320 Mass. 217 | Mass. | 1946
These are two suits in equity.
In the first case Ferrick sues Lawrence N. Barry and Margaret M. Barry, his wife, for alleged breach by Lawrence N. Barry of a covenant contained in articles of copartnership dated September 22, 1943, among Ferrick, Lawrence N. Barry, and one Joy, by which Lawrence N. Barry agreed to cause to be executed to Ferrick “as trustee for the partnership ” a lease of certain premises and machinery at Hudson, where the business of the partnership was carried on. It is alleged that the defendant Lawrence N. Barry fraudulently conveyed the real estate to the defendant Margaret M. Barry and that she merely holds the title in his behalf. The prayers are that she be ordered to convey to him, and that he be ordered to execute to Ferrick a lease of the real estate and machinery in accordance with the articles of copartnership, and for further relief.
In the second case Barry and Joy sue “Ferrick, alleging refusal to account and various other breaches by Ferrick of his obligations as a partner, and that, by reason of his conduct and of the inability of the partners to agree as to the management of the business and to carry it on harmoniously, the business of the partnership is deteriorating and will soon cease to be of value, and praying for an accounting, a re
In the first case the trial judge entered a final decree dismissing the bill. In the second case he entered a decree denominated interlocutory dissolving the partnership and ordering the receivers (who had been appointed on May 19, 1944) to wind up its affairs and to distribute its assets. Ferrick appeals from both decrees. The decree in the second case, although interlocutory in the sense that it did not end the litigation, was final in its effect of dissolving and liquidating the partnership, so that the appeal from it could be entered and can now be considered here. Plumer v. Houghton & Dutton Co. 277 Mass. 209, 212-213. General Heat & Appliance Co. v. Goodwin, 316 Mass. 3, 4-5. Vincent v. Plecker, 319 Mass. 560, 563-564. Both appeals are properly before us.
The evidence is reported at great length and has been fully considered in accordance with the rule that findings made by the trial judge upon oral evidence, where the appearance and manner of the witnesses are important elements in arriving at the truth, will not be reversed unless plainly wrong.
By the articles of copartnership Barry, Joy, and Ferrick associated themselves as equal partners (except as to contributions of capital) in the business of “coating and combining of all materials” for the period of five years from September 22, 1943, unless all parties should agree to an earfier termination. Joy and Ferrick were to receive stipulated salaries. The provision relative to the lease bound Barry to cause it to be executed for a term of two years commencing October 1, 1943, at a rental of $200 a month, with an option for a further term of three years at the same rental and a further option to purchase the property for $42,000 during the term or any renewal thereof.
The judge made detailed findings of fact, among which are, in substance, these: Barry was a dealer in machinery
In addition to the foregoing findings, the judge found in reference to the proposed lease that in November, 1943, Ferrick asked Barry for the lease, which Barry had agreed to cause to be executed in behalf of the partnership; that in January, 1944, after the trouble between the partners had become acute, Barry definitely refused to procure the lease; that Barry and Joy do not. want the lease for the two year term or for the further term of three years; that in spite of the dissensions of the partners, and (we may add) in spite of the fact that for considerable periods there was insufficient work to keep the plant fully occupied, the business was profitable; that a lease of the premises “would have been quite valuable to the partnership as a going business harmoniously carried on by the three partners”; but that “under the existing discordant conditions which
The findings of the judge hereinbefore stated cannot be pronounced plainly wrong. They are well supported by evidence which it was within his province to believe.
It will be convenient to deal with the second case first. The decree dissolving the partnership and liquidating its affairs was right. The conduct of Ferrick had brought about a situation in which the business could no longer be carried on jointly in the manner contemplated by the articles of co-partnership. The other partners were not required to submit to Ferrick’s domination or to continue in an atmosphere of non-cooperation, suspicion, and distrust, even though Ferrick was not actually dishonest, and even though substantial profits were being made. An enterprise organized on the principle of equality in proprietorship and management cannot be expected to realize its aims under such conditions. Even if the court may think that one partner could carry on successfully, if he were allowed to push aside the others, it ought not to sanction such an alteration in the agreed relations of the partners. See G. L. (Ter. Ed.) c. 108A, § 18 (e). The case comes within the provision of the uniform partnership act, G. L. (Ter. Ed.) c. 108A, § 32 (1) (d), that on application of a partner the court shall decree a dissolution whenever a partner "so conducts himself in matters relating to the partnership business that it is not reasonably practicable to carry on the business in partnership with him.” See further, c. 108A, §§ 31 (2), 32 (1) (c), (f); State Street Trust Co. v. Hall, 311 Mass. 299, 301, 310; Skolnick v. Greenburg, 230 Mass. 359. Lavoine v. Casey, 251 Mass. 124, 127. Pertinent cases in other jurisdictions are Whalen v. Stephens, 193 Ill. 121, 143 (quoting from Singer v. Heller, 40 Wis. 544), Lunt v. Van Gorden, 224 Iowa, 1323, 1331, Mayhew v. McGlothlin, 269 Ky. 184, 186-187, Fooks v. Williams, 120 Md. 436, 440-441, Steckroth v.
