Court Opinion

ID: 6429493
Source: CourtListenerOpinion
Date Created: 2022-06-25 12:06:54.884733+00
Date Added: 2024-06-11T15:52:07.904930
License: Public Domain

Braley, J.
These cases were referred to a master under decretal orders which did not require a report of the evidence, but only such facts and questions of law as either party might request. Under this form of reference he declined to report the testimony in detail, and as the report is full and sets forth the facts on which his rulings of law were based, he was not obliged to submit the evidence on which these conclusions were reached. Parker v. Nickerson, 137 Mass. 487, 493. Sawyer v. Common*361wealth, 185 Mass. 356, 359. In all the plaintiff alleged one hundred and twenty-one exceptions to the original and supplementary reports, and, although his brief presents many of them in groups and others by single instances, yet generally they may be correctly classified as relating either to the rights of the parties under the agreements and the declaration of trust as modified, or to adverse findings of fact made upon conflicting evidence. Upon a full consideration of these exceptions no reversible error is found except in one particular, to which full reference later will be made.
The partnership, of which the plaintiff and the decedents comprised all of the members, was a joint stock enterprise with transferable shares, organized under a declaration of trust. Originally it was provided that the death of a member should not work a dissolution of the firm, but that those who then became lawfully entitled as owners should succeed to all the rights in the certificate held by the deceased member. At the expiration by limitation of the first partnership it was extended for a further period, which had not expired at the time of the testator’s death. This agreement of extension or renewal essentially modified the declaration of trust by providing that upon the death of either of the trustees, who then were Adams and Barney, at the election of any stockholder the partnership should be terminated and the assets distributed among the beneficiaries in proportion to their holdings. If the form of the association was intended to give to the partnership the attributes of a corporation without taking organized corporate form, while the liability to creditors for partnership debts would not be changed, as between themselves any right to contribution would be ascertained according to the shares held by each, and upon death distributees or legatees would succeed to the title and interest of the deceased partner in such share or shares, the value of which might be ascertained by an appraisal, but there would be no division or distribution of the assets as such, for the firm would continue as before. Tyrrell v. Washburn, 6 Allen, 466. Gleason v. McKay, 134 Mass. 419, 425. Phillips v. Blatchford, 137 Mass. 510, 515. Breck v. Barney, 183 Mass. 133. 2 Lindl. Part. (2d Am. ed.) 762. A bill in equity, however, would lie by the plaintiff if necessary to compel an accounting and the *362payment of dividends, if the trustee in the exercise of a sound discretion had refused or failed to divide accrued net profits. Phillips v. Blatchford, ubi supra. Howe v. Morse, 174 Mass. 491.
Whatever the plaintiff’s rights as a partner may have been on the death of Adams to demand an adjustment on the basis of a dissolution and final distribution according to the proprietary interest of the members, he has not chosen to exercise this option, but seeks by the first bill specific performance of the several contracts, and by the second that an account of profits may be taken for the purpose of establishing the value of his services, which he alleges were rendered, not only under the written agreements, but also under certain additional oral contracts made with Adams, and after his death with Barney, who, as associate trustee, had succeeded to the authority of the- principal trustee with a corresponding right to make such contracts in behalf of the firm. The evidence on the question not being reported, the master’s finding that none of these oral contracts were proved is final. Freeland v. Wright, 154 Mass. 492. Joslin v. Goddard, 187 Mass. 165. In the beginning the defendant Break’s testator, Adams, was the owner of a controlling interest in the company and so continued until his death, when out of the entire capital of three thousand shares he possessed seventeen • hundred and fifty, and of the remaining twelve hundred and fifty the plaintiff owned five hundred shares, while Barney, the third partner, held seven hundred and fifty shares. Break v. Barney, ubi supra. This preponderating interest permitted him as principal trustee under the terms of the trust substantially to manage the affairs of the company as he deemed expedient, and all of the stock owned by the plaintiff had been sold to him from time to time by Adams according to the terms of the agreements.
