Hirschberg v. Bacher

149 N.W. 383, 159 Wis. 207, 1914 Wisc. LEXIS 397

• Court: Wisconsin Supreme Court
• Decided: October 28, 1914
• Status: Published

Opinion

SiebecKee, J.

The plaintiff contends that the trial court erred in finding there was due him under the contract the sum of $1,789.60. It is urged that the court below committed error in refusing to allow the plaintiff recovery of the value of good will as an asset of the partnership business appropriated by the defendant, and that the court erred in allowing charges of expense to be deducted from the income of the partnership business which were not supported by evidence, and thus deprived the plaintiff from recovering his full share of the net income of the partnership business. These claims of the plaintiff require interpretation of the contract of the parties, designated a copartnership agreement. It appears from the context of this agreement that the defendant Bacher was, prior to and at the time this agreement was made, engaged in the business of soliciting liability insurance and was conducting this business in connection with the firm of Louis Auer & Son, who were doing a general insurance business in the city of Milwaukee. The contract provides that out of the gross receipts of the business transacted “all expenses shall first be paid, including all sums due to said Louis Auer & Son, pursuant to the agreement made, and to be made from time to time between said Louis Auer & Son and said first party hereto, which said sum so paid to Louis Auer & Son shall in no event exceed one quarter (i) of the net receipts of the partnership hereby created, after payment of all other expenses.” It was also agreed that the plaintiff was to pay the defendant $3,000 on the day the contract was made and an additional $3,000 out of his profits on September 1, 1906, 1907, and 1908. In consideration, of these payments to the defendant he assigned to the plaintiff “a one-third (-£) interest in said business and in the net income thereof.” The partnership was to continue five years from the date of the contract, September 1, 1905. The stipulations of the contract and the recitals therein clearly contemplate that the business to be transacted by the partnership was principally that which the defendant Bacher secured the right to do by his connection with the firm of Louis Auer & Son. The business transacted during the contract period was almost entirely under contract by defendant with this firm. It appears that the defendant had been engaged as soliciting agent for years under like arrangements with said firm and- that there were a large number of policies in force -at the time the plaintiff joined him in the business. It is urged that the down payment by the plaintiff of the $3,000 and an additional $3,000 out of his share of the earnings was a purchase by him of an interest which included an element of good will in defendant’s business. The nature of the business and the terms of the contract tend to negative this claim. Defendant’s business cannot be likened to an established commercial plant. Its advantages to plaintiff in associating himself therewith consisted in becoming acquainted with defendant’s patrons, in sharing in the profits of the commissions that would naturally come to the firm through renewals of contracts with such patrons, and the proceeds of defendant’s success as a soliciting insurance agent in connection with Louis Auer & Son. Under the circumstances and condition of this business it is apparent that the terms of the contract assigning to the plaintiff a “one-third (■£) interest in the said business and the net income thereof,” granted to plaintiff an interest in the earnings thereof for the contract period. We find nothing in the agreement, when applied to the situation of the parties, to indicate that they contemplated that the transfer of an interest in the business and the income thereof was to include an element of value in the nature of good will. We are of the opinion that the trial court properly held that the contract gave plaintiff a right to a one-third interest in their joint net earnings realized from the business during the contract period.

The question remains, Did the court find the correct amount due plaintiff out of the net proceeds of the business under the contract? The plaintiff contends that he has not been awarded recovery of the full amount due him, and bases this contention on the ground that be bas shown tbe gross amount of commissions and fees earned by them during tbe fiye yéars covered by tbe contract, and that defendant, wbo bad charge of tbe disbursements, has failed to prove an amount thereof which reduces tbe gross earnings to tbe net amount found by tbe court. Tbe account of tbe income and disbursements of the business was kept in tbe books of Louis Auer & Son. This is not disputed. According to tbe entries of these books tbe court allowed tbe plaintiff recovery for tbe correct amount due him. It however is urged that this basis of settling tbe partnership affairs is not proper, and that tbe book entries cannot control because tbe defendant failed to show that tbe disbursements as itemized in such book accounts are correct and proper deductions. Tbe bookkeeper testified that she made tbe entries of expense therein as they were given to her by Mr. Bacher. It also appears that Bacher gave tbe plaintiff a monthly statement of their earnings, and that they were not objected to by the plaintiff as incorrect. Tbe contract provides that tbe books shall be closed on tbe 1st day of January in each year, and that tbe profits, if any, be then divided. Tbe contract furthermore provides that Bacher “shall be the bead and manager of tbe business, and all questions concerning such business shall, in case of disagreement between such parties, be settled and determined by said first party”' {Bacher). Under these terms of tbe contract Bacher clearly bad tbe management of tbe business concerning tbe charges and disbursements and was authorized to direct tbe entry of tbe charges in tbe books of account. When be submitted monthly statements to plaintiff of tbe net earnings, it devolved upon tbe plaintiff to object thereto if be did not accept them as correct. This be never did until tbe five years of tbe contract bad run. It is apparent that tbe plaintiff accepted tbe defendant’s statement of tbe business expenses as correct until tbe contract period was about to expire. Under these circumstances and under tbe terms and conditions of tbe contract for conducting tbe partnership affairs, tbe evidence of tbe monthly statements, tbe books of accounts, and tbe testimony of tbe bookkeeper that the items of expenditure deducted from tbe gross earnings were proper and correct as they appeared therein, prima facie established tbe items involved in tbe accounting. Tbe facts and circumstances were competent proof on tbe subject and warranted the trial court in concluding that tbe items Bacher reported' and directed to be charged as expenses should be deducted from tbe gross earnings. The court properly allowed them and awarded plaintiff a judgment for tbe balance due him on tbe amounts collected and paid before September 1, 1910, and for tbe amount earned before but collected after that date.

By the Gourt. — Judgment affirmed;