Boyd v. Walker, 70--822

• Decision Date: 22 June 1971
• Docket Number: No. 70--822,70--822
• Parties: Melvin BOYD, Appellant, v. W. H. WALKER, Jr. et al., Appellees.
• Court: Florida District Court of Appeals

Page 332

251 So.2d 332

Melvin BOYD, Appellant, v. W. H. WALKER, Jr. et al., Appellees.

No. 70--822.

District Court of Appeal of Florida, Third District.

June 22, 1971.

Rehearing Denied Aug. 31, 1971.

Frates, Floyd, Pearson & Stewart, Miami, for appellant.

B. E. Hendricks, Miami, for appellees.

Before CHARLES CARROLL, BARKDULL and HENDRY, JJ.

CHARLES CARROLL, Judge.

Appellant filed a complaint seeking an accounting from the defendants. Upon granting the defendants' motion to dismiss the third amended complaint, the court dismissed the cause with prejudice, and the plaintiff appealed. We find error, and reverse.

By his third amended complaint the plaintiff alleged that on or about January 1, 1966, he and the defendants entered into an oral partnership agreement to engage in the practice of law; that in part the terms of the oral agreement were as set forth in a document in the form of an agreement between the parties, unexecuted, dated January 1, 1966, a copy of which was attached to the amended complaint; that the provisions relating to compensation recited in said document were not those that were agreed to by the parties; that it was agreed all partners would share in the partnership profits according to a method of computation translated into specific percentages; that the plaintiff's share for the first year was to be no less than a percentage computed on a certain basis which was set out in the complaint as amended, which included the element of the gross earnings of the firm, but other details of which we omit here; that the same criteria were agreed to be employed for determination of plaintiff's compensation in subsequent years; that it was agreed the plaintiff should share 'in all profit and/or losses of the partnership from January 1, 1966, with the sole exception of dividends from investments prior to january of 1966'; and that the plaintiff was to share in the firm's library and other assets and expenses from January 1, 1966.

It was further alleged that such partnership agreement was in effect from January 1, 1966, to an on or about April 22, 1969; that on or about April 12, 1968, and at various times thereafter until and including on or about April 11, 1969, the plaintiff demanded of defendants an accounting of the firm's profits to determine the profits due to plaintiff under the terms of the plaintiff's agreement, which demands were refused by the defendants, and that defendants excluded plaintiff 'from the partnership premises and affairs' on or about April 22, 1969. Plaintiff prayed for an accounting for the period of his partnership with the defendants, and for determination thereon of amounts due to him and for entry of judgment therefor.

The order of dismissal does not reveal the ground or reason upon which the trial court concluded that the third amended complaint failed to state a cause of action. In contending the trial court was correct in that ruling, the appellees argue (1) that the plaintiff is not entitled to an accounting because the written document attached to the third amended complaint refers to him as a professional partner and refers to the defendants as general partners, implying by that argument that unless plaintiff's interest and participation in the partnership was equal and coextensive with that of other partners he would not be entitled to an accounting; (2) that under a provision in the attached (unexecuted) written agreement the defendants were to control the policies of the firm; (3) that the complaint did not specify the method of computation of the compensation to be received out of the profits by each of the other members of the firm, and that it was not sufficient for the plaintiff to allege only an agreed method of arriving at compensation for him; and (4) that plaintiff could become a partner only by consent of the other partners (implying they had not so agreed or 'consented,' whereas the complaint as amended alleged such agreement between the parties). We view those arguments of the defendants to be insufficient to support dismissal of the complaint.

The decisions cited by appellees wherein the existence or non-existence of a partnership is determined by consideration of whether the actions of the parties and other circumstances showed there was intent to form a partnership, are not applicable here. That is so because in this case the complaint as amended expressly alleged that an oral contract of partnership was entered into between the plaintiff and the defendants.

Partnership is a creature of contract. 24 Fla.Jur., Partnership § 18. It is not necessary to the existence of a partnership that the share or interest therein of each member be the same. Davis v. Spengler, Fla.1957, 93 So.2d 348; 24 Fla.Jur., Partnership § 60, p. 360. The extent of the interest of a member of a partnership, or the percentage of his share of the profits, whether for 1% Or 90% And whether more or less than some other partner or partners, are matters controlled by the terms of the agreement between the parties, where a partnership is entered into. A partner entitled to a lesser share of the profits than other partners has a right equal to that of each of the other partners to demand and receive his agreed compensation.