The plaintiff’s right to specific performance and to an ac-, counting is thus left on these agreements, and the first question of importance is, when within the meaning of the contracts did he leave the employment of the firm, as that date determines the time when his shares were to be valued and his right to salary ended. Each contract contains a clause that the plaintiff should be considered as the absolute owner “ subject only, *363as between the parties hereto, to the agreements hereinafter mentioned.” An important fact to be remembered is that they are not executed by the company, but only by Adams, whose obligation to repurchase the shares was his personal undertaking. For the purposes of determining the excess in price beyond the par value, a full examination of the books of the partnership was required, as well as for the purpose of ascertaining the amount of unpaid dividends or dividends which had accrued but had not been declared, and a possible embarassment is removed by the master’s finding' that the surplus shown by the partnership books is to be treated as “ dividends accrued but not declared,” from which it follows that the shares never have exceeded in value for each year the maximum price at which they were to be repurchased. In his bill for specific performance the plaintiff alleges that he left the employment of the firm “ after January 1,1901,” without naming any definite time, but- the master finds that on May 16, 1901, in compliance with the agreements he gave a notice in writing to the executor that as this employment had ceased he was ready to transfer the shares, and demanded a settlement. While it is manifest from the report that the plaintiff in fact continued at the company’s place of business acting with Barney in the management of its mercantile affairs until he was discharged the last of March, 1903, by the executor who had been elected principal trustee, and that on the twenty-seventh of that month he again demanded a settlement and repurchase of the shares, yet the master’s finding, that the plaintiff’s presence after May 16 was not as an employee, but as a member of the firm, and that he actually ceased to be employed by the company after the first date, is not reviewable as the evidence has not been -reported. East Tennessee Land Co. v. Leeson, 183 Mass. 37, 38. Crane v. Brooks, 189 Mass. 228. O’Brien v. Murphy, 189 Mass. 353. Apart from this finding, however, the plaintiff is not shown to have acted under any mistake of fact, as the correspondence and negotiations between him and the executor make it plain that having taken this position he did not withdraw his demand or suggest any other- date of adjustment as being either preferable, or more equitable. The executor at the plaintiff’s request having treated the date selected as the time when performance was *364enforceable proceeded to arrange for a settlement by a sale of the company’s property, and to permit the plaintiff subsequently to shift his position by moving forward the date for an accounting which might result in an additional payment to him therefore would be inequitable and unjust. Raphael v. Reinstein, 154 Mass. 178, 179. See Miller v. Hyde, 161 Mass. 472, 482, and cases cited.
If this date is accepted as the time of adjustment, the amount to be paid is to be determined by the fourth clause of each agreement.* These clauses, except as to dates, in this particular are synonymous, and by their terms to the par value of the shares is to be added the plaintiff’s one sixth part of the net profits, which may be represented by surplus assets considered as dividends accrued but not declared. This method was adopted by the master, who took the financial standing of the company as shown by its books upon the date named by the plaintiff as the true criterion for the ascertainment of assets in whatever form they appeared. Instead of ascertaining the net assets by charging off uncollectible debts carried on the books at their face value, but which if taken at their actual value would have left little above the par value of the shares, he allowed the plaintiff the full amount, and there is no sufficient reason shown *365in the numerous exceptions to this part of the report why the result reached, and which was sufficiently favorable to the plaintiff, should be modified or reversed.
