1. The petition was not subject to the demurrer that the contract sued on was unenforceable as being within the statute of frauds.
2. The auditor erred in admitting testimony of the defendant as to the gross operating expenses of the business.
3. The plaintiff was entitled to a percentage of the net income of the business done during the existence of the contract, and to have taken into consideration in determining his compensation the total income of the business earned during the period of the contract, including collections made after the termination of the period of the plaintiff's employment.
DECIDED APRIL 4, 1941. J. Z. Craig instituted suit against L. D. Baggs, trading as L. D. Baggs Company, in which he alleged that the defendant was indebted to him upon a contract of employment under which he had performed services for the defendant. It appeared from the allegations of the petition, that as a part of the terms of employment the defendant agreed to pay to the plaintiff, who was an accountant, for his services as such twenty per cent. of the net income of the accounting business of the defendant, which was to be determined by deducting from the gross income the necessary operating expenses of such business; that under the contract the defendant guaranteed compensation to the plaintiff for his services to the extent of $2100 per year; that the defendant also agreed to reimburse the plaintiff for all expenses incurred by him while performing services for the defendant outside of the City of Macon; that the defendant was to keep the books of the business; that the contract of employment was entered into after November 1, 1936, and was for a period of one year, running from November 1, 1936, through October 31, 1937; that the contract was renewed on November 1, 1937, for a period of one year; that the contract was again renewed on November 1, 1938, for a one-year period; that on April 30, 1939, the defendant "wrongfully" discharged the plaintiff; that the defendant refused, upon request, to render to the plaintiff a statement showing the gross income, the necessary operating expenses, and the net income of the business; that the defendant kept the books of the business, and refused plaintiff access thereto except the cash-book for a portion of the period of time covered by the plaintiff's employment with the defendant; *Page 851 that the gross income of the defendant's business exceeded $46,928.85 for the period from November 1, 1936, to April 30, 1939; that the plaintiff, not having access to the books of the defendant's business, had no way of knowing what the operating expenses of the business were, but the plaintiff "believes and avers" that the operating expenses of the business for the entire period stated did not exceed $10,000; that the plaintiff incurred expenses while working out of Macon for the defendant, in the sum of $712.29; that the plaintiff has withdrawn $5241.74 from the sum due him by the defendant; and that the defendant is indebted to the plaintiff approximately $3000. The plaintiff prayed for an accounting to determine the gross income of the defendant's business for the period of his employment, the operating expenses for such period, the net income therefor, and the twenty per cent. of the net income; and prayed for judgment of $3000 or such other sum as might be found to be due on an accounting.
On June 23, 1939, the defendant demurred generally on the ground that it affirmatively appeared from the petition that the contract sued on was oral, and incapable of being performed within the space of one year, and that such contract was void under the law requiring that any agreement that is not to be performed within one year from the making thereof must be written. In his answer filed on June 23, 1939, the defendant denied the existence of the contract for the period and as claimed by the plaintiff. He admitted that a contract of employment was entered into between him and the plaintiff, as alleged, for one year from November 1, 1936, through October 31, 1937, but denied that there was any renewal of this contract as the plaintiff claimed. He further alleged that after the expiration of the first year of employment, October 31, 1937, the plaintiff was employed from month to month at a monthly salary of $175. He further denied that he was indebted to the plaintiff in the sum sued for, or any similar sum, but admitted that he was due the plaintiff $903.51, which sum he was "ready, able, and willing to pay."
On September 1, 1939, the plaintiff amended paragraph 16 of the petition, and alleged that the contract sued on was renewed by mutual agreement of the parties, early in November, 1937, to have effect from November 1, 1937, through October 31, 1938, in that at such time the plaintiff by written memorandum called to *Page 852 the attention of the defendant the fact that the 1936-1937 contract year had expired, that a settlement was in order for that year, and a determination whether the contract should run for another year was then proper, to which the defendant replied by assigning the plaintiff to further work and continued to assign the plaintiff to work during the remainder of 1937 and through October 31, 1938, which work the plaintiff performed. The plaintiff amended paragraph 7 of the petition, and alleged that the contract was renewed by mutual consent of the parties early in November, 1938, to have effect from November 1, 1938, through October 31, 1939, in that on November 5, 1938, the plaintiff by written memorandum called attention to the defendant the fact that the 1937-1938 contract year had expired, that a settlement was in order for the contract year and a determination of whether the contract was to run for another year was then proper, to which the defendant replied by assigning the plaintiff to further work and continued to assign the plaintiff to work, which work the plaintiff performed until he was discharged by the defendant. On September 9, 1939, the defendant demurred specially to paragraphs 16 and 17 of the petition, on the ground that it was not alleged how, where, when, or in what manner the contract sued on was renewed, "nor is it alleged that said contract was continued in effect by mutual consent for another year; nor is it alleged whether any such renewal was in writing or oral." The court ordered the above special demurrer filed as of September 1, 1939. On September 12, 1939, the court passed this order: "The general demurrer as renewed and the special grounds of demurrer all coming on to be heard, and after argument thereon, it is considered, ordered, and adjudged that said general demurrer as renewed and said special grounds of demurrer are all overruled." To this judgment the defendant, on September 14, 1939, filed exceptions pendente lite, which were allowed and certified.
