Court Opinion

ID: 6141027
Source: CourtListenerOpinion
Date Created: 2022-02-05 14:38:47.909137+00
Date Added: 2024-06-11T08:54:38.574829
License: Public Domain

Van Brunt, P. J.
[After stating the facts as above.]— The counsel for the respondents, upon the argument of this case, claimed that the articles of copartnership settled beyond question that the machinery, &c., contributed by the plaintiff and his wife, were to be taken by them at the dissolution at and for the same value and amount it represented in the capital stock of the firm, and that this value was fixed at $10,000; and that as the plaintiff and his wife were to take this machinery at that valuation upon the dissolution of the copartnership, *475because the defendants have retained the same, they are chargeable with precisely the same amount; and it would seem that the referee took this view of the case in the settlement of the copartnership accounts. An examination for a moment of the relation of the parties one to the other, of their rights under the copartnership articles, and of the objects which they sought to attain thereby, will show, I think, that this conclusion is based uj)on erroneous premises. After the contribution of the capital stock, in money, book accounts and machinery, although some contributed much more than others, it is to be observed that the profits and losses are to be divided equally, and that- upon the settlement of the copartnership accounts at the end of the copartnership, the profits remaining, after paying to each copartner the amount of capital contributed by him, were to be divided equally between the copartners.
The plaintiff and his wife, however, in the making up of these accounts, instead of receiving cash or the same as the other copartners for their share of the capital stock, agreed to take back the machinery contributed by them, at the same value that it was stated to be in the articles of copartnership. In other words, the machinery was not to be taken by the co-partners absolutely at a valuation of $10,000, so that upon the termination of the copartnership the cash capital contributed and the machinery capital contributed should be treated upon the same bases, but the machinery capital and the cash capital were to be kept separate. Those who contributed cash were to get back as capital, cash, and those who contributed machinery were to get back as capital the same machinery (without any additions) which they had contributed as capital; therefore, as far as the interests of the copartners were concerned, if the Weldons took back the machinery, it was entirely immaterial, in the settlement of these copartnership accounts, or in the making of the copartnership agreement, what the actual value of the machinery was. They might have stated it in the articles of copartnership to be $100,000, and upon the settlement of the copartnership accounts it would not have made the slightest difference. It will, therefore, be seen that the fixing *476of the value of $10,000 upon this machinery contributed by the plaintiff and his wife was a mere arbitrary valuation, and was of no importance whatever in fixing the rights of the various copartners. It might be true that, in the absence of any evidence in regard to the value of this machinery, it would be assumed that the value fixed in the articles of copartnership was the rvalue for the purpose of settling the copartnership aU fairs; but in view of the fact that the valuation placed upon this machinery in the articles of copartnership was not of the' slightest consequence to the other copartners, and in the face of direct and positive evidence as to its value, which was entirely uncontradicted, the referee was not bound to talco, as he seems to believe that he was, the valuation contained in the articles of copartnership. All the evidence shows thqt this machinery depreciated, and that it was not worth what it was when it was put in. The witness Straus states that the depreciation of the machinery account was over $2,000, and it appears from the testimony of the witness Roth that $3,000 had been expended in new machinery, which must have gone into this machinery account, which had depreciated during the year to the extent of $2,000.
The referee, in considering the testimony, seems to have assumed that, because the Weldons agreed to take back this machinery in the settlement of the capital account for the same amount that it was put in at, therefore, the defendants,' having retained that machinery, were bound to account for it at the same value. In this, I cannot but come to the conclusion that the referee has erred.
As has been above stated, in the absence of any testimony in regard to value his finding could have been sustained, but in view of the uncontradicted testimony that there had been a large depreciation in the value of this machinery, the referee could not find that the machinery was of the value at the time of the death of Mrs. Weldon which it was stated to be in the articles of copartnership. The defendants in this action, if they have converted this machinery to their own use, are liable for the value of the machinery and nothing more, as they *477did not agree any where in the articles of copartnership to take the machinery at any fixed valuation in case of dissolution.
It is urged that as the defendants elected to keep the machinery they have thereby agreed to allow the amount as the value of the machinery which the plaintiff and his wife, in the articles of copartnership, covenanted to do. There is nothing in the articles of copartnership to sustain this proposition. There is nothing in the copartnership articles which gives to the plaintiff and his wife the right to claim the machinery in question upon the settlement of the copartnership accounts ; but the clause in question is an agreement upon their part to take and receive the machinery in lieu of cash in the settlement of such accounts. If the machinery was of greater value than the amount stated in the articles of copartnership, the other copartners could have claimed the benefit of such enhanced value : if it was of a less, however, the other copartners had a right to claim that the plaintiff and his wife should take back the machinery at the valuation at which it was put in. These rights did not impose the duty upon the other defendants of paying the value named in the copartnership articles of the machinery in case it was not returned to the plaintiff and his wife upon the dissolution of the firm.
Although in the settlement of the copartnership accounts, for the purpose of determining the amount of capital contributed by each, the valuation of the machinery contained in the copartnership agreement could not be impeached, yet in charging the parties who have possession of that machinery, the actual value only could be adopted.
• There were a variety of other exceptions which were argued upon this appeal, but which it is not necessary now to consider, because of the error above mentioned into which the learned referee has fallen.
The judgment must therefore be reversed and a new trial ordered, with costs to abide the event.
J. F. Dalt and Van Hoesen, JJ., concurred.
. Judgment reversed and new tidal ordered, with costs to abide event. ... . -