Cole v. Holton
| Decision Date | 06 October 1930 |
| Citation | 172 N.E. 858,272 Mass. 565 |
| Parties | COLE v. HOLTON et al. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
OPINION TEXT STARTS HERE
Appeal from Superior Court, Suffolk County; Daniel T. O'Connell, Judge.
Suit by Harold E. Cole against Jesse A. Holton and another. The master's report was confirmed in the superior court by an interlocutory decree, objections of both parties were overruled, and a final decree was entered for plaintiff. From the final and interlocutory decrees, both parties appeal.
Modified and affirmed.Harold G. Jackson, of Boston, for plaintiff.
John W. Gorman, of Jamaica Plain, for defendant.
The plaintiff in this suit in equity asks that the defendant Holton, hereinafter called the defendant, account to him for $3,000 paid to the defendant under a partnership agreement, and for moneys due under said agreement.
On April 7, 1926, the plaintiff and defendant made a contract of partnership, in writing, ‘for the general practice of law,’ ‘to continue indefinitely.’ Either partner could terminate the partnership on thirty days' notice. In accordance with the agreement the plaintiff paid the defendant $3,000. It was agreed that this amount was ‘to be returned’ to Cole by Holton It was further agreed that if the partnership was terminated after April 7, 1929, or by act of Cole on or after December 31, 1927, the sum of $3,000 was not to be returned to Cole. The agreement provided for ‘a trial period’ from April 7, 1926, to December 31 of that year, and if either party desired to withdraw on December 31, 1926, ‘all moneys drawn from the partnership income by said Harold E. Cole shall be paid by him to said Jesse A. Holton less the sum of $1,533 which is to be kept out by said Harold E. Cole as compensation for his services during this trial period.’
On January 31, 1928, a new partnership agreement was signed by the plaintiff, the defendant and Alexander W. Murray for the practice of law. On March 1, 1928, the three partners began to conduct their affairs under the name of Holton, Murray and Cole. To the new partnership Holton contributed furniture, fixtures and books valued at $1,000, and a two-thirds interest in furniture, books and stationery valued at $100. Murray contributed $825 in cash, and Cole paid $775 in cash and his one-third interest in the furniture, books and stationery valued at $50. A schedule of the personal property belonging to the firm of Holton and Cole is annexed to the partnership agreement of the new firm, showing in detail the property transferred to the firm of Holton, Murray and Cole. Holton was to receive forty per cent. of the profits, Murray and Cole were each to receive thirty per cent. Under the agreement for the first partnership of Cole and Holton, Cole was to receive one third and Holton two thirds of the profits.
The master found that ‘All net cash income of the partnership [of Cole and Holton] has been distributed in accordance with the agreement’; that, when the new partnership was formed, no mention was made concerning a settlement with Cole ‘for the share of Mr. Holton's business purchased by Mr. Cole or for the $3,000 paid for the same’; that it was contemplated that after March 1, 1928, no business was to be conducted by the old partnership and all business was thereafter to be carried on by the new partnership ‘including unfinished business of the old partnership’; that on February 28, 1929, the partnership of Holton, Murray and Cole was dissolved by Holton; that prior to this dissolution the plaintiff made no request ‘for his share of Mr. Holton's business or for the $3,000 mentioned in the first agreement’; that when the new partnership was formed the question of the settlement of the affairs of the old partnership was not considered; that this question was raised at a meeting on March 1, 1929, when the settlement of the affairs of Holton, Murray and Cole was considered; that on March 6, 1929, Cole demanded of the defendant the sum of $3,000 and a ‘one-third interest in the profits and good will of all defendant Holton's law business making both claims under the agreement dated April 7, 1926.’
The master further found that there were accounts receivable of the partnership of Holton and Cole amounting to $219.25; that a number of these accounts ‘may be uncollectible’; that services were rendered by the old partnership to the defendant Holton, in connection with the contest of his father's will, of the value of $125; that the ‘liability of Mr. Holton to the partnership for these services is contingent upon the success of a will contest case which is still pending’; that the old partnership of April 7, 1926, rendered services to Holton as trustee of the value of $250, which services have never been billed or paid.'
In the Superior Court by an interlocutory decree the master's report was confirmed and the objections of the plaintiff and defendant were overruled. A final decree was entered ordering that the defendant was indebted to the plaintiff in the sum of $3,000, and that execution was to issue in said sum. The defendant and plaintiff appealed from the final and interlocutory decrees.
As we interpret the agreement of April 7, 1926, between Holton and Cole, the $3,000 paid by Cole was not a contribution to the capital of the partnership of Holton and Cole; it was a payment to Holton personally and not a payment to the partnership. It was agreed that this sum was to be paid to Holton ‘for a one third interest in the business which has been and now is conducted under the name ‘Jesse A. Holton.” Holton could not under the agreement dissolve the partnership of Holton and Cole prior to April 7, 1929, and retain the $3,000. The agreement contemplated that, if the partnership continued until this date, the $3,000 was not to be returned, but it was to be repaid to Cole if the partnership was dissolved by the act of Holton at any time before April 7, 1929, or by mutual consent before that time. The word ‘terminated’ is used in the partnership agreement as fixing the time when the $3,000 is to be repaid, but in our opinion the parties intended that this sum was to be paid by Holton when the partnership was dissolved as provided in the contract.
It was found that a new arrangement, effective on March 1, 1928, was entered into by Holton, Murray and Cole to carry on their profession. It was understood that no further business was to be done by the old firm, that all business, including the unfinished business of Holton and Cole, was to be conducted by the...
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