Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1911-08-01

Capital stock: The capital stock
of the firm is to be one hundred and
five thousand dollars.
Division of profits: The profits
and losses are to be equally divided.
w. l.. Hill has contributed eighty
thousand dollars to the capital stock
and C. L. and P. B. Kennedy twenty
five thousand dollars G. L. Kennedy
and P. 2. Kennedy are to pay w. L.
Hill interest at eight per cent per an
mum on forty-five thousand dollars;
that Is to say, interest on $22,5 that
w. L. Hill loans to each Of them (out
Of $80,00O) TO give them an equal in
terest In the profits.
"Dissolution: In the event Of dis
solution the stock and other assets are
to be taken at their actual market
value, w. L. Hill to receive 80-105ths
and the two Kennedys 25-105ths. Pro-
vision must Of course be made for the
Indebtedness Of w. L. Hill and Kenne-
dy Brothers, that was outstanding
when the partnership was formed.
Where moneys Of the new firm are
used for that purpose, strict account
must be kept; and the accounts so
paid shall bear interest at the rate of
eight per cent per annum (to be paid
moneys are 80 used.) For convenience
1t is agreed that the interest shall be
computed from the end Of the month
in which the moneys are so used, upon
the aggregate Of the sums so paid"
Under the clause first quoted w. L.
Hill gave due notice of his desire that
there should be dissolution Oh Janu-
ary 1, 1907. The partners undertook
to make the dissolution settlement
but fell into disputes about the mean
ing Of the contract; and the plaintiffs
brought this action for q settlement
under the orders Of the court. 1t will
be observed that under the contract
the Kennedys had together only
twenty-five one hundred and fifths in
terest in the capital, while they had
together two thirds interest In the
profits. Hence 1t was to their advan-
tage that as little as possible Of the
firm assets should be regarded capital
and as much as possible profits. Hill,
on the other hand, was interested to
make the capital as large as possible
and the profits as small as possible.
Nearly all the ENHANCEMENT Of this
complex cause unwinds on the adjudi-
cation Of this point. The main ques-
tion then Is what portion Of the assets
now in the hands Of the receiver shall
profits.
Judge Klugh held that the property
put into the new firm, consisting Of the
assets Of the Kennedys and Hill mer-
camille establishments, was shown by
the evidence to be worth only $4,000,
and that therefore that sum and not
$105,000, as stated in the contract
should be taken as the original capi-
tai. Carrying out this view he held
the contribution Of Hill to the capital
stock to have been $64, 900 and that of
the Kennedys $4,000. He held fur
ther that the net assets in the hands Of
the receiver should be applied to the
repayment of the capital stock of $S4,-
900 and the remainder regarded as
profits and paid out to the parties In
equal shares as provided by the part
nership contract.
We are unable to agree to the first
conclusion for the reason that 1t seems
to us to be a substitution Of that which
the court thought II would have been
prudent for the parties to agree to for
the agreement which they actually
made. They expressly agreed that the
capital stock should be s105,000, and
recited in the contract that "W. L.
Hill has contributed $4,000, to the
capital stock and c. L. and P. b. Ken
nedy $25,000." There is no evidence
Of fraud or imposition in this valua-
ton Of the property, nor is there any
dispute that the property was actually
received by the firm. Judicial author
ity can no more alter the contract by
substituting what seems to be a true
valuation for that agreed upon by the
parties than 1t can refuse to enforce
or undertake to reform a contract for
the purchase Of land on the ground
that the price agreed on was beyond
the real value Of the property. The
contract may have been improvident,
but persons who are sui juris can not
have relief from their agreement on
that ground.
We think there was also error in
holding that the entire assets must be
applied to the repayment Of the capi-
tai stock. Such a conclusion Is incon-
sistent with the following provision Of
the contract: I'm the event Of disso-
luton the stock and other assets are
to be taken at their actual market
value, w. l.. Hill to receive S0=105ths
and the two Kennedys 25-105ths." :"
This indicates that the partners did
not contemplate that dissolution and
settlement of the affairs Of the firm
should be made by reducing the assets
to cash by sale or otherwise; but on
the contrary that the stock and other
assets should be taken, that Is, listed
and appraised at their market value,
and a settlement Of the firms affairs
made on that basis. The design Of
the partners and the purpose to be
gained in this taking Of stock was the
ascertainment Of the value Of the
whole and the value of the share Of
each partner The only ultimate end
80 hn 90 fnts a1 hrrf 10 toll ant M
values was to enable the partners to
divide the assets among themselves. 1t
was contemplated that when the total
market value had been fixed by the
taking Of the stock and other assets, It
should be the basis for the ascertain
ment Of the rights Of the partners
with respect to partnership matters
including profits and losses.
This seems clearly to be the mean
ing Of the contract as written, and II
was the Interpretation placed on 1t by
the partners themselves; for when
they undertook to make the settle
ment they commenced by taking
stock Unfortunately they could not
agree and the Court is deprived Of the
benefit Of an appraisement OF the
property at its market value made by
the partners on January l, 1907 the
Circuit Court very wisely ordered an
appraisement by three disinterested
persons. That appraisement must be
regarded as taking the place Of the es-
innate the parties themselves were to
make-subject Of course to correction
by adding any omitted items of either
assets or liabilities, or by correcting
any clear mistake of fact. The gross
value Of the assets as fixed by the ap-
praisement was $139,S56.97. The de-
ductions made by the appraisers, to-
gether with the debts of the firm not
taken into account by them, aggregat-
ed $2S,S69.1S. This left as the assets
on hand as valued by the appraisers
$110,9S779. The net profit at the date
Of dissolution was therefore $5,987.79.
These are the figures reported by Mr..
Glenn in his statement Of the accounts
on the principle which we have adopt
ed. They were obtained by an ap-
praisement made as soon as possible
after dissolution and represent as
nearly as possible what would have
been the result of the settlement
among the partners according to the
scheme contemplated by the contract.
1t Is admitted that the assets which
the receiver will have for distribution
will not be sufficient to liquidate both