In re Nagel

• Citation: 278 F. 105
• Decision Date: 14 December 1921
• Docket Number: 185.
• Parties: In re NAGEL. v. KRAUS. NAGEL
• Court: U.S. Court of Appeals — Second Circuit

278 F. 105

In re NAGEL.

NAGEL v. KRAUS.

No. 185.

United States Court of Appeals, Second Circuit.

December 14, 1921

Archibald Palmer, of New York City (C. Deward Benoit, of New York City of counsel), for appellant.

Arthur C. Kahn, of New York City, for appellee.

Before ROGERS, HOUGH, and MAYER, Circuit Judges.

ROGERS Circuit Judge.

The question involved arises in a 'proceeding in bankruptcy,' within section 24b (Comp. St. Sec. 9608) and so is to be disposed of upon a petition to revise, not being a 'controversy arising in a bankruptcy proceeding,' under section 24a (section 9608), which could be brought here only upon an appeal; and it is of course well settled that in the case of a petition for revision, as the statute confers jurisdiction 'to superintend and revise in matters of law,' it does not contemplate any review of the facts by the appellate court and only questions of law decided by the court below can be brought up for revision in this mode. It will be necessary, however, to set forth the facts, in order to ascertain whether the District Court fell into any error of law in the rule of law which it applied to the facts which were found to exist.

The following facts found by the referee are herein incorporated:

'On May 26, 1920, the claimant Kraus made a written contract with the alleged bankrupt. This contract, among other things, provided that the claimant was to receive a weekly salary of $100 and 15 per cent. of the net profits of the business, and that 'irrespective of the profits earned by the said manufacturer' (the alleged bankrupt), 'the manufacturer guarantees to the salesman' (the claimant) 'that in no event will the salesman's share of the said profits be less than thirty-five hundred ($3,500) dollars,' the contract running for the period of one year from June 1, 1920.

'The second paragraph of the agreement is as follows: 'Second. The salesman will assist Nagel in the purchase and sale of such goods, wares, and merchandise which the manufacturer shall require in connection with the cloak and suit department to be operated by the said manufacturer, and the salesman will render any service which may be required of him in connection therewith, which service shall be under the direction, supervision, and control of the said manufacturer. The duties of said salesman shall likewise consist in the selling of goods, wares, and merchandise of the manufacturer in the showroom, not only of the cloak and suit department, but also other departments of the said manufacturer, and the salesman will in addition thereto travel as salesman for the manufacturer at such times and at such places as he may be directed by the manufacturer from time to time. The expenses for such traveling on the road to be paid, however, by the said manufacturer.'

'The fourth paragraph of said agreement provides as follows: 'Fourth: The salesman agrees to devote his entire time and attention for, on behalf, and in the interest of the manufacturer, and will not represent any other person, firm, or corporation during the term of this agreement, directly or indirectly, and will give to the manufacturer his sole and exclusive service.'

'The claimant entered into and continued in the employment of the alleged bankrupt under this agreement until November 20, 1920, when Nagel paid the $100 salary for the week ending November 20, 1920, when the claimant was discharged by Nagel. Upon the occasion of his discharge, Nagel told the claimant, 'I know that you have been doing things that undermine my business.'

'The claim filed is as follows: 'Weekly salary at $100 a week from November 20, 1920, to May 28, 1921, 27 weeks, $2,700; weekly salary at the rate of $100 a week from May 28, 1921, to May 31, 1921, three days, $42.84; profits guaranteed, $3,500; whole amount of claim, $6,242.84.'

'The evidence shows that, some three or four weeks before his discharge, Kraus asked Knoll, another employee of Mr. Nagel, whether he would like to go in business with him (Kraus). This employee told Kraus, 'Yes, but he hadn't any money; that his money was with Mr. Nagel, $2,500 as a deposit.' Mr. Kraus then said, 'That's nothing, the money I can get you out.' Kraus proposed to this employee that he should put this money into a partnership with him. Kraus said he would 'put in money and the profits would be divided fifty-fifty.' About two or three days after this, and before the discharge, this employee told Mr. Nagel what Kraus had proposed to him.

'The evidence shows that Kraus, on the Monday following the Saturday when he was discharged, reported at Nagel's place of business, and Nagel asked him 'What are you doing here?' and Kraus said he came to work. ' I said, you know I discharged you, and I had good cause to discharge you; you tried to undermine my business, and you wanted to go in business with Knoll, and even promised to get his money.' Nagel further said that Kraus 'went out and bought a lot of goods that you wanted me to take in from Weinstein, that I gave you no authority to buy.' Kraus then said, 'I am the manager here; I can go out and buy goods whenever I like, and we need goods next month, and I need a lot of goods to sell; I can't stand around here and not sell any goods.'

'In view of the agreement made by Kraus that he would assist Nagel in the purchase and the sale of such goods, wares, and merchandise as Nagel should require, and would 'render any service which may be required of him in connection therewith, which service shall be under the direction, supervision, and control of the said manufacturer,' and that Kraus further covenanted that he would 'devote his entire time and attention for, on behalf, and in the interest of the manufacturer' (that is, Nagel), 'and will not represent any other person, firm, or corporation during the term of this agreement, directly or indirectly, and will give to the manufacturer his sole and exclusive service,' I have come to the conclusion that there was sufficient cause in the conduct of Kraus to justify his discharge.

'I therefore find that he was discharged for cause, and, as he was paid up to the date of his discharge in full for his salary, I think he has no further claim against Nagel. An order expunging the claim of Walter Kraus may be entered accordingly.'

An order was thereupon entered, directing that the claim of Kraus against the bankrupt in the sum of $6,242.82 be in all respects expunged and stricken from the records; and the creditor, feeling aggrieved by the order and believing it erroneous, filed his petition praying that the order might be reviewed. In his petition he set forth that (a) the findings of conclusion of the referee, as stated in his opinion, are contrary to and against the evidence and against the weight of evidence; (b) that the evidence of the alleged bankrupt, if true, was insufficient in law to justify a discharge; (c) that the evidence of the alleged bankrupt, claimed to justify the discharge, did not disclose such a systematic course of conduct for a definite period of time prior to the discharge as would justify petitioner's discharge.

The District Judge states in his opinion that he agrees with all the findings of the referee except one. That one is the statement made by the referee that Knoll told Nagel of Kraus' talk with him two or three weeks after it occurred. 'In fact,' says the District Judge, 'he told him about three weeks before November 20th, the day of the discharge. ' He continues:

'I agree that Kraus' approaches to Knoll were certainly intended for action before their contracts expired, and were a just ground for discharge. Therefore the only question is whether Nagel's inaction for three weeks was conduct from which condonation should be inferred. * * * Therefore the question is whether an employer, knowing that his employee has tried to wrest away other employees and to set up a rival business, in breach of his own contract of service, may wait for three weeks before discharging him.' Then the District Judge held that, as there was no explanation given for the delay, Nagel--

'was not entitled to wait so long and the discharge was not justified. It is possible that Nagel seized upon these faults, because he found himself drifting into financial embarrassment and wished to retrench; but, whatever his motive, the fact is that by his conduct he has condoned the fault, and also the earlier faults.'

We may observe that the remark as to the possible motive of Nagel is quite immaterial and irrelevant. The motives which actuate the employer in discharging his employee are wholly immaterial, if a legal ground exists for the discharge. Von Heyne v. Tompkins, 89 Minn. 77, 93 N.W. 901, 5 L.R.A. (N.S.) 524; Crescent Horse...