Opinion
No. 35578.
May 22, 1944. Suggestion of Error Overruled July 6, 1944.
MASTER AND SERVANT.
Where oral contract of employment for five years as plantation manager provided for monthly salary and for percentage of operational profits, and first year's losses exceeded subsequent four years' profits, "profits," in view of custom and practice and parties' testimony, were computable annually and not on entirety basis, and hence manager was not barred from recovering percentage of profits.
APPEAL from the chancery court of Tunica county, HON. R.E. JACKSON, Chancellor.
Maynard, Fitzgerald Maynard, of Clarksdale, and J.D. Magruder, of Tunica, for appellant.
This case arose in the chancery court of Tunica County, Mississippi, on bill of complaint filed by appellant against appellees, asking for an accounting and attachment. After appellant had introduced his evidence, appellee, Harry Knowles, filed a motion to strike out all evidence introduced by appellant and enter judgment for appellee. This motion was sustained, and from this order appellant prosecutes the present appeal.
As appellee admitted that the profits to be paid appellant were to be computed on each separate year's operations, the sole questions are, first, were any profits made on each year's operations which have not been paid to appellant; and second, was there an agreement to pay appellant profits on the sale of the property, and, if so, were there any such profits?
The lower court erred in sustaining appellee's motion to strike testimony. We submit that the lower court was without authority to sustain appellee's motion to exclude appellant's evidence, and enter judgment for appellee. Using the well established rule that on a motion by defendant for a judgment before introduction of his proof, every material fact which there is substantial evidence to establish, either directly or by reasonable inference, should be treated as proof in favor of the party against whom said motion is asked.
Hays v. Federal Land Bank, 163 Miss. 8, 140 So. 517; Pearce v. Tharpe, 118 Miss. 107, 79 So. 69; Carter v. Studdard, 118 Miss. 345, 79 So. 225; Stewart v. Coleman Co., 120 Miss. 28, 81 So. 653; Columbian Mutual Life Ins. Co. v. Gunn, 173 Miss. 897, 163 So. 454; Masonite Corporation v. Dennis, 175 Miss. 855, 168 So. 613; Stricklin v. Harvey, 181 Miss. 606, 179 So. 345; Wheat v. Teche Lines, 181 Miss. 408, 179 So. 553; Laws of 1938, Ch. 265.
Appellant established the fact that he was entitled to $100 per month, and in addition to 50 percent of the net profits of operation and 25 percent of the profits of sale.
The evidence shows that appellee made a profit during 1938, 1939, 1940 and 1941 operations, and on the sale.
The record shows that the net profits on the operation of the place for the year 1938 were $3,110.47; for the year 1939, $2,962.81; for the year 1940, $988.28; and for the year 1941 up until May of that year, $3,982.69; making a total profit of $11,044.25. The record likewise shows without dispute that the profits on the sale amounted to $15,005.56. Thus appellant's share of the profits from the operation of the place based on 50 percent would have been $5,522.12, and his profits on the sale based on 25 percent would be $3,751.39, or a total compensation due appellant of $9,273.51. From this figure should be subtracted appellant's excessive withdrawals of $3,440.63, leaving appellant entitled to $5,832.88.
Brewer Sisson, of Clarksdale, and W.L. Bankston, of Tunica, for appellees.
Counsel for appellant in the preliminary statement of their argument seem to proceed upon the untenable and unwarranted theory that losses sustained by appellee should not be taken into consideration. Such a contention, as a matter of course, is wholly without foundation.
Counsel further proceed upon the theory that the audit and report prepared in response to appellant's request for an accounting, Exhibit "A" to complainant's testimony, the testimony of appellee who was placed on the stand as an adverse witness, and that part of the testimony of complainant, his wife and auditor which is unfavorable to complainant, could not properly be considered by the trial judge simply because he did not require appellee, defendant in the court below, to go forward with proof after appellant, complainant in the court below, had rested. The chancellor heard all the evidence, he considered it carefully, and reached the conclusion that complainant, appellant, had not made out a case, and, therefore, the bill of complaint was dismissed.
