132 N.Y.S. 126 | N.Y. App. Div. | 1911
William Daintrey entered the employment of the firm of Arnold, Constable . & Co. in 1877, and at the time of the death of Frederick A. Constable was in charge of its rug and carpet departments, both wholesale and retail. On July 1, 1905, the defendants, constituting the new firm, made an oral agreement with Daintrey by which he was to continue in charge of the' same departments, receiving a salary of $8,000 per year, in addition to five per cent of the net profits of the departments whereof he had charge. Thereafter Daintrey remained in the employ of the firm under this agreement until about January 1, 1909, when his connection therewith was terminated. He died May 27, 1909. During the continuance of his employment by the firm, semi-annual statements showing the condition of his account therewith were furnished by the bookkeeper of the firm from their books which are kept “confidentially.”
Plaintiff, who is the administratrix of Mr. Daintrey, produced and offered in evidence six of the accounts rendered by defendants to plaintiff; the seventh, covering the first six months of 1908, not being produced by her (although she had the preceding and succeeding ones) a copy thereof produced ' upon the trial by defendants was offered by plaintiff in lieu of the missing one. Thus the plaintiff offered in evidence statements furnished to her intestate by defendants covering the entire period 'of his employment by them. These statements are itemized, containing' debit and credit entries, and where
The plaintiff now seeks to recover from defendants a balance claimed to be due her intestate as his share of the net profits, she contending that the defendants were not entitled under the agreement with intestate to deduct any interest upon the amount of capital invested in these departments, representing the stock carried therein, and that the term “net profits” should not be so construed as to permit such deduction. From a j udgment dismissing her complaint at the close of her case she now appeals. There is no doubt that the term “net profits,” in the absence of any special agreement defining the same, means the balance remaining after deducting the outgo from the income, without deducting interest on the capital invested. So in Paine v. Howells (90 N. Y. 660) it was said: “We do not think that interest upon capital is an expense to be deducted in ascertaining net profits. Those profits themselves constitute the earnings of the capital and may exceed or fall short of the legal rate of interest. They are the product of the investment, and the capital is used, not to earn interest, but profits. The cases between partners to which we are referred are not pertinent. Where all the partners put in equal amounts of capital no question of interest arises. It comes up only to redress an inequality, and interest is allowed upon what practically is a loan. But here the plaintiff was not a partner. It was expressly agreed that he should not be, and he made his contract for a share of the net profits as compensation for his services upon the assumption that the firm capital was in the business and to be used in its conduct and to produce profits.” In the same case it was held that a custom of merchants to so charge interest upon their capital could not be shown. So in Thorn v. De Breteuil (86 App. Div. 405) the court, quoting from Last v. London Assurance Corporation (10 App. Cas. 438, 450),
The judgment appealed from should^ therefore, be affirmed, with costs.
Ingraham, P. J , Clarke, Soott and Miller, JJ., concurred.
Judgment affirmed, with costs.