Beatty v. Ammidon

157 N.E. 702, 260 Mass. 566, 1927 Mass. LEXIS 1467

• Court: Massachusetts Supreme Judicial Court
• Decided: July 11, 1927
• Status: Published

Opinion

Pierce, J.

This is an action of contract. The first count of the declaration was waived at the trial. The second count, “allowed by consent at the time of the trial,” alleged in substance that on or about August 15, 1923, the plaintiffs “were in possession of valuable information to the effect that a certain parcel of property known as the ‘Tech Block’ could be purchased at an advantageous price and resold at a profit, and the plaintiffs were making efforts to purchase said property and were intending to purchase the same; that the plaintiffs gave said information to the defendants and the parties agreed that the plaintiffs would not attempt to purchase said property and thereby assist the defendants in the purchase; that the defendants would take a conveyance of said property, pay for same and thereafter the property would be carried by the defendants and sold and that after it was sold the net profits would be divided one third to the plaintiffs and two thirds to the defendants; that in accordance with said agreement the plaintiffs forebore to attempt to purchase said property, the defendants purchased the same for a specified sum; that said property was later sold for a much larger sum, leaving a large profit, and thereupon the defendants refused to pay the plaintiffs any part of said profits or otherwise to keep their agreement.” The answer was a general denial and payment.

At the close of the evidence and before final arguments the defendants filed a written motion that the court direct the jury to return a verdict for the defendants. This motion was denied, and the defendants duly excepted. The defendants at the close of the evidence and before final arguments presented certain written requests for instructions to the jury. The judge declined to give said instructions except so far as they were covered by his charge, and the defendants duly excepted. No exceptions were taken by either party to the charge. All the material evidence and all of the judge’s charge are stated in the defendants’ bill of exceptions. The case was submitted to the jury and it returned a verdict for the plaintiffs in the sum of $8,002.80.

The material facts in support of the plaintiffs’ case which the jury were warranted in finding upon consideration of the whole testimony, giving credit to such portions of it as they deemed worthy of credence, are as follows: In the summer of 1923 the plaintiff Bowler learned from the office of Cape, Inc., real estate brokers in Boston, that the Tech Block in Cambridge could be purchased from its owner for about $200,000. There was an outstanding mortgage of $150,000 on the property, and Bowler decided that, if he could arrange a second mortgage for $40,000, he would furnish the remaining $10,000 himself out of funds that were available for his benefit and purchase the block with the intention of reselling it at a profit; and to that end he invited the plaintiff Beatty to assist him in obtaining $40,000 upon a second mortgage in case he should purchase the property.

About the first of August, 1923, the plaintiffs went to the office of the defendants, who were practising lawyers in Boston, in an endeavor to raise the second mortgage, but were not successful. They gave the defendants a statement of the rents or receipts from the property and the amount' of the mortgage, interest and tax assessment on it.

About the middle of August they again went to the office of the defendants and the plaintiff Bowler told them that he believed the property could be bought for less than $200,-000, and suggested that the defendants finance the proposition in its entirety and that the plaintiffs assist in selling •the property and share in whatever profits might accrue from the resale. The defendants replied that they would interview Mr. Apsey, the record owner of the property, regarding its sale, “and said, ‘You fellows lay off, . . . and don’t go near anybody, and don’t make any attempts to buy this thing, and we will see just what we can do towards buying it at the lowest possible figure,’ ” to which. the plaintiffs agreed.

About August 20, the defendant Ammidon informed the plaintiffs that he had signed an agreement with Mr. Apsey to purchase the property for $191,000, plus $3,000 for some new flooring. On this occasion the minimum price at which ' the property should be resold was discussed and the parties agreed to use their best efforts to effect such resale. Bowler testified “that the question at that time arose as to how the profits should be divided; that . . . [the defendant] Bick-nell made the remark, ‘and when the property is sold how are the profits to be divided? ’; that it was a question, put to the witness and Beatty; that Mr. Beatty replied, ‘On an equal basis; fifty-fifty’; ‘to which Mr. Bicknell replied saying that as long as they were going to put in all of the money that they would be unwilling to divide on that basis, and they then suggested that we take one third and they take two thirds of any profits arising from the sale of the property'; that Beatty turned to the plaintiff and said, 'Is that agreeable to you?' and the witness replied, ‘ Yes. ’ ”

Between the time the above conversation occurred and September 29 when the defendants actually took title, the plaintiff Bowler made efforts to effect a resale of the property and had reported his progress in this matter to the defendants.

