Fried v. Burk

Thomas, J., delivered the opinion of the Court. Charles Burk, of Baltimore City, a member of the firm of Burk, Fried and Company, died on the 17th of October, 1913, leaving a last will and testament which was duly admitted to' probate in the Orphans’ Court of Baltimore City in March, 1914, and letters testamentary were granted to his widow, the executrix therein named. By the terms of the will all of the testator’s estate remaining after a devise to his widow and the payment of certain legacies to her and others, is bequeathed and devised to her, in trust to hold and manage the same for a period not exceeding five years, so as to enable her to gradually withdraw from the firm of Burk, Fried and Company such part of his estate “as may be invested therein as capital without embarrassing oí hindering the operations ⁵⁰² of the business of the said firm,” and to sell the real and leasehold property belonging to his estate without forcing the same upon the market. On the 20th of July, 1914, the executrix filed a bill of complaint in Circuit Court Ro. 2 of Baltimore City against Jacob Fried, Joseph Fensterwald and Julius B. Fensterwald, the surviving partners of said firm, in which it is alleged that the deceased and the defendants were for a number of years “co-partners in the business of manufacturing clothes” at the southwest comer of Baltimore street and Market Space, in Baltimore City, and that each of said partners were supposed to have an equal interest in the business; that upon the death of Charles Burk the plaintiff employed William B. Bamberger, Esq., a member of the Baltimore Bar, and also the bookkeeper of said firm, to represent her in the management of her trust, and that while so employed he prepared for1 her and had her file in the Orphans’ Court a list of debts in which the firm is charged with being indebted to Charles Burk’s estate in the sum of $66,138.79, which debt, she is now informed, is supposed to represent the entire interest of the testator in the partnership of Burk, Fried and Company, as follows: “Capital account .......................$56,874.52 “Loan account ......................... 22,500.00 $79,374.52 Credits. “l/s Inventory of Dallas store....................$ 9,117.92 “1/16 Inventory of Memphis, Tenn., store ............. 2,195.12 “Charles Burk’s withdrawals, 1913.................... 1,922.69 $13,235.73 $13,235.73 $66,138.79;” ⁵⁰³ that the above account was prepared by William B. Bamberger from the books of Burk, Fried and Company, “supposedly in the interest of your oratrix, while he was in the employ and subject to the control and direction of the surviving members of” the firm; that the plaintiff has no knowledge as to its accuracy, and that-the defendants have refused to allow her to examine the books of the firm for the purpose of ascertaining their condition, but that from the information since received by her she charges and alleges that the saméis not “a true statement of the interest and, account” of the testator in the partnership.

The bill further alleges that the defendants in their alleged statement of the interest of the testator in the partnership estate have valued some of the assets of the firm far below their market value, claiming that the same is in accordance with the books of the film; that they have valued the property at the corner of Baltimore street and Market Space, the cost price of which was in excess of $145,000, at $100,-000.00; the property USTo. 748 Lombard street, the cost price of which exceeded $13,000, at $6,000, and the property Rov. 8 Market Space, which cost more than $2,000, at $1,441.65, and that they have valued the stock, fixtures, etc., without reference to their market value, as appears by a copy of their statement filed with the bill as “Exhibit Ro-. 3.” It is also averred that in the statement referred to the interest of the testator in the firm assets is not credited with any part of the undivided profits of the firm, amounting to $53,769.85,. or any part of the profits for the year 1913; that the plaintiff is entitled to- have the statement of payments made to- the testator in the year 1913, amounting to $1,922.69, and the item in the statement designated “Goods Account,” amounting to $639.03, verified; that the defendants have collected from the Kew York Mutual Life Insurance Company, on a policy of insurance on the life of the deceased, payable to the firm, the sum o-f $15,000 (to which no- reference is made in the statement), and that as the cost of the policy was paid ⁵⁰⁴ by the firm, and the policy was one of the assets of the firm, the estate of the deceased is entitled to one-fourth of the amount collected thereon. The bill further alleges that the testator in his will, a copy of which is filed with the bill, directs his executrix in settling with the surviving partners of Burk, Fried and Company to accept as the value of his interest in the business of the firm the valuation thereof as shown by the last inventory “regularly taken and made by the said firm prior to his death”; that said provision of the will “is not mandatory but directory * * * but if the Court should decide that the same is mandatory then” the plaintiff “is entitled to examine and verify such last inventory, all of which has been denied her.” It also avers that the deceased and the defendants, on the 2nd of May, 1913, “attempted to enter into an agreement,” a copy of which is exhibited with the bill, in which, after reciting that the firm of Burk and Company, of Dallas, Texas, was, on January 1st, 1913, indebted to them in the sum of $72,943.41, and that the firm of Burk and Company, of Memphis, Tenn., was indebted to them, on the 1st of January, 1913, in the sum of $35,121.80; that they had from time to time set aside from their profits sums designated in their books as “Undivided profits,” amounting, on January 1st, 1913, to $53,769.80, for the purpose of meeting any loss that might accrue from said accounts of the two firms referred to and to keep their capital account intact, they agreed that in the event of the death of either of them during the year 1913 * * * such undivided profits should become the property of the surviving partners of Burk, Fried and Company, who, in accounting to the executor of the deceased partner, should consider the account of Burk and Company, of Dallas, Texas, as worth fifty per cent, of the amount due January lst, 1913, that is to say, $36,471.70, and the account of Burk and Company, of Memphis, Tenn., as worth seventy-five per cent, of the amount due January 1st, 1913, or $26,341.35, and that to these amounts all charges after January 1st, ⁵⁰⁵ 1913, should be added, and all credits after that date should be deducted in ascertaining the amounts for which the surviving partners must account to the estate of the deceased partner on account of said claims. That agreement, the plaintiff charges, is void for want of consideration, and she further charges that if it is not void, then its “true meaning” is that the accounts therein mentioned are to be paid out of the undivided profits, whereas the defendants, in fixing the value of the testator’s interest in the partnership estate, have claimed the whole of the undivided profits and charged the interest of the testator “with its proportionate part of the supposed loss from” said accounts. In conclusion the bill avers that for the purpose of ascertaining the interest of the deceased in the 'partnership she is entitled to have “the books, papers and assets of” the firm examined by an accountant, and that the facts of which discovery is sought “are indispensable as proof to the plaintiff, and that she is unable to prove them except by the answer of the defendants.” The bill then prays (1) that the defendants “may be required to answer under oath and set out in detail and discover all property of every kind, real and personal, wheresoever situated, belonging to the firm of Burk, Fried and Company * * * on October 17 th, 1913, the date of the death ■of Charles Burk;” (2) that the plaintiff may have “the books, papers and assets of said firm * * * examined by an accountant under the supervision” of the Court; (3) that the defendants may be required to account to the plaintiff for the interest of Charles Burk in the partnership property to October 17th, 1913; (1) that the money collected on said policy of insurance “be declared to be partnership assets;” (5) that the alleged agreement between the partners be declared void, and (6) for general relief.

The defendants demurred to the bill “and each paragraph thereof” upon the ground, first, that the plaintiff has not stated in the bill “such a case as entitles her to any relief ⁵⁰⁶ in equity against the defendants or any of them;” second, that “there is a want of certainty in the bill,” and, third, that “it appears by the bill that the same is exhibited against these defendants for several and distinct matters and causes, and that the bill is multifarious.” The Oourt below overruled the demurrer, with leave to the defendants to answer, and this appeal is from that order. The obvious purpose of the bill is to secure from the defendants an accurate accounting of the partnership estate, and to require them, as surviving partners, to make discovery of the property and assets of the firm.