Smith v. Bedell Bros

• Decision Date: 14 June 1915
• Docket Number: No. 71.,71.
• Citation: 96 A. 898,84 N.J.Eq. 268,84 N.J.Eq. 509
• Parties: SMITH v. BEDELL BROS.
• Court: New Jersey Supreme Court

96 A. 898

84 N.J.Eq. 268

84 N.J.Eq. 509

SMITH

v. BEDELL BROS.

No. 71.

Court of Errors and Appeals of New Jersey.

June 14, 1915.

Appeal from Court of Chancery.

Bill for accounting by Clifford W. Smith against Bedell Brothers, a corporation which was referred to a master. From a decree overruling exceptions to his report, defendant appeals. Affirmed.

The following is the opinion of Vice Chancellor Stevens:

This case comes up on exceptions to the master's report; the bill being for an account.

The complainant was manager of the Newark store. He was to receive a salary of $2,860 per annum, and in addition 10 per cent. of the net profits. By the agreement made with complainant in 1906, when the company began business, it was agreed that Alfred and Walter Bedell, the owners of the company's stock, were each to receive a salary of $12,000 per annum. I have requested counsel to examine the minutes of the company to ascertain whether these salaries were fixed by a resolution. He informs me that no resolution on the subject can be found. It therefore does not expressly appear whether these salaries were attached to the office of president and treasurer, or whether they were arbitrary sums awarded to the owners of the business under the name of salary, for the purpose of determining complainant's compensation. Being the only stockholders, they would have been entitled to the profits under any name. That the salaries were personal to the owners is fairly to be inferred from the way in which the business was managed. This is what W. E. Bedell says in reference to his brother Alfred's work: "Q. As a matter of fact, did your brother do considerable work in connection with the Newark store? A. Very little. Q. Very little work? A. Yes, sir. Q. Did you do the same amount of work in connection with the Newark store as you did previously? A. I did extra work. Q. You did his very little extra work. Is that it? A. That is right."

The minutes show that when Alfred retired from the business on August 15, 1912, W. E. Bedell was, by resolution, appointed treasurer in his place; but they do not show that the corporation took any action in reference to his salary. Mr. Bedell said in his evidence that they showed that he was to receive his brother's salary, but it is conceded that he is mistaken.

As the evidence stands, it would seem that the money value of the services rendered did not exceed $1,000 per annum. There is a conflict between the evidence of Mr. Smith and Mr. Bedell. Mr. Smith says that after Alfred left he did most of the work Alfred had been doing, and that he knew nothing about Mr. W. E. Bedell's intention to keep on charging the $12,000 as an expense until after he left defendant's employ. On the other hand, W. E. Bedell says that complainant's work was not increased, and that he knew, or had the means of knowing, that he (W. E. Bedell) was going to draw his brother's salary. The burden of proof is on the defendant, and I do not think it has sustained it.

The question raised by the first exception is whether, in computing complainant's share of the net profits, $21,000 should be deducted from the gross earnings, or only $12,000. Smith says that the original agreement (made, as I have said, in 1900) was, "I was to receive a compensation of $55 per week, and in addition 10 per cent. of the net profits." The two ...