Price v. Briggs

VAN DYKE, P. J.

This is an appeal from a judgment based upon an order sustaining a demurrer to a second amended complaint without leave to amend.

Plaintiffs, who are appellants here, alleged as follows: That from 1943 until 1951 plaintiffs and defendants were joint owners of ranch property in Glenn County and during that time were copartners in the ownership and operation thereof; that defendants, respondents here, managed the partnership business and kept the books and records thereof ; that they kept no adequate or formal books of account; that in July of 1950, the partners began negotiating for a dissolution of the partnership and a settlement of its affairs between them and in the course of such negotiations plaintiffs requested of defendants a complete record of partnership affairs, but defendants made available to them only unintelligible scratch memorandums and scraps of papers which represented an unintelligible, inadequate and incomplete record of the financial and business affairs of the partnership; that plaintiffs have never been permitted by defendants to make a complete examination of the partnership records, all of which are in the exclusive possession and control of defendants; that notwithstanding the foregoing, and on the 17th day of March, 1951, the partners entered into a written agreement whereby the partnership was dissolved and the affairs thereof were settled and plaintiffs sold their interest to defendants for a fixed sum; that while the negotiations for dissolution and settlement were progressing, defendants employed an accountant to review the partnership records and to prepare a formal accounting and book of accounts based thereon; that the accountant did this and that defendants paid him for his services with partnership funds; that the formal accounting and book of accounts so prepared by the accountant constitute a part of the books and records of the partnership; that ever since the preparation thereof defendants have had and still have the same in their possession; that now a demand has been made upon plaintiffs by the Bureau of Internal Revenue to produce a full and complete record of the financial and business affairs of the partnership, including the formal accounting and book of accounts prepared by said accountant for the purpose of a determination of plaintiffs’ income tax

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liability arising out of said partnership enterprise; that unless said information is produced plaintiffs stand in danger of heavy income tax penalties; that defendants have refused all requests of plaintiffs for permission to have plaintiffs’ accountants examine the formal accounting and book of accounts referred to; that by reason of said refusals plaintiffs have been required to needlessly employ and pay for the services of accountants, investigators and attorneys in an attempt to determine their income tax liability aforesaid and that the reasonable value of such services is the sum of $5,000. Plaintiffs prayed that defendants be compelled by the court to permit plaintiffs’ agents to examine the said formal accounting and book of accounts in order that their income tax liability could be properly settled and determined. They also prayed for a judgment in the sum of $5,000 as damages for the expenses they have needlessly been put to.