In re Spengler

• Decision Date: 20 December 1916
• Citation: 238 F. 862
• Parties: In re SPENGLER.
• Court: U.S. District Court — Southern District of Iowa

238 F. 862

In re SPENGLER.

United States District Court, S.D. Iowa, Davenport Division.

December 20, 1916

Wm Hoersch, of Davenport, Iowa, and R. W. Olmsted, of Rock Island, Ill., for bankrupt.

Isaac Petersberger, of Davenport, Iowa, and Albert Huber, of Rock Island, Ill., for creditors.

WADE District Judge.

The petition by creditors, alleging insolvency and acts of bankruptcy, was filed December 11, 1915. The answer of the alleged bankrupt was filed December 27, 1915. Nothing further was done in the matter until February 5, 1916, when it was referred to Special Master Williamson, for whom, on March 30 1916, F. A. Cooper was substituted, and the case came on for hearing before the special master, May 22, 1916. Report of special master was filed June 23, 1916, and thereafter exceptions were filed thereto, and argued before the court. I have reviewed the evidence fully with reference to the following questions: (1) Provable debts. (2) Insolvency. (3) Whether Spengler was chiefly engaged in farming. (4) Acts of bankruptcy.

First. It appears from the record that in 1914 parties with whom Spengler was in some relation associated, by advertising and other ways, induced some 14 people to enter into contracts to pay $125 each for the location of homesteads in Utah, and 13 of these persons, as I understand the record, entered into a contract with Spengler & Crawford, by which they obligated themselves 'to clear off, plow, and seed to wheat 80 acres of land, ' which it was contemplated would be part of the homestead located as aforesaid. It was specifically provided that 40 acres 'shall be cleared off, and shall be under cultivation on or before January 1, 1916; 40 acres more on or before January 1, 1917,' and it was specifically provided that 'second party shall start the improvement of the above said land as soon as the weather permits in San Juan county, and complete it as soon as possible. ' Later Crawford went into bankruptcy. Spengler wrote the parties that he would carry out the contracts, but on December 11, 1915, nothing was done, and at the time of the hearing in May, 1916, nothing appears to have been done to in any manner carry out these obligations. Each of 13 persons paid these parties, as I understand it, $325 cash and obligated themselves to execute notes for $300 more. Whether the notes were actually executed, and, if so, what became of them in all cases, does not specifically appear but it does appear that Spengler, or Spengler & Crawford, received $4,225 in cash, and it does appear that up to the time of the hearing nothing was given in return therefor.

It is strenuously urged that the question of whether there was any liability for repayment of the money, or damages, must be determined with reference to the specific question as to whether the contract was 'breached' on December 11, 1915; and it is earnestly contended that no such breach occurred at that time, because it is contended Spengler had until January 1st, 20 days later, in which to comply with the contracts. That this view is entirely erroneous is clearly shown by the above quotations from the contracts. It is true that it specifies that the 40 acres is to be cleared off and under cultivation on or before January 1, 1916; but it is also true that the contracts specifically provide that 'second parties shall start the improvement of the above said land as soon as the weather permits in San Juan county, and complete the same as soon as possible. ' No contention is made that the weather did not permit the commencement of the improvement before December 11th, and no one can seriously contend that within the 20 remaining days the 40 acres could have been plowed and put under cultivation, and no one even pretends that there was any intention to do so, and from the fact that up to the time of the hearing, so far as the record shows, no steps were taken to in any manner comply with the contracts, it may be fairly inferred that Spengler did not have any intention on December 11th of attempting to comply with the contracts.

It is true that the bankruptcy proceeding is pointed out as an obstacle, but it does not appear that his property was taken out of his hands, or that any obstacle was placed in the way of the performance of these contracts, if Spengler seriously intended to perform them, and the delay in bringing the matter to trial does not indicate any purpose upon the part of Spengler to attempt the performance of these contracts; in fact, my recollection is that the appointment of the special master was upon my own motion, and not upon any request by the parties. Of course, to furnish the foundation for a claim for breach of contract, the breach must have occurred prior to December 11, 1915; but evidence as to subsequent acts and conduct is admissible to determine whether or not there had at that time been a breach, and...