Opinion
No. 70-004.
January 27, 1970. Not Selected for Official Publication.
Gaunt, Byrne Dirrim, Bradley J. Coover, Charles T. Byrne, Brighton, for plaintiffs in error.
Costello Kofoed, Eugene F. Costello, David L. Kofoed, Declan J. O'Donnell, Denver, for defendant in error.
Partnership case dealing with question of whether or not a partnership was formed and if so, what were damages incurred by breach of partnership. The jury found that a partnership did exist and awarded plaintiff damages. The District Court of County of Adams, Oyer G. Leary, J., gave plaintiff alternative of accepting reduced judgment or having a new trial on issue of damages only. Plaintiff accepted reduced judgment. Defendants brought error. The Court of Appeals, Enoch, J., held that where there was no evidence to support a verdict which would include loss of future profits as part of damages incurred by breach of partnership formed for ownership and operation of drug store, it was error to give damage instruction permitting consideration of future profits.
Judgment affirmed in part, reversed in part and remanded with directions.
I. Partnership 53
Evidence supported jury's finding that there was a partnership for ownership and operation of a drug store.
2. Appeal and Error 1001(1), 1010(1)
Where there is sufficient evidence to sustain trial court's or jury's findings, reviewing court on writ of error is bound by the trial court's determination.
3. Partnership 122
Probative value of an accounting sheet prepared by accountants for drug store was for jury to determine in partnership case dealing with question of whether or not partnership was formed for ownership and operation of drug store and if so, what were damages incurred by breach of partnership.
4. Partnership *122 ½
Under proper facts situation, loss of future profits is a proper measure of part of damages incurred by breach of partnership.
5. Trial 252(20)
Where there was no evidence to support a verdict which would include loss of future profits as part of damages incurred by breach of partnership formed for ownership and operation of drug store, it was error to give damages instruction permitting consideration of future profits.
6. Partnership 122
Instructions relative to determination of existence of a partnership were not erroneous.
7. Appeal and Error 1033(10)
Generally there is no basis for the defendants to complain when remittitur reduces recovery of plaintiff and is in favor of defendants.
This case was originally filed in the Supreme Court of the State of Colorado and subsequently transferred to the Court of Appeals under authority vested in the Supreme Court.
This is a partnership case dealing with the question of whether or not a partnership was formed and if so, what were the damages incurred by breach of the partnership.
The plaintiffs in error are John L. Kane and the Derby Drug Store, Inc. They were defendants in the original action and will hereinafter be referred to as defendants or by name.
The defendant in error, Bernard E. McNally, was the plaintiff in the trial court and will hereinafter be referred to as plaintiff or McNally.
McNally and Kane had known each other since 1946. Kane established the Derby Drug Store in 1947. McNally was a pharmacist and prior to 1958 was a salesman for several drug companies and worked as a relief pharmacist at night in various drug stores including the Derby Drug Store.
The plaintiff's evidence is undisputed that plaintiff and Kane, at the invitation of Kane, had several discussions about forming a partnership between them for the ownership and operation of the Derby Drug Store. There was a luncheon meeting in the fall of 1957 where plaintiff presented a written partnership agreement, prepared by his attorney, to Kane who looked it over and indicated "it was fine". The instrument was never signed by either of the parties. The defendant, Kane, contended that all the details were never finally worked out by the attorneys for the parties, denied that the partnership ever went into existence and consequently denied that plaintiff is entitled to any compensation or damages for plaintiff's alleged interest in the partnership.
However, the evidence does further show that plaintiff did in fact quit his other employment in December, 1957 and in January, 1958, started full time work in the drug store which continued until September 15, 1964. A state liquor application was filed in their names as partners and signed by both plaintiff and Kane for the years 1960, 61 and 62. There was also an application for a pharmacy license filed in the names of both parties. In 1962, there was discussion between the parties about incorporating the business and on September 19, 1962, Articles of Incorporation were filed with the State of Colorado. Plaintiff was one of the original incorporators and was Vice-President. There was no organizational meeting, no stock issued and no minutes. However, Kane considered plaintiff to be the Vice-President until the break-up in 1964.
Plaintiff testified that he was to pay for his half interest in the business by the application of one-half of the net profits as determined at the end of each year. An accounting statement dated June 30, 1963 prepared by the drug store's accounting firm showed that there had been net profits credited to plaintiff's capital account.
