Court Opinion

ID: 7194375
Source: CourtListenerOpinion
Date Created: 2022-07-24 17:00:39.35172+00
Date Added: 2024-06-11T16:16:16.734131
License: Public Domain

On Application for Rehearing.
Watkins, J.
We have been presented with quite an elaborate application for a rehearing of this cause, and but for counsel’s disclaimer, should feel disposed to consider it censorious and disrespectful.
We sincerely trust that we shall not, in the future, feel constrained to mention to attorneys their obligation of courtesy to the Court.
We have carefully examined and considered the application for rehearing; read all of the briefs of counsel again ; made a careful inspection of the two transcripts, and compared them with our opinion, and have reached the conclusion that the principles of law therein announced are entirely correct.
For the purpose of being accurate and of bettor condensing the statement of the case, we will cite a few of the salient facts we have gleaned from the record :
On the 29th of June, 1878, Margaret Haughery and Bernard Kioto formed a partnership for the purpose of conducting a bakery business for a term of ten years.
They were full and ecpial partners, and the profits or losses were to be shared by them equally, and all the expenses of the business were to be borne by each proportionately.
Margaret put into the partnership merchandize, etc., valued at $20,000, as the capital stock, and donated to Kioto one-half interest therein; and this donation constituted his part of the capital invested in the business.
The partnership did quite a profitable business until the 9th of February, 1882, when Margaret died.
Klotz, as surviving partner, was, under the articles of partnership, entitled to retain control and continue the administration of the partnership affairs for a period of six months thereafter.
On the 15th of October, 1879, Margaret and Klotz purchased of John T. Moore the real estate which figures on the inventory and on which the partnership business was conducted, then and since, for the price of $15,500.
On the 20th of February, 1882, the defendants, as the testamentary *645executors of Margaret, caused an inventory and appraisement to be made of all the partnership effects, ft covered, substantially, the following values, viz:
Goods and personal effects...............................$20,268 81&
JEteal estate.............................................. 14,000 00
Book accounts........................................... 14,990 00
Total value........................................$49,258 81 Of this, $1500 was in cash.
At this date the six months’ term of Klotz’s administration as liquidator began, and it closed on August 20, 1882.
There were large profits made by him during that term.
Mr. Chapotin, one of the persons chosen by the executors to examine the books of the firm, and upon whose reports all parties seem to' rely — as witness for the plaintiff says, on this subject:
Question. “Mr. Chapotin, from your examination, that you have made of the books, can you tell us whether or not the firm of Margaret Haughery & Co. made any money or profits since the ninth of February ? ”
Answer. “Certainly.”
Q. “Well, what profit did they make?”
A. “I took a memorandum from the 9th of February, 1882. They made sales, $87,948, and made a profit of 31% = $27,197 gross.”
Q. “That was for four months f ”
A. “Yes sir; for four months.”
This witness shows what had been the net profits of this partnership. during previous years, as follows, viz:
Mr. Klotz’s share of the net profits of the first year was.....$ 9,184.23
The second year.......................................... 7,989.38
The third year........................................... 3,487.97
The fourth year (to June 20).............................. 9,326.02
Total amount of Klotz one-half interest in the partnership profits from its establishment to June 20, 1882.. .$29,987.60
These were actual profits realized, as will be shown by the report of the experts and the testimony of Mr. Chapotin, in which is given the amounts that Klotz withdrew from the cash of the firm, on his private account, thus :
Question. “ Well, take the report and say how much Mr. Klotz has drawn since he has been a member of the firm of Margaret Haughery &, Co.”
Answer. “ The different items ? ”
*646Q. “ Yes, each year.”
A. “ Well, lie has drawn — lie lias liad profits on the 3(Hh of June,. 1882. Mr. Klotz had to his credit, all told, $3097 42.”
Q. “What has been the drawing of Mr. Kllotz since he entered the partnership ? ”
A. “Let me see. The first statement I have will tell you.”
Q. “ He commenced with a capital of $10,000 9 ”
A. “Yes, sir.”
Q. “ Donated by Margaret 9 ”
A. “ Yes, sir.”
Q. “ Now, what has he drawn since that partnership, each year 9” A. “He began with a capital of $10,000. He has drawn the first year $4934 48 ; the second year he has drawn $11,903 39; * * * the third year $8072 89.”
Q. “ And the fourth year 9 ”
A. “ The last year, it was only up to the 20th of June (1882).”
Q. “Well, up to the time the ¿«sf report was made what had been drawn 9 ”
A. “ Six thousand seven hundred and seventy-nine dollars and eighty-eight cents.”
CL “ He had drawn for the year 1882, up to the 20th of February?”' A. “Six thousand seven hundred and seventy-nine dollars and eighty-eight cents.”
■ft •}. * ill « -fl V -fv
CL “ I am simply asking you what his draft has been.”
A. “ Well, you want me to take it from the ‘ trial balance,’ and it cannot be done.”
<L “ Well, will you look at the ledger and tell us?”
A. “Well, yes, sir.”
CL “ Well, look at the trial balance of June.”
