Smith v. Bull

• Decision Date: 16 May 1958
• Citation: 50 Cal.2d 294,325 P.2d 463
• Court: California Supreme Court
• Parties: Bertille B. SMITH, as Administratrix With-Will-Annexed of the Estate of Vincent Richard Smith, sometimes also known as V. R. Smith, V. R. 'Dick' Smith, and Dick Smith, Deceased, Plaintiff and Respondent, v. Frank BULL and Mel Roach, Defendants. Frank Bull, Appellant. L. A. 24510.

Page 463

325 P.2d 463

50 Cal.2d 294

Bertille B. SMITH, as Administratrix With-Will-Annexed of the Estate of Vincent Richard Smith, sometimes also known as V. R. Smith, V. R. 'Dick' Smith, and Dick Smith, Deceased, Plaintiff and Respondent, v. Frank BULL and Mel Roach, Defendants Frank Bull, Appellant.

L. A. 24510.

Supreme Court of California, In Bank.

May 16, 1958.

Rehearing Denied June 11, 1958.

A. G. Ritter and H. E. Lindersmith, Los Angeles, for appellant.

Darling, Shattuck & Edmonds, Douglas L. Edmonds and Thomas F. Call, Los Angeles, for respondent.

CARTER, Justice.

Defendant Frank Bull appeals from a judgment in favor of the plaintiff, Bertille B. Smith, administratrix with-will-annexed of the estate of her husband, Vincent Richard Smith, deceased. Mel Roach was also a defendant but judgment was in his favor.

The complaint originally pleaded ten causes of action but on plaintiff's motion in open court, all causes of action, save the first were dismissed. The complaint alleged the existence of a partnership between Frank Bull and decedent, Vincent Richard Smith, and, in brief, an appropriation and conversion of the partnership assets, including good will, by defendant Bull. The court's findings, conclusions of law and judgment were based upon the first cause of action. The judgment adjudicated that plaintiff was entitled to one-half of the proceeds of four accounts, to a certain sum of money on deposit with the Citizens' National Trust & Savings Bank of Los Angeles, and 'that plaintiff shall recover from defendant Frank Bull the sum of Twenty-eight Thousand Six Hundred Ninety-five and 83/100 Dollars with interest thereon from the date of entry of this final judgment until paid at the rete of 7% per annum' which sum represented one-half of the estimated value of the good will of the advertising agency known as Smith & Bull. It is from the quoted portion of the judgment that defendant Bull appeals.

The record shows that Vincent Richard Smith and Frank Bull had been associated together in the advertising business for many years. Their association began in 1936 and continued thereafter in different forms. At one time the association included others and operated as a corporation. On September 1, 1949, an oral partnership agreement was entered into between them for the purpose of conducting an advertising agency. While the agency, known as Smith & Bull, represented several accounts, the only major account was that of Seaboard Finance Company and the agency was, in effect, a 'one-account' agency. The Smith & Bull agency employed some twenty-one or twenty-two employees and ran its own print shop in conjunction with the advertising business. Mel Roach, a defendant, was an employee of the agency and acted as general manager and senior account executive. His duties with the partnership centered around the Seaboard Finance account and he spent part of each day, while he was in town, at the Seaboard offices where he became very well acquainted with the executives of that company. Roach had been associated with Smith and Bull for almost the entire length of their association although his employment had not been continuous prior to the formation of the last partnership because of service with the armed forces and because he had been in business for himself at one time.

Smith was ill during the latter part of 1952 and was not as active in the partnership as he had previously been and was away from the office part of the time. The record shows that during this time Bull and Roach gradually took over the handling of the Seaboard account which Smith had previously brought into the office and had controlled. While Raoch was the one who met with the Seaboard officials, the guiding force and the one to whom he reported and from whom he took orders was Smith. During the latter part of the year 1952, however, the relationship apparently changed and Roach conferred with Bull with respect to the account. Although it appears that in December, 1952, Seaboard officials had expressed dissatisfaction with the handling of its account, that matter was not brought to Smith's attention. On January 15, 1953, a letter was written by Mr. Lide, the assistant vice president of Seaboard, referring to a 'conversation between Frank Bull, Mel Roach and myself the early part of December' in which the topic of conversation had been that Seaboard was not 'too happy' with the service rendered to it by Smith and Bull and calling to the partners' attention the fact that notice had been served 'early in December that, unless things improved, it might be necessary to make a change in agencies March 1st. However, inasmuch as I will be out of the city for approximately three weeks, I think it only fair to extend the time to April 1st.' The letter concluded with the hope that a change in agencies would not be necessary and that the association between Seaboard and Smith and Bull would continue for many years. This letter was not called to Smith's attention and, apparently only Bull, Roach and Seaboard knew of it. On February 5, 1953, Bull wrote a letter in longhand to Smith informing him that he was dissatisfied with Smith's handling of his personal affairs as well as his business plans for the future and that he believed the partnership should be 'liquidated.' This was the first time that Smith had learned that Bull was dissatisfied with the partnership relationship and was considering dissolution thereof.

