Bainbridge v. Harris — 123 A.D. 18

Majority

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Henry C. Bainbridge and Others, Respondents, v. Maria Louise Harris, Individually and as Sole Acting Executrix and Trustee under the Last Will and Testament, of Hannah Maria Bainbridge, Deceased, and Others, Defendants, Impleaded with Carleton Bainbridge and Others, Appellants.

Second Department,

December 5, 1907.

Headnote

Partnership—modification of written contract by parol.

A mother entered into a partnership with her two sons under a written agree-, ment for the period of ten years, which was continued for two years longer. The management of the business was left entirely to the sons. Annual and monthly statements were given her during said period showing her interest and profits in the business. After the expiration of the period, and until her death several -years afterwards, annual and.monthly statements were given her taken, from the hooks, showing that the-former agreement had been superseded by a new' arrangement changing her interest and profits in the business. These statements were found in her papers after her death. Two of her.daughters testified they had seen her read these statements, and that she had- told them they correctly slated her interest. On all the evidence,

■ Held, that the written contract of partnership had been superseded by a new parol agreement.

.Hooker, J., dissented.

Appeal, by the defendants, Carleton Bainbridge and others, from a judgment.of the Supreme Court in favor of the plaintiffs, entered in the office of the clerk of the county of Kings on the 17th day of

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January, 1907, upon the decision of the court rendered after a trial at the Kings County Special Term.

Charles- T. Bainbridge died in the year 1880. He was engaged with another in the business of manufacturing paper, goods. Upon his death, and in' that same year, his widow Hannah Maria Bainbridge, and two of his sons, Henry C. and Richard W., entered into copartnership to carry on the'same business. The mother put in all of the capital, namely, the odds and ends of the father’s business, and $6,200 in cash. The interest of the partners in the capital and in the profits was fixed at 50 per cent for the mother, 26 per cent for one of the sons and 24 per cent for the other. The partnership agreement was not in writing. The partnership continued to January 1st,-1884, when they entered into a new partnership agreement in writing and dated that day. Its term was fixed at ten years. It stated'the capital of each to be, that of the mother $15,860.48, of Henry C. $4,225.75 and of Richard’W, $3,671.37, the amounts to the credit of each shown by the firm’s books at that time. It provided that she might draw $3,000 and each of the sons $2,000 a year as salaries; that at the end of every two years the salaries should he readjusted according to the condition of the business; that profits were to be divided one-tliird to each at the end of each year, and losses borne in the same proportion; -and that if the partnership should be wound up each partner should receive after payment of the debts the amount, to his or her credit on the books, and one-third of any sum remaining. e

At the expiration of the said term of ten years, viz., on December 31st, 1893, the partnership business continued without any change or new agreement. On January 1st, 1895, the boobs exhibited the total amount, to the credit of each partner to be, that of the mother $28,987.54, of Henry C. $24,638.86 and of Richard W. $22,099.04, the increase being by .credits from time to time of undrawn profits.

The said mother died testate on August 26th, 1903, aged eighty-three years. The partnership had continued up to her death. She never took part in the management of the business but left it to her said two sons. This action is by her said two sons against her executor, her two surviving daughters, her other surviving son, the two children of a.deceased son, the seven children of a deceased

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■ daughter, and the executors of- the said daughter, comprising- all of - her heirs at law and next of kin, they all being the children and grand children, of herself and her. -said deceased husband, Charles T. Bainbridge. By her will she left her estate to her children, and the children of her deceased children, share and share alike, per ' stirpes, except that the share of lier daughter Lucy-was to he at least- $-10,000, and that she left 'nothing to her two said sons, her partners, .saying, in her will that she made no provision for them . for the reason that she had already provided for them by giving to each of them a sufficient .interest in the said partnership business. The will was dated March 5tli, 18.87, a. codicil January 1.0th,. 1889, ■ and a second codicil February 8tli, 1892. It was admitted by thé " ■ plaintiffs on the -trial that if the said written partnership continued, up to the mother’s death- her share of capital - then' was at least . - $60,000.

