Sandias v. Mustacchi

Clarke, J.: This action was brought to recover damages for breach of a contract to continue a partnership for one year. The complaint alleges that on or about the 25th of October, 1910, the plaintiff and defendant entered into an agreement to form and continue a copartnership in the business of purchase and sale of various articles for export, for a period of one year, commencing on the said date; that the defendant was to invest in said business the sum of $15,000 in cash, and each of the parties was to draw from the said firm the sum of $2,236 per year, or the sum of $43 each week during the continuance of the said , agreement; that the plaintiff was to pay to defendant out of his drawing a sum equal to five and one-half per cent on $7,500 in lieu of an investment in that amount, it being understood that plaintiff was to make no actual cash investment; that the copartnership continued until the 19th day of December, 1910, when the defendant committed a breach thereof in that he failed and refused to continue the same, and thereafter refused to permit plaintiff to draw the amount agreed upon; that the plaintiff duly performed and offered to perform all conditions upon his part to be performed, and that by reason of the breach on the part of defendant he was damaged in the sum of $6,892. The agreement was oral. The defendant provided the entire cash capital. The plaintiff had no money, either for investment or living expenses. They decided that a working capita] of $15,000 would be required. Defendant agreed to provide this sum, plaintiff to pay him an amount equal to interest [812] at five and one-half per cent on $7,500. Defendant asked what plaintiff would need for his living expenses. He said $50 per week, but finally got down to $35 per week, and figuring that $8 was Weekly interest at five and one-half per cent on $7,500, they agreed that each should have a weekly drawing account of $43, and plaintiff should pay defendant $8 per week as interest; profits and losses to be shared equally, and the firm name to be L. Mustacchi & Co. The plaintiff testified: “He spoke about the terms of the partnership — half profits.” It was in evidence that no sales were made until the 26th of June, 1911, some six months after the alleged breach, and there was a loss on the operation of the business for that year. The court charged the jury that “the books of the defendant show a loss and not a profit, so that no ground is furnished for the calculation of profits; but if you believe that the agreement was made as alleged by the plaintiff, and was made for a year, and that the plaintiff was entitled to draw by that agreement $43 per week from the firm’s assets, less $8 a week, which he says he was to pay back to the defendant as interest on the $7,500, then you may award plaintiff a verdict for forty-four weeks at $35 per week.” The defendant asked.the court to charge that “If the jury shall find that, there was a binding partnership agreement for a year, and this agreement was violated by the defendant, the damage which the plaintiff has suffered thereby is the loss of one-half of the net profits which the business would have earned during the year, less any sum the plaintiff earned, or by the exercise of reasonable diligence might have earned during the period; ” which was refused and exception taken. He also asked the court to charge that “If the jury cannot find from the evidence before it that a profit would have resulted if a partnership business had been continued for the full' term of one year, then the plaintiff is entitled to nominal damages only; ” which was refused and exception taken. He also asked that the court charge “That in considering the amount in which the plaintiff has been damaged by the defendant’s breach of the partnership contract, the jury shall not take into consideration the plaintiff’s right to draw $43 per week from the business; ” which was [813] refused and an exception taken. The jury found a verdict for $1,540, and from the judgment entered thereon, and from the order denying a new trial, this appeal is taken. We think it clear from the evidence that the drawing account allowed was in anticipation of profits, and that if the partnership had continued for the year and the business had shown a loss, as it did, the amount of said drawings would have been chargeable against the plaintiff. “ In general, where a sum of money is advanced to a partner, or a partner is permitted to take it as.a loan and there are no express terms agreed upon, his profits are in the first place answerable; and if they.are insufficient, his share of the stock goes to discharge this balance, and if that be insufficient, he becomes a personal debtor for the balance. ” (Pars. Part. [4th ed.] § 166, p. 214.) The said drawings were not allowed to the plaintiff as compensation to an employee, as in Gifford v. Waters (67 N. Y. 80), and in the cases cited by the plaintiff, where by the terms of employment a clerk or selling agent was to be compensated in an amount equal to a percentage of the profits, with a drawing account of a certain amount, where it has been held that he was entitled to said drawing account in any event as salary or wages. This was a partnership agreement, and all that either of the parties in such an agreement was entitled to was a division of the profits. The drawing account was merely anticipatory of the ascertainment thereof. It was not a guaranty that plaintiff should receive at least the said amount irrespective of actual results. As the plaintiff was unable to show that there were or would have been any profits, and as it was affirmatively established by the defendant that there were no profits, a recovery was permitted upon an improper basis, and the refusal to charge the requests was error. At best the plaintiff was entitled to recover a nominal amount. The defendant requested the court to charge that plaintiff was entitled to nominal damages only. We think that the jury should have been so directed, and section 1317 of the Code of Civil Procedure, as amended by chapter 380 of the Laws of 1912, authorizes this court, when a trial has been before a jury, to render judgment upon a motion to direct a verdict, and as it would be futile to direct a new trial to enable the plaintiff to [814] recover nominal damages, the verdict is, therefore, reduced to six cents damages, and the judgment is modified accordingly, with costs to .the defendant. Ingraham, P. J., Laugiilin, Scott and Miller, JJ., concurred. Judgment modified as stated in opinion, with costs a,rid disbursements to defendant. Order„to be settled on notice.