Beard v. Beard

• Citation: 44 A.2d 469,185 Md. 178
• Decision Date: 01 November 1945
• Docket Number: 7.
• Parties: BEARD v. BEARD.
• Court: Court of Appeals of Maryland

44 A.2d 469

185 Md. 178

BEARD v. BEARD.

No. 7.

Court of Appeals of Maryland

November 1, 1945

Appeal from Circuit Court of Baltimore City; E. Paul Mason, Judge.

Action by Catherine Beard against James H. Beard for an accounting of the profits of an alleged partnership. From a decree holding that the business in which the parties were engaged was a joint adventure and directing defendant to pay plaintiff $21,500 representing one-half of proceeds of sale of business and other investments, the defendant appeals.

Decree reversed and decree entered for plaintiff for $18,750.

H Mortimer Kremer and Wm. Taft Feldman, both of Baltimore, for appellant.

John E Magers, of Baltimore, for appellee.

Before MARBURY, C.J., and DELAPLAINE, COLLINS, GRASON, MELVIN, and MARKELL, JJ.

MARKELL Judge.

In this case a wife (plaintiff, appellee) filed a bill against her husband (defendant, appellant) for an accounting for the profits and proceeds of an alleged partnership between them.

At the time of the hearing the parties had been married twenty years, had lived together until a few months before, and were still living in the same house, although the husband had recently filed a bill for divorce. For years they lived happily in moderate circumstances and through adversity. Recently prosperity has been followed by domestic and pecuniary discord.

In 1926 the husband and wife acquired half, in 1928 the other half of the stock of the Liberty Cab Company. He was president, she secretary and treasurer. The business was conducted by him, with an associate until 1928. In the depression the corporation went into a receivership. In 1933 Beard incorporated the New Liberty Cab Company. On application to the Public Service Commission for taxicab permits he testified that he and his wife had conveyed to the new company the cabs and other assets of the old (purchased from the receivers) for fifty shares of stock of the new. For these fifty shares (the only stock issued) one certificate was issued in the names of Beard and his wife, signed by him as president and by her as assistant treasurer and secretary. To launch the new company they borrowed $300 on their furniture; she says (he denies) that she also borrowed $400 from a friend. The company paid no dividends; she got no income from it. She had no bank account. He received a salary of $100 a week, on which they lived. He conducted the business.

In June, 1937, they sold the fifty shares of stock for $37,500. The contract of sale was signed by each of them individually, by the corporation by them as president and secretary respectively, and by the purchaser. The price was payable, $10,000 forthwith, $2,000 per month for thirteen months, and $1500 after another month, with interest at five per cent. Just before the sale, pursuant to consultation between Beard, his counsel and his accountant, the fifty shares were transferred into two certificates for twenty-five shares in the name of each spouse. Payment was made to each by check for $5,000 and monthly checks for $1,000 (and $750) with interest.

At the time of the sale the two checks were deposited in separate bank accounts with the Equitable Trust Company, one account in the name of each. As the monthly checks were received, hers were endorsed and turned over to her husband. Some of their monthly checks were deposited in bank accounts in his name at the Equitable or elsewhere, some in an interest-bearing account in the names of both as joint owners, opened in January, 1938, with a federal savings and loan association. They also had a savings account in their joint names, opened in October, 1937, with the National Central Bank. In December, 1937, they went together to the Equitable, drew out their balances on counter checks, and she turned her $5,000 over to him. The money they thus drew out was deposited by him in some other bank account in his name.

Except for 1937 and 1938 the wife has filed no federal income tax returns. For 1937, at the instance of her husband and his tax advisers, she and he filed separate returns, each including half of the profit from the sale of the New Liberty Cab stock. For 1938 they filed a joint return. He says he saved about $3,300 by filing separate returns, instead of a joint return, for 1937.

For about a year after June, 1937, Beard was not engaged in any business. He says he was tired and told his wife he 'was going to take it easy for a while.' At the end of December they took a trip to California, and later to Florida, returning in March, 1938. The wife then went to a hospital for a serious operation. She was in the hospital five weeks.

