321 Mass. 122 | Mass. | 1947
J. These two cases, a bill in equity and an action of contract, were tried together. In the suit in equity Kavanagh, formerly sales manager, seeks an accounting from Ellingson and McAdams of a share of the profits of an unincorporated business, called the Golden Cookie Company, during the years 1940 to 1943, inclusive. Kavanagh became sales manager under an oral agreement with Elling-son, who, on the findings of the judge, must be taken to have been the sole owner of the business, and'not the partner of Kavanagh, or of McAdams, who was the production manager. A final decree was entered dismissing the bill against McAdams, and ordering Ellingson to pay to Kavanagh the sum of $5,552.91 with interest. The “defendants” appealed. The case is here with report of the evidence. In the action at law Ellingson sought to recover various payments made to Kavanagh in 1943, the judge found for the defendant, and Ellingson’s exceptions relate to the denial of certain of his requests for rulings.
I. Ellingson’s demurrer to the bill for want of equity was overruled, and he appealed. We need not consider this question, because subsequent to the overruling of the demurrer, Ellingson was allowed to amend his answer by setting up a counterclaim for overpayments of profits to the plaintiff alleged to have been made subject to adjustments which never were made. The subject matter of the counterclaim Was the same as that of the action of contract and appears to have been fully litigated. His conduct was a waiver of the objection that there was a plain, adequate, and complete remedy at law. Parkway, Inc. v. United States Fire Ins. Co. 314 Mass. 647, 651, and cases cited.
2. The only issue concerning the action at law, and the counterclaim as well, is whether Kavanagh, who resigned September 8, 1943, was entitled to any share of the profits after January 1, 1943, on account of which he had been paid $2,557.83. We are not sure whether Ellingson now makes any contention in this respect. In any event there was no error. In the equity case the judge found — and he was not
3. The remaining questions are in the suit in equity and concern the amounts upon which Kavanagh’s share of the profits should have been computed.
(a) The first is whether Ellingson’s own salary was properly deducted in determining the profits. On July 17, 1939, Ellingson, who several years before had purchased the Golden Cookie Company business, and Kavanagh made an oral agreement for the employment of Kavanagh as sales manager with a salary of $100 weekly plus ten per cent of the profits. At that time Ellingson was drawing $100 weekly. In 1939 there were no profits, but there were profits in each subsequent year. Without making disclosure to Kavanagh Ellingson increased his own salary to $7,000 in 1940, to $9,000 in 1941, to $11,000 in 1942, and to $15,000 in 1943. These figures were deducted in computing the share of the profits paid to Kavanagh, who concedes that Ellingson was entitled to deduct $100 weekly for his own salary, but no more. The judge found that “Kavanagh was warranted in believing that Ellingson was drawing not more than $5,200 annually, and that such sums in excess of $5,200 as were segregated by Ellingson in the form of salary to himself should have been included as earnings upon which profits would be based.” This finding was not plainly wrong. There was a question of fact as to what was the oral contract the parties made. That Kavanagh’s salary was raised to $150 weekly about December 1, 1941, is not decisive. Nor is the result affected by the finding in substance to the effect that Ellingson’s services to the business were worth the amounts he allotted to himself as salary.
(c) The judge ruled that Ellingson’s own income tax payments should not have been deducted. This ruling also was right. They were personal obligations of Ellingson arising out of the fact that there had been profits,, and were not an expense of his doing business as an individual. .There was nothing about the profit and loss statement for 1940 which charged Kavanagh with knowledge that such payments were taken out in computing the profits for the purposes of his contract, nor was there anything which showed that he ever agreed with Ellingson that his share of the profits should thus be reduced. Indeed such conversation as there was tended to the contrary. Ellingson told Kavanagh that "there was no company tax paid; he filed a return for the company in his own income.”
4. The result is that in the equity suit the interlocutory decree is affirmed and the final decree is affirmed with costs, and in the law action the exceptions are overruled.
So ordered.