In re Flick

• Decision Date: 05 November 1900
• Citation: 105 F. 503
• Parties: In re FLICK.
• Court: U.S. District Court — Southern District of Ohio

105 F. 503

In re FLICK.

United States District Court, S.D. Ohio, Western Division.

November 5, 1900

The following is the opinion of Referee GEIGER:

'This matter has come on for hearing before the referee upon the petition of the trustee and certain creditors for the re-examination and disallowance of the claims of Clarence E. Edmondson, E. C. Edmondson, Fred Kaufman, and Charles W Flick, which claims were filed with the referee, and heretofore allowed, for the purpose of voting for trustee. On November 4, 1898, the bankrupt, Claude W. Flick purchased of the administrator of E. C. Mellott a stock of gents' furnishing goods, located on South Fountain avenue, Springfield, Ohio, paying therefor the sum of $800. He continued in the business until December 11, 1899, when he made an assignment to his brother, Charles W. Flick. On December 22, 1899, Edgar G. Stearns and other creditors of the said Claude W. Flick filed their petition in the United States court, asking that the said Claude W Flick be declared a bankrupt, and on the 20th day of January, 1900, said Flick was declared a bankrupt by the United States court, and the case was referred to the referee.

'I will examine the several claims which have been asked to be disallowed, separately.

'Claim of Clarence E. Edmondson.

'Clarence E. Edmondson has filed his claim for $269.13, 'for work and labor done and performed as employe as wages within three months from the date of Claude W. Flick's assignment to C. W. Flick, which affiant (Clarence E. Edmondson) claims for wages under state as well as United States laws.' Charles W. Flick, the bankrupt, and Charles W. Flick are brothers. E. C. Edmondson is the brother-in-law of the bankrupt, and Clarence E. Edmondson is his son and the nephew of the bankrupt. Clarence E. Edmondson had been employed by E. C. Mellott, the former owner of the store, as a clerk, or, more properly speaking, a salesman, at $5 per week, and he served as such under said Mellott until the death of Mellott, in 1898. When his uncle, Claude W. Flick, bought the stock of goods from the administrator of Mellott, November 4, 1898, Clarence E. Edmondson was employed, as is claimed by him and his uncle, as salesman and buyer, at the rate of $18 per week, only $5 per week of which was paid to him in cash, he claiming that the balance ($13 per week) was retained by the uncle, with his consent, for the purpose of accumulating a fund in his uncle's hands to furnish him with the means for a collegiate education. He continued his services at $18 per week until September 1, 1899, when his salary was raised by his uncle from $18 to $20 per week, he continuing to receive $5 a week in cash. Clarence E. Edmondson, at the time he first began business with Mr. Mellott, was about 18 years old, and at the time of the assignment of his uncle was about 22 years old. It is claimed by the creditors on the one hand that the contract purporting to have existed between Clarence E. Edmondson and his uncle for the payment of $18 and $20 per week for his services was fraudulent; while, on the other hand, it is claimed by Clarence E. Edmondson, in which he is supported by his uncle, the bankrupt, that the contract was made in good faith, and that the services rendered by him were fairly worth the sums agreed to be paid by the uncle. Evidence has been introduced by the creditors tending to prove that in the city of Springfield the prevailing rate of wages for salesmen of the age and experience of Clarence E. Edmondson is much less than $18 per week; that $5 per week would have been a fair compensation for services of the young man. To the referee it appears that $18 and $20 per week was an exorbitant salary for the services of the claimant, and I must confess that I have some suspicions concerning the matter. But we have the direct testimony of Clarence E. Edmondson as to the contract, and the direct testimony of the bankrupt concerning the contract, and nothing to disprove it except that the amount seems entirely out of proportion to the services rendered. Yet we are not justified in saying that the claim is fraudulent, because the bankrupt made an improvident contract with his nephew. It may be argued that the plan to thus enhance the services of the nephew was a part of a general scheme begun at the very inception of the business to enrich the various members of the bankrupt's family at the expense of the creditors. This feature of it I will mention further along in the examination of the claim of Charles W. Flick. Clarence E. Edmondson maintains that his claim should be allowed by the trustee as a preference, and paid in full. The bankruptcy act, by section 64b, subd. 4, provides that wages due to workmen, clerks, or servants, which have been earned within three months before the date of commencement of proceedings, not to exceed $300, shall have priority. The petition of the creditors was filed December 22, 1899. Three months prior thereto would be September 22d. Clarence E. Edmondson served as clerk from September 22d to December 11th, 11 1/2 weeks, at the rate of $20 per week, which amounts to $230. During that time he received in cash $60, as shown by his account on pages 71 and 72 of the ledger of the bankrupt. But, as shown by page 234 of the ledger, from October 3d to October 18th he was paid in merchandise $208.40, upon which merchandise account he paid in cash $11, leaving a balance against him on account of the merchandise received in the month of October of $197.40, which, together with the cash received by him, amounts of $257.40, which he received in cash at $5 per week, and in merchandise within the period of three months prior to the beginning of the action. I am not clearly convinced that the employment as salesman and purchasing agent, and the performance of such duties as devolved upon Clarence, would constitute him a clerk under the bankruptcy act, and thereby give him priority over general creditors. The strict meaning of the word 'clerk' is a person employed to keep accounts or do writing, or hired about an office or counting house, or the like. It is true that the bankruptcy act itself defines 'wage-earners' as an individual who works for wages, salary, or hire at a rate not to exceed $1,000 a year. But section 64 does not speak of wage-earner, but of workmen, clerks, or servants. I do not think it would be claimed that Edmondson would come within the term 'workman' or 'servant,' and it remains to be determined whether the word 'clerk' includes what is more properly known as 'salesman.' In taking the census, the United States census officers were very careful to direct the enumerators to distinguish between the clerk and the salesman,-- the former being the designation of those who have charge of books or accounts; the latter, of those who sell merchandise. But I think that colloquially the term 'clerk' includes salesman, and the Standard Dictionary states that colloquially in the United States the word 'clerk' is made to include salesmen or shop assistants; and the latest edition of Webster defines a clerk as an assistant in a shop or store, and designates the definition a colloquialism. It is held in the Case of Scanlon, in the United States district court of Kentucky (2 Nat.Bankr.N. 58, 97 F. 26), that a traveling salesman does not come within the meaning of the terms 'workmen,' 'clerks,' or 'servants, as used in section 64b, subd. 4; and in the Case of Mayer, before Referee D. Lloyd Jones (2 Nat.Bankr.N. 719), it is held that a person selling goods for $5 per week and a commission is not a clerk entitled to priority under the section of the statute. But I am inclined to the opinion, and will so hold, that a salesman, properly speaking, will come within the term 'clerk,' and is entitled to priority, provided he has not surrendered his claim to priority or been paid in any way. But there are two reasons why this claim should not be allowed as a preference: First, that both Edmondson and Flick, the bankrupt, testified that the agreement between

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