In May or June Beard obtained a lease of a building on Baltimore Street, which he remodeled for a restaurant and tavern. In September he opened it as 'Beard's Cafe'. The liquor license was obtained in his name; in the application he said that no other person was pecuniarily interested in the business. He says he 'used about everything he had to start the place'--about $28,000 of the $37,500.' He 'went overboard on it'. He 'cleaned out all the banks' and the loan association account. The business lost money in 1938 and 1939. In 1939, while it was losing money, he and his wife, to keep it afloat, mortgaged their house, which they own as tenants by the entireties, for $2,500, and also assigned their loan association account to secure other loans aggregating $1,700. After 1939 the business made substantial profits. On June 3, 1943, it was sold, at a profit, for $33,000; $20,000 was paid in cash, the balance in weekly payments of $250. Mrs. Beard received no part of the proceeds of the sale or the profits of the business.

Beard testified that everything he had was his and his wife's property. He says he put the stock in both names for her protection. Nevertheless, he says he owned the Company. 'I did not have to get my wife's consent to sell out this business. I always conducted the business myself, and I did not have to ask no questions. I was under no obligations to anybody. * * * The only thing my wife knew I told her I was going to sell the Cab Company'. He was 'always figuring' he was boss of his own money--and his wife's too--and 'always acted that way'. His wife always trusted him. 'We never had any arguments about the business or anything'. 'There was never any question about money in my home'.

When he and his wife each deposited $5,000 in a separate account with the Equitable, he says he 'always thought that $10,000 deposit' was his. When she turned over her monthly checks or her $5,000 to him, she knew he was depositing the money in his own name. She says she turned the checks over to him for deposit; he was looking around for something to go into; when she gave them to him she did not say anything; she just endorsed them and turned them over to him because they were going into some other business; at their age 'and that little bit of money' they could not afford to retire; there never was a question of money between them; she always trusted him to use the money, whoever it belonged to, to the best of his ability. When she turned over the $5,000 she was expecting to go to the hospital. 'My health was bad, and I did not want the money in my name. I did not know whether I was going to live or not, and I thought with all the other money in his name, and it belongs to both of us, * * * I would put that into the bank before I went into a hospital so that there would be no question about it, because I always figured what we had belonged to both of us, and when I left this world everything should belong to him.'

On June 29, 1943, Mrs. Beard found that her husband a few months before had purchased two $5,000 war bonds, each in the names of himself and George Brennan, a friend. She asked him why he put the bonds in Brennan's name instead of hers, because whatever they had owned or had they had had between themselves and not outsiders. He told her he did not trust her (referring to a 'scene' in 1941 when he saw a man's arm around her at Beard's Cafe) and that was why he put them in Brennan's name. A few weeks later he said that if anything should happen to him, Brennan would see that she got the money. She never had any reason to mistrust him until she found out about these $10,000 of bonds.

On July 20, 1943, the bill in this case was filed. A demurrer to the bill was sustained; the amended bill was filed on October 28, 1943. The amended bill alleges that a partnership, by verbal agreement between Beard and his wife, as equal partners, to conduct the restaurant and tavern business, continued from August 15, 1938, to June 3, 1943, and prays an accounting. The lower court found no partnership, but held that the business was a 'joint adventure' between the Beards and decreed that he pay her $21,500, representing one-half of (a) the $33,000 received from the sale of the business and (b) the $10,000 invested in War Bonds. From this decree the defendant alone has appealed.

Mrs. Beard says (he denies) that after Beard's Cafe had been opened, and after she regained her health, she was there every night, as a sort of general superintendent to see that the business went along; when he was at home sick for five weeks, or in Florida, she 'ran the business' and made deposits in bank. In 1941 or 1942, on account of the 'scene' with a man, he told her to stay out of the place; from that time she kept out of the place altogether. She never received any income from the business, as such, or any accounting. He has always supported her liberally. The winter after this case was instituted, they took a trip together to Florida. She says if he had given her a financial...