Gardner v. Smith

THE COURT.

Plaintiff brought this action for the dissolution of a partnership alleged to exist between plaintiff and defendants, and -for an accounting. On conflicting evidence, the trial court found in favor of the existence of the partnership, ordered it dissolved, and gave judgment in favor of plaintiff in the sum of $5,131.54.

On this appeal defendants concede that they are bound by the finding of the trial court in reference to the existence of the partnership, and also concede that the following facts were satisfactorily established by the evidence:

That the partnership consisted of respondent and appellants, the latter being father and son; that all three should share equally in the profits and losses; that the partnership commenced on February 1, 1926, and continued until May 1, 1927; that the nature of the business was the manufacture and sale of farming and canning equipment; that appellant J. S. Smith was to furnish the plant and equipment; that there was charged therefor the sum of $400 a month as rental; that appellant C. 0. Smith was to and did handle the sales and office end of the business; that respondent was to and did act as engineer and general supervisor of the shop;

[352]

that appellant J. S. Smith handled all the finances of the business. It is also accepted as an established fact that from February 1, 1926, to December 31, 1926, the partnership made a net profit over all expenses, including rental and depreciation, of $24,136.70. For this eleven-month period the share of each partner in the profits was $8,045.50, respondent receiving, however, only $2,936.10, leaving a balance owing him for 1926 of $5,109.40. From this should be deducted the sum of $75 paid by appellants to respondent for a purpose which the trial court determined made it properly deductible from respondent’s share of the profits. This leaves a net of $5,034.40 owing to respondent for 1926.

Some time in April, 1927, appellant J. S. Smith, who signed all checks for the partnership, refused to issue any further sums to respondent, and, as a result, respondent left the partnership on May 1, 1927. On this appeal the only controversy worthy of note is as to whether the trial court correctly computed the profits and losses of the partnership for the first four months of 1927. During these four months respondent admittedly drew $780. It is admitted that for the entire year of 1927 the business made a net profit of $7,900. The appellants introduced an audit which purported to show that for the first four months of 1927 the business suffered a $7,200 loss. The trial court was not satisfied with this audit, for reasons that will later appear, and upon proof that the business was a seasonal one, and that the first months of the year were months in which money was spent, and the last months were periods in which the work of the earlier months was realized upon, used the following scheme in an attempt to determine equitably the share of profits due respondent for the four months’ period involved. In order to determine the average monthly income for 1927, the trial court divided the net profit of that year by twelve. Four times this result obviously gives the average profit for four months. Since there were three partners, if this result be divided by three, the total will be the profit due each partner for the first four months of 1927. From this must be deducted the $780 received by respondent, and if the result be added to the profits still due respondent for 1926, the total will be the sum for which the trial court gave judgment.