Anagnosti v. Almy

• Decision Date: 25 May 1925
• Citation: 252 Mass. 492,147 N.E. 854
• Parties: ANAGNOSTI v. ALMY et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

252 Mass. 492

147 N.E. 854

ANAGNOSTI

v.ALMY et al.

Supreme Judicial Court of Massachusetts, Suffolk.

May 25, 1925.

Appeal from Superior Court, Suffolk County; John D. McLaughlin, Judge.

Two bills in equity by William Anagnosti against William Almy and others, copartners under firm name and style of William Almy & Co. for accounting. From interlocutory and final decrees dismissing both bills and ordering plaintiff to pay $1,500 plaintiff appeals, and from an interlocutory decree denying their motion to recommit cases to a master defendants appeal. Reversed in part, and affirmed in part.C. E. Fay, of Boston (E. Stuart Macmillan, of Boston, with him), for plaintiff.

G. K. Gardner, of Cambridge, for defendants.

CROSBY, J.

These are two suits in equity for an accounting for profits under two agreements; the first is alleged to be oral while the second is in writing. The cases were referred to a master, who filed a single report to which both parties excepted and moved that it be recommitted. Upon hearing in the superior court, the judge denied these motions, overruled the plaintiff's exceptions, sustained the defendants' exceptions so far as they conformed to his order for decrees, and entered interlocutory and final decrees dismissing the first suit and ordering the plaintiff in the second suit the sum of $1,500 on the accounting, with costs to the defendant in both suits. The cases are before this court upon the plaintiff's exceptions and appeal from all these orders and decrees; and upon the defendants' appeal from so much of the interlocutory decree as denies their motion to recommit, confirms the master's report, and fails to sustain all of their exceptions thereto. The evidence is not reported.

The plaintiff, an expert in Egyptian cotton, was for some years before September 7, 1921, employed in the foreign cotton department of E. A. Shaw & Co. in Boston. On or about that date he severed his relations with that company, and as the result of negotiations with William Almy, senior member of the defendant firm, made an oral contract with the defendants to manage their foreign department, dealing especially in Egyptian cotton. The defendants agreed to pay him 50 per cent. of the net profits of that department, to be determined when all losses and expenses including a proper charge for overhead had been deducted. He was to be allowed a drawing account of $100 a week which was to be charged against his share of the net profits, if any; he was not to be liable for losses sustained except as they might be deducted in the determination of the net profits. The arrangement was to continue until December 31, 1921, and the plaintiff was entitled to share in the net profits on all business originating or consummated before that date. At the time this oral agreement was made the parties intended to reduce it to writing, but on the advice of counsel the plaintiff delayed so doing until his connections with E. A. Shaw & Co. were closed by a final accounting and settlement; this was done on October 5. In the meanwhile the parties acted under the oral agreement. The day after his settlement with E. A. Shaw & Co., the plaintiff and his attorney conferred with the defendant Almy regarding the terms of the written contract; these were settled on October 8.

The master found that:

‘The parties desired and intended to have their contract date back to the beginnings of their relation in September, but counsel advised that on account of the overlap of time with the plaintiff's relations with Shaw & Co. it should not be done and both parties appear to have acquiesced in this advice. * * * Mr. Barker [attorney for the defendant Almy] advised Mr. Almy that because the new contract was to be dated October 6th, it would necessitate a separate accounting for the transactions already closed. * * * He then suggested that they have their accounting on those transactions at once, but the parties pointed out that this was not practical at that time because until all of the cotton sold had been delivered and the final payments made and charges and expenses determined, the net profits could not be ascertained, and the matter was dropped with the understanding that the accounting on these transactions would be had when it was convenient and practical for the parties.’

The written contract was actually executed on October 20, 1921. By reason of the defendants' objection to the report, the master added to the paragraph above quoted the following:

‘The parties intended the written contract of October 6th to supersede and take the place of the oral agreement previously existing between them, except as to those transactions which had been closed by purchases and sale prior to that date and concerning which they made the special oral agreement set forth.’

The terms of the two contracts were substantially the same, with the addition in the written agreement of a provisionby which the defendants were to take the plaintiff into their firm on January 1, 1922, unless they gave prior notice to the contrary. They did give such a notification, and the parties severed their relations on December 31, 1921.

The first suit is for an accounting for the period before October 6, and the second for the period from October 6 until December 31. It is the contention of the defendants that there should be a single accounting for the entire period. The master's finding, quoted above, was favorable to the plaintiff's contention that the accounting should be divided into the two periods. The court ruled, however, that this finding could not be supported and that the oral contract was binding for the entire period; that the written contract did not operate to terminate or merge the oral contract but was rather a permanent record of it. He further ruled that there was no certain and definite agreement to account separately for the transactions closed before October 6; that if such an agreement existed, it was parol and could not be admitted to vary or control the terms of the written contract, and that the account must be taken as a whole rather than in two parts. The plaintiff contends that accounts for each period should show a profit. The defendants admit that a profit is shown in the period from September 7 to October 6, but contend that the true account of the entire period from September 7 until December 31 shows a net loss of at least $240,000.

It appears by Exhibit 2, annexed to the master's report, that during the time the plaintiff was in the defendant's employ the latter contracted for the purchase of 9,050 bales of Egyptian cotton by 31 separate contracts; that during the same period they contracted to sell 5,053 bales by nine separate contracts shown by the same exhibit. The purchases in excess of sales were 3,997 bales, besides two contracts for the sale of 1,500 bales to one Brander which never were consummated, so that the defendants had 5,497 bales to dispose of after December 31, 1921. These bales were all sold before January 29, 1924, by 35 sales contracts as shown by Exhibit 2. The profits and losses resulting from all these transactions are involved in the present suits.

Between September 27 and October 6, 1921, the defendants purchased 1,500 bales of Sakel type of cotton in Alexandria for shipment to the United States, expecting that before its arrival the duty on such cotton would be removed. Instead the duty was continued, and the cotton was diverted to Liverpool about November 1, 1921; the price declined materially thereafter and it ultimately was sold at a loss of $242,294.09. The plaintiff had advised the defendants to protect themselves against this loss by ‘hedging.’ The master finds that, as practiced on the Liverpool exchange, hedging consists in selling contracts for the future delivery of cotton upon the exchange either with the idea of filling the contracts with the actual cotton on hand, or of offsetting any loss which may be incurred upon the sale of the actual cotton against a corresponding profit to be realized from the liquidation of the future contract. He further found that the loss could have been lessened by hedging. The plaintiff contends that this transaction should not be included in the account because it was not contemplated by the contract, and also because the...