Whittle v. Davie

• Decision Date: 11 June 1914
• Citation: 116 Va. 575,82 S.E. 724
• Parties: WHITTLE. v. DAVIE.
• Court: Virginia Supreme Court

82 S.E. 724

(116 Va. 575)

WHITTLE.

v.DAVIE.

Supreme Court of Appeals of Virginia.

June 11, 1914.

Rehearing Denied Sept. 5, 1914.

Appeal from Circuit Court of City of Petersburg.

Suit for a partnership accounting between one Whittle and one Davie. From the decree, Whittle appeals. Affirmed.

Wm. B. Mcllwaine, of Petersburg, for appellant.

R. B. Davis, of Petersburg, Turn-bull & Turnbull, of Lawrenceville, and Christian, Gordon & Christian, of Richmond, for appellee.

KEITH, P. In 1891 there was a partnership in the city of Petersburg under the name of Davie & Whittle, in which Davie owned a two-thirds interest and Allison and Addison the other third, Whittle having no interest in the assets of that firm. This partnership expired on August 31, 1891, and thereupon Whittle became the purchaser of the one-third interest owned by Allison and Addison in the realty, machinery, trademarks, brands, and good will of the former partnership, and Davie and Whittle formed a new partnership under the firm name of Davie & Whittle. This partnership began September 1, 1891, and was to continue from year to year or until the death of one of the parties. In the articles of copartnership it was provided that the firm name was to be Davie & Whittle, and was formed for the purpose of conducting the business of the manufacture and sale of fertilizers and fertilizer materials; that Pascal Davie was to contribute to the capital of the firm his two-thirds interest in the realty and machinery of the firm of Davie & Whittle, which expired on August 31, 1891, and his share of the assets of the old firm. Whittle was to contribute to the firm his one-third interest in the realty and machinery of the firm of Davie & Whittle, which he had purchased from Allison and Addison, and was to put into the concern in addition one-half as much money as was to be contributed by Davie, and should the money contribution of Whittle to the capital of the concern exceed one-half of the money contribution of Davie, then Whittle was to receive 8 per cent. per annum from Davie on such excess. Pascal Davie, therefore, owned two-thirds of the real estate, machinery, brands, and trademarks of the concern, and Whittle owned one-third. It was agreed that a salary of $5,000 per annum was to be paid to Whittle, which was to constitute a first charge against the annual earnings of the concern. After the payment of the $5,000 to Whittle, the earnings up to $35,000, of which the $5,-000 paid to Whittle was to be a part, were to be divided in the proportion of two-thirds to Davie and one-third to Whittle, and if the earnings should be in excess of $35,-000 annually, all in excess of that sum was to be divided equally between Davie and Whittle.

The partnership was successfully conducted under these articles until the firm was dissolved in 1895. By an agreement bearing date on October 4, 1895, but which by agreement of the parties was to take effect as of July 1st of that year, Davie & Whittle sold to the Virginia-Carolina Chemical Company their business of manufacturing fertilizers, including all lands, buildings, and fixed plant, machinery, and fixtures used in conducting the business of said firm, and the good will, brands, and trade-marks of such business, and the firm further agreed to pay to the Virginia-Carolina Chemical Company in cash, or its equivalent, the sum of $97,000; and in consideration thereof the Virginia-Carolina Chemical Company agreed to transfer and deliver to Davie & Whittle 1550 shares of its preferred stock and 3391 shares of its common stock; and in pursuance of that agreement Davie & Whittle, on October 5, 1895, conveyed to the Virginia-Carolina Chemical Company the lands, buildings, plant, fixtures, machinery, good will, brands, and trade-marks agreed to be transferred as aforesaid. Davie & Whittle also paid to the Virginia-Carolina Chemical Company the sum of $97,000 in cash or its equivalent, as agreed upon, and received from the Chemical Company the shares of preferred and common stock as agreed upon, and at the same time Davie & Whittle subscribed in addition to 10 shares of the preferred stock and paid for the same in cash, making the total number of shares of preferred stock in the name of Davie & Whittle 1560.

When this contract was executed by Davie & Whittle, they agreed that Whittle should take possession of the books, accounts, and assets of the firm of Davie & Whittle, and wind up the business by selling the tangible property of the concern not conveyed and assigned to the Virginia-Carolina Chemical Company, and should collect all amounts due and owing to the concern, and pay its debts, rendering an account thereof to his copartner, Davie. It was also agreed that Whittle, out of the assets of the firm, would pay over to the Virginia-Carolina Chemical Company the $97,000 agreed to be paid under the agreement hereinbefore recited. It was further agreed that Davie was entitled to two-thirds of the preferred stock and Whittle to one-third; but, inasmuch as it was thought possible that it would be necessary for the partners to advance additional money to the concern for the purpose of raising and paying the $97,000, it was agreed between Whittle and Davie that Davie would leave 250 shares of his part of the preferred stock and Whittle would leave 125 shares of his part of the preferred stock in the hands of the concern of Davie & Whittle, for the purpose of enabling Whittle, who had undertaken to wind up the affairs of the firm as above stated, to raise and pay over the sum of $97,000.

All the affairs of the firm of Davie & Whittle seem to have been satisfactorily adjusted until they came to the distribution of the common stock of the Chemical Company, with respect to which there was a disagreement, which resulted in the suit now before us.

The Virginia-Carolina Chemical Company, a New Jersey corporation, was organized for the purpose of acquiring control of a large part of the fertilizer business by purchasing the properties of a number of independent companies engaged in that business. The principle upon which it seems to have organized was that the capital stock issued upon its formation was to be based upon the earnings of the firms purchased by it, that the average annual earnings of the constituent companies for four years next preceding and ending July 1, 1895, should be ascertained, and that should these earnings be equivalent to or exceed 8 per cent. per annum on $5,000, 000, the issued capital should be arbitrarily made $5,000, 000, and should these earnings be less than 8 per cent. per annum on $5,000, 000, then the issued capital should be a sum of which the annual earnings would be 8 per cent.

A committee of experts were employed, who visited the offices of the several vendors, and ascertained the aggregate earnings in question to be $421,236, and the earnings of Davie & Whittle to be $43,738; and as a result of this investigation the capital stock of the ...