On September 22, 1939, the case was referred by the court to an auditor to investigate and pass on all questions of law and fact arising upon the pleadings and the evidence adduced on the hearing (except the demurrers which had been filed and passed upon by the judge). On December 13, 1939, the plaintiff again amended the petition by striking from paragraph 14 the last clause, reading, "and be automatically renewed from year to year by the parties *Page 853 by mutual consent at the end of each contract year," so that the paragraph as amended should read: "That it was agreed that the terms of employment on said basis should be retroactive and begin as of November 1, 1936, and run for a period of one year, from November 1, 1936."
On January 13, 1940, the auditor made a report of his findings of law and fact. The plaintiff excepted to that part of such report denominated finding of law No. 6, in which the auditor overruled objections to defendant's testimony, interposed by the plaintiff, that the defendant could not prove the gross amount of expense chargeable against the gross income of his business by testifying generally as to the amount of expenses incurred in the operation of his business. The plaintiff excepted to this finding as follows: "Plaintiff excepts to finding of law No. 6, for the reasons contained in plaintiff's objection to the testimony offered by plaintiff [defendant] at time it was offered; that is, that testimony as to the gross amount of expense is not admissible unless supported by competent evidence as to what the expenses were, and that defendant actually incurred the expenses; that the expenses could only be shown by books of original entries as to individual items of expense, for what incurred and by whom incurred, with testimony of party incurring same that the entries were correct, and that the items of expense so entered were incurred in connection with the business." This exception of law was filed January 29, 1940.
On February 12, 1940, on motion of the plaintiff, the case was recommitted to the auditor for certain specified purposes as therein stated. The auditor was instructed to find and show the gross income, reasonable operating expenses, and net earnings of defendant's business for the period of time involved, together with the sum to which the plaintiff was entitled, if any. The auditor was further instructed to disclose in his findings the basis for his findings as they related to the reasonable operating expenses as allowed in his first report, to make such other and further findings of fact and of law as might be relevant to the issues, and to determine the facts and issues as above indicated and report his findings to the court upon completion of his investigation. The auditor made certain findings of fact on February 19, 1940, upon the recommittal of the case, as appears in his final report, as to the gross income and as to the total expenses for the operation of the defendant's *Page 854 business for the period of the plaintiff's employment, and found for the plaintiff in an amount representing twenty per cent. of the difference between the gross income and the total operating expenses, the latter being, as the auditor found, $16,822.44, being the amount of the gross sum of the operating expenses of the defendant's business as testified to by the defendant ($16,929.29), less two items totaling $56.85, disallowed by the auditor, without giving details as to his total expenses of the operation of the business. To these findings the plaintiff filed exceptions 1, 2, 3, 4, 6, and 7. The auditor found for the plaintiff $1036.25, and further found that the plaintiff was not entitled to share in the gross receipts collected by the defendant after the termination of the plaintiff's employment on work done previously thereto. The plaintiff excepted to this finding (exception 5). The auditor found that if he had erred in admitting the testimony of the defendant showing a lump sum as the amount of his claimed operating expenses, "then there remains in the record testimony as to a very small portion of the expenses claimed by the defendant, and less in amount than is conceded by the plaintiff as" a reasonable and allowable sum for the defendant's operating expenses during the period of plaintiff's employment, to wit, $10,000; and basing his finding upon $10,000 as the allowable operating expenses of defendant's business, the auditor found that the plaintiff would be entitled to recover twenty per cent. of the difference between this sum and the gross income derived from the operation of the defendant's business, which exceeded the sum as found due to the plaintiff in the amount of $1185.29.
The court overruled the plaintiff's exception to the finding of the auditor admitting in evidence the defendant's testimony as to the total amount of the operating expenses without giving items in detail, and submitted the case to the jury on the plaintiff's exceptions to the auditor's findings of fact. No exception to the report of the auditor was taken by the defendant. The case was submitted to the jury solely as to the operating expenses of the defendant's business during the period of the plaintiff's employment. The only evidence adduced upon this issue was the testimony of the plaintiff and that of the defendant, as given on the hearing before the auditor. The jury found against the plaintiff on exceptions 1, 2, 3, 4, 6, and 7, of the report, and found for the *Page 855 plaintiff on exception 5. The court thereupon entered judgment for the plaintiff in the amount found by the auditor, and in addition thereto in an amount representing twenty per cent. of the income found by the auditor to be derived from the operation of the business of the defendant, but which was not collected until after the termination of the employment of the plaintiff. The plaintiff moved for a new trial; the motion was overruled, and he excepted to that ruling and to the judgment overruling his exception to finding of law No. 6 by the auditor. The defendant in a cross-bill of exceptions assigned error on the judgment overruling the demurrer to the petition as amended, and to the overruling of his motion for new trial. The first question presented is whether the court erred in overruling the exception of law to the plaintiff's objection to the admission in evidence by the auditor of the testimony of the defendant that the operating expenses of his business for the period from November 1, 1936, to April 30, 1939, was the lump sum of $16,929.29. It appears that the plaintiff and the defendant were working under a contract by which the plaintiff was to receive as his commission twenty per cent. of the net income derived from the operation of the defendant's business, which was to be twenty per cent. of the difference between the gross income and the operating expenses. The defendant himself operated the business, and all of this information was peculiarly within his knowledge. He testified that the books were kept by him at his home. He was an accountant and operated an accounting business. Under such an arrangement a duty rested on the defendant to keep a detailed and accurate account of the income and the operating expenses of the business, so that the net income could be accurately determined. The plaintiff, in seeking an accounting, was entitled to have the defendant show in detail the items of expenses incurred during the period of his employment.
