Griffith v. Kirley

• Decision Date: 29 November 1905
• Citation: 189 Mass. 522,76 N.E. 201
• Parties: GRIFFITH v. KIRLEY et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

189 Mass. 522

76 N.E. 201

GRIFFITH v. KIRLEY et al.

Supreme Judicial Court of Massachusetts, Hampden.

November 29, 1905

COUNSEL

R. O. Dwight, for appellants.

Green & Bennett, for appellees.

OPINION

HAMMOND J.

The main question is whether the estate of Kirley, who has died since the beginning of this suit, should be charged with the value of the good will of the partnership business. The master has found that he should be thus charged, unless by operation of law the good will passed to the receiver. It seems plain from the report of the master and the evidence of the receiver that the receiver did not undertake to do anything with the real estate. He simply took possession of some of the personal property. He does not seem to have had any authority to deal with the real estate. He therefore could make no sale of the firm property as a going concern. The good will was apparently not attached to that portion of the personal property of which the receiver took possession. Upon the question whether Kirley should be charged with the value of the good will the master finds the following facts:

'It appeared that in 1895 the plaintiff, Frank E. Griffith, and his brother, the defendant Richard E. Griffith, agreed with the defendant Thomas Kirley to enter into a partnership. The defendant Kirley then owned certain real estate in Chicopee, used as a farm and a fertilizer factory, and there he carried on also a butchering business and dealt in tallow, bones, grease, and hides. It was agreed that the said Frank E. Griffith and Richard E. Griffith should pay five thousand dollars ($5,000) to said Kirley for a half interest in the real and personal property used in the above-mentioned business and the good will of the business. This $5,000 was payable, $1,000 in cash, and the balance in annual installments of $1,000, with interest. By the terms of this agreement, which was wholly oral, the defendant Kirley was to receive one-half the profits of the business and the plaintiff Frank E. Griffith, and the defendant Richard E. Griffith, were each to receive one-fourth. To make this division equitable, as the Griffiths were putting in the time of two men and Kirley only his own time, it was agreed that the Griffiths should be allowed wages for Frank E. Griffith's services, and that the services of Richard E. Griffith should offset the services of Kirley. The business was to be carried on under the name of Thomas Kirley & Co. The $1,000, as above agreed, was paid by the Griffiths, $500 in cash October 7, 1895, and the balance in a note, dated October 26, 1895, which was subsequently paid by them, with interest. Some six months after the beginning of the partnership, a bond for a deed was given by Kirley to Richard E. and Frank E. Griffith, in which he bound himself to convey to them one undivided half interest in the real estate, above mentioned, upon the payment of $5,000, as above set forth; and at the same time R. E. Griffith and F. E. Griffith signed a promissory note for $5,000, 'payable $1,000 each and every year until the whole sum is paid, with interest, payable annually.' A payment of $1,000 was indorsed upon the note as of the time of its date. * * * I find that this bond for a deed and this note were parts of one transaction, but that they did not purport to state all the terms of the agreement between the parties, and that the consideration for the $5,000 note included a half interest in the personal property and the good will of the business, and that the bond and note were with this intention dated back to the time of the beginning of the partnership. The partnership began September 1, 1895, and continued until May 5, 1902, when it was terminated by the acts of Kirley, who made a deed of the real estate and a bill of sale of the personal property of the firm to the defendant Martin L. Barnes. Barnes immediately took possession of the real and personal property and ejected the Griffiths from the real estate. Thereupon the bill of complaint in this suit was brought, and a receiver was appointed, who took possession of the partnership property, as pointed out by the defendant Kirley. The receiver has sold this property, collected the bills due the partnership, and paid its debts, and has a balance in his hands to be divided between the partners in accordance with the decree of the court in this case. Said deed and bill of sale from Kirley to Barnes were without consideration. Said Barnes was merely a secret agent of Thomas Kirley, and Kirley kept on uninterruptedly with the business formerly of the firm, and the business was not interrupted by the receivership, as Kirley purchased the personal property of the firm from the receiver.'

In the final adjustment of the accounts the master has charged the Griffiths with the balance due upon the $5,000 note. Although the title to the real estate was in Kirley, yet the master rightly ruled that in equity it should be regarded as partnership property. Here, then, is a case where the original proprietor of the business has sold one-half of all the property used therein, including the good will, to two persons, as a part of an agreement to carry on the business as partners. The business is then carried on by them for several years, when the original proprietor dissolves the ...