Ferrick v. Barry

• Decision Date: 17 September 1946
• Citation: 320 Mass. 217,68 N.E.2d 690
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: MYLES J. FERRICK v. LAWRENCE N. BARRY & another (and a companion case [1]).

320 Mass. 217

68 N.E.2d 690

MYLES J. FERRICK

v.

LAWRENCE N. BARRY & another (and a companion case ^[1]).

Supreme Judicial Court of Massachusetts, Middlesex.

September 17, 1946

April 1, 1946.

Present: FIELD, C.

J., LUMMUS, QUA RONAN, & SPALDING, JJ.

Partnership Dissolution, Accounting. Equity Jurisdiction, Dissolution of partnership, Specific performance, Plaintiff's clean hands, Retention for assessment of damages. Equity Pleading and Practice, Appeal. Contract, Parties, For lease. Agency Ratification. Damages, For breach of contract.

An "interlocutory" decree in a suit in equity dissolving a partnership and ordering it wound up and its assets distributed was so far final that the case properly came to this court on an appeal therefrom.

A decree in equity dissolving a partnership at the instance of two of its three partners was justified under G. L. (Ter. Ed.) c. 108A Sections 31

(2); 32 (1) (c), (d), (f), by conduct of the third partner which, although not dishonest, brought about such discord between him and the other two partners that the business could no longer be continued on the basis of equality of proprietorship and management among the partners as contemplated by the partnership articles.

A defence of unclean hands barring a suit in equity by a partner for dissolution of the partnership was not established by the mere making of certain extravagant allegations in the bill; nor by the plaintiff's failure to obtain a lease of certain premises for the benefit of the partnership as provided in its articles, where his failure was not fraudulent, the partnership was actually occupying such premises, and soon after the articles were executed the defendant's conduct became such as to make a dissolution probable.

Specific performance of a provision in partnership articles requiring one of the partners to give to another partner, solely on a dry trust for the benefit of the partnership, a lease of premises occupied by it, could properly be refused in the discretion of the court in the circumstances, where the partnership had been ordered dissolved and wound up and the partners other than the one seeking specific performance did not want the lease.

A wife who was the owner of certain real estate was not bound by a sealed instrument wherein her husband had covenanted to cause a lease of the real estate to be given to another party where she was not a party to the instrument and it did not purport to bind her or to have been made in her behalf; nor could she ratify such instrument.

Specific performance of a covenant to give a lease for a certain term with an option for a further term should not be granted at a time after the expiration of the original term for which it was to have been given and when the circumstances were such that it was impossible to say that the option for the further term would have been exercised.

In a proceeding between partners, where the partnership had been ordered dissolved and wound up, certain evidence respecting real estate which had been occupied by the partnership did not afford a basis for the ascertainment of damages for a technical breach by the defendant of the partnership articles through failing to perform a covenant to procure a lease of such real estate to the plaintiff solely for the benefit of the partnership.

TWO BILLS IN EQUITY, filed in the Superior Court on April 26, 1944, and May 15, 1944, respectively.

The suits were heard by Brogna, J.

J. C. Johnston, (H.

C. Thompson with him,) for Ferrick.

E. M. Murray, (J.

H. Burke, Jr., & L.

L. Bobrick with him,) for Barry and Joy.

QUA, J. These are two suits in equity.

In the first case Ferrick sues Lawrence N. Barry and Margaret M. Barry, his wife, for alleged breach by Lawrence N. Barry of a covenant contained in articles of copartnership dated September 22 1943, among Ferrick, Lawrence N. Barry, and one Joy, by which Lawrence N. Barry agreed to cause to be executed to Ferrick "as trustee for the partnership" a lease of certain premises and machinery at Hudson, where the business of the partnership was carried on. It is alleged that the defendant Lawrence N. Barry fraudulently conveyed the real estate to the defendant Margaret M. Barry and that she merely holds the title in his behalf. The prayers are that she be ordered to convey to him, and that he be ordered to execute to Ferrick a lease of the real estate and machinery in accordance with the articles of copartnership, and for further relief.