Shortly after September 29, the plaintiffs met the defendants in their office and were informed by them that they had taken title; that the defendants were obliged to go to a great deal more expense than had been anticipated in taking the title; that the expense of financing was very large and that they did not know how much profit there might ultimately be in the transaction. Bowler replied that he thought it would be best for all parties concerned to discuss the exact amount of these expenses at that time rather than have any misunderstanding later on. The defendants then asked the plaintiffs what their share of the profits would be in the event that the property were sold for $225,000; the plaintiffs answered, “Substantially $10,000.” The defendants then said that that would be entirely too much; that owing to the great expense of taking title they could not afford to pay that much. The parties then agreed upon $7,500 as the minimum in the event of a sale for $225,000. At this time the plaintiffs received no information as to the amount of the expenses other than that they were heavy.

About October 8, 1923, the plaintiffs again met the defendants in their office and were told by Bicknell that the defendants had sold the property, but he refused to tell the plaintiffs the amount received upon such sale. The plaintiff Bowler then said that in view of the fact they were all jointly interested in the profits arising from the sale it might be well for all parties to see the agreement. The defendants objected to this, saying that the plaintiffs, not having sold the property, nor put up any money, had no interest in those agreements; that no partnership relation existed between the parties and denied any right of the plaintiffs to a share in the profits. The property was actually sold by the defendants to one Hennessey for $230,000, less $150,000 existing mortgages, the net profit of the defendants being $21,064.05.

The consideration for the agreement of the defendants to share the profits of a resale of the aforesaid property with the plaintiffs inferentially is stated in the second count of the declaration to be “that the plaintiffs would not attempt to purchase said property and thereby assist the defendants in the purchase.” This being so, proof that the defendants also promised to share the profits of a resale in consideration of the plaintiffs’ promises to them to use their best efforts to bring about a sale of the property would not be a radical variance between the allegation and proof which went to the merits of the case and required a directed verdict.

The evidence of what took place at the interview on August 15, supra, if believed, would constitute both an offer and an acceptance. “Since the governing principle in the formation of contracts is the justifiable assumption by one party of a certain intention on the part of the other, the undertaking of each promisor in a contract must include any promises which a reasonable person in the position of the promisee would be justified in understanding were included.” Williston on Contracts, 2340. The force to be given to the conversation at this interview is determined by an answer to the question, What was the sense in which the plaintiffs should reasonably have apprehended the defendants would understand the proposal of the plaintiffs? Stoddard v. Ham, 129 Mass. 383, 385.

The alleged contract of August 15 was oral, the facts were in dispute: the language used and the meaning to be given it were questions of fact for the jury. Hammond Coal Co. Inc. v. Lewis, 248 Mass. 499, 501. The jury could have found a promise on the part of the defendants to try to buy the property at a favorable price if the plaintiffs would “lay off,” did not “go near anybody,” and did not “make any attempts to buy this thing”; and an acceptance by the plaintiffs when they “agreed to have nothing further to do with the negotiations for the purchase of the property, leaving the matter entirely” in the hands of the defendants. Trowbridge v. Wetherbee, 11 Allen, 361. The conversation of August 20, at which the plaintiffs and defendants made it definite that the shares in the profits were to be divided on the basis of two thirds to the defendants and one third to the plaintiffs, was not a new contract nor a modification of the old contract as to profits, but was in the nature of an interpretation by the parties of what would be a reasonable division of the profits. On all the evidence it is plain the motion for a directed verdict for the defendants was refused rightly. Requests numbered 1 and 2 are embraced in the consideration given to the motion for a directed verdict.