The complaint.alleges that “■ at- or about the- end of-the year' . 1895 ”■ the partners made' an agreement “ whereby the- capital interest -. of the-said Hannah- Maria Bainbridge .therein ” (in- the copartnership) “ was ascertained and- agreed to he and was fixed at the sum', of about $30,000,. while the remainder of the capital -and assets, of the said business was ascertained and agreed to belong to the said • plaintiffs; Henry- C. Bainbridge and Richard W. Bainbridge ”, and “ that thereafter the capital interest .of the said Hannah Maria Bain-. bridge in the-said husiness-and copartnership assets so long as-.the.same ■ might be continued by them as.copartners should, be limited to and .. continue at the sum of $30,000, and her share of any profits made should be limited to the sum of $2,500 a year ” ; .excepting that for the year 1896 she. should receive one-third of the profits in' addition to tho said sum of $2,500, after the said .sons, had each, drawn for that year.$7,000 and for'the year 1897 the same after they had each drawn $9,000.' The hill of -particulars furnished. by the plaintiffs states that the said contract was oral.

The prayer of the-complaint is (in substance)-that it he adjudged ■that the- interest of the said- mother in the said partnership assets is $30;000 (and. $1,000 of undrawn profits), and that upon payment of the same to her executor by the .plaintiffs, the said- copartnership . -assets, real and, personal, be freed of all claim, trust or equity of her estate or of the defendants in Or to the same.

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The executrix of the said mother’s will, her daughter Maria Louise, did not answer either as executrix or individually, nor did the other daughter Lucy Anna Bainbridge, nor the son Charles Edward Bainbridge. Only the children of the two deceased children (who were a son and a daughter), and the executor of the said deceased daughter, answered.

Alfred A. Wheat [ Gilbert H. Montague and William S. Woodhull with him on the brief], for the appellants Carleton Bainbridge and Sherman Bainbridge.

William Byrd [Robert L. Harrison with him on the brief], for the appellants John C. Mcliennie and others.

Albert G. McDonald, for the respondents.

The question of fact tried was what was the partnership agreement between the mother and her two sons when she died in 1903. The, partnership books showed that since 1895 her share of the capital remained constant at $30,000, and that, she received each year only $2,500 as her share of the profits, all increase of capital and all the rest of the profits being meanwhile credited to her sons. This course of dealing among the partners would be controlling evidence of the status and interest of each in the absence of any other evidence. But she did not participate in the'management of the business, but left it to her sons. It is therefore argued that the contents of the books, did not bind' her, as would otherwise have been the case. Against this it was shown that annual and monthly statements were regularly made out from the-books and given to her showing the capital interest and profits of each as stated above. These statements were found among her papers after her death. Two of her daughters also testified that they had seen her read these statements, and that she had told them that her capital interest in the partnership was $30,000 and her income therefrom $2,500 a year, and were to remain so, by agreement with her said sons. All of this suffices to show that the books correctly showed the relation and interests of the partners, and that therefore the written partnership agreement made on January 1st, 1884,' to continue for ten years, and which continued for two years longer, as the partnership

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books showed, had been superseded/ by a new arrangement at the beginning of 1896. The books showed that she had about $30j000 to her credit at that time, that theretofore the profits had been divided equally among the partners, and that her capital, like that of her sons, had been increased almost every year by undrawn profits of the business placed to her credit. This course of business' ceased at the end of 1895, and was succeeded by the course stated above. During the time the written partnership agreement was in operation, annual and monthly statements were given to her like those given to her after 1895. This series of statements for nine teen years, viz., from January 1st, 1884, informed her fully of the changing interest of each partner in the capital and profits as .shown by the books from time to time.

It was not unconscionable or unreasonable that at the age of .seventyrthree the mother should allow all future increases, in the business to go to her two sons upon whose efforts it depended, and that -she should be content iii the retirement of her old age with over eight per cent return on the capital which she had accumulated by the industry and' fidelity of her sons and allowed, to remain in the business. It was impossible because of her death for any direct oval evidence to be given by the sons of the making of the new arrangement, but. the other evidence sufficed to enable the learned trial Judge to find thatlt was made. •

There is a class of Cases, i. e¡, of attempts to get the property of persons.after their death by means of alleged oral agreements with them, Which aré looked upon with . disfavor and suspicion by the courts, and against which there is a presumption at the outset, instead pf their being approached, like other cases, with a neutral mind ; but this case after all is hardly of it. And if it be deemed to be, such presumption was removed, and the case fairly proved. That the new arrangement was not put in writing is a fact to consider, but it is not controlling. The partnership agreement for the first three years, viz., from 1880 to 1884, was not in writing.

The ¡judgment should be affirmed.

■Jenks and Rich, JJ., concurred; Hookee, J., dissented; Hibsohbeeg, P. J., not voting. ‘ ■

Judgment affirmed, witli costs.