Shulkin v. Shulkin

• Decision Date: 15 September 1938
• Citation: 301 Mass. 184,16 N.E.2d 644
• Parties: SHULKIN et al. v. SHULKIN.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

301 Mass. 184

16 N.E.2d 644

SHULKIN et al.

v.SHULKIN.

Supreme Judicial Court of Massachusetts, Suffolk.

Sept. 15, 1938.

Bill in equity by Irving Shulkin and another against Morris Shulkin for the dissolution of partnership and an accounting of partnership affairs. The case was referred to a master to determine whether the trade-name ‘Allen Stationery Company’ was a partnership asset. The master determined that the trade-name was a partnership asset and another master then heard the parties. The trial judge denied motions to recommit to the master and ordered interlocutory decree to be entered confirming master's report as modified in certain respects and overruled objections and exceptions to the report except in so far as they were dealt with or disposed of by the rulings and findings of the judge. Plaintiff Irving Shulkin and the defendant appealed from the interlocutory decree, and defendant appealed from the denial of his motion to recommit. From the final decree, all parties appeal.

Final decree modified and, as modified, affirmed.

Appeal from Superior Court, Suffolk County.

F. I. Rose, A. H. Grossman, and H. C. Kagan, all of Boston, for plaintiff Irving Shulkin.

R. L. Weiner, of Lynn, for plaintiff Benjamin Shulkin.

S. B. Stein, H. J. Stein, and L. Shulman, all of Boston, for defendant.

COX, Justice.

This is a bill in equity filed on October 29, 1936, in which the plaintiffs seek not only a dissolution of the partnership alleged to exist between them and the defendant, but also an accounting of the partnership affairs. A receiver, who was appointed on November 2, 1936, operated the partnership business until December 29, 1936, when its assets were sold at public auction. There is a substantial sum available for distribution. The parties are brothers and, as copartners, did business under the name of Allen Stationery Company. The case was referred to a master to determine, in the first instance, whether the trade name, Allen Stationery Company, was a partnership asset or belonged to the plaintiff Irving Shulkin. The master found that the name was an asset of the partnership. The record, which is abbreviated by stipulation, contains no other reference to this finding, but the plaintiff Irving Shulkin, who claims to have appealed from a decree confirming this finding, now waives any right under that alleged appeal. Another master then heard the parties and found that in 1919 the plaintiff Irving Shulkin and the defendant formed a partnership to conduct a stationery business in Lynn, under the name of Allen Stationery Company. In 1923, the plaintiff Benjamin Shulkin, who had been an employee since 1919, was admitted as a third partner. The partnership agreement was oral, and the profits and losses were to be shared equally. Benjamin and Morris Shulkin were to have the active management of the business, the defendant to be the ‘outside man’ and Benjamin Shulkin to have charge of the store. Benjamin and Morris Shulkin (hereinafter referred to as the active partners) were to give their full time to the business and were to draw salaries, but Irving Shulkin was not. The master found that the records of the business were inadequate and confusing, and that, as a result, it was difficult to ascertain precisely what actually happened with reference to some of the transactions hereinafter referred to. Irving Shulkin, beyond selecting an accountant in 1931 to install a double entry system of bookkeeping had nothing to do with the keeping of the firm accounts or books, and so far as appears made no examination of them. The accounting, ‘so far as it relates to money,’ is, by the plaintiffs' election, confined to the period from January, 1931, to October 29, 1936.

The trial judge denied motions to recommit to the master, and ordered that an interlocutory decree be entered confirming the master's report as modified in certain respects, and overruling the objections and exceptions to the report except in so far as they were dealt with or disposed of by the rulings and findings of the judge. Irving Shulkin and the defendant appealed from the interlocutory decree which was entered upon this order, and the defendant appealed from the denial of his motion to recommit. The final decree ordered that the partnership funds be distributed to the partners in the amounts therein specified, and from this final decree all the parties appealed. It is agreed that the mathematical computations, upon which the amounts set out in the final decree are based, are correct.

The active partners, during the accountable period, each withdrew from the business about twice the amount drawn by the other partner, and without the latter's knowledge. The master finds that, as to their withdrawals, the active partners are ‘equally at fault.’ The judge charged each partner with the amount of his respective drawing and also charged the active partners with interest at six per cent on the amount of their drawings in excess of that of the other partner. The parties do not question the computation of these amounts of interest, which was to the date of final decree, which date, for computation purposes, was taken to be as of October 25, 1937. The judge ruled that the interest so charged should be shared equally by all the partners.

