Saute onion in butter in a skillet until clear, but not brown. Add remaining ingredients. Make small meatballs. Brown in 2 Tbs. butter. Remove from skillet and put in casserole dish.
Put in skillet:2 Tbs. butter, 1 cup milk, ¼ teaspoons pepper, ½ teaspoons salt, and 1 teaspoons sugar.
Dissolve cornstarch (3 Tbs.) in a little water. Add to liquid. When thickened, pour over meatballs. Bake about 40 minutes at 350 degrees.