In Wootton Land Fuel Co. v. Ownbey, 265 Fed. 91, 99, 100, it was held as follows: "In making proof of credits claimed by him (the accounting party) he should present an itemized statement, showing the details of expenditures, with the vouchers, receipts *Page 856 and memoranda supporting his claim. . . It follows as a corollary to these principles that the duty to account is not fulfilled by a mere general statement that the money was expended . . or by a general denial that any of the principal's money was taken for the personal use of the trustee. Such statements are but the conclusions of the witness, and afford no reasonable opportunity to the principal to test the fact or the propriety of the expenditures, and give the court no basis for determining from the facts of each transaction whether the trustee has faithfully performed his duty." If the plaintiff was employed from November 1, 1936, to April 30, 1939, on the basis of receiving twenty per cent. of the net income derived from the operation of the business during that period, he is entitled to recover twenty per cent. of the difference between the gross income and the operating expenses during that period, and the defendant has the burden of proving what allowances he is entitled to receive as operating expenses. "In a suit for an accounting, one who is liable to render an account has the burden of proving allowances or credits which he may claim." Choctaw c. Co. v. Sittel, 21 Okla. 695 (97 P. 363). See also Sharpv. Behr, 136 Fed. 795; Simper v. Scorup, 78 Utah, 71 (1 P.2d 941); Wootton Land c. Co. v. Ownbey, supra. SeeOliver v. Hammond, 85 Ga. 323 (11 S.E. 655), andGarrett v. Morris, 104 Ga. 84 (30 S.E. 685), as supporting this general rule. Therefore it was error for the auditor to admit in evidence, and base his finding thereon, testimony of the defendant that his operating expenses for the period of the contract was so much money in a lump sum. With this testimony excluded and not considered, it appears from the auditor's alternative report that the plaintiff would be entitled to commissions of $2221.54, which sum was in excess of that as reported by the auditor, $1036.25. The court having erred in admitting this testimony the verdict sustaining the auditor's report (as to all except exception 5) based upon such testimony was illegal and can not be allowed to stand. Had this evidence been excluded, the plaintiff, under the auditor's report, would have been entitled to a sum in excess of that found by the auditor, and as found by the jury in sustaining the auditor's report. We are not holding in what amount the plaintiff would be entitled to recover. We are holding only that the court erred in failing to sustain the exception to the admission by the auditor *Page 857 of the testimony of the defendant as to the gross expenses of the operation of the business. This error necessarily affected the legality of the verdict. The court erred in overruling the plaintiff's motion for new trial.
We will now dispose of the questions made in the cross-bill of exceptions. The plaintiff, as alleged, is suing to recover compensation for the period of his employment from November 1, 1936, to April 30, 1939, on a contract of employment, as alleged in the petition, made in November, 1936, for a period ending October 31, 1937, and on another contract containing the same terms made the first part of November, 1937, by a renewal, by agreement between the parties, of the existing contract, to extend through October 31, 1938, and on another contract containing the same terms, made in the first part of November, 1938, by a renewal, by agreement between the parties, of the existing contract, to extend through October 31, 1939. The plaintiff alleged that the defendant wrongfully discharged him and terminated the contract April 30, 1939. He is not suing on one contract extending through the entire period of his employment, but is suing on three separate and distinct contracts of the same nature and terms, between the same parties, each of which contracts, under the facts as alleged in the petition as amended, was to be performed within one year. Therefore the petition is not subject to the demurrer that the contract sued on was oral and was unenforceable as being within the statute of frauds. The court did not err in overruling the defendant's general demurrer. There is no merit in the special demurrers based upon the grounds as stated above.
Under the contract between the plaintiff and the defendant, which on the record as here presented must be taken as true, the plaintiff was entitled to twenty per cent. of the net income of the business done during the existence of the contract. The plaintiff was entitled, in the computation of his percentage, to have taken into consideration the total income of the business earned during the period of his employment, notwithstanding some of the income was not collected until after the termination of his employment. There is no merit in the defendant's so-called cross-bill of exceptions that the verdict was without evidence to support it in so far as it found for the plaintiff a percentage of the income on business earned during the period of plaintiff's employment and *Page 858 which was collected after his employment had terminated. We are not, however, holding in what amount the plaintiff is entitled to recover.
Judgment reversed on the main bill of exception, andaffirmed on the cross-bill. Sutton and Felton, JJ.,concur as to the cross-bill. Sutton, J., dissents fromthe reversal on the main bill.