PRESENT: All the Justices 

ROY J. BUCHOLTZ, P.C. 

 OPINION BY 

v. Record No. 970361 JUSTICE LAWRENCE L. KOONTZ, JR. 

 February 27, 1998 

COMPUTER BASED SYSTEMS, INC. 

FROM THE CIRCUIT COURT OF FAIRFAX COUNTY 

Jane Marum Roush, Judge 

 This appeal involves a lease dispute between the tenant of 

office space in a building formerly owned by a bankrupt 

partnership and the subsequent purchaser of that property at a 

foreclosure sale. Specifically, we consider whether the lease 

permitted the tenant to set off debts the tenant alleged were 

owed it by the partnership against rents owed to the new owner 

of the property. We further consider the effect of a provision 

in the lease for an extension of its term at “market rates.” 

 We recite only the facts necessary to our resolution of 

this appeal. Prior to a foreclosure sale in the summer of 1995, 

the building in question was the property of Old Reston Limited 

Partnership (Old Reston). Roy J. Bucholtz and Harold O. Miller, 

partners in a professional corporation for the practice of law, 

were the general partners of Old Reston and leased space for 

their law practice in the building. In June 1992, Miller left 

the practice of law in Virginia and relocated to Florida. 

Bucholtz formed Roy J. Bucholtz, P.C., a new professional 
corporation, and continued his law practice in the same 

location. 

 Bucholtz alleges that after Miller moved to Florida 

Bucholtz discovered that Miller had improperly withdrawn funds 

from Old Reston. In order to “equalize” the alleged imbalance 

in the Old Reston account resulting from Miller’s actions, 

Bucholtz, as general partner of Old Reston and principal of Roy 

J. Bucholtz, P.C., entered into a new lease between these two 

entities for the office space used for Bucholtz's law practice. 

In pertinent part, the lease included the following provision: 

 Lessee and/or Roy J. Bucholtz or heirs, successors or 

assigns shall have the right of setoff and deduction 

from money owed by Lessor to Lessee and/or Roy J. 

Bucholtz or heirs, successors or assigns. 

(Emphasis added.)*

 The term of the lease was from April 1, 1993 to March 31, 

1996 at a monthly rental rate of $2,227.50. A further provision 

in the lease permitted Bucholtz to renew the lease for two 

consecutive three-year terms “at market rates” upon specified 

notice to the lessor. 

 *

Apparently because of the emphasized language, the parties 

have not drawn a distinction between the rights and obligations of 

Roy J. Bucholtz, P.C., the actual lessee, and Roy J. Bucholtz 

individually. Accordingly, hereafter we will simply refer to 

“Bucholtz” to mean either depending upon the context in which the 

reference is made. 

2
 In December 1994, Old Reston filed for bankruptcy. During 

the period prior to the bankruptcy, Bucholtz paid no rent to Old 

Reston. Instead, payment was made by the professional 

corporation to Bucholtz individually and “credited as if it was 

rents paid to Old Reston” so as to reduce the amount of the 

“debt” Bucholtz alleged was owed him by Old Reston. Bucholtz 

maintained that he received these payments in his capacity as a 

general partner of Old Reston. 

 Computer Based Systems, Inc. (CBSI) purchased the building 

owned by Old Reston in a foreclosure sale in July 1995. CBSI 

acknowledged that the purchase was subject to the existing lease 

with Bucholtz. However, CBSI disputed any obligation to honor 

the setoff provision in the lease, and thereafter Bucholtz paid 

rent, “under protest,” in accord with the terms of the lease 

into an escrow account for the benefit of CBSI. CBSI 

subsequently sought to terminate the lease at the conclusion of 

its original three-year term. Bucholtz responded to the notice 

of termination by giving notice of its intent to exercise the 

first three-year extension of the lease. 

 On April 9, 1996, Bucholtz filed a petition against CBSI, 

seeking a declaratory judgment that under the terms of the lease 

it was entitled to continue setting off rent against amounts 

still alleged to be owed Bucholtz individually by Old Reston. 

The petition further sought a declaration that the option for 

3
the first three-year extension of the lease had been properly 

exercised. 

 CBSI filed an answer, grounds of defense, and counterclaim, 

asserting that it had given Bucholtz notice of its intention not 

to renew the lease, which voided the tenant's option to extend 

the lease. In the alternative, CBSI asserted that Bucholtz's 

current rental payments were less than “market rates” as called 

for in the lease, thus placing Bucholtz in default. Finally, 

CBSI sought judgment for possession of the office space and for 

rent from March 31, 1996 at “reasonable market value.” 

 Following a two-day hearing, the chancellor orally ruled 

that the lease was valid, CBSI had “ratified and affirmed” it 

subsequent to the foreclosure sale, and Bucholtz was entitled to 

exercise the extension option and had properly done so. The 

chancellor further ruled, in a subsequent decree, that Bucholtz 

was not entitled to exercise the setoff provision of the lease 

“because there is no money owed by the former Lessor,” Old 

Reston, to Bucholtz. Although Miller had testified that he had 

not made any improper withdrawals of partnership assets from Old 

Reston, the chancellor found this testimony “to be wholly 

incredible and . . . that Mr. Miller looted this partnership.” 

Thus, the chancellor found that Bucholtz's claims were against 

Miller personally. 

4
 The chancellor's rulings were incorporated into a decree 

entered on November 15, 1996. The decree further ordered that 

the parties seek an agreement on the appropriate rental at 

“market rates” for the renewal term or, in the alternative, that 

a panel of real estate brokers be selected by the parties to 

determine the appropriate rate “all to be completed within 

ninety days.” 

