GUNNELL
v.
BIRD
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In a partnership dissolution accounting dispute, the Supreme Court reversed the lower court's decree and held that the auditor had erred by failing to charge the managing partner Gunnell with capital contributed by all partners and failing to credit him with the cost of lumber he originally contributed to the business. The Court recalculated the final accounting, determining that Gunnell owed his former partners Bird and Hepburn $6,889.39 plus interest from May 1, 1849, with losses from uncollected debts to be divided equally among all partners rather than charged solely to those who held the securities.
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Mr. Justice BRADLEY delivered the opinion of the court.
The opinion of the court is that the auditor committed an error,- and we should refer the cause back for a further report if we deemed it necessary to do so; but the facts are confined within such narrow limite, and are so clearlv ascer taiucd by the proofs and admissions of the parties before the auditor, that we deem it a useless formality.
The error of the auditor consists in not charging Gunnell with the capital contributed by the partners and placed in his hands, and not crediting him with the cost of the lumber originally contributed by himself.
Being the active managing partner, it is plain that he should be charged with—
First, the whole capital, ...... $14,403 21 Secondly, the. proceeds of sales, ..... 93,471 11 Amounting in all to.....$107,874 32 He received these amounts, and he should be charged with them.
On the other hand, it is equally plain that he should be eredited’with—
First, the lumber on hand when the business was commenced, he having disposed of it, and being charged with the proceeds instead.
This, as charged to him, was . . . • . . $6,627 56 Secondly, the amount paid out by him to others for lumber, which was ....... 55,146 55 Thirdly, the general expenses of the business, . . 12,242 95 Fourthly, the item paid for lime, .... 732 18 And the item paid for rent,..... Ill 00 Amounting in all to.....$74,860 24 And leaving a balance in hand, at the conclusion of the business, of.......$33,014 08 The original capital had been increased to this sum, and had the assets all been good, there would have been a clear profit of $18,610.87. But the bad and uncollected debts being deducted, the profit is reduced to $13,149.31; one-half of which, besides his or their original capital, belonged to each party.
Gunnell’s capital was......$6,627 56 His half of the profits was...... 6,574 65 Total amount due to Gunnell,.....$13,202 21 Bird and Hepburn’s capital was .... $7,775 65 Their half of the profits was..... 6,574 66 Total amount due to Bird and Hepburn, . . . $14,350 31 There remains to be adjusted a question of interest due to Bird and Hepburn for having contributed more capital than Gunnell whilst the business was being carried on. The - auditor makes this interest $183.52, one-half of which should be deducted from the share of Gunnell, and added to that of Bird and Hepburn. This would reduce the former to $13;110.45, and raise the latter to $14,442.07.
Now the books show that Bird and Hepburn drew and collected only $7552.68. This left a balance still due them of $6889.39 to be accounted for by Gunnell.
In this account neither party is charged with the bad and uncollected debts. They are simply deducted from the profits, and the loss is thus equally divided. It is' claimed by the defendant that Bird and Hepburn should be charged with the whole of this loss because they had the securities and failed to collect them, when, by the use of due diligence, they might have done it. This fact does, not appear in the case except by the unsupported allegation of the defendant, made in his answer to the bill of revivor. This portion of the answer was entirely impertinent to the bill, which was strictly and purely a bill of revivor. No formal replication was required to avoid its effect as evidence in the cause.
The result is that the complainants are entitled to a decree against the defendant for the sum of $6889.39, with interest from' the 1st day of May, 1849, and costs. The decree of the District Court must be reversed, and a decree rendered For the complainants accordingly.