Schoen v. J.C. Bradford & Co.

• Decision Date: 23 January 1984
• Citation: 667 S.W.2d 97
• Parties: Kenneth B. SCHOEN, Plaintiff-Appellee, v. J.C. BRADFORD & CO., a partnership, and J.C. Bradford, Incorporated, and the individual partners and stockholders thereof; J.C. Bradford, Gordon Brooks, Einer Nielson, J.C. Bradford, Jr., David Stein, Melville M. Barnes, Charles H. Robinson, Robbie T. Maher, Thomas H. Stafford, Jr., R. Fred Trexler, O.L. Garrison Elder, William S. McGinness, Clarence W. Haley, Bledsoe C. Pinkerton, W. Lucas Simmons, Jr., Frank C. Tobin, J.W. Berry Reid, Jr., James S. Gallivan, and Robert W. McInness, Defendants-Appellants.
• Court: Tennessee Court of Appeals

Page 97

667 S.W.2d 97

Kenneth B. SCHOEN, Plaintiff-Appellee, v. J.C. BRADFORD & CO., a partnership, and J.C. Bradford Incorporated, and the individual partners and stockholders thereof; J.C. Bradford, Gordon Brooks, Einer Nielson, J.C Bradford, Jr., David Stein, Melville M. Barnes, Charles H Robinson, Robbie T. Maher, Thomas H. Stafford, Jr., R. Fred Trexler, O.L. Garrison Elder, William S. McGinness, Clarence W. Haley, Bledsoe C. Pinkerton, W. Lucas Simmons, Jr., Frank C. Tobin, J.W. Berry Reid, Jr., James S. Gallivan, and Robert W. McInness, Defendants-Appellants.

Court of Appeals of Tennessee Middle Section.

Jan. 23, 1984.

Application for Permission to

Appeal Denied by Supreme Court

March 12, 1984.

Val Sanford, Joel M. Leeman, Gullett, Sanford & Robinson, Nashville, for plaintiff-appellee.

William Waller, D.L. Lansden, Waller, Lansden, Dortch & Davis, Nashville, for defendants-appellants.

OPINION

LEWIS, Judge.

This is the third appeal of this case which began in the Chancery Court for Davidson County on May 14, 1971, when plaintiff Kenneth B. Schoen filed his complaint against defendant J.C. Bradford & Company, a partnership (hereinafter "the Partnership"), the individual partners, and J.C Bradford, Incorporated, a closely held corporation.

On October 2, 1970, plaintiff was expelled from the Partnership at the direction of J.C. Bradford, Sr., who acted pursuant to authority vested in him by the Articles of Co-Partnership which provided that "a majority in interest of the general partners, or J.C. Bradford may require the withdrawal forthwith of one or more of the partners upon twenty-four hours written notice delivered personally or sent by registered mail to such partner or partners." Plaintiff had been associated with the Partnership for approximately twenty-five years.

At the time plaintiff was required to withdraw, he was entitled to a 3.69 percent share of the profits of the Partnership. The Partnership had shown a profit for each of the twenty-five years plaintiff had been associated with it. However, he was advised that on October 2, 1970, the date he ceased to be a member of the Partnership, his interest had a negative net worth of $28,756.54. Plaintiff was offered a settlement of $7,739.82 in February, 1971. This settlement represented his shares in the corporation, J.C. Bradford & Company, Inc., reduced by the alleged negative worth of his partnership interest. Even though the Partnership told plaintiff that as of October 2, 1970, the firm had a negative value, the Partnership's year-end figures showed a profit for 1970 of $774,280 and a net worth of $1,012,000.

On May 14, 1971, plaintiff commended this suit in the Chancery Court for Davidson County and sought an accounting of the value of his interest in the Partnership, to recover the value of that interest, and the profits attributable to the use of his interest. He also sought to recover the value of his stock in J.C. Bradford & Company, Inc.

