174 F.2d 908 | 3rd Cir. | 1949
The two appeals at bar are an outgrowth of a prior litigation between the same parties which terminated in a judgment of the court below
Pursuant to the decree, Goldman conveyed the property to Blum and filed a “Statement of Cash Receipts and Disbursements”
The suit at No. 9755 is an appeal by Goldman from an order of the court below disallowing him credit for the item listed as “Home office expense” (Item 15 in the account rendered. See note 5, supra) amounting to $7,397.29. Goldman contends that this amount represents a reasonable proportion of his general overhead that is properly attributable to the 69th Street property that was conveyed to Blum.
The suit at No. 9762 is a cross appeal by. Blum from the same judgment. In particular he claims that he is entitled to be recompensed for alleged excessive salaries and excessive interest paid on the mortgage, and also to receive interest on several items. It is Blum’s theory that since Goldman has been found to have wrongfully obtained possession of real estate belonging to Blum, and a restitution and accounting having been ordered, he, Blum, is entitled to
The two appeals may be disposed of in one opinion. We turn first to Goldman’s appeal at No. 9755. Preliminarily we state that Goldman has extensive real estate and theatre holdings; that its primary business is the motion' picture business; that in 1946 Goldman owned or .operated twelve theatre properties; that of its income in 1946 amounting to more than $2,000,000, only $35,426.24 was derived from rental of properties other than theatres, exclusive of rentals received from the 69th Street Theatre property. It further appears that in 1946 the total overhead expenses of Goldman, exclusive of the salary of its president (William Goldman) but including all other salaries and expenses incurred by Goldman not specially identified with the operation of a particular theatre or other property, amounted to $155,525.67. ' This sum was then allocated or proportioned among eleven
On the basis of the foregoing facts, Gold-' man contends and Blum denies that Goldman should be permitted to deduct the home office expense item. The court below -disallowed .this disbursement. After stating that “It seems obvious that the defendant is attempting to charge the plaintiffs with some portion of a general. overhead which includes picture buying, institutional advertising, traveling, entertainment, and many-other items unconnected with the leasing and operating of apartments and stores, * * * ” the court concluded that as there was nothing before it from which it, could determine “ * * * how much, if any, of this item could be properly allocated * * * ” to the 69th Street property, it had no choice but to disallow the entire item. Goldman then moved to reopen the record, submitting with the motion, an itemized account of the items he considered properly chargeable to the 69th Street Theatre property.
We turn next to Blum’s cross ap
Blum contends (1) Goldman paid $1,033.-28 in excessive salaries and expenses, e. g., Goldman employed five persons to manage the property and collect the rents while Blum requires only four; (2) that Goldman paid $14,028.79 excessive interest on the mortgage, the sum being the difference between that which Goldman actually paid, and what Blum would have paid had he been in possession. Blum contends that as the mortgagee had agreed to reduce the interest rate thereon from 5y2% to 4% upon payment of $53,500 or more of the principal and since he, Blum, was prepared to make and did make a reduction of $103,-500 in principal amount upon gaining possession of the property, following which time the interest rate was reduced to 4%, he is therefore entitled to the difference; (3) that he is entitled to interest on the amounts claimed in (1) and (2).
Blum asserts also that he is entitled (4) (a) to interest on the balance, $3,625.01 admittedly due under the accounting, from a “median date”, July 1, 1946, and (b) interest on the same amount, viz., $3,625.01, from the date Goldman tendered its check on December 30, 1946, to January 27, 1948 (see note 5, supra), when permission to cash the check without prejudice to any future claim was given by Goldman ;
Blum further concedes that the only question (exclusive of the items of interest set out immediately above) as to items (1) and (2) as set out above, is whether or not Goldman is entitled to full credit for the amounts paid as salaries and interest paid on ,the mortgage both of which Blum contends are excessive.
Blum makes no contention that any of the expenditures are tainted with fraud or are unreasonable. His case is pitched solely upon the theory that had he been in possession the sums expended would have been less, and in respect to certain items, that since gaining possession he has effected substantial reductions. He takes the position that he is entitled to that amount, plus interest, which he would have saved had he,
The court below refused to allow the amounts claimed by Blum, concluding that under the decree for accounting he was not entitled to maintain his claim for $14,028.79 based on the alleged excess interest paid by Goldman on the mortgage, or, to the amount of $1,033.28 claimed by him by way of alleged excessive salaries. As to the amount based on alleged excess interest on the mortgage, the court concluded that the decree for accounting “ * * * plainly does not include gains and profits which might have been, but actually were not, derived.”
We agree. As he was directed to do, pursuant to the decree of the court below ordering an accounting (which this court affirmed) Goldman submitted an accounting for the “surplus of gains, rents, issues and profits over and above its proper charges connected therewith * *
Tjirning first to Blum’s claim for excessive salaries, item (1) above, we state that since there is no showing that the expenditures were not made in good faith, nor were unreasonable, we do not think Goldman should be charged for alleged “excessive” salaries and expenses on the speculative and conjectural premise that the property might or would have been more economically managed by Blum. Goldman’s management was a reasonable and adequate one, well within the permissive limits of sound business judgment.
We find also that Blum’s contention that Goldman is not entitled to credit to interest-on the mortgage in the amount paid by him is without merit. While Goldman was in possession of the property he was legally obligated to pay interest on the then-existing principal at 5%%. He was under no duty, legal or moral, to reduce the mortgage. Until the mortgage was actually reduced, Goldman had no choice but to pay the interest at the prescribed rate. After the final decree of the lower court, had Blum wished to do- so, he could have reduced the principal prior to actual conveyance, thus gaining the benefit of a lower interest rate than that which Goldman was.
