Opinion ID: 1830892
Heading Depth: 1
Heading Rank: 2

Heading: management fees for burgess mining

Text: The special master made the finding that DTK had no office and that all of its management functions, except the operations at the mines, were performed by Burgess Mining personnel in the normal course of their employment and without any additional cost to Burgess Mining. He found that the monthly statements distributed to partners, prior to December 1975, indicating the earnings of DTK, listed no expense for management fees and that there had been no agreement for DTK to pay Burgess Mining for its management services. In his findings, the special master stated that commencing with the year-end statement for 1975, T.H. Terrell and W.E. Prescott, acting upon instructions from A.E. Burgess, devised a formula for a management fee to be paid to Burgess Mining by DTK. The fee, as calculated under the formula devised by Terrell and Prescott, amounted to $110,857 for the year of 1975, and this fee brought strong objections from Lees. The special master found that the management fee computations for the year of 1976, ($122,384) and in the statement for October 31, 1977, ($95,406.41) lacked consistency in the items of overhead utilized. Recalculating the management fees for all three years, the special master determined that Burgess Mining was actually entitled to additional payments. In his report and recommendations to the court, he concluded: DTK and Lees are not bound by the arrangments for payment for management fees. However, Burgess Mining performed substantial services for DTK and is entitled to reasonable compensation for them. The formula devised by Terrell and Prescott is a reasonable basis for determining the amounts due. The items included in the recapitulation [See Figure I] relate to coal production and the amounts shown by the recapitulation are fair and reasonable. As this amount is in excess of the amounts actually charged, the plaintiffs' claims in COUNT FIVE should be denied and Burgess Mining is entitled to recover on its counterclaim. The amounts due from DTK to Burgess Mining for management fees are: 1975  $ 7,524.13 1976  $28,417.66 1977  $13,039.76 The special master further recommended that: [A]ny judgment rendered by the court be made directly on behalf of Lees and against the appropriate defendants for his proportionate interest in the partnership. In accordance with paragraph 16(a) of the partnership agreement and paragraph 19 of the stipulation, Lees would be entitled to his proportionate share of any adjustments as follows: 1975  1/11 1976  1/15 1977  1/18 Lees's proportionate share of the management fee owed Burgess Mining was set off against the additional amount which the special master found Burgess Mining owed DTK for coal sales (See Figure I [1] below for the special master's calculations as they appear in the record). Burgess Mining argues that this recapitulation performed by the special master resulted in its claim against DTK being reduced from $48,981.55 to only $3,302.86. [2] Further, Burgess Mining asserts that as a general proposition of law, it is entitled to collect the full amount of its claim against DTK, i.e., $48,981.55, from Lees, who was a general partner of DTK. See e.g., Code 1975, §§ 6-7-70 and 10-8-52; Cleckler v. First National Bank, 204 Ala. 268, 85 So. 484 (1920). Hence, Burgess Mining maintains that Lees's judgment against it in the amount of $21,383.16 (See Figure I), should be eliminated and instead a judgment entered for it and against Lees in the amount of $24,296.06. [3] Lees takes issue with the management charges made to DTK on the ground that the evidence does not justify the inclusion of officers' salaries or contributions to a pension fund in which he could not participate. Thus, he claims that his portion of officers' salaries ($5,459.87) and pension fund contributions ($1,841.78) paid by DTK to Burgess Mining should be disallowed and the judgment entered on his behalf against the mining company increased by $7,301.65. At the outset, it is to be noted that a court accepts a master's findings of fact in non-jury actions unless clearly erroneous; and to the extent the trial court has adopted the findings of a master, this same standard applies to an appellate review of these findings. Rule 53(e)(2), Ala.R.Civ.P., and committee comments to Rule 53, Rule 52 Ala.R.Civ.P., and committee comments to Rule 52. In essence, a master's report is accorded the same weight as a jury verdict and, therefore, is not to be disturbed unless it is palpably and plainly wrong. Patterson v. Lovelady, 233 Ala. 554, 556, 172 So. 646, 648 (1937). Burgess Mining's contention that partners are jointly and severably liable for all debts and obligations of the partnership and that as a consequence, it may sue Harry Lees, individually, for the obligations of DTK, is correct as a general proposition of law. Under the circumstances of this particular case, however, the Court is of the opinion that the special master, in an effort to arrive at a fair accounting of the liabilities of the parties, was justified in apportioning to Lees his share of the additional management fees due Burgess Mining from DTK, and that the circuit court did not err in adopting the master's report in this regard. It should be noted that the special master concluded that DTK and Lees were not bound by the arrangement for payment of management fees, but, nevertheless, found that Burgess Mining had performed substantial services for DTK and was entitled to reasonable compensation for those services. Because of the particular circumstances, we hold that the circuit court was entitled to apply equitable principles. In Moore v. Moore, 255 Ala. 393, 51 So.2d 683 (1951), the Court stated: It is a familiar principle that equity grants full relief when it has jurisdiction on an equitable ground to grant any relief. Having assumed jurisdiction of a part the court will determine all the interrelated equities of the whole. `Equity delights to do justice, and not by halves.' The bill in the instant case is based upon these fundamentals and will avoid multiplicity of suits. 255 Ala. at 401, 51 So.2d at 690. Indeed, equity must mold its decrees to suit the obvious necessities of each situation and possesses the power to do so. Bouldin v. City of Homewood, 277 Ala. 665, 674, 174 So.2d 306, 314 (1965); see also Baker Sand & Gravel Co. v. Rogers Plumbing & Heating Co., 228 Ala. 612, 619, 154 So. 591, 597 (1934). The Court holds, therefore, that the special master was free to fashion an appropriate remedy that was fair to all parties, including one that merely apportioned to Lees his individual share of the additional amount due Burgess Mining, particularly since all the partners except Lees had signed release forms releasing Burgess Mining and Burgess Brothers from all claims relating to DTK, and also, as found by the master, the other partners were key personnel in Burgess Mining and the partnership was formed to benefit these key personnel. Although Lees insists that he is due an additional $7,301.65, he has failed to direct the Court to any evidence in the record which conclusively indicates that he is entitled to additional reimbursement and that the special master has specifically failed to account for it. Consequently, the court will not attempt a detailed examination of accounts for the purpose of finding errors not specifically pointed out, nor will the findings of the master, sustained by the trial court, be disturbed unless mistake or fraud is clearly shown. 1 C.J.S. Accounting § 44, at 689 (1936). Because the Court has not been directed to appropriate evidence supporting Lees's claim concerning management fees, the Court cannot conclude that the findings and recommendations of the special master as adopted by the circuit court were palpably wrong.