Ferrick v. Ferrick

• Decision Date: 17 September 1946
• Citation: 68 N.E.2d 690,320 Mass. 217
• Parties: FERRICK v. FERRICK et al. BARRY et al. v. FERRICK et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

320 Mass. 217

68 N.E.2d 690

FERRICK

v.FERRICK et al.

BARRY et al.

v.FERRICK et al.

Supreme Judicial Court of Massachusetts, Middlesex.

Sept. 17, 1946.

Two suits in equity, one by Myles J. Ferrick against Lawrence N. Barry and wife for alleged breach by Lawrence N. Barry of a covenant contained in articles of copartnership. The other, by Lawrence N. Barry and another against Myles J. Ferrick for an accounting, a receiver, a dissolution of the partnership, and the winding up of the business, wherein Myles J. Ferrick counterclaimed. In the first case the trial judge entered a final decree dismissing the bill. In the second case trial judge entered a decree dissolving the partnership and ordering receivers to wind up its affairs and to distribute its assets. From both decrees Myles J. Ferrick appeals.

First decree affirmed. Second decree modified and affirmed.Appeal from Superior Court, Middlesex County; Brogna, Judge.

Before FIELD, C. J., and LUMMUS, QUA, RONAN, and SPALDING, JJ.

J. C. Johnston and H. C. Thompson, both of Boston, for Ferrick.

E. M. Murray, of Boston, J. H. Burke, Jr., of Dedham, and L. L. Bobrick, of Cambridge, for Barry & Joy.

QUA, Justice.

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, 178 N.E. 716;General Heat & Appliance Co. v. Goodwin, 316 Mass. 3, 4, 5, 54 N.E.2d 676;Vincent v. Plecker, 319 Mass. 560, 563, 564, 67 N.E.2d 145. 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 rpoduct 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 contracts 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 contracts 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 contracts 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 responing 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 dissention existing between Ferrick and his partners were of a serious, irreconcilable and permanent character; that they had brought about a complete lack of confidence; and that such an ill will had been engendered as to render coöperation impossible. That while Ferrick was not dishonest in his dealings with the partnership business, his mannerisms manifested an assumption of preëminence in the firm; he was reluctant and slow in making full disclosures of his doings to his partners; he was wanting in spontaneous candor; he was indiscreet and created natural suspicion and distrust in the minds of his partners. I find that it was not reasonably practicable or equitable for Barry and Joy to continue to carry on the business in partnership with Ferrick and that they are justified in dissolving the partnership.’

In addition to the foregoing findings, the judge found in reference to the proposed lease that in November, 1943, Ferrick asked Barry for the lease, which Barry had agreed to cause to be executed in behalf of the partnership; that in January, 1944, after the trouble between the partners had become acute, Barry definitely refused to procure the lease; that Barry and Joy do not want the lease for the two year term or for the further term of three years; that in spite of the dissentions of the partners, and (we may add), in spite of the fact that for considerable periods there was insufficient work to keep the plant fully occupied, the business was profitable; that a lease of the premises ‘would have been quite valuable to the partnership as a going business harmoniously carried on by the three partners'; but that ‘under the existing discordant conditions which * * * would not only continue but would progressively get worse, * * * the lease would probably have been a liability rather than an asset.’ The judge also found that Mrs. Barry was the owner of the real estate and did not find that it had been fraudulently conveyed to her by her husband as alleged by Ferrick.

The findings of the judge hereinbefore stated cannot be pronounced plainly wrong. They are well supported by evidence which it was within his province to believe.

It will be convenient to deal with the second case first. The decree dissolving the partnership and liquidating its affairs was right. The conduct of Ferrick had brought about a situation in which the business could no longer be carried on jointly in the manner contemplated by the articles of copartnership. The other partners were not required to submit to Ferrick's domination or to continue in an atmosphere of non-coöperation, suspicion, and distrust, even though Ferrick was not actually dishonest, and even though substantial profits were being made. An...