Four other items remain to be considered. We will discuss them in the order hereinbefore set out. Item No. 4(a) supra, consists of a claim for interest in the sum of $108.75 on the amount of $3,625.01 found to be due on the accounting from Goldman to Blum, the interest calculation being based on a so-called “median” date, viz., July 1, 1946. What Blum has done is to take the amount found to be due from Goldman under the accounting of December 30, 1946, and selecting July 1, 1946, as a “median” or mid-point between January 10, 1946, the day on which the property was conveyed by the trustees to Goldman, and December 30, 1946, the date on which the accounting was rendered, claim interest from July 1, 1946 on that amount. No authority is cited for such a proposition and we know of none. Interest runs on a sum found in an accounting from the date of the order requiring it. We reject Blum’s contention.
Item 4(b), supra, consists of a claim for interest on the sum of $3,625.01 from the date that the accounting was completed and a check for the sum last mentioned was given by Goldman to January 27, 1948 when Goldman authorized Blum to cash the check tendered therefor without prejudice to any other claims which Blum might have had. The circumstances are as follows. Goldman gave Blum a check in the sum of $3,-625.01 due under the accounting but Blum, as indicated in this opinion, asserted many other claims. He demanded that Goldman authorize him to cash the check without prejudicing any rights which he may have had to assert such additional claims. It is obvious that no cause of action can be based on such a state of facts. Insofar as the record shows the check did not purport to be a release or have any legend written upon it which might give it such effect. There is nothing to indicate that Blum would have been prejudiced by cashing the check and receiving the money.
Item 5, supra, consists of a claim of $109.22, representing interest on the sum of $6,361.90 given to Goldman by the trustees on the day of the conveyance of the property to Goldman, viz., January 10, 1946. This claim requires such explanation as we can make from the present record. It is as follows. The trustees of the property prior to the time of their conveyance to Goldman had accrued the sum of $6,361.90 representing interest due on the mortgage on the property from October 23, 1945 to January 10, 1946. This amount with an additional appropriate sum was payable on April 23, 1946 to the mortgagee as the semi-annual installment of interest due on the mortgage. The sum of $6,361.90 was turned over by the trustees to Goldman pursuant to their agreement. The claim of $109.22 represents interest on the amount of $6,361.90 from the date (January 10, 1946) on which Goldman received the money from the trustees until the day he paid the interest (April 23, 1946).
In view of the foregoing it is difficult indeed to grasp the point upon which Blum bases his claim. He seems to contend that Goldman had the use of $6,361.90 for 103 days and that this was a gain or profit to Goldman. There is no showing that Goldman invested the sum of $6,361.90 for 103 days or made any use of the money other than to pay the semi-annual installment of interest when it became due. Absent such a showing Blum’s claim for interest cannot be sustained. If he had made such a showing other questions would arise which need not be discussed here.
Item 6, supra, represents a claim by Blum for interest from the date of conveyance by Goldman, December 30, 1946, until the date of final adjudication, on any or all of the
The' judgment will be affirmed.
See D.C., 69 F.Supp. 468
See 3 Cir., 164 F.2d 192.
See the opinion of this court in Blnm v. William Goldman Theatres, Inc., 3 Cir., 174 F.2d 914, filed concurrently with this opinion.
The circumstances leading to this part of the judgment need not be related here.
69th Street Theatre Building -and Killogary Apartments Statement of Cash
Receipts and Disbursements Year Ended December 30, 1946
Receipts:
1 Rents received $75,773.84
Disbursements:
2 Salaries (Bldg. Supt., Janitor, Firemen, Cleaners) $10,465.80
3 Supplies (Lamps, Cleaning Supplies, etc.) 246.05
4 Maintenance & Repairs 2,009,40
5 Electricity 1,242.70
6 Heat 3,343.62
7 Insurance (Fire, Liability, Plate Glass, etc.) 2,958.13
8 Taxes — Real Estate 14,486.85
9 Taxes — Payroll 240.70
10 Sewer Rent 438.42
11 Water Rent 1,042.73
12 Interest — $603,500-5% % 26,830.60
13 Commission — Rent Collections 620.17
14 Trash and Ash Removal 420.00
15 Home Office Expense (Supervision, Bookkeeping, etc.) 7,397.29
16 Miscellaneous (Exterminating, Window Cleaning, etc.) 401.37
72,148.83
Excess of Receipts Over Disbursements $ 3,625.01
See paragraph 4 of the stipulation of the parties of February 6, 1948.
One of the properties was not charged with a proportion of the overhead because Goldman did not operate the theatre but merely leased it.
See par. 15 of the stipulation.
These totaled $7,906.46, $509.17 more than charged ip item 15 of the account rendered.
5% is normal charge for rent collections in the Philadelphia area.
These arrangements were made pursuant to the accounting required by the decree of the court below. Goldman was not required by the decree or by any principie of law to assure Blum that if the latter cashed Goldman’s check he might do so without prejudice to any future claim that Blum might assert.
As stated, Blum claimed that he could get the mortgage at a lower interest rate upon making the required reduction in principal amount. The court below treated this as one of the “gains and-profits” sought by Blum and so stated as appears from the quotation from the opinion of the court below quoted above. The court deemed the interest actually paid by Goldman on the mortgage to be a proper charge and therefore a credit in Goldman’s favor in its. accounting with Blum.
Emphasis added.