The jury found that a partnership did exist and awarded plaintiff damages in the amount of $48,333.33. The defendants filed a motion for a new trial and motion for a directed verdict or remittitur. In ruling on the motions, the trial court determined, as alleged by the defendants, that the damage instruction (No. 11) to the jury was not correct in that it permitted consideration of future profits. The court then determined that there should be a remittitur of $18,190.54 and reduced the judgment to $30,142.79 and gave the plaintiff the alternative of accepting the reduced judgment or having a new trial on the issue of damages only. The plaintiff accepted the reduced judgment.
The defendants appealed alleging several errors which will be considered as they appeared in the brief.
1. That the motion for directed verdict made by the defendants should have been granted by the court because the evidence was insufficient to establish a partnership, and that unless a partnership can be established, there is no basis for any other findings of the court.
[1, 2] There was a conflict in the testimony and disputed facts as to the existence of a partnership. However, since there was a conflict in the facts, it was a jury question and not a question for the court to determine as a matter of law. We find there was sufficient evidence to present the issue to the jury and to support the jury's findings that there was a partnership. Where there is sufficient evidence to sustain the trial court's (or jury's) findings, the reviewing court, on writ of error, is bound by the trial court's determination. Whatley v. Wood, 157 Colo. 552, 404 P.2d 537. The trial court correctly denied defendants' motion.
2. The motion by the defendants at the close of the case to strike Exhibit A should have been granted.
Exhibit A was an accounting sheet prepared by the accountants who were the accountants for the drug store. The defendants argued to the trial court that it was privileged communication which the trial court properly rejected. At the time it was prepared by the accountants, they were the accountants for the corporation in which plaintiff was undisputedly listed as Vice-President. The defendants on appeal now argue that the exhibit should not have been admitted basically because they don't agree with its contents. The probative value of the exhibit was for the jury to determine and we find no merit in this argument.
3. It is the position of the defendants that, assuming arguendo, a partnership was formed, the verdict of the jury is clearly erroneous as to amount and must be based upon passion and prejudice.
We find the record disclosed no evidence to base any allegation of passion or prejudice. However, we do find that the amount of the verdict is not supported by the evidence. This finding is more fully discussed in the consideration of the jury's instruction No. 11. 4. The defendants show the court that the verdict was in fact based upon erroneous jury instructions No. 6, 8 and 11.
[4, 5] Instruction No. 6 and 8 give to the jury instructions which were necessary to assist the jury in determining if in fact a partnership did exist. We find no error in the giving of either of these instructions.
Instruction No. 11 is as follows:
"You are instructed that if you find the issues herein joined in favor of plaintiff, you will assess as his damages an amount which, in your consideration and best judgment will reasonably and justly compensate him for the wrongful dissolution of the partnership.
In assessing such sum, you shall take into consideration the amount of profits which were due from the plaintiff up to the time of the commencement of this action and the possible profits plaintiff would have made had not the partnership been wrongfully dissolved."
The error alleged as to this instruction concerns the portion which permits the jury to determine as a part of the damages an amount for possible future profits. In the reconsideration of this instruction by the trial court on the motion for new trial, the trial court determined that it was improper to have given an instruction for possible future profits which led to the remittitur ordered by the trial court. Under the proper facts situation, the loss of future profits is a proper measure of part of the damages which the jury might allow to the plaintiff as was pointed out in Ramsay v. Meade, 37 Colo. 465, 86 P. 1018. In that case the court stated "where * * * the sole object of the business in question is the accumulation of profits, we think that a proper element of damages is the profits which would have accrued to the plaintiff had not the partnership been wrongfully dissolved." We agree with the trial court that it was error in this particular case to instruct the jury on future profits but not for the same reason given by the court. We find from a review of the record that there is no evidence to support a verdict which would include future profits. The question of whether the trial court in ordering a remittitur cures this defect will be discussed subsequently.
5. The order of the trial judge entered June 28, 1966, is erroneous in that the judge has allowed the jury to determine that there is or is not a partnership, whereas that question is for the court to decide as it is a question of law, and that even if because it is disputed in the testimony, the erroneous instructions by the court to the jury misled the jury.
As we have discussed, we find no error in the instructions given by the court to the jury relative to the determination of the existence of a partnership and that the trial judge was quite correct under the circumstances with proper instructions to allow the jury to determine if in fact a partnership did exist between the plaintiff and the defendant.
6. Plaintiff's arguments No. 6, 7, 8 and 9 all relate to the question of instruction No. 11, which was the damage instruction.
