2 N.Y.S. 443 | N.Y. Sup. Ct. | 1888
At the time of his death, March 1, 1885, the deceased, James Laney, with Enos G-. Laney, now the sole acting administrator of his estate, and one Barker, were partners in business under articles which fixed the term of the copartnership at seven years from February 8,1883, and provided that, “in case of the death of any of the parties before the expiration of said term, the copartnership shall not be dissolved, but shall continue and be conducted by the survivor or survivors, under the same firm name, to the expiration of said term; and the share of the profits on that part of the capital stock belong
1. The amount rendered by the administrator proceeds by the method -of ascertaining the amount of the contribution of each partner, at the beginning of each year, by charging him with his drafts, and crediting him with "his share of the profits, of the preceding year. The decree of. the surrogate, -on the other hand, adopting the method of the referee, deducts the average of the monthly drafts of each partner from the amount to his credit at the beginning of the year, and treats the balance as his average contribution for the year to the funds of the copartnership. It makes no application of profits ■until the beginning of the next year, when it adds each man’s share of profits to his last monthly balance, to obtain the amount of credit with which he begins the year which is to follow.
2. The theory of the account rendered by the administrator is to credit each partner (including the estate of the deceased) whose contribution is in excess of the stipulated amount with interest on such excess, and to charge the partner whose contribution is deficient interest on the deficiency. The decree of the surrogate, on the other hand, holds the administrator chargeable with a share of the profits of the business proportioned to the entire contribution of the estate to the funds of the copartnership.
8. The account of the administrator treats the $2,000 which, by the terms
4. We think the method adopted by the referee for arriving at the amount .of that deficiency was erroneous. As we have seen, he treats the drafts of each partner, from month to month throughout the year, as so much impairment of his capital, while he gives him no credit for his share of the profits of the year until the opening of the next year’s account. It seems apparent that this method is faulty and the result fictitious. The profits of the business must be supposed to be realized—as the year’s business is done—currently, and, in the absence of any indication to the contrary, equally throughput the year. The fact that the amount of those profits is not definitely as-pertained until the end of the year dpes not alter the case. The profits go into the business as fast as they are realized. So that if a partner’s share of the current profits equals the amount of his current drafts, there is no impairment of his capital. The method adopted by the partners themselves seems to have been substantially correct. They deducted from each man’s investment g,t the beginning of the year his drafts during the year, and added his share of the profits; and it was upon the difference between this result and the prescribed .contribution of $20,000 that the interest to be charged or credited to him was pomputed. We are unable to see that this method is subject to any just criticism, and we think it should be adopted for the purposes of the accounting in -this case.
In respect to the disposition to be made of the $2,000 paid by the estate of the deceased member of the firm as the equivalent of his services, we think-the surrogate was right. The copartnership agreement does not declare what .shall be done with this money after it is deducted from the share of profits belonging to the estate; but, on principle, it belongs to the copartnership, and-•not to the surviving partners. The.services of which it was the prescribed .equivalent were for the common benefit. The estate of the deceased suffers the same detriment by the loss of those services as does either of the surviving partners. If the deprivation of those services has made it necessary to employ another clerk, the estate of the deceased has paid an equal share of his compensation. There seems to be no doubt that the money paid as an equivalent for those services should be distributed equally between the three interests represented. We think the failure to provide by the terms of the agreement what was to be done with,the $2,000 was an omission which may properly be supplied by the court in construing the contract. This seems to dispose of all ■the questions raised on this appeal. The decree of the surrogate should be modified as indicated in this opinion, and, as so modified, affirmed. Proceedings remitted to the surrogate’s court of Monroe county, with directions to modify the decree accordingly, and the decree, when so modified, affirmed, with .posts of this appeal to the appellant, to be paid out of the estate.