The record contains an undated letter from Roach to Smith who had learned of the Seaboard letter of January 15th through a conversation with Mr. Lide. Although the record is not clear, this letter was probably written on, or about, February 20, 1953. The letter, which was signed 'Mel,' is as follows: 'Overheard your (Smith's) request for a copy of the letter from Lide regarding Seaboard's ultimatum.

'She (secretary) has not seen, and knows nothing of the letter and Frank (Bull) and I grabbed the letter upon arrival to prevent anyone here seeing it. In wrong hands or with wrong interpretation, the letter could prove very embarrassing and create a new problem in the trade.

'You are very welcome to read it at any time but we don't want it moving out of the office or to have copies made. The situation is very quiet and I have just about resolved all weakness and got the complaints quieted. Frank (Bull) called upon Thompson and Appleby (executives of Seaboard) and discussed the entire situation and everything is alright. Any further discussion or re-opening of the issues can only serve to confuse and irritate all concerned there.

'Lide is in the east on business and vacation and I don't want anything to arise in his absence which will cause him to get on me again about doing things while he is away. I've put Perkel (an employee) on the account with me and we have the whole year's campaign for all medias layed out and approved and Lide and the rest like his personality and his ideas and new approach to old ideas.

'All's well so don't worry about it any more.'

Roach testified that at some time early in January, 1953, he notified Seaboard of the impending dissolution of the partnership, and that early in February, 1953, Seaboard informed him that its account would be transferred to 'Frank Bull & Company.' Bull admitted that, early in February, he notified Seaboard that the partnership of Smith and Bull was going to be dissolved. On February 20th, Bull signed a lease on new premises located not far from the offices occupied by the partnership; on the same day he certified that he was conducting an advertising agency at the new premises under the name of 'Frank Bull & Company.' Bull testified that on February 20th he was notified by Seaboard that its account would be transferred to him. On February 23rd, Bull notified Smith of the lease he had taken. On February 26th, Seaboard notified Smith that it would no longer require his 'personal services' and that because of the dissolution of the partnership of Smith & Bull, it would no longer place its account there. On February 27th, Smith and Bull signed and filed notices of dissolution of the partnership. At about this time Smith's attorney notified Bull's representative that Smith would hold Bull accountable for the good will of the partnership. On February 28th, Bull moved from the partnership offices to the new location taking with him the firm accounts, books, and all of the partnership employees except one. On March 1st, he commenced conducting an advertising agency known as Frank Bull & Company.

The record shows that Roach had told an employee of the partnership that he had the Seaboard account 'in the palm of his hand; he could take it anywhere he wanted to. * * *' Bull admitted that he 'probably did' or 'might have' or 'could have' told various people that Smith was 'constantly off his rocker,' that he was taking so much medicine that his mind was affected, that he was 'erratic and eccentric.' The record also shows that Bull's decision to open his own agency was dependent upon the Seaboard account.

A certified public accountant, called and qualified as an expert witness for the plaintiff, testified that there was a good will factor attached to a personal service partnership such as the one under consideration; that it was not customary to carry such an item on the books of an organization, firm, or partnership, unless the good will had been purchased originally; that by using various known and approved methods of computation, he was of the opinion that the good will factor of the partnership should be valued at $57,391.66. This testimony was uncontradicted and defendants produced no expert witness to testify concerning the value of the good will. The record shows that after the dissolution Smith had no accounts and no business; that he was in the process of trying to organize a new agency at the time of his sudden death on June 6, 1953.

The trial court found, in accord with the...