The ordering of a remittitur can be and has been approved as proper action on the part of the trial court under certain conditions. Generally there is no basis for the defendants to complain when the remittitur reduces the recovery of the plaintiff and is in favor of the defendants. Sills v. Hawes, 14 Colo.App. 157, 58 P. 422; Colorado Springs Electric Co. v. Soper, 38 Colo. 126, 88 P. 161. The defendants obviously recognize remittitur as a proper action of the trial court under proper circumstances even though they argue against it in the brief. The record shows that defendants filed a motion for new trial and incorporated into it a motion for directed verdict or remittitur. The real purpose of remittitur is to give the trial court an opportunity to do justice to the parties by reducing an excessive judgment where the excess can be reasonably ascertainable by the trial court from the evidence. In this case, however, though a remittitur may have been proper, we find that error was committed in the trial court's determination of the amount of the remittitur. The trial court states in its order of June 28, 1966, wherein the remittitur was determined that the plaintiff's capital account taken from plaintiff's Exhibit A equalled the amount of $25,725.79. The only source in the record for this figure is the accounting sheet previously identified as plaintiff's Exhibit A. Apparently, this accounting sheet was misinterpreted not only by the trial court, but by the plaintiff who refers to the same figure. According to Exhibit A, which the trial court relied upon, we find that plaintiff agreed to pay to the defendant $40,345.48 for a one-half interest in the partnership. This figure is identified in the exhibit as "original note interest at 6%". The exhibit has 12 columns which are headed: income, expenses, partnership income, plaintiff's share of the partnership income, interest on the money owed by plaintiff to the defendants, adjustment for federal and state income taxes. Column 11 is the net reduction of the note and column 12 is the note balance. Figures are given in each of the columns for the years 1958 through June 30, 1963. The $25,725.79 which the trial court and the plaintiff refer to as the plaintiff's capital account is the figure which appears in column 12 which is in fact the balance still owed to the defendant Kane on the original obligation of $40,345.48. The net reduction of the note which appears in column 11 is $14,619.69. This is the capital account of the plaintiff representing his interest in this partnership as of that date.
In determining the amount of plaintiff's capital account since the date of the accounting sheet of June 30, 1963 up to the date the partnership was dissolved in September, 1964, the trial court states, among other things, "The evidence further discloses that Mr. McNally testified that subsequent to June 30, 1963, his capital account was accruing at the rate of not quite $600.00 per month. Now, this figure is obviously a gross figure since there had to be deductions from such amount for rent, interest and taxes based on the plaintiff's evidence and his own testimony. Therefore, utilizing the figure on plaintiff's Exhibit A, the net amounts accruing to the capital account, taking into consideration and account all deductions, it would not have exceeded the sum of $285.00 per month. Therefore, applying this monthly accrual, based on the average of earnings of the Derby Drug Store in the years 1962 and 1963, there could not have accrued more than $1,710.00 for the remaining 6 months in 1963 and $2,707.00 for 9½ months in 1964, being a total of $4,417.00. This figure when added to the $25,725.79, as shown in plaintiff's Exhibit A, as the plaintiff's interest accruing to June 30, 1963, would arrive at a grand total of $30,142.79, being plaintiff's interest in the capital amount as of September 15, 1964."
The jury returned a verdict for $48,333.- 33. The trial court, based upon the computations set forth above, ordered a remittitur of $18,190.54, reducing the judgment to $30,142.79 and gave plaintiff the alternative of accepting the reduced judgment or submitting to a new trial, restricted only to the issue of damages.
Again accepting the figures of Exhibit A to be accurate and accepting the trial court's computations, for accumulation during the years 1963 and 1964, the plaintiff's credit balance was $14,619.69 plus the court's computation of $4,417.00 for a total of $19,036.69 and not $30,142.79.
We, of course, do not know how the jury arrived at that figure which it returned in its verdict. We do know, however, that the trial court used the wrong figure in determining the plaintiff's capital account as of June 30, 1963 and the trial court's determination of the accumulation for the balance of 1963 and 1964 is obviously based upon speculation and not evidence that appears in the record.
The trial court's order granting a remittitur was in error and is set aside.
The case is hereby remanded for further appropriate proceedings to determine the
amount of the judgment. Such proceedings should be conducted in a manner in which each of the parties will be permitted to present competent evidence upon which a judgment could be based.
DWYER and DUFFORD, JJ., concur.