A. “ At the end of June the trial balance shows Bernard Itlotz’s private account $11,997 32.”
C¿. “ That is up to the 30th of June ? ”
A. “Yes, sir.”
CL “ Of this year 9 ”
A. “ Yes, sir.”
Up to and including the 30rh of June, 1882, Klotz is shown, by this indubitable evidence, to have withdrawn the total sum of $36,908 08, more than three and one-half times the amount of his original capital, within four years.
We have, then, this statement:
*647Klotz’s capital...............................$10,000 00
Klotz’s profits............................... 29,987 60 — $39,987 60 Cr.
Klotz’s drawings........................................ 36,908 08
Balance to liis credit.................................$ 3,079 52
This is upon the hypothesis that the stock had been kept up to the original standard of $20,000.
The significance, of these figures, when considered in relation to the plaintiff’s present contention, appears the more manifest from the fact that they were selected from transcript 8661, and were therein relied upon to establish his claim to a new term of liquidation, upon the theory that his administration, as such, had been profitable.
In taking this standpoint, in which to review this case, we do the plaintiff no injustice. If injustice has been done him — and we do not think there has — it proceeds from evidence he has furnished.
Let us see, in this connection, what Margaret’s drawings were, and the state of her account at her death :■
She drew during the first year.............................$ 6.674 54
She drew during the second year.......................... 4,456 23
She drew during the third year........................... 4,580 36
She drew February 9, 1882................................ 3,321 57
Margaret’s drawings are..............................$19,032 72
Her capital (original) and profits.......................... 39,987 60
She has to her credit.........:......................$20,954 88
An inspection of the report of the experts will show that Kioto is indebted to the balance on stock account of $5750 72 instead of $3079 52, as stated in this report. But that results from the fact that the experts did not take into their account his drawings, or profits of the year 1882, to June 20, as we have done.
On the other hand, Margaret is entitled to an additional allowance for the additions she made to her capital, from time to time, as shown by the report of the experts, viz:
From collections from sundry old accounts—
To June 30, 1880.........................................$4,332 43
To June 30, 1887......................................... 1,443 50
To part of last year (1882)................................ 240 00
Total..............................................$0,015 93 This would increase her share to $26,970 81.
*648The statement of the assets on hand at Margaret’s death, made by the experts shows the following facts, viz :
Stock on hand...........................................$14,000 00
Bills receivable......................................... 159 82
■Cash.................................................... 2,359 89
Sundry debtors.......................................... 16,270 10
Machinery............................................. 12,312 99
Lafrya stock........'.................................... 250 00
Total.............................................$45,352 80
As we have, in our preceding calculation of the respective interests, proceeded upon the basis of $20,000 of capital stock, that sum should be deducted from the total amount of assets; and this would leave a surplus remaining of $25,352 80. But the report of the experts shows that the firm liabilities were $19,622 62. They include the $10,000 mortgage note that the firm negotiated; sundry creditors, as per ledger; rent; wages, interest on note, etc.
Deducting this sum from the balance of the assets, and there remains $5,730 18. Adding' one-half of this balance to the share of Margaret, previously ascertained, and she will have $29,835 90, and .Klotz will have $5944 61.
This statement does not include the real estate, $16,436 21 ; nor the Reed oven No. 1, $900; nor the profits of the partnership, from the 20th of June to the 20th of August, 1882, the date at which the term of six months’ liquidation ended.
The difference between the present computation, made from the transcript and expert testimony and reports, and the amount awarded in our decree, is $1,505 75. If the items above mentioned, except the real estate, were taken into the account, there would be no difference whatever.
The district judge fixed the value of the partnership property at............................................. $58,857 28
Including real estate.................................... 16,436 21
Net value, less real estate............................... $42,421 07
He then deducted liabilities............................. 19,622 34
And found a balance of................................. $22,798 73
And gave half to each...................................$11,399 36
The learned judge of the lower court was certainly incorrect in *649making-an equal apportionment between the parties; and we think •our statement of the values is near the proper figure.
In support of the theory announced, wo have the uncontradicted statement of Mr. Macready, one of Margaret’s executors. He says, •on p. 390 of transcript No. 9607, viz: ‘.‘We (the executors) had the books thoroughly examined by an expert — in fact one or two experts— and we came to the conclusion that Margaret’s interest, at the end of the partnership, which would he six months after her death, ought to be worth in the neighborhood of $40,000,
“ Knowing there was a depreciation to some extent in the machinery, and had debts to a certain extent, we made an allowance of $10,000, one-half of which was to he borne by Mr. Klotz, and one-half by Margaret Haughery’s estate — -and her interest would represent $35,000.
“We authorized our lawyer to make an arrangement on that basis.’’
On May 24,1882, Klotz proposed to pay $32,000 for Margaret’s interest, including her half interest in the real estate, valued at $7000.
If we deduct the $7000, value of the real estate, from the $32,000, Klotz’s offer would he $25,000; and the judgment rendered is just .about a mesne between the two offers of settlement made by the respective parties.
The defendant’s counsel have entered, in this Court, a formal remittitur of the sum of $624 42, to which the plaintiff is entitled a credit. Our former opinion is correct.
Rehearing refused.