In the second case Barry and Joy sue Ferrick, alleging refusal to account and various other breaches by Ferrick of his obligations as a partner, and that, by reason of his conduct and of the inability of the partners to agree as to the management of the business and to carry it on harmoniously, the business of the partnership is deteriorating and will soon cease to be of value, and praying for an accounting, a receiver, a dissolution of the partnership, and a winding up of the business. In this suit Ferrick filed a counterclaim wherein he alleged that Barry and Joy wrongfully "terminated said business and destroyed the good will thereof," and prayed for damages.

In the first case the trial judge entered a final decree dismissing the bill. In the second case he entered a decree denominated interlocutory dissolving the partnership and ordering the receivers (who had been appointed on May 19, 1944) to wind up its affairs and to distribute its assets. Ferrick appeals from both decrees. The decree in the second case, although interlocutory in the sense that it did not end the litigation, was final in its effect of dissolving and liquidating the partnership, so that the appeal from it could be entered and can now be considered here. Plumer v. Houghton & Dutton Co. 277 Mass. 209 , 212-213. General Heat & Appliance Co. v. Goodwin, 316 Mass. 3 , 4-5. Vincent v. Plecker, 319 Mass. 560 , 563-564. Both appeals are properly before us.

The evidence is reported at great length and has been fully considered in accordance with the rule that findings made by the trial judge upon oral evidence, where the appearance and manner of the witnesses are important elements in arriving at the truth, will not be reversed unless plainly wrong.

By the articles of copartnership Barry, Joy, and Ferrick associated themselves as equal partners (except as to contributions of capital) in the business of "coating and combining of all materials" for the period of five years from September 22, 1943, unless all parties should agree to an earlier termination. Joy and Ferrick were to receive stipulated salaries. The provision relative to the lease bound Barry to cause it to be executed for a term of two years commencing October 1, 1943, at a rental of $200 a month, with an option for a further term of three years at the same rental and a further option to purchase the property for $42,000 during the term or any renewal thereof.

The judge made detailed findings of fact, among which are, in substance these: Barry was a dealer in machinery and had a general knowledge of the operation of machines for coating and combining. Joy had knowledge and experience in coating and combining fabrics. Ferrick was a lawyer who had no experience in the business. In the coating and combining of fabrics each product presents an individual chemical problem which calls for special training, technical knowledge, and experience. Ferrick, however, represented that his friendship with certain persons close to the Government in Washington would be helpful in getting government contracts. It was understood that Ferrick would do the buying, selling, and solicitation of business; that Barry would endeavor to make contacts and advise as to the business generally; and that Joy would have charge of production. ^[1] Within a month after the signing of the articles of copartnership Barry "began to manifest disappointment because Ferrick had not, in his opinion, exerted the energy and effort which he had promised and particularly because he had made no government contacts and had not obtained any government business. This feeling gradually grew more intense; so that by early November there was not only discord and disharmony but also hostility and antagonism." Barry and Joy insisted that Ferrick spend more time soliciting business and less time in the office. "Ferrick did not react very kindly to the suggestion. It soon became apparent that Ferrick's Washington contacts either did not exist or were not of the productive kind." By November relations had become so strained that Ferrick began to talk about buying out his partners. When operations at the plant had to be suspended for some days for lack of work "relations became so strained that talk of dissolution became inevitable." Ferrick resisted dissolution and refused to reduce his salary when Joy consented to reduce his. The relations of the partners continued to grow worse. In March, 1944, "because of diminishing business prospects" Joy relinquished his salary altogether, but Ferrick continued to draw his in full, insisting upon his contract. Ferrick's conduct in other respects which need not be here related in detail gave to his partners just cause for dissatisfaction. Perhaps the most important of these respects was that Ferrick, although he was in general charge of the office and of the books and had the most complete knowledge of the daily transactions, appeared slow and reluctant in responding to reasonable requests from his partners for information on these matters. The trial judge sums up the situation in these words: "I find that the disagreements, misunderstandings and dissension existing between Ferrick and his partners were of a serious, irreconcilable and permanent character; that they had brought about a...