Title: Chambers v. Sims
Citation: 13 Utah 2d 371, 374 P.2d 841
Docket Number: N/A
State: Utah
Issuer: Utah Supreme Court
Date: October 1, 1962

13 Utah 2d 371 (1962) 374 P.2d 841 J.T. CHAMBERS, PLAINTIFF AND RESPONDENT, v. R.W. SIMS, DEFENDANT AND APPELLANT. MARGARET S. CHAMBERS, CROSS DEFENDANT AND RESPONDENT. J.T. CHAMBERS, PLAINTIFF AND APPELLANT, v. R.W. SIMS, PLAINTIFF AND RESPONDENT. Nos. 9554 and 9556. Supreme Court of Utah. October 1, 1962. McKay &amp; Burton, Paul E. Reimann, for R.W. Sims in No. 9554. Richards, Bird &amp; Hart, Salt Lake City, for J.T. Chambers and another. CALLISTER, Justice. Plaintiff commenced this action seeking a partnership accounting. Defendant, Sims, filed a counterclaim and impleaded. Mrs. Chambers as a cross-defendant, asking damages from her for alleged improper bookkeeping. Mrs. Chambers is the wife of plaintiff and sister of the defendant. By time of trial all accounting differences had been reconciled except those relating to salaries. The lower court, sitting without a jury, at the conclusion of the trial dismissed defendant's counterclaim and cross-claim and awarded plaintiff judgment for the reasonable value of his services to the partnership. Both the plaintiff and the defendant appeal. At the outset it should be noted that the record in the instant case is lengthy, complex, and replete with contradictory testimony. It would be extremely difficult and unnecessary to set forth in any great detail the testimony and exhibits introduced. However, it does appear that a limited partnership, known as South East Ready Mixed Concrete Company, was formed on May 8, 1948. Plaintiff and defendant were the general partners and L.H. Sims, father of defendant and Mrs. Chambers, was the limited partner. The latter died a few months after the creation of the partnership, and his interest therein descended to defendant, Mrs. Chambers, and another daughter. At the outset, it was agreed that important decisions would be referred to defendant, and that he was to give only such time to the partnership as was necessary. Plaintiff, on the other hand, was to devote his full time to the business. Mrs. Chambers was made office manager and was, at all times pertinent hereto, in charge of the firm's books and records. The two general partners did not draw money from the business at regular intervals, but instead drew out money as they needed it. Mrs. Chambers allowed part of her salary to remain in the partnership and added to her husband's capital account. Entries were made in the capital accounts for salaries by either Mrs. Chambers or a bookkeeper under her direction. The evidence is conflicting as to when these entries were made and is conflicting as to whether either plaintiff or defendant was aware of them, although each had access to the books. The books reflected that from 1948 to 1958 no salary was credited to defendant, while rather large salaries were entered in favor of the plaintiff. Prior to the introduction of any evidence it was agreed by counsel for the respective parties, and so understood by the judge, that the question of reasonableness of salaries was not to be an issue. It was understood that the plaintiff intended to prove the salary due him by the specific practice of the partnership as evidenced by the books and records. Defendant, on the other hand, claimed that the salary entries were unauthorized and that the salaries of both partners had been fixed by an oral agreement entered into on the same day the articles of partnership were executed. The articles of partnership contained the following pertinent provisions: After the respective parties had put on their case and rested, the trial judge submitted a memorandum decision in which he held that partners had orally agreed, at the time the partnership was formed, that the defendant was to receive $400 per month as salary and the plaintiff $350. However, he held that this agreement never became operative. He further determined that a specific practice, of which defendant had notice, had been established of compensating plaintiff for full-time services (including his wife's) and allowing nothing by way of salary to defendant from 1951 to 1959. The trial judge rejected the salary entries in the books as being insufficient and conflicting. He held that in light of the provisions of paragraphs XII and XIII of the partnership agreement the plaintiff was entitled to a reasonable compensation and suggested that a master be appointed to hear testimony and determine the matter. This suggestion was opposed by the defendant and plaintiff's motion to reopen was granted. Whereupon, evidence was taken relating to the reasonable value of the services rendered by plaintiff. At the conclusion judgment of $29,314.66 was awarded to plaintiff, which was $22,000 less than plaintiff claimed the books showed. In arriving at its decision, the lower court made, among others, the following findings of fact: As previously stated, the record before us is lengthy and complex. However, we have carefully examined the same and find that it contains substantial evidence to support the findings of the lower court. Generally, a partner is not entitled to any remuneration for his services in the absence of an agreement by the partners to that effect.[1] However, the lower court correctly held that articles of partnership contemplated compensation, and that a practice of remunerating plaintiff, of which defendant had knowledge, had been established. That the books and records did not support plaintiff's claim is clearly shown by the evidence and the exhibits. Where the partnership agreement or a specific practice, acquiesced to by the partners, contemplates the payment of salary to one or more partners, but no amounts are specified, it is presumed that payment of reasonable salaries is intended.[2] Therefore, the trial court correctly permitted the plaintiff to reopen[3] and receive evidence relating to the reasonable value of his services. Affirmed. No costs awarded. WADE, C.J., and HENRIOD, McDONOUGH and CROCKETT, JJ., concur. [1] See 48-1-15(6), U.C.A. 1953. [2] 66 A.L.R.2d p. 1027 (sec. 3). [3] 6 Moore's Federal Practice, sec. 59.04 (13).