Winchester v. Glazier

9 L.R.A. 424, 25 N.E. 728, 152 Mass. 316, 1890 Mass. LEXIS 65
CourtMassachusetts Supreme Judicial Court
DecidedOctober 24, 1890
StatusPublished
Cited by25 cases

This text of 9 L.R.A. 424 (Winchester v. Glazier) is published on Counsel Stack Legal Research, covering Massachusetts Supreme Judicial Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Winchester v. Glazier, 9 L.R.A. 424, 25 N.E. 728, 152 Mass. 316, 1890 Mass. LEXIS 65 (Mass. 1890).

Opinion

C. Allen, J.

The first question is, whether the defendant was entitled to draw a salary .in half-years when there were no net profits. This question is open to doubt if the partnership articles alone are looked at, but its determination does not depend merely upon the construction which would be given to the partnership articles taken by themselves alone. It is a general rule for the construction of written instruments, including deeds, contracts, statutes, and constitutions, that when the language is open to doubt, and parties whose interests are diverse have from the outset adopted and acted upon a particular construction, such construction will be of great weight with the court, and will usually be adopted by it. Stone v. Clark, 1 Met. 378. Stevenson v. Erskine, 99 Mass. 367, 375. Lovejoy v. Lovett, 124 Mass. 270, 274. Chicago v. Sheldon, 9 Wall. 50, 54. Stuart v. Laird, 1 Cranch, 299. Cohens v. Virginia, 6 Wheat. 264, 418. This rule has full force in the construction of partnership articles, and a practical construction given for several years by the partners themselves to language which would otherwise be open to doubt will usually be accepted by the court as conclusive.

The defendant was credited with the full amount of his salary in every year during the continuance of the partnership. The master finds that the plaintiff had knowledge, at least as early as 1878, that credits of salary were made to the defendant in half-years when there were no profits. At that time six such half-yearly credits had been entered, namely, in 1872, 1874, 1876, 1877, and twice in 1875. The master-reports that there was no evidence that the plaintiff ever objected to this course [324]*324prior to the bringing of this suit, and that the plaintiff testified as a witness before him. The partnership continued for six yeai’s after 1878, and under these circumstances it must now be considered that under the partnership articles, as understood and acted upon by the partners, the defendant was entitled to his salary, whether there were profits of the business or not.

By a similar course of reasoning, though upon the facts the conclusion is less clear, the plaintiff must be held bound by the increase of the defendant’s salary in 1874 from $2,500 to $3,500 a year. When the partnership began, the defendant said that after the expiration of three years, if the business continued, he should insist upon more salary; beginning with 1874 thenceforward his salary was credited to him upon the books at the rate of $3,500 a year; the plaintiff had access to the books, and the master reports that his attention was distinctly called to this fact on December 31, 1877, and that it was quite probable that he was aware of it earlier, if he did not agree to it in advance; and upon the further facts found by the master, it seems to be a fair conclusion that at that time he virtually waived all objections and assented to the increase.

The next question is, whether the plaintiff is entitled to interest upon his advances to the firm and his unwithdrawn profits in excess of the $15,000, which it was stipulated in the partnership articles that he should pay in as capital. It was provided in the articles that “the capital of neither shall be taken to pay interest to the other.” So far as concerns the capital which the partnership articles call for, this may be taken as an express provision, which leaves no room for construction; and the plaintiff makes no claim for interest on his $15,000 of capital when there were no profits. But he contends that the above provision relates merely to the capital stipulated for in the partnership articles, and that it does not apply to his advances or profits left in the firm above that sum; and this appears to have been the practical construction adopted by the parties prior to the year 1877. Until that year interest at the rate of seven per cent per annum was uniformly credited on the books of the firm, both to the plaintiff and to the defendant, on all balances found due to them respectively. These books were kept under the eye of the defendant. If in 1877 he had for the first time [325]*325raised the objection that the plaintiff was not entitled to this allowance, his own course of conduct for eight years would justly have been held conclusive upon him of the understanding with which the firm had received and held these sums, and the provision in the partnership articles may well be considered to be limited to the interest on capital already therein referred to. There was no provision in the articles referring to advances or unwithdrawn profits, and the understanding of the parties in relation to them must be gathered from their acts. At the beginning of the year 1877, under the practical construction adopted by the parties, the plaintiff’s advances and unwithdrawn profits amounted to $25,000 over and above the $15,000 of capital which he paid in under the provisions of the articles; while the defendant had recently drawn out so much upon his own account as to make himself indebted to the firm. Now, although interest might not be allowed to a partner for such advances and unwithdrawn profits in the absence of an agreement or understanding to that effect, yet slight circumstances may be sufficient to show such an understanding, and in the present case the circumstances are sufficient fairly to lead to that conclusion.

In the first place, the plaintiff proceeded at once to pay in considerable sums of money, and the balances taken from time to time show a rapid and nearly uniform increase of the amounts standing to his credit. There was an unbroken habit of crediting to each partner, upon the books of the firm, interest upon all balances thus placed to his credit, which is almost conclusive evidence of such an understanding. Baker v. Mayo, 129 Mass. 517. Bradley v. Brigham, 137 Mass. 545. Harris v. Carter, 147 Mass. 313. Leserman v. Bernheimer, 113 N. Y. 39. Lloyd v. Carrier, 2 Lansing, 364. Pratt v. McHatton, 11 La. An. 260. Ex parte Chippendale, 4 DeG., M. & G. 19, 36. Millar v. Craig, 6 Beav. 433. Moreover, during the whole continuance of the partnership after 1877, as well as before, the firm was borrowing money for its business in considerable amounts, and was paying interest for this borrowed money at the rate of seven per cent per annum. In addition to this, it appears that the plaintiff had added to the sum standing to his credit, and allowed it to increase by paying in money as aforesaid, and by the accumulation of interest and profits, with the expectation [326]*326that he would be credited with interest on it at the rate of seven per cent per annum, and with no expectation that the provision of the partnership articles would be construed to deprive him of interest on amounts standing to his credit in excess of his capital in half-yearly periods of losses, if such occurred, nor did it appear that the understanding and expectation of the defendant had been any different.

If, by reason of the acts of the parties, such was the right of the plaintiff in 1877, we cannot see that anything has happened since then which impairs that right.

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Bluebook (online)
9 L.R.A. 424, 25 N.E. 728, 152 Mass. 316, 1890 Mass. LEXIS 65, Counsel Stack Legal Research, https://law.counselstack.com/opinion/winchester-v-glazier-mass-1890.