Zogarts v. Smith

[86 CalApp2d Page 166] Rudy Zogarts and Josephine Barry brought separate actions on promissory notes, dated January 2, 1945, against the makers, Walter E. Smith and Thelma I. Smith. The Zogarts note was for $7,200 and stated ""this note is payable only out of eight and one-third per cent (8 1/3%) of the net profits of that certain partnership known as Keystone Tool & Supply Company hereafter to be organized by and between Walter E. Smith and Thelma I. Smith, the makers hereof."" It is further provided that the profits were to be calculated ""as of July 30, 1945, and said percentage paid on account hereof, and the balance, if any, shall be similarly calculated and paid on July 30 of each successive year until the total be paid."" The Barry note was for $16,800, payable only out of 19 4/9 per cent of the net profits of the said partnership. It had been given to Emmett D. Barry, now deceased, who, before his death, transferred it to Josephine Barry, his wife. It was alleged in each complaint upon information and belief that on July 30, 1945, defendants had received from the respective percentages of profits, namely, 8 1/3 per cent and 19 4/9 per cent, sums of money which were more than sufficient to pay said notes in full, but that during the month of August, 1945, defendants, the sole partners of Keystone Tool &