As a rule, interest is not chargeable among partners in the absence of some agreement. Harris v. Carter, 147 Mass. 313, 17 N.E. 649;Winchester v. Glazier, 152 Mass. 316, 325, 25 N.E. 728,9 L.R.A. 424;Lockwood v. Roberts, 171 Mass. 109, 50 N.E. 517. But this general rule is subject to a well recognized exception that interest may be charged if, under the circumstances of the particular case, the equities so require. Miller v. Lord, 11 Pick. 11, 25;Baker v. Mayo, 129 Mass. 517;Crabtree v. Randall, 133 Mass. 552;Wiggins v. Brand, 202 Mass. 141, 147, 88 N.E. 840;Cole v. Holton, 272 Mass. 565, 572, 573, 172 N.E. 858;Buckingham v. Ludlum, 29 N.J.Eq. 345, 357, 358; McCormick v. McCormick, 7 Neb. 440, 447, 448; Atherton v. Whitcomb, 66 Vt. 447, 29 A. 674;Forsyth v. Butler, 152 Cal. 396, 402, 403, 93 P. 90. Compare Arnold v. Maxwell, 230 Mass. 441, 445, 119 N.E. 776;Cochran v. Boston, 211 Mass. 171, 97 N.E. 1100, 39 L.R.A.,N.S., 120, Ann.Cas.1913B, 206; Central Trust Co. v. National Biscuit Co., 273 Mass. 319, 323, 173 N.E. 695. Although the partnership agreement containedno provision for withdrawals or for payment of interest in this or any other circumstance, we think that interest was properly charged with respect to the withdrawals, and that the method provided in the other for decree for its computation and distribution was equitable. Irving Shulkin relied upon the diligence and integrity of his brothers. It does not appear that he ever examined the books, and, if he had, he would have been required to search out the amounts of withdrawals recorded in the manner hereinafter stated. Although the order for decree provided that interest upon the withdrawals should be shared by all the parties equally, nevertheless, in effect, the result accomplished and incorporated in the final decree was to allow Irving Shulkin interest upon a sum equivalent to the difference between what he had drawn and the amounts which had been drawn by the active partners. We think this is all to which Irving Shulkin was entitled, and that, under the circumstances, the active partners cannot complain. The defendant contends that the fact that the withdrawals were recorded in the books as ‘Purchases' and ‘Cash purchases' requires the inference that there was something illegal behind these entries and that consequently the plaintiffs are not in a position to seek equitable relief. If we assume that the purpose behind these entries was fraudulent or illegal, nevertheless the facts as to the withdrawals could be established without reference to any such purpose and the defendant takes nothing by his contention. Hazelton v. Lewis, 267 Mass. 533, 540, 166 N.E. 876;O'Gaspian v. Danielson, 284 Mass. 27, 34, 187 N.E. 107, 89 A.L.R. 1159.

At the time of the organization of the partnership, it was agreed that Benjamin and Morris Shulkin were to draw salaries of $35 and $45 respectively each week, and Irving Shulkin then said that ‘they were to draw enough to get along on.’ Both of the active partners were married and had families. From the date of the partnership agreement until October, 1936, Irving Shulkin never inquired, and the active partners never told him, what they were drawing, but he assumed that they were drawing more than the sums originally agreed upon. They increased these weekly drawings from time to time so that from October, 1932, to September, 1936, Morris Shulkin drew $80 and Benjamin Shulkin, $70. All these salary withdrawals were accurately recorded in the account books. Irving Shulkin contends, in view of the master's finding that the amount of salary usually paid to employees performing the duties of Morris and Benjamin Shulkin was $35 to $40 a week, although the master states that he had no means of determining whether ‘one or two or more proprietors of a business would usually and nominally draw more,’ that the decree is wrong in not charging Benjamin and Morris Shulkin with the amounts of their salaries in excess of $35 and $45 a week. We do not think there was any error. The right of a partner to compensation for his services depends wholly upon agreement, express or implied. G.L.(Ter.Ed.) c. 108A, § 18(f). Dunlap v. Watson, 124 Mass. 305, 306;Hoag v. Alderman, 184 Mass. 217, 218, 68 N.E. 199;Wiggins v. Brand, 202 Mass. 141, 145, 88 N.E. 840. The court may draw its own inferences from the subsidiary facts reported by the master. Ryder v. Donovan, 282 Mass. 551, 554, 185 N.E. 473. The entire facts reported warrant the conclusion that the salary rates rested upon agreement and that their amounts were not unreasonable. See Winchester v. Glazier, 152 Mass. 316, 323, 324, 25 N.E. 728,9 L.R.A. 424;Hoag v. Alderman, 184 Mass. 217, 218,...