We cannot agree with Ferrick’s contention that Barry and Joy, or either of them, was guilty of fraud, and that they do not come into court with clean hands. The trial judge did not find that Barry made any fraudulent conveyance to his wife, or any false representations to Ferrick, and the evidence does not convince us that he did. The bill of Barry and Joy contains some allegations of fact which perhaps might better have been more carefully limited to the proof at hand or stated as upon information and belief only, but these were largely matters of opinion or of deduction or of the interpretation of words, and Ferrick’s own conduct had given just ground for suspicion. We find nothing showing that Barry and Joy were guilty of any dishonesty in making these allegations. These matters are too trivial and too remote from the crucial issues to preclude relief. Lurie v. Pinanski, 215 Mass. 229. Warfield v. Adams, 215 Mass. 506, 523-524. Hopkins v. Flower, 256 Mass. 367, 377-378. New England Wood Heel Co. v. Nolan, 268 Mass. 191, 197. Service Wood Heel Co. Inc. v. Mackesy, 293 Mass. 183, 189. Samuel Hertzig Corp. v. Gibbs, 295 Mass. 229, 231. Satren v. Sponheim, 199 Cal. 366, 368. Comstock v. Morgan Park Trust & Savings Bank, 367 Ill. 276, 280. Connecticut Telephone & Electric Co. v. Brown & Caine, Inc. 10 Fed. (2d) 823, 825.
We do not think that Barry’s failure to procure the lease, even if it amounted to a technical breach of the articles of copartnership, renders his hands unclean, so that he cannot maintain a suit. A slight delay in furnishing the lease might well have been inadvertent and would have been of no consequence, since the partnership was actually occupying the premises. Not long after the signing of the articles of co-partnership the conduct of Ferrick became such that Barry as a layman may well have - believed himself justified in withholding the lease, if indeed he was not. There is nothing to show that Barry’s conduct was fraudulent or inten
We return to the first case. The terms of the articles of copartnership as well as the circumstances under which they were made show clearly that the lease to Ferrick was not to be for his individual use but was to be held by him solely on a dry trust for the benefit of the partnership in which Barry, who agreed to procure the lease, was a partner. The parties contemplated the actual use of the premises by the partnership for the purposes of the partnership and not otherwise. Even if the title' to the real estate had been in Barry himself, instead of in Mrs. Barry, we think the court in its discretion could properly have refused to compel him to grant the lease at a time when the partnership was being dissolved, when two of the three partners did not want the lease, when the only use that could have been made of it, if granted, would have been to offer it at a receiver’s sale, possibly to the great damage of the owner, with rent accruing in the meantime, and when the receivers had manifested no desire to take on such a lease. But in fact the title to the real estate was in Mrs. Barry. Relief against her on any theory of breach of contract by her seems beyond the scope of the bill. At any rate, she was not a party to the sealed articles of copartnership, or to the covenant contained in them expressly binding her husband to "cause” the lease "to be executed.” Even if Barry was, in general, her agent in respect to the real estate and acted with her knowledge, she is not bound by a sealed instrument not executed in her name and not purporting, or even, as we think, intended, to bind her or to have been made in her behalf. Congress Construction Co. v. Worcester Brewing Co. 182 Mass. 355, 358. Seretto v. Schell, 247 Mass. 173, 176. Berman v. Rowell, 274 Mass. 260, 268. Exchange Realty Co. v. Bines, 302 Mass. 93, 98-99. Moran v. Manning, 306 Mass. 404,
In our opinion, therefore, the case of Ferrick v. Barry comes down to the question whether Barry is liable in damages for failure to procure the lease from Mrs. Barry for the benefit of the partnership. On the record before us we think that he is not liable. We assume, without deciding, that Barry’s duty to procure the lease arose as soon as the copartnership articles were executed, and that he committed a technical breach of the articles in not procuring the lease before any conduct of Ferrick had occurred which would excuse Barry from performance. Even so, the right to have the lease was not the individual right of Ferrick. That right belonged to the partnership, which is now in liquidation by receivers. The liquidation will result ultimately in a full accounting among the partners. G. L. (Ter. Ed.) c. 108A, §§ 38, 40. It is difficult to understand on what ground Ferrick should be allowed in equity, while the suit in which the account will be taken is actually pending, to segregate and withdraw from the accounting a single item which is properly a part of the general account and to insist
The record is barren of any evidence which would enable a court to make any satisfactory finding of damages. The measure of damages would be at most the value of the leasehold after occupancy by the partnership ceased, less the rent to be paid, taking into account all uses to which the property was adaptable. Townsend v. Nickerson Wharf Co. 117 Mass. 501, 502. Riley v. Hale, 158 Mass. 240. Neal v. Jefferson, 212 Mass. 517, 522-523. Nelson Theatre Co. v. Nelson, 216 Mass. 30, 34-36. Grennan v. Murray-Miller Co. 244 Mass. 336, 339. Parker v. Levin, 285 Mass. 125, 128. Taylor, Landlord & Tenant (9th ed.) § 177. In this instance there could have been no additional special or peculiar damages of any kind, such for example as loss of profits, since the partnership actually occupied the premises at the agreed rental without a lease as long as the business continued and until the partnership and the business were terminated for reasons having nothing to do with the failure to obtain the lease. Compare Kostopolos v. Pezzetti, 207 Mass. 277, 280. The partnership therefore had every advantage it would have had if there had been a lease, except the advantage of counting the lease as an asset, if it would have been an asset instead of a liability, in liquidation. There'is no acceptable evidence of the value of the leasehold, if indeed it would have had any value in the market. The property had remained idle for about six years before the articles of copartnership were signed. At most the lease would have run only about four more years. The only testimony offered by Ferrick was that of an expert witness who based his opinion solely upon the capital value that would commonly be deemed necessary to produce the profits actually realized at the plant. His estimate appears to take no account of the actual character, loca
The decrees appealed from are affirmed with costs to the defendants in the first case and to the plaintiffs in the second case, except that the decree in the second case is to be modified by the addition of a clause dismissing the counterclaim of Ferrick, the subject matter of which was fully covered at the hearing and is fully covered by this opinion.
7 bo ordered.
Evidence of this understanding was competent as bearing upon the causes and degree of lack of harmony among the partners, even though the articles of copartnership did not expressly provide for this division of labor.