219 Mass. 23 | Mass. | 1914

Braley, J.

The master reports that the defendant admitted the material allegations of the first, second, third, fourth, sixth, seventh and eighth paragraphs of the bill, but denied the allegations of the fifth paragraph. It followed from these admissions, as the master has found, that a partnership existed in which the profits and losses should be shared equally between the partners Charles H. Brown, junior, and the defendant. McMurtrie v. Guiler, 183 Mass. 451. It was terminated on May 22, 1906, when its business and assets were transferred to a corporation which also assumed all liabilities, but the report states that no adjustment or *26settlement between the partners was then or at any time thereafter made.

The defendant under his first exception contends, that, if upon an accounting any sum whatever was shown to be due from him, the amount belonged to the corporation. But “assets” of a partnership ordinarily mean the property of the partnership originally contributed or which has been subsequently acquired on account of the firm for the purposes of their business. Scott v. McKinney, 98 Mass. 344. Reed v. Hanover Branch Railroad, 105 Mass. 303, 304. And the right to an accounting between themselves after dissolution, and the payment of any balánce due from one partner to the other upon a winding up, is not an asset of the partnership. Harvey v. Varney, 98 Mass. 118. Wiggins v. Brand, 202 Mass. 141. The master moreover has found as a fact, that neither partner considered “their accounts with each other in reference to said business had been adjusted, cancelled or paid.” The intention to make a transfer to the corporation of this mutual liability is thus negatived, and, the evidence not being reported, the finding is conclusive.

The second exception relates to the question whether certain items of the account as stated by the master are barred by the statute of limitations. The controversy over this question centres on the fifth paragraph of the bill, and embraces the merits of the defendant’s contention under the third exception. The partnership apparently was formed in June, 1899, but the report states that the plaintiff asked only for an accounting from January 1, 1902, to May 22, 1906, the date of dissolution and the time when the master finds that the right matured. It also is stated that the firm at the formation of the partnership intended that each member should withdraw from the business an equal amount yearly whether denominated as salary or expenses or profits, but that neither was to take his salary in full unless warranted by the business, and that no amount to be withdrawn as salary was agreed upon for the year 1902. It was not until the following year that the annual salary was fixed by an agreement which remained unchanged until December 31, 1905, when a reduction was made, and the salary then established continued until the firm dissolved. The books having shown the transactions of the partners and the amounts each had withdrawn during the life *27of the partnership, the master found that during the year from January 1, 1902, to December 31, 1902, the defendant withdrew funds largely in excess of the sum withdrawn by his partner, and also during the succeeding years overdrew his salary under each of the agreements. In stating the account the master has charged the defendant with all moneys withdrawn and has credited him with the amount due for salary except for the year 1902, where credit is given only to the extent of the sum withdrawn by his copartner. It is contended, that the master erred because the books show that for the year ending December 31, 1902, the accounts were closed by charging the amount of the overdrafts to profit and loss. It is further alleged as error, that, as the books also show that, beginning in 1903, the account of each partner appears to have been balanced at the end of the year and the balance carried forward to the following year, each account became an “account stated” which also comes within the statute. If these views are correct the master should have omitted all items earlier than 1905. But the fact that a balance has been struck against a partner on the firm’s books, and the amount charged off to profit and loss and not carried over into the next year is not necessarily a settled account. The partnership had not ended. The account still remained open for adjustment. Boss v. Bass, 8 Pick. 187, 193. Volkening v. De Graaf, 81 N. Y. 268, 270. Mandeville v. Wilson, 5 Cranch, 15, 18. See Buckingham v. Ludlum, 2 Stew. 345, 354. The finding that Charles H. Brown, junior, claimed an indebtedness largely in excess of the amount finally allowed by the master sufficiently shows that he did not acquiesce in these bookkeeping entries as creating an estoppel in favor of the defendant. Nor do the subsequent balances constitute an account stated. A stated account is an agreement between the parties entered into after an examination of the items by which a balance is struck in favor of one of them. Chace v. Trafford, 116 Mass. 529, 532. Lockwood v. Thorne, 11 N. Y. 170,174. Hunter v. Belcher, 2 DeG., J. & Sm. 194. It is a final settlement arrived at after the allowance or disallowance of their respective claims. That no statement of the accounts or partial settlement upon this basis ever was made is manifest from the master’s report.

The right to an accounting and to the balance due having ac*28crued at the date of dissolution, it was not barred until six years had elapsed. R. L. c. 202, § 2. Moore v. Rawson, 185 Mass. 264. Penniman v. Rotch, 3 Met. 216. If by the death of Charles H. Brown, junior, before the expiration of this period the duly appointed administrator of his estate at any time within two years after giving bond for the discharge of his trust could have maintained the bill, the plaintiff to whom the administrator has assigned the claim is clothed with his rights. R. L. c. 202, § 10; c. 173, § 4. Boston & Roxbury Mill Corp. v. Tyndale, 218 Mass. 425. Andrews v. Tuttle-Smith Co. 191 Mass. 461, 465. The suit having been seasonably begun and none of the exceptions well taken the decree for the plaintiff should be affirmed with costs.

Ordered accordingly.

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