McPherson v. J. E. Sirrine & Co.

• Decision Date: 07 March 1945
• Docket Number: 15718.
• Parties: McPHERSON v. J. E. SIRRINE & CO. et al.
• Court: South Carolina Supreme Court

33 S.E.2d 501

206 S.C. 183

McPHERSON v. J. E. SIRRINE & CO. et al.

No. 15718.

Supreme Court of South Carolina

March 7, 1945

Rehearing Denied March 26, 1945.

Appeal from Common Pleas Circuit Court of Greenville County; J Robert Martin, Jr., Judge.

Action by John A. McPherson against the J. E. Sirrine & Co., a partnership, and the members thereof, to recover money claimed to be due plaintiff as his interest in the firm following his ouster therefrom. Judgment for plaintiff, and defendants appeal.

One suing partnership and members thereof for amount claimed to be due plaintiff under partnership contract as his interest in firm following his ouster therefrom by other partners' vote was not entitled to recover damages as for breach of contract.

W. G. Sirrine, P. A. Bonham, and E. M. Blythe, all of Greenville, for appellants.

Price & Poag, of Greenville, for respondent.

BAKER Chief Justice.

This is an action at law brought by the respondent for the recovery of money claimed to be due him as his partnership interest in the firm of J. E. Sirrine and Company following his ouster from the firm. Three items are set forth in the respondent's complaint, to wit: (1) A claim for salary; (2) a claim for respondent's share of an accrued earnings or profits fund known to the partners as 'partnership investment account'; and (3) the value of respondent's interest in the capital assets of the partnership.

The salary claim arises out of a somewhat informal but definitely recognized agreement among the partners under which salaries were allotted to each. The status of the 'partnership investment account,' the percentage of the partnership capital account owned by each partner, and the valuation of the capital assets of the partnership for the purposes of settling with a partner who leaves the firm, were matters of formal contractual stipulation.

The respondent claims that he was improperly and unlawfully ousted from the partnership, and brings his action against the other partners on the partnership contract and on alleged complementary interpretive stipulations which he undertook to establish by parol testimony.

In the progress of the trial of the cause the questions between the litigants respecting the respondent's salary claim and his claim to a stated amount as his share of the partnership investment account were eliminated from the case by the stated position of the appellants that they would not further contest the payment of these two items in the amounts claimed. Thus the controversy as it reaches us relates exclusively to the differences between the parties respecting the amount to which the respondent is entitled as his share of the partnership capital assets.

At the times in question in this case the firm of J. E. Sirrine and Company consisted of thirteen partners, of whom the respondent was one. The action was brought by the respondent against the partnership, and against the twelve partners other than the respondent, on the law side of the Court, and was tried before the Court and a jury, resulting in the rendition of a verdict in favor of the respondent for the full amount claimed by him.

The complaint sets forth a cause of action on contract. After setting forth the present composition of the partnership it alleges that the sum of $220,000 'was the fixed value' of the partnership assets, and that the respondent's interest in said partnership 'was definite and fixed at eighteen percent.' It charges that in November, 1943, while the respondent was absent on business in Washington, D. C., the appellants 'without just cause or reason, agreed among themselves to oust plaintiff as a partner and without any just cause, reason or excuse, demanded plaintiff's withdrawal from the firm and forthwith informed plaintiff that he was no longer a member of the firm, but that his salary would be paid and his interest in the profits of the business would be allowed to accumulate up until January 1, 1944.'

It is further alleged in the complaint that prior to the aforesaid action of the appellants the respondent had not been given any intimation of any charges against him, and was not given any hearing on the alleged charges; that the respondent's first knowledge of the action of the partners came in a conversation with J. E. Sirrine on or about November 6, 1943; that following a protest by respondent to Mr. Sirrine the appellants revoked their former action and made the effective date of respondent's forced withdrawal from the firm as of November 10, 1943, and ordered respondent's immediate dismissal from the firm.

Aside from the allegations respecting the salary item and the 'partnership investment account' item, the complaint then proceeds to set forth the respondent's claim as constituting eighteen percent. of the $220,000 valuation of the partnership capital assets, to wit, the sum of $39,600. The prayer for relief is for judgment against the appellants for the aggregate of the three items above referred to.

No reference is made in the complaint to any formal partnership agreement governing the rights of the partners in respect to any of the matters in controversy herein.

The appellants answered jointly. They admit the existence of the partnership and the membership thereof as alleged by the respondent, and the amount of the respondent's partnership interest as eighteen percent of the total partnership assets. They then set forth that the relationship between the parties was contractual 'and wholly in writing.' They allege that they 'offered to pay the plaintiff more than is due him, but he has refused to abide by the terms of his agreement.' They allege that the amount due the respondent as his share of the partnership assets is $7,920 instead of $39,600 claimed by the respondent. And they set forth the contractual stipulations between the parties on which their calculation of the amount is based.

In addition to stating the pertinent details respecting successive contracts relating to the rights and interests of the partners that were made since the beginning of the partnership in 1921, and which are referred to in the statement of facts infra, the answer proceeds to state the pertinent terms of the final partnership contract which was in effect at the time of the ouster of the respondent and under the terms of which, according to the appellants, the amount to which the respondent was entitled at the time of his ouster was 'one-fifth of the amount his estate would have received in the case of his death * * *'; that in the event of the respondent's death his estate would have been entitled to eighteen per cent of $220,000, and that therefore, under the express provisions of the contract, the respondent was entitled to receive one-fifth of eighteen percent of $220,000, to wit, $7920.

The answer further sets forth that the partnership agreement contains a provision, hereinafter more fully referred to, empowering the partners to effect the withdrawal of any partner, and the appellants allege that 'after full and careful consideration all members of the firm (with the exception of the respondent) reached the definite conclusion that it would be for the best interest of the partnership that the plaintiff should no longer be a member thereof'. And they set forth that in adopting this course, and notifying the respondent thereof, they acted under an express provision of the partnership contract reading as follows:

'The right to terminate the interest of any one of the partners is hereby vested in the other partners for any cause which in their discretion seems to be reasonable, and the interests set forth hereinafter are accepted with this express condition and limitation.'

It is then alleged that the respondent declined to accept the terms of the agreement covering the involuntary withdrawal of a partner, 'whereupon all of the remaining members unanimously exercised the power given them by the written agreement and modifications and terminated the plaintiff's membership as of November 10th, 1943.'

The answer then admits that the appellants are required to pay the respondent the sum of $7,920, representing one- fifth of eighteen percent of the agreed value of $220,000, and consents to the entry of judgment for that amount.

Annexed to the answer and by the terms thereof made exhibits, are the successive contracts of partnership and supplementary written agreements made between the parties.

From the foregoing it is perceived that on this appeal the ultimate question between the litigants is whether the respondent is entitled to $39,600, representing eighteen per cent of the agreed valuation of the partnership capital assets of $220,000, or $7,920, representing one-fifth of eighteen per cent of $220,000.

The last complete partnership agreement was made under date of September 17, 1937. The several provisions of this agreement upon which the appellants rely, with such additional matter as is necessary for a full understanding of the case, are as follows:

'I. The plans and good will of the business shall be held by all of the partners, or such of them as, subject to the terms and conditions of this agreement and future agreements, shall continue to be identified with the business. In the event any of the partners should leave the business by death withdrawal or otherwise, any right, title or interest possessed by him shall absolutely cease and determine. The right to terminate the interest of any one of the partners is hereby vested in the other partners for any cause which in their discretion seems to be reasonable, and the interests set forth hereinafter are accepted with this express condition and limitation. In the determination of any question among the partners a majority in the amount of the...