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IN RE HERBERT CANDY CO.

March 12, 1942

In re HERBERT CANDY CO.


The opinion of the court was delivered by: KALODNER

This matter comes before the court on a Petition for Review of the Referee's Order of June 17, 1941, reducing to the sum of $1,083.07 the Proof of Claim filed by Samuel Gleit in the amount of $2,316.33 for commissions earned as a traveling salesman for the bankrupt company from November, 1939, to October 21, 1940, on which date the petition in bankruptcy was filed. Out of the total of $2,316.33, Gleit claimed $325.38 as a priority under Section 64, sub. a(2), of the Bankruptcy Act, 11 U.S.C.A. § 104, subd. a(2), as amended June 22, 1938, c. 575, § 1, 52 Stat. 874, for commissions earned within three months of bankruptcy, and the balance of $1,990.95 as a general claim.

The Trustee in Bankruptcy filed objections to the Proof of Claim on the ground that the claimant was not an employee of the bankrupt; that he was not entitled to priority; and that the amount due him was $1,083.07. The Referee sustained the Trustee's objections, allowing the sum of $1,083.07 as a general claim.

 The bankrupt company was engaged in the business of manufacturing and selling candy and, in the disposition of its products, used what are commonly known in the trade as "candy brokers" -- i.e., individuals who solicit orders from retail candy stores for the various firms which they represent, on which orders they are entitled to commissions.

 The claimant avers that he was employed as a traveling salesman by the bankrupt concern, whereas the Trustee alleges that he was not a salesman, but an independent contractor or "sales broker".

 Additionally, claimant avers that he was employed at a commission of 5 per cent. on net sales, while the Trustee alleges that the commission was 2 1/2 per cent. of net sales.

 Two questions are therefore presented in this Petition for Review:

 (1) Was the claimant a traveling salesman employed by the bankrupt concern and, therefore, entitled to priority as to any portion of his commission as a "wage-earner" under Section 64, sub. a(2) of the Bankruptcy Act, supra -- or was he an independent contractor or sales broker?

 (2) Is the claimant entitled to 5 per cent. commission or 2 1/2 per cent. commission?

 As to the latter question, which may be immediately disposed of, the Referee found that the claimant was entitled to a commission of 2 1/2 per cent. The evidence was in conflict, and involved purely a question of fact. No purpose can be served by reviewing the conflicting testimony. The Referee heard and saw the witnesses, and the court is not inclined to disturb his findings or to substitute its judgment for his: General Order in Bankruptcy 47, 11 U.S.C.A. following section 53 -- In re International Chewing Gum Co. (Freedman v. Brown), D.C., 38 F.Supp. 662.

 Now, as to the first question: The Referee found that the claimant was not entitled to priority for any part of his claim because "* * * it was indispensably necessary to his priority here that he establish that the relationship of employer and employee existed between himself and this bankrupt" and he was unable to find that such relationship existed.

 As to this finding, the Referee was in error.

 Section 64, sub. a(2), of the Chandler Act, 11 U.S.C.A. § 104, ...


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