Court Opinion

ID: 5707562
Source: CourtListenerOpinion
Date Created: 2022-01-12 15:49:19.833141+00
Date Added: 2024-06-11T08:40:27.139688
License: Public Domain

M. M. Frank, J.
(dissenting in part). On a prior appeal (2 A D 2d 971) we held that the contract in question was ambiguous and warranted a trial “as to the actual practice in the firm and other evidence in support of what was understood and acted upon by the partners,”
*418After conflicting testimony was adduced concerning the intention of the parties at the time of the execution of the agreement, the trial court resolved the issue in favor of the plaintiff. It seems to me that the record sustains the determination, and there is little to require a rejection of the judgment in view of the admitted ambiguity of the contract.
According to the partnership agreement, net fees represented the balance remaining after all expenses were subtracted from the gross fees earned. Net profits were defined as the balance remaining after 10% was deducted from net fees and transferred to the capital fund. These definitions control the provisions of article IV of the contract applying to the death or withdrawal of a partner, and quoted in the majority opinion. If, as asserted by the defendants, the term “net profit ” was intended to mean cash fees actually billed and collected rather than the balance left from the gross fees earned, whether billed or not, it would have been simple for the parties, all of whom were members of the Bar, to so state.. There would have been no need then for an “estimate” of net profits, as subdivision (b) provides.
It follows, therefore, that there is no justification for equating net profits with cash fees.
From the record, it is a fair conclusion that the real distinction intended between subdivisions (a) and (b) was that under the former, a partner was entitled to receive his proportionate share of net fees in all matters “ pending ” at the time of his death, regardless of billing, whereas under the latter he was limited to his share of fees on completed matters only.
The defendants’ version of the intention of the parties is not warranted by the evidence and does not permit a reasonable construction of the agreement, for it would require that payment be received by the firm for services previously rendered, before the withdrawing partner became entitled to his proportionate share. That interpretation would enable the firm to deprive the withdrawing partner of his portion merely by delaying the billing or collection of earned fees. The contract should not be construed to place the plaintiff at the mercy of the defendants (see Gillet v. Bank of America, 160 N. Y. 549, 557). Under such circumstances, the plaintiff would lose not only his share of the fees for services not completed at the time he withdrew, but more significantly, be deprived, in the nature of a penalty or forfeiture,. of his share in fees completely earned, but not billed or collected. The law abhors a forfeiture (see Matter of Herzog, 301 N. Y. 127, 137; Schnitzer v. Fruehauf Trailer Co., 283 App. Div. 421, 432, affd. 307 N. Y. 876).
*419The plaintiff questions the accuracy of the financial statement submitted by the accountants for the firm. In my opinion, we should not rule that the plaintiff is conclusively bound by the accountants’ report and thereby barred from the opportunity of proving it inaccurate. Moreover, this aspect of the litigation was not considered by the trial court but was reserved for the accounting. Thus the denial of an accounting and the dismissal of the complaint preclude the plaintiff from contesting the accuracy of the financial statement, to his prejudice. Generally, upon a termination or dissolution of a partnership, a partner is entitled to an accounting to determine his share, if anything. In view of the nature of the dispute an accounting is in order.
Except as herein indicated, I concur with my colleagues as to the other issues raised.
Accordingly, I dissent and vote that the interlocutory judgement be modified to delete the reference to tangible personal property in the third decretal paragraph, and otherwise to affirm.
Breitel, J. P., Rabin and Valente, JJ., concur in Per Curiam opinion; M. M. Frank, J., dissents in part and votes to affirm in opinion, in which Stevens, J., concurs.
Interlocutory judgment reversed, on the law and on the facts, and the complaint dismissed, without costs.
Settle order on notice.