Request numbered 12 is based upon the theory that the evidence disclosed a new contract, if the testimony of the plaintiffs were believed, whereby the plaintiffs surrendered all claims which they then asserted against the defendants, and acquired thereby a right to receive, in place of one third of the profits, the sum of $7,500 upon the resale of the property by them within three or four months as a special commission. In this regard the judge instructed the jury that there could be no recovery because the plaintiffs did not “sell the property so as to earn the commission. ... I do not think there is any contention between these parties on that phase of the case at all.”

Request numbered 4 reads as follows: “Upon all the evidence there was no partnership between the plaintiffs and the defendants in connection with the purchase or sale of the property in question.” It is plain there was no partnership within the accepted legal definition of that term, for the reason that while the plaintiffs and defendants may properly have been found on the evidence to have a common interest, as adventurers in the enterprise, the plaintiffs’ only interest was in the profits from a resale of the property, and they incurred no obligation to share in any possible losses. Rosenblum v. Springfield Produce Brokerage Co. 243 Mass. 111, 119. St. 1922 c. 486, §§ 6-8. If this were all, the exceptions should be sustained; but the judge, while he said “There must be a contract of partnership” and that “this case . . . turns wholly on the question of whether there was a partnership relation existing between Bowler and Beatty and Ammidon and Bicknell, and the plaintiffs’ claim, based wholly on that, is that he is entitled to a verdict on that basis, and ... he is not entitled to a verdict on any other basis, . . . that is the vital point in this case,” defined without exception a partnership to be a business status where “two or more people decide to put their money or goods or skill or labor into a common project for their mutual profit and advantage . . . there is something like a common endeavor that is called for in a partnership, an endeavor that reaches toward, profit to be shared by the parties mutually, as a joint undertaking, and also perhaps there is a corollary to that same, an agreement either express or implied that any loss that is entailed shall likewise in common be shared by 'them, because all partnerships do not reach profits, very often they reach losses, and so it involves not only a sharing and participation in profits but also in losses.” It is plain the defendants knew that a partnership involved as an essential term of its being an obligation of the members to share losses; and that they must have known that the jury under the charge would understand a partnership to be the thing that the judge described, without the corollary referring to a possible agreement, express or implied, to participate in any losses. In a word, the relation defined to the jury as possible was that of a joint undertaking miscalled a partnership. The defendants should have directed the attention of the judge to any possible confusion in his definition of a joint undertaking or of a partnership. Since they did not except to the charge, their exception to the refusal to give request numbered 4 should not be sustained.

Upon the case submitted to the jury, the defendants suffered no harm by the refusal of the judge to give requests numbered 7, 9, or 16. And they were not entitled to have the judge read to the jury the summarization of the plaintiffs’ claim as the defendants assumed it to be, and to instruct the jury as to the law applicable to that view of the testimony. This summary omits any reference to inferences which a jury have the right to draw, and therefore may be incomplete or even untrue in substantial particulars. It follows that the requests numbered 11 and 14 were refused rightly. Shattuck v. Eldredge, 173 Mass. 165, 168. Morrissey v. Connecticut Valley Street Railway, 233 Mass. 554, 556.

Requests numbered 18 and 19 were based upon the assumption of misrepresentations of fact which may have induced the defendants to associate themselves with the plaintiffs. Since the defence of fraud was not pleaded, the requests were refused rightly.

There was no error in the refusal on cross-examination to permit the defendants to ask Bowler, in substance, whether he had any money at the time of the treaty with the defendants other than what he was “getting through a spendthrift trust.” Nor, on cross-examination of the trustee, Richard W. Hale, was it error to refuse to allow the witness to answer the question, “The amount of that trust fund is what?” or the question, “At any time in the past five years or — yes, the past five years, Mr. Hale, have you advanced any sum to Mr'. Bowler like $25,000 for a real estate operation?” The amount of the trust was not material. It was not shown that the trust fund was not sufficient to enable the trustee to advance the amount stated. Both questions were properly excluded in the discretion of the court.

Exceptions overruled.