Hale v. Wilmarth

• Decision Date: 13 January 1931
• Citation: 274 Mass. 186,174 N.E. 232
• Parties: HALE v. WILMARTH et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

274 Mass. 186

174 N.E. 232

HALE

v.WILMARTH et al.

Supreme Judicial Court of Massachusetts, Norfolk.

Jan. 13, 1931.

Appeal from Superior Court, Norfolk County; Broadhurst, Judge.

Suit by Cornelius E. Hale, executor, against Harry S. Wilmarth and others. From a decree dismissing the bill, plaintiff appeals.

Affirmed.W. B. Grant and H. Richter, both of Boston, for appellant.

J. N. Clark, of Boston, for appellees.

CARROLL, J.

In this suit in equity the plaintiff, the executor of the will of Mrs. Blackinton, a deceased member of a partnership, seeks to have declared void a provision in the partnership agreement between the testatrix and the defendants; that upon her death her interest in the partnership should become the property of the defendants. The report of the master was confirmed by an interlocutory decree from which the plaintiff appealed. A final decree was entered, dismissing the bill. The plaintiff appealed.

The testatrix was the defendants' aunt. Her husband, at the time of his death in 1888, carried on the business of manufacturing jewelry in North Attleboro. After his death she became a partner with the father of the defendants, in the same business. The factory in which the business was done was then owned by the testatrix. In 1908 a new partnership was formed between the testatrix and the defendants, which continued until 1914. Under the 1908 agreement she had a one-half interest. In 1911 or 1912 the defendants concluded that the factory could be operated much more economically if electricity were substituted for steam. Mrs. Blackinton objected to the cost. It was agreed that Harry S. Wilmarth, one of the defendants, should at his own expense make the change and a contract was drawn up by which the firm should pay Harry S. Wilmarth $35 a month a rent for the new equipment, with an option in the firm to purchase at cost. In 1917 business had increased and the defendants decided that the original plant was not large enough. This matter was discussed by the partners. Mrs. Blackinton was unwilling to put more money into the buildings or the business. She offered to give the defendants the entire interest in the business if they would buy the land and buildings from her at a fair price. It was finally agreed that the defendants would purchase the land and buildings at a price to be fixed by an appraiser selected by her, and, as a part of the same transaction, she would transfer one-half of her interest in the partnership, retaining as long as she lived the remaining part of her interest in the business, namely, a one-quarter interest, and upon her death all of her interest in the firm was to cease without further compensation being made therefor. The land was conveyed to the defendants and the price paid by them. The partnership agreement was duly executed in June, 1917. It provided that on the death of Mrs. Blackinton her interest in the firm should become the property of the defendants, that the profits of the business should be divided, one quarter payable to Mrs. Blackinton. She died in December, 1922. In her will she stated, ‘I have purposely omitted Harry S. Wilmarth and Edwin Robinson Wilmarth [the defendants], as I have amply provided for them during my life-time, by giving them an interest in the V. H. Blackinton & Co.’

The main contention of the plaintiff is that the words in the partnership agreement, to the effect that on the death of Mrs. Blackinton her interest in the partnership should become the property of the defendants, are testamentary in nature and therefore inoperative and void under the statute of wills. G. L. c. 191, § 1. In Murphy v. Murphy, 217 Mass. 233, 104 N. E. 466, it was held that partnership agreements providing for the disposition of the interest of partners in partnership property after the death of one or more of the parties are frequent; that when fairly made without intent to evade the statute of wills they are valid and open to no objection. There are sound reasons, as stated in the opinion at page 236, of 217 Mass.,104 N. E. 466, 467, ‘why a fair agreement entered into by partners, as to the disposition of partnership property in the event of the death of one or more of the partners, should be sustained. The terms of such an agreement made by those most familiar with the real character and value of the property, are quite as likely to be just as an arrangement made after the decease.’ The fact that in the Murphy Case the partnership was to continue for five years, and in the case before us no specific time, during the life of the parties, was fixed for its dissolution, is no ground for distinguishing the cases. Nor is it important that in the Murphy Case a valuation was placed on the interest of the deceased partner. Mrs. Blackinton could provide, if she so desired, that her interest should be sold to the surviving partners at a fixed price, or contract for the disposition of her interest on her death, as stated in the partnership agreement. Krell v. Codman, 154 Mass. 454, 28 N. E. 578,14 L. R. A. 860, 26 Am. St. Rep. 260.

It is not disputed that an attempted gift of property, to take effect on the death...