211 A.D. 316 | N.Y. App. Div. | 1925
The complaint alleges that the defendants are copartners conducting a business divided into various departments, and that the plaintiff, prior to the date of the agreement hereinafter referred to, was employed by the defendants as manager of one of the departments of said business; that on the 5th day of June, 1918,
“ The plaintiff herein was duly employed by the defendants herein to continue as manager of said * * * department for the year beginning July 10, 1918; the terms of said employment being in writing in words and figures following, to wit:
’
Mr. E. B. Hutchinson,
“ ‘ 391 Washington Street,
“ ' New York City.
“ ‘ My dear Mr. Hutchinson:
“ 1 This is to confirm the arrangement with you for year beginning July 10th.
“ ‘ It is agreed that you shall continue as Manager of our Shelled Nut Department as heretofore * * *.
“ ‘ Compensation — You are to have a drawing account of $6,000 per year, payable monthly, and your salary to be 25% of the net profits in your department payable year ending July 10th, 1919, deducting your $6,000 drawing account.
“ ‘ In the event your department should show a loss at the end of the year or a profit not sufficient for your 25% to amount to $6,000 it is understood that should we mutually agree to continue the Department for the second year on the same basis that your drawing account shall remain the same and whatever amount there should be charged to your drawing account for the two years shall be deducted from your share of the profits. * * *
“ ‘ Profits & Losses — It is also agreed that should your department any year show a loss that you are to assume 25% of the loss.
“ ‘ Renewal — It is also agreed that this arrangement is subject to renewal from year to year by mutual consent.
“ ‘ Yours very truly,
“ ‘ BIRDSONG BROTHERS “ ‘ (Signed) S. A. Birdsong.’ ”
The complaint further alleges that the contract was renewed from year to year and was in existence at the time of the bringing of this action; that an accounting was had for. the term ending July 10,1919, and an indebtedness to plaintiff of $17,000 ascertained, for $10,360 of-which defendants gave to plaintiff their promissory note, but that subsequently defendants obtained possession of said note and have refused.to redeliver the same: that there-has been
The answer denies all the material allegations of the complaint except the making of the agreement sued on, and by way of separate defenses alleges payment of all moneys due plaintiff; that any note given plaintiff had been voluntarily surrendered and released; that plaintiff has an adequate remedy at law. And further, by way of counterclaim, the defendants allege that plaintiff was employed by the defendants under the aforesaid agreement; that during the years 1920, 1921 and 1922 the department in question had been operated at such a loss as to leave the plaintiff indebted to the defendants in excess of $25,000. It is also alleged, for a further counterclaim, that during said years the plaintiff received from the defendants $18,826.87 in excess of the amount due him for the first year of the contract term and over and above all claims and demands of the plaintiff; for which said amounts the defendants demand judgment.
The plaintiff moved for judgment on the pleadings directing an interlocutory decree. This was opposed upon the ground that the plaintiff was not a partner and had no rights entitling him to be heard upon the equity side of the court; and in addition, the defendants moved to dismiss the complaint upon the ground, among others, that the complaint, as amended, in the absence of any allegation tending to show a partnership, trust or fiduciary relation between the parties, presents nothing more than a claim for salary, measured by profits and losses, and was an issue triable on the law' side of the court before a jury. If a dismissal of the complaint should be denied, the defendants then demanded a trial by jury. After listening to argument, «the learned court, without taking any testimony, made certain findings of fact and conclusions of law, directed an interlocutory judgment for the plaintiff and appointed^ referee'to take and state an account of
In Heye v. Tilford (2 App. Div. 346; affd., 154 N. Y. 757) the court (at p. 349) said: “ Whenever in an action between two persons alleged to be partners, a partnership is sought to be proved, the decision of the question depends entirely upon the intention of the parties as legally ascertained. That does not mean a mere arbitrary intention. If the terms of the contract between the parties are fixed and certain, the question of partnership is usually a question of law to be decided upon the construction of the contract * * *. But unless in some manner it is found to be the intention of the parties that they should become partners, then the partnership cannot be said to exist. (Salter v. Ham, 31 N. Y. 321; * * *.) If the terms of the coutract are in dispute they must be ascertained, and then the question whether or not the parties are partners as between themselves, is ordinarily to be determined by the contract as that shall be found to be. But if by the terms of the contract or by other competent evidence it is made to appear that the parties had no intention of becoming partners between themselves they will be held not to have assumed that relation. In the case of London Assur. Co. v. Drennen (116 U. S. 461) the court says: ‘Persons cannot be made to assume the relation of partners as between themselves when their purpose is that no partnership shall exist. There is no reason why they cannot enter into an agreement whereby one of them shall participate
An employment upon a salary, the amount of which is measured in terms of a percentage of profits and losses, raises no equitable issue; but is to be tried before a court and jury, and evidence as to the amount of money due is to be determined upon an examination before trial.
In Oppenheimer v. Van Raalte (151 App. Div. 601) the plaintiff was an employee on a salary of three per cent of the net profits, which of necessity could only be computed after the profits and losses had been ascertained. This court, by Ingraham, P. J., said: “ This action was to recover the balance of salary due to the plaintiff under a written contract by which the plaintiff * * * was to receive as salary 3 per cent of the net profits of the business * * * the defendants guaranteeing that the plaintiff should receive at least $6,000 each year. * * * The mere statement of this cause of action is sufficient to establish that the only method the plaintiff has of proving his cause of action is to examine the defendants before trial. * * * The plaintiff cannot maintain an action for an accounting under such a contract, but is required to bring an action at law.”
In Smith v. Bodine (74 N. Y. 30, 32) the court, by Miller, J., said: “The action was brought to recover for services rendered by the plaintiff as a salesman of the defendants, for which the plaintiff was to receive a certain percentage of the profits realized from the business. * * * The counsel for the appellants claims that the referee erred upon the trial in allowing an accounting to proceed between the parties. I think that the decision of the referee, and the proof introduced, did not constitute a variance from the pleadings, or change the cause of action, and that there was no error in this respect. * * * If the plaintiff had been a partner, then the action might properly have been brought in equity for an accounting; but we think that the plaintiff was not a partner, and the claim that he shared the profits and losses, and hence the parties having this community of interest inter sese were partners, is not well founded. To constitute a partnership it is generally necessary that the parties should share in the profits and loss. * * * An agreement for sharing in the profits of a business is sufficient, in some cases, to establish a partnership, as to third persons. * * * But the rule last stated does not apply where one is interested in the profits of the business as a means of compensation for services (Leggett v. Hyde, 58 N. Y. 272). * * * The fact that a statement of an account between him [plaintiff] and the defendants was necessary to establish his
In reaching its conclusion, the court at Special Term relied upon the case of Parker v. Pullman & Co. (36 App. Div. 208). That case, however, was decided upon a demurrer to the complaint and hence all the allegations of the complaint were deemed to have been true. One of the allegations was that the account involved was long and complicated, which has always given a right to have a reference, upon the ground that the accounts being long and complicated, they were not suitable for a jury to pass upon. (Civ. Prac. Act, § 466, revising Code Civ. Proc. § 1013.)
On such a retrial the plaintiff may be able to show such facts and circumstances as, taken in connection with the agreement, will show it to be an agreement of joint adventure. On the other .hand, such facts may be lacking.
It follows that the interlocutory judgment appealed from should be reversed and a new trial ordered, with costs to the appellants to abide the event.
Judgment reversed and new trial ordered, with costs to appellants to abide the event.