 Twenty-one days later, on December 6, 1996, the chancellor 

denied a motion to stay the November 15, 1996 decree, which then 

became final. We awarded an appeal to Bucholtz challenging 

those portions of the final decree which denied the right to 

setoff under the terms of the lease and the establishment of a 

panel of real estate brokers to determine market rates after the 

court no longer had jurisdiction over the matter. CBSI by 

assignment of cross-error also appeals the manner in which the 

chancellor sought to determine the “market rates.” 

 Bucholtz first contends that the chancellor erred in ruling 

that Old Reston was not indebted to Bucholtz and, therefore, 

that CBSI was not bound to honor the setoff provision of the 

lease. We disagree. 

 The chancellor found, and CBSI does not dispute, that CBSI 

accepted the lease as part of its acquisition of the building. 

Indeed, CBSI asserted the right to receive rent from Bucholtz 

under the lease. Nonetheless, CBSI asserts that the setoff 

5
provision is not enforceable as a matter of law, because it 

would permit Bucholtz, a partner of Old Reston, to favor himself 

over the other creditors of that partnership. We need not reach 

this issue because we agree with the chancellor that the 

evidence does not establish that Old Reston was indebted to 

Bucholtz. 

 It is fundamental and well settled that “in the absence of 

an agreement, express or implied, between partners in respect to 

their shares in the profits and losses of the business, they are 

to share equally.” Legum Furniture Corp. v. Levine, 217 Va. 

782, 787, 232 S.E.2d 782, 786 (1977). Moreover, “the interest 

of a partner in the partnership assets, real and personal, is 

his share of the profits and surplus after the payment of all 

partnership debts.” Savings and Loan Corp. v. Bear, 155 Va. 

312, 331, 154 S.E. 587, 593 (1930). Thus, Bucholtz was entitled 

to an equal share of the profits, if any, of Old Reston and to 

have any lawful debts owed him by the partnership paid to him. 

 In this context, Bucholtz asserts that he was attempting to 

“equalize” the “payments” by Old Reston to Miller through the 

provision for the setoff in the lease. Yet Bucholtz himself 

concedes, and the chancellor found, that the funds taken by 

Miller were not proper partnership draws of profit, but amounted 

to embezzlement of partnership assets to the detriment of the 

partnership and its creditors. Miller's acts clearly did not 

6
create a debt of the partnership in favor of Bucholtz or permit 

Bucholtz, the remaining partner, to compound the malfeasance by 

“equalizing” the amount wrongly taken by another partner. 

Accordingly, assuming, without deciding, that the liability 

imposed by the setoff clause was applicable to CBSI as the 

“Lessor” under that clause, we hold there was ample evidence to 

sustain the chancellor’s finding that no outstanding debt of Old 

Reston to Bucholtz ever existed against which the setoff could 

be applied. 

 We turn now to the remaining issues in this case. Neither 

party challenges the chancellor's finding that Bucholtz properly 

exercised the option to extend the term of the lease for three 

years. Accordingly, that finding is conclusive and binding on 

appeal. Both parties, however, challenge aspects of the 

chancellor's ruling concerning the lease provision that the 

extension would be at “market rates.” Both parties contend that 

the chancellor erred in delegating the determination of an 

appropriate market rate to a panel of real estate brokers 

without providing for continuing control of the court over the 

issue. We agree. 

 Initially, we note that despite the broad power to do full 

justice usually afforded to a court sitting in equity, we are 

unaware of any authority, by statute or in common law, that 

permits the chancellor to delegate the issue before the court in 

7
this case to an independent panel of real estate brokers. 

Although an equity court may from time to time refer matters to 

commissioners in chancery or special masters, we are not 

persuaded that such a panel of real estate brokers as that 

appointed here is encompassed within that authority. Moreover, 

here the chancellor lost jurisdiction over the case twenty-one 

days after entry of the November 15, 1996 decree, Rule 1:1, and, 

yet, the panel, which had not acted within that period, was 

expressly given a period of ninety days to reach a 

determination. Under these circumstances, the chancellor 

clearly erred by permitting the panel to act on the issue after 

the court would no longer have had jurisdiction over the matter. 

 We are left then to consider what action the chancellor 

should have taken with respect to the issue of the proper 

“market rates” of rental. Based upon the evidence produced, 

Bucholtz contends that the chancellor erred in failing to find 

that the original rental rate in the lease was the appropriate 

rental rate for the extension period. We agree. 

 It is axiomatic that the failure to produce evidence on an 

issue is held against the party having the burden of proof, not 

against the party that does not have the burden of proof. See

Ransom v. Watson's Adm., 145 Va. 669, 679, 134 S.E. 707, 710 

(1926); Brothers Construction Co. v. VEC, 26 Va. App. 286, 298, 

494 S.E.2d 478, 484 (1998). Here, the sole evidence in the 

8
record concerning “market rates” for the office space was that 

following the extension Bucholtz continued to pay, and CBSI 

accepted into the escrow account, the same rent Bucholtz had 

paid under the original term of the lease. CBSI had the burden 

of producing evidence that this was not the “market rates” 

contemplated by the extension provision of the lease for the 

space. Under these circumstances, the chancellor erred in not 

finding that the original lease rate was an appropriate market 

rate. 

 For these reasons, we will affirm that portion of the final 

decree which found that Bucholtz was not entitled to apply the 

setoff provision of the lease against CBSI, thus entitling CBSI 

to the funds in the escrow account and all other rents due under 

the lease. We will reverse that portion of the decree which 

would have submitted the determination of market rates of rental 

for the extension period to a panel of real estate brokers, and 

enter final judgment for Bucholtz declaring that the original 

lease rate is the rental rate for the first extension period. 

Affirmed in part,

reversed in part,

and final judgment. 

9