'Every partner is entitled to an accounting of partnership affairs in a proper case. A retiring partner is entitled to an accounting of his interest in the partnership.' 24 Fla.Jur., Partnership § 153. See also § 154, ibid, stating it is the normal duty of a partner to render an accounting to his copartners and a performance of this duty can be enforced by appropriate judicial proceedings. 'The fiduciary relation inherent in partnerships is sufficient to invoke the jurisdiction of equity for the purpose of compelling an accounting.' § 160, ibid.

The amended complaint stated, prima facie, a cause of action for accounting, on two grounds. First, because of the alleged partnership, and second, on the ground that a partner whose compensation is based on a percentage of profits of a partnership business ordinarily is entitled to an accounting from his partner or partners who are in possession of the records of the business to determine therefrom the amount due for his agreed compensation. Chandler v. Sherman, 16 Fla. 99 (1877); Uhrig v. Redding, 150 Fla. 480, 8 So.2d 4. The latter would appear to be particularly applicable in the case of a partner who has withdrawn or been excluded from a partnership. See Jackson v. Hunt, Hill & Betts, 7 N.Y.2d 180, 196 N.Y.S.2d 647, 164 N.E.2d 681, 687.

A right or basis for accounting which is disclosed in a complaint may be disputed by denial of allegations material thereto or by pleading matters in confession and avoidance which if established will be sufficient in law to preclude an accounting. Where the accounting is thus opposed, the plaintiff first must establish the basis and need for the accounting before an accounting will be ordered and had. Thus where the pleadings present triable issues bearing on the right, basis or necessity for an accounting, the prescribed procedure is for trial in two stages; first as to the basis or a need for accounting, and, if the plaintiff prevails thereon, then for the accounting. Manning v. Clark, Fla.1951, 56 So.2d 521; Charles Sales Corp. v. Rovenger, Fla.1956, 88 So.2d 551; Gladman v. Hallam, Fla.App.1958, 104 So.2d 46; Cooper v. Fulton, Fla.App.1959, 107 So.2d 798.

Our decision, therefore, is limited to holding that the third amended complaint for accounting was sufficient to withstand the motion of the defendants to dismiss, and to require responsive pleading by the defendants.

The judgment of dismissal is reversed, and the cause is remanded to the circuit court for further proceedings.

BARKDULL, Judge (concurring specially).

I concur in reversal of the order under review not only for the views expressed in the above opinion, but additionally for the reason that the appellant upon the allegation in his amended complaint (that he was to be compensated by a specific percentage of the profits) would be entitled to an accounting even if he did not allege that he was a partner. See: Charles Sales Corp. v. Rovenger, Fla.1956, 88 So.2d 551; Goldfarb Novelty Company of Florida v. Vann, Fla.1957, 94 So.2d 845; Drucker v. Martin, Fla.App.1963, 157 So.2d 435; Legum v. Campbell, 149 Md. 148, 131 A. 147; Cyranoski v. Keenan, 363 Mich. 288, 109 N.W.2d 815; Gauthier v. Dickerson, 41 Wash.2d 419, 249 P.2d 370; 1 Am.Jur.2d, Accounts and Accounting, § 52.

HENDRY, Judge (dissenting).

I respectfully dissent from the holding in the majority and concurring opinions. I would affirm the dismissal of the complaint but without prejudice to the plaintiff's right to seek his remedy at law, if any.

The issues concern the sufficiency of allegations as to the existence of a partnership and plaintiff's right to an accounting. I am of the view that the existence of the partnership and a right to an accounting were not sufficiently alleged and that the complaint has not otherwise invoked equity jurisdiction. Therefore, an action at law would be the proper proceeding to enforce his rights, if any.

The well-established rule that averments are to be construed in favor of the pleader, where a motion to dismiss is made, applies in this case.

A brief word about equity jurisdiction as to accounting may help to put this case in proper perspective. In equity, both a concurrent and an exclusive jurisdiction developed over matters of account. The concurrent jurisdiction of equity could be invoked as to claims purely legal in nature, only where the remedy at law was inadequate. The exclusive jurisdiction of equity could be invoked where the claims involved in the accounting were equitable in nature; for example, where the facts alleged showed fraud or breach of fiduciary relationship. 5 Moore, Federal Practice 38.25, p. 199, nn. 10--11 (1970 ed.); Charles W. Merritt, 'Note, Jurisdictional Prerequisites for...