Title: Sullivan v. Hoey

State: rhode-island

Issuer: Rhode Island Supreme Court

Document:

231 A.2d 789 (1967) Richard P. SULLIVAN v. James F. HOEY, Jr. Equity No. 3167. Supreme Court of Rhode Island. July 18, 1967. Dick & Carty, Joseph B. Carty & Paul J. Pisano, for complainant. Edward W. Day, Jr., for respondent. PAOLINO, Justice. This is a bill in equity praying for a dissolution of two partnerships owned equally by the complainant and the respondent, and ancillary thereto, for an accounting of the affairs of each, the appointment of a receiver for both, and damages. Following a hearing on bill, answer and proof before a trial justice in the superior court, a decree was entered granting substantially all of the complainant's prayers. The case is before us on the respondent's appeal from such decree. Under his reasons of appeal, respondent contends (1) that the decree is against the evidence and the weight thereof, and (2) that it is against the law in that it awards complainant the right to elect to receive one half of the profits from May 1, 1961, to the date of the entry of the decree. On the view which we take of this case, we do not reach either of these questions at this time. After examining the entire record we come to the conclusion that the instant appeal is premature. In the circumstances it will serve no useful purpose at this time to indulge in any detailed discussion of the evidence. It will suffice merely to point out in a very general way that this controversy between two partners involves two separate partnerships organized by them in 1955 under the firm names of the Airadyne Company and Empire State Equipment Company, hereinafter referred to as "Airadyne" and "Empire," respectively. Sometime in 1959 differences of opinion arose between the partners and the situation became progressively worse until, by letter dated April 28, 1961, respondent notified complainant that he was terminating the Airadyne partnership. It appears that complainant received this letter on May 1, 1961. The respondent concededly never gave complainant any notice affecting the dissolution of Empire. *790 During the period between 1959 and 1961, the partners, personally and with counsel, held conferences and carried on negotiations pertaining to the partnerships for the purpose of arriving at an amicable solution of their problems. These attempts were fruitless. In the meantime, respondent took certain actions pertaining to customers which had carried on business with Airadyne, which actions the trial justice found had constituted a violation of his fiduciary duties owed to the partnerships. These actions included the formation of Airadyne, Inc., a Massachusetts corporation, which thereafter secured business with various manufacturers who had previously carried on business with the Airadyne partnership. Following the hearing the trial justice rendered a written rescript on November 27, 1962, in which he found, inter alia, that respondent violated his fiduciary duties to the partnerships prior to April 28, 1961, as well as on April 28, 1961; that he succeeded in terminating the Airadyne partnership on May 1, 1961; that he violated his fiduciary duties in forming Airadyne, Inc., without notice to complainant and in proceeding thereafter in picking up contracts with manufacturers who formerly had contracts with the partnerships; and that in view of the close business association between the two partnerships, he also violated his fiduciary duties to Empire. In the circumstances, he concluded that by his actions respondent rendered himself liable for an accounting not only of the business of the partnerships prior to April 28, 1961, but thereafter until relieved by decree of court, and also to an accounting for half of the business of Airadyne, Inc., or other business conducted by him in any capacity with the manufacturers who had contracts with the Airadyne partnership on April 28, 1961. Accordingly, he ordered the parties to prepare a decree carrying out the objects specified therein, including the appointment of a permanent receiver for both partnerships and the appointment of a master to take an accounting. Subsequently, in a supplementary rescript filed on January 8, 1963, the trial justice stated that The trial justice then expressly reaffirmed his prior rescript, as clarified in the January 8, 1963, rescript, and requested counsel to present a decree incorporating certain orders expressly set forth in such rescript. On March 19, 1963, a decree was entered which incorporated the findings and conclusions of the trial justice and the orders based thereon.[1] Although a master has been appointed, no accounting has taken place. Paragraph 7 in the decree provides that complainant shall be awarded the value of his interest in the partnerships as of the date of dissolution, and that such value is to be based on an accounting as of that date plus half the good will therein as of that date. And in accordance with the provisions of G.L. 1956, § 7-12-53, as amended, paragraph 8 provides that complainant shall elect whether to receive interest on any such award or profits found after May 1, 1961, as a result of the decreed accounting. In the circumstances the value of any interest which complainant may have in any of the companies, or the value of any profits, cannot be determined at this time and the choice presented by § 7-12-53 is of no avail to complainant. Moreover, paragraph 12 provides that if an appeal be taken to this court, the superior court, after the accountings referred to in paragraphs 4 and *791 5 have been taken, shall conduct a hearing to determine the value of the good will of the respective partnerships as of May 1, 1961, as provided for in paragraph 6 of the decree. Since there has been no accounting, and in view of the fact that the decree requires the superior court to pass on the question of the value, if any, of the good will of the partnerships as set forth in paragraph 6 of the decree, we hold that the instant appeal is premature. For the reasons stated the appeal is denied and dismissed without prejudice, and the cause is remanded to the superior court for further proceedings. [1] The orders incorporated in such decree are included herein as Appendix A.