224 Mass. 218 | Mass. | 1916
This is a bill for an accounting by two retiring members of a partnership against three remaining general partners, who hereafter will be referred to as the defendants. The firm carried on a wholesale dry goods business of considerable magnitude. The articles of copartnership provided, among other matters, that upon the termination of the partnership two or more of the general partners having a majority interest therein might continue the business under the firm name, and in that event should “ pay to the retiring general partners, for their interest in said business, the amount standing to the credit of each of the retiring general partners on the books of the firm January 1, 1913, after the stock taking of that date, and after the interest and profit has been placed to each general partner’s credit.” The three defendants elected to continue the business, and the two plaintiffs, to retire. Disagreement as to how much should be paid to the plaintiffs caused this suit. The case was referred to a master under a rule which required him "to state the accounts in accordance with the terms of the partnership.” Exceptions to the master’s report present the questions to be decided.
The basis of settlement established by the partnership articles in the present case was what was shown by the books of the partnership. But this means a set of books which was a reasonably •correct representation of the firm’s affairs. It did not mean books so full of palpable mistakes and grave errors as to be manifestly untrustworthy and incapable of showing justly the affairs of the firm. Under the circumstances disclosed, the only course open was to correct the errors so far as possible, and from all credible evidence ascertain the true condition of the firm. This was the course pursued by the master.
There was no error in the finding as to the cash on hand on December 31, 1912. There was a considerable discrepency between the cash shown on the books and the actual amount. As to this matter, the master found that “There is no evidence in the case that the defendants have received any benefit from the loss in cash, if there was a loss, and I find, as asked by the defendant, ‘that the weight of the evidence is in favor of adopting the actual cash on hand as ascertained by Mr. Albee’s [[the expert accountant’s] count rather than the showing of a blundering cash account, and that it is fair to assume that a full and minute investigation of all pertinent entries in the books would discover errors sufficient to account for the shortage.’ Mr. Albee was of the opinion, and I think he was right, that an investigation sufficient to make the audit complete would not be warranted by the amount involved.” The reasonableness of this finding is its complete support. If the books could not be relied on in this re
In general the same principles were followed in determining what the books really showed, after making corrections for errors, as to merchandise and accounts receivable. For the same reasons no error is shown in this respect.
The taxes assessed as of April 1, 1912, rightly belonged to the firm to pay. The taxes were assessed on its property and naturally were an expense wholly to be borne by it. There is nothing in the partnership articles expressly or impliedly indicating any division of the charge for taxes between the firm and the continuing partners. The case at bar is quite different from J. L. Hammett Co. v. Alfred Peats Co. 217 Mass. 520.
The portion of expense of the accountant charged to the firm affords no ground for exception. This work was necessary in order to find an approximation to the real state of the partnership. The results of his work were equally available to all the partners. It was done for the firm as a whole and rightly was charged to it.
Exceptions numbered two, seven, ten and thirteen have been waived, and what has been said shows that no error was committed in overruling the others.
Decree affirmed with costs.
The case was brought in the Supreme Judicial Court. Crosby, J., made an interlocutory decree overruling the exceptions to the master’s report,