On May 8, 1972, the Chancellor heard the case and thereafter issued his Memorandum Opinion in which he held, inter alia, that rather than having a negative value as represented by the Partnership, plaintiff's interest in the book value of the Partnership was $37,370.36 as of October 2, 1970; that plaintiff is entitled to a proportional share in the "going concern value" of the Partnership over and above its book value and this value was to be determined through a reference to a Master; that plaintiff is "entitled to that share of the profits which have been earned by the firm since the date of dissolution;" and that plaintiff is to recover $37,526.36 as the total value of his stock in J.C. Bradford & Company, Inc., with interest from January 1, 1971.

Defendants were granted an interlocutory appeal from the Chancellor's decree. On April 27, 1973, this Court issued its opinion affirming the Chancellor's finding of liability and remanded the case to the Chancery Court for determination of the foregoing issues and prescribed guidelines to be followed by the Master and the Chancellor upon remand. Schoen v. J.C. Bradford, (Tenn.App. at Nashville, April 27, 1973.)

Upon remand, the cause was referred to the Special Master who made findings with respect to the issues remanded for determination. These findings were confirmed by the Chancellor and a judgment of $620,478.46 was entered for plaintiff.

Defendant appealed that judgment and, on June 22, 1982, this Court filed its opinion affirming the Chancellor in all respects and remanded the case to the Chancery Court for any further necessary proceedings. Schoen v. J.C. Bradford & Co., 642 S.W.2d 420 (Tenn.App.1982).

On December 31, 1982, defendants paid plaintiff the amount found to be the "going concern value" of plaintiff's interest on the date of his withdrawal from the Partnership.

In January, 1983, plaintiff made written demand upon the Partnership to pay him $159,449.95 which he alleged was his share of the Partnership's 1981 profits. This amount had been determined from information provided by the Partnership. The Partnership insisted that plaintiff was not entitled to share in any profits for any period after November 9, 1981, the date on which the Chancellor entered judgment in plaintiff's favor, and refused to pay plaintiff any part of the profits after that date. This demand was settled when an agreed judgment was entered for plaintiff for $136,733.80 and paid by the Partnership. That judgment was arrived at by prorating plaintiff's profits for all of 1981 over the first 313 days of that year, i.e., through November 9, 1981, the date of judgment.

On February 15, 1983, plaintiff filed a motion for partial summary judgment seeking the remaining balance of his share of the 1981 profits, i.e., from November 9, 1981 through December 31, 1981, and pre-judgment interest. Thereafter the Chancellor found in plaintiff's favor and stated that his November 9, 1981 judgment had reserved for future determination the amount of profits, earned after January 1, 1981, to which plaintiff was entitled and had clearly specified that plaintiff was entitled to share in profits until the date he actually received payment for the value of his partnership interest. The Chancellor also held that plaintiff was entitled to prejudgment interest on 1981 profits from and after January 1, 1982. Subsequently, a judgment was entered in plaintiff's favor in the amount of $40,924.46 representing the remaining balance of the 1981 profits and pre-judgment interest on the entire 1981 profits from and after January 1, 1982.

On July 5, 1983, a judgment of $140,509.44 with ten percent (10%) prejudgment interest from January 1, 1983 was entered in plaintiff's favor. This judgment represented that portion to which plaintiff was entitled of the profits from the Partnership for 1982. This amount was based upon financial data furnished by the Partnership.

The defendants have presented three issues in this appeal. The first two are:

1. Whether after obtaining a judgment for $31,451.71, representing the value of his "right in the property of the dissolved partnership" from which he was expelled, plus interest on said amount from date of judgment to date of payment, plaintiff is also entitled to share in the profits of the successor partnership during the appeal period prior to the payment of the judgment pursuant to T.C.A. 61-1-141 (Section 42 of the Uniform Partnership Act)?

2. If Question 1 be answered "yes," whether under T.C.A. 61-1-141 (Section 42 of the Uniform Partnership Act) plaintiff's share of the profits for said period November 9, 1981, through December 31, 1982, should be computed on the basis of his original 3.69% share in the profits and losses of the firm before his expulsion, making a total for said period of $163,225.44, representing 3.69% of the profits of the firm for that period, after deducting from said profits an amount equivalent to salaries estimated to...