The plaintiff’s exceptions so far as they are found to relate to the second case rest on a misconception by the plaintiff of the nature of his remedy. Having made an election for specific performance without a dissolution of the firm, he cannot treat the partnership as dissolved and demand an accounting on that basis, for the company continued under the declaration of trust unaffected by the modification though one member had died, and when the plaintiff sold his shares he sold his interest in the property, however designated, and the purchaser thereby became entitled to what he had purchased. Between the parties this transfer became absolutely effective May 16,1901, and thereafter the shares and profits by way of undeclared dividends attaching to them became vested in the executor, who stood in the testator’s place. Phillips v. Blatchford, ubi supra. See Kingman v. Spurr, 7 Pick. 235. What the plaintiff in effect attempted to maintain before the master, and now endeavors to maintain under his exceptions, is, that for the purpose of enforcing the agreements the partnership is a joint stock company, and when a member has been paid for his shares, which carry with them accrued but undeclared dividends, they belong to the transferee, but that after such a sale and transfer has been made the former shareholder can maintain a bill in equity against the partnership, which then includes the new member, for an accounting of these profits. The answer is obvious: the plaintiff is no longer a member of the firm, having unreservedly parted with all his title and interest in the company when he sold his shares with their accumulations.
If the principal object for which the bill was brought failed when the master found that the alleged oral contracts were not proved, or that it could not be maintained for a partnership accounting except to recover arrears of salary and dividends declared and placed to his credit but not paid, further relief may be granted for the purpose of compensating the plaintiff for any service he may have rendered and for which the partnership was liable. It is undisputed that he did not actually sever his connection with the business management of the com-*366pony until he was discharged on March 27, 1903, and the master in his supplementary report finds that during the period from May 16, 1901, to this date, his services were beneficial, and estimates their value at $7,500, and the evidence on this issue not being reported this finding is conclusive. But as the plaintiff’s connection with the company had not been discontinued while the negotiations" were in progress there would seem to be no sufficient reason why independently of the agreemehts he is not entitled to reasonable remuneration in some form, although disallowed by the master, especially as his services which were valuable were performed with the knowledge and without any dissent by the executor, and with the knowledge and assent of the associate trustee, who during the time properly represented the company. See Schenkl v. Dana, 118 Mass. 236; Jepson v. Killian, 151 Mass. 598; Fitzgerald v. Allen, 128 Mass. 232, 234.
The motion of the plaintiff at the hearing before the master under the order of recommittal that the whole case be reopened for the introduction of further evidence under the second bill was irregular as it should have been addressed to the court, and his refusal to grant this request is not a matter of exception. 2 Dan. Ch. PL & Pr. (5th ed.) 1221, note 2. And as all the remaining exceptions to the supplementary report of the master depend upon a different view of the testimony than that taken by him they must be overruled.
The thirty-sixth exception to the original report, that the “ account and findings, and several items therein, are less than is required by law, equity, the evidence, and weight of the evidence ” therefore must be sustained. For the purpose of allowing the sum named above the final decree under the second bill must be reversed so that the account may be reformed by the addition of $7,500 with interest, but the final decree under the first bill is affirmed for reasons already stated. Appeals also having been taken from the interlocutory decrees it is enough to say that the first decree granting a limited recommittal protected the plaintiff’s rights at the only point where the master is found to have erred, while the second decree overruling his exceptions under the first bill and confirming the report should be affirmed as no error is shown, although upon the second bill the decree *367must be modified to the extent of allowing the exception to the refusal to award reasonable compensation for the period named.

Ordered accordingly.

 In the agreement of December 31, 1897, the fourth clause or paragraph was as follows:
“Fourth. Whenever, after one year from date, said Taber shall leave said employ, he agrees for himself and his legal representatives to sell and convey to said Adams, or his legal representatives, and said Adams, for himself and his legal representatives, agrees to purchase said shares of stock at the price of one hundred dollars per share and in addition thereto the value of such shares in excess of one hundred dollars per share, as shown by the books of said company, but the value of said shares in excess of one hundred dollars per share shall not exceed the rate of ten dollars per share per year, and the value of said shares as shown by the books of said company shall be deemed and taken to be one hundred dollars per share on January 1st, 1899, and all unpaid dividends, or dividends accrued but not declared, shall also be paid to said Taber, said sale to be for cash.”
In the contract of February 1, 1899, the fourth clause or paragraph was in substantially the same language, with unimportant differences in punctuation, except that the date “January 1st, 1899,” on which the value of the shares was to be taken to be one hundred dollars per share was changed to “ January 1, 1900.”