he had less than 12 creditors, filed petition praying his adjudication as a bankrupt.

Defendant filed answer in which he excepted to the plaintiff's petition, on the ground that he had more than 12 creditors and, further answering, denied that he was bankrupt, denied that he had committed any act of bankruptcy, and specially denied that he was indebted to the petitioning creditor against whom he pleaded a claim in offset.

The list filed by defendant showing his creditors at the date of the filing of the petition discloses 24, not including the plaintiff. Only 3 of them were for more than $100, the highest being for $252.56, and 12 of them were for sums under $5. These small claims were current accounts for groceries, drugs, dry goods, milk, gas and oil, telegrams, telephone bills, water, light and gas bills, etc., such as are contracted and paid for from month to month. Such creditors are practically secured, as their bills have to be paid from month to month before further necessities can be obtained. The bankruptcy law is never invoked by any such small creditors, who themselves have adequate remedy for the collection of their accounts by cutting off further supplies. As to these accounts, I think the maxim, 'De minimis non curat lex,' applies. Such was the holding of Judge Treber in Re Blount (D.C.) 142 F. 265. As was well said in that case:

'If the contention of the respondent is to be sustained, the involuntary feature of the Bankruptcy Act would be a dead letter; for any insolvent who desired to prefer some of his creditors, leaving out one or two, could always manage to have as many as 20 creditors by purchasing for his personal use and that of his family small things amounting to sums ranging, as in the case at bar, from 10 cents to $2, and having them charged. By paying them the succeeding month, after he had made some small purchases, to be charged again, it would always leave a number of creditors ready to be used whenever proceedings of this kind are instituted against him. It is hardly reasonable to suppose that creditors of that kind, who feel secure in having their bills promptly paid, would want to incur the risk of losing a good customer in order to join a bona fide creditor to institute proceedings in bankruptcy. All laws must be given a reasonable construction, and for this reason the claims herein before recited must be disregarded in determining the number of the creditors of Mr. Blount at the time these proceedings were instituted, and if this is done it clearly appears that there were less than 12 creditors.'

So in the case at bar, if these small claims are disregarded, there are less than twelve creditors. Accordingly the exception was overruled. However, later, and before the trial of the case on the merits, two other creditors intervened, so that, as finally presented, there were three petitioning creditors.

Briefly stated, the facts out of which plaintiff's claim arose, and on which defendant bases his counterclaim and set-off, are as follows:

Plaintiff is a manufacturer of kerosene and gasoline engines, and a tractor known as the Waterloo Boy, so named for the home city of the company. Burg, who had been working as a clerk in an implement house in Dallas, which handled this tractor, on January 28, 1916, entered into a contract with the plaintiff, under the terms of which he was employed for one year as agent in the state of Texas for the sale of the engines and tractors manufactured by plaintiff. It was agreed that Burg should put at least two men besides himself at work in organizing the territory and pushing the sales, and that he should pay $522.50 net for each tractor shipped from the factory, and $550 net for each tractor shipped from some distributing point in Texas, the plan being that Burg should order the tractor to be shipped to the purchaser secured by him at a price in advance of that named, the difference to be his commission. Payment was to be made by a sight draft by Burg on the purchaser with bill of lading attached, returnable to plaintiff at Waterloo, Iowa, the plaintiff to then give Burg credit for his commission.

It was further agreed that the Waterloo Company should carry at three distributing points a stock of four tractors for the convenience of Burg, and should likewise carry a sufficient stock of gasoline engines at these points to take care of the trade. Gasoline engines were to be sold at prices named by the Waterloo Company, the defendant to receive a commission of 10 per cent. thereon. He was likewise to receive a commission of 15 per cent. on sales of extra parts for repairs. Burg was to be furnished by the company with literature for distribution in his territory.

Operating under this contract, Burg sold a number of tractors for which he did not draw drafts payable to the company, as stipulated in the contract, but himself collected the price and failed to account for same. Repeated demands were made on him by letter for a statement and remittance of the amount collected, but without avail. Finally, in answer to a letter in December threatening to place the matter in the hands of an attorney, Burg wrote, urging that this be not done, and adding:

'There are things in your claim for goods that have been returned to the warehouse by customers and then to you at factory by forwarding company in car that was shipped you some time ago.'

Finally Johnson, manager of the company, came to Dallas and checked up his account with Burg. The statement, as made out by Johnson, was several thousand dollars too much, and, after checking over the books, it was found that there was due the plaintiff $8,295.69, as against which Burg for the first time made claim for damages suffered by reason of the fact that the tractors sold did not come up to representation, claiming that he had for that reason lost in profits more than the amount of the balance due to the Waterloo Company.

On the trial of defendant's claim much evidence was offered as to the merits and demerits of the tractor. I am of the opinion that the tractor was too light for the work required of it in plowing black waxy lands of Texas. The greatest defect perhaps was in the radiator. It held only about 8 gallons of water, when it was represented in plaintiff's literature to hold 12. As a result the water boiled quickly and the...