It is further said by appellant's counsel that the court was without authority to sustain appellee's motion to exclude appellant's evidence and enter a decree for appellee, and several Mississippi cases are cited, but all of which were decided prior to the passage of Chapter 265 of the Mississippi Laws of 1938. It is claimed that if Chapter 265 of the Mississippi Laws of 1938 were passed to meet the condemnation contained in the case of Hays v. Federal Land Bank, 163 Miss. 8, 140 So. 517, that it fails to accomplish that purpose. We think the only answer necessary is to say that counsel wholly misconstrue the effect of the 1938 statute. Appellant says that if this court adopts the view that a motion to strike the evidence may now be entertained by chancery courts that the effect of the motion is the same as a motion to exclude at the conclusion of plaintiff's case in circuit court and direct a verdict for the defendant. The reason for the rule in circuit court is that if there is any substantial evidence in plaintiff's behalf this should go to a jury and let it say whether or not the plaintiff should prevail. But in the chancery court the chancellor is the trier of both the law and the facts. He has the right and it is his duty to consider all the evidence. Just because, as in this case, there may be discrepancies in the testimony of the complainant's witnesses does not mean, as we understand the law, that the court must wholly disregard that part of the testimony in support of defendant's side of the case and take only that which is favorable to complainant.
Under the present record we can accept as true the competent evidence of complainant and his two witnesses, and disregard the figures prepared by auditor Bell and offered in evidence by complainant, and accept the figures and not improper conclusions of auditor Hirsberg and with all assurance ask for an affirmance of the decree of the trial court.
It is the general rule of law that the chancellor's findings of fact are not reversible unless manifestly wrong. The court heard the testimony of appellee, who was used by appellant as an adverse witness, he had before him the audit and account of H.F. Bell filed in response to appellant's demand and by him offered in evidence, he considered the testimony of appellant, his wife and his auditor, Hirsberg, and upon all this it was the chancellor's opinion that appellant was not entitled to any relief and the bill of complaint was dismissed. It cannot be successfully insisted that the chancellor was manifestly wrong, and, therefore, the case should be affirmed.
Argued orally by William F. Maynard, for appellant, and by Ed. C. Brewer, for appellees.
Crow filed his bill for an accounting and discovery against Knowles in connection with the employment of Crow as plantation manager for appellee for the years 1937-1941 inclusive. The contract was oral. It is agreed that Crow was to receive $100 per month and at least 25% of the net profits from operation of the plantation. There is dispute of Crow's claim that he was to receive 50% of such profits and one-fourth of the profits from a sale of the plantation. The latter was sold in 1941 at a substantial increase above its cost price. From the operations, there was a loss of $10,369.17 the first year, 1937. In each of the following years there was shown a substantial net profit, the sum total of which is less than the losses the first year.
Appellant introduced four witnesses, himself, his wife, the defendant Knowles and an auditor. At the conclusion of complainant's case, the defendant moved for decree dismissing the bill. The motion was granted and from this decree Crow appeals.
The only theory which would sustain a decree against complainant's claim for a share in operational profits is that such profits were to be computed upon an overall or an entirety basis. Such theory ignores not only common practice and custom but also the testimony of both parties to the agreement. Knowles testified that Crow was to receive, in addition to a monthly salary of $100, "25% of the operations of the property each year." It is only by charging against each of the subsequent years the loss taken the first year that the account can show a loss. Disregarding the circumstances that a substantial part of the "expense" the first year consisted of betterments, equipment and permanent investment, we find no warrant for retaining the net loss as a permanent charge against future profits so as to affect the agreement here. If this could be sanctioned, it would mean that if, after four successful and profitable years, a loss were incurred the fifth year, Crow could be charged with a refund from past profits to balance an over-all loss. Principles of partnership are not involved. By common practice and custom, as well as upon authority, we must take note of the practical meaning of rents and profits as here referable to annual accounting. Taylor v. Harwell, 65 Ala. 1, 11; Equitable Life Ins. Co. of Iowa v. Brown, 220 Iowa 585, 262 N.W. 124; In re Eger's Will, 139 Misc. 59, 247 N.Y.S. 527, 529.
Since the case must be reversed, it is not necessary to resolve the question as to the implications in the decree sustaining the motion to exclude and dismiss. Whether there is implicit in the chancellor's decree a finding of factual issues is not adjudged since these must follow the case upon remand. These issues involve the propriety of allowing Knowles as part of operational expenses a rental charge of $7,500 which is asserted to include "replacement, insurance, taxes and repairs," and if allowed, whether it is telescoped into a fixed depreciation as claimed by appellee. The latter item is relevant upon the computation of net profits from the sale of the property in the event a contract for division thereof shall be established. Since the learned chancellor found that there were no over-all operational profits, we assume that the issue as to whether a division thereof was to be upon a one-fourth or one-half basis was not decided.
Reversed and remanded.