Monson v. Rahlmann

WASTE, C. J. Plaintiff recovered a judgment for $24,081.61 against defendant in an action on a renewed promissory note given by the defendant for an assumed balance due on a partnership accounting on dissolution, and for certain advances found to be unpaid.

The partnership was originally formed under a verbal agreement that plaintiff was to receive two-thirds of the profits and defendant one-third. The partners later entered into a written agreement of partnership for the purpose of “defining and fixing their respective rights and interests in the business and assets of said partnership”. By this agreement, the amount of the investments of plaintiff and of defendant was fixed, and in the agreement it was expressly provided that “these respective investments may vary from time to time . . . but the investment account is to be kept up to date at all times so as to show the true amount which each partner has invested in the capital of the said firm”. The agreement also provided that profits should be shared two-thirds by plaintiff and one-third by defendant, which was but a repetition of the former oral agreement.

Subsequently, it was agreed that the partnership • should be dissolved, which agreement was consummated. In that connection, a certified public accountant was employed to write up and balance the books and accounts of the partnership, and to do other things necessary in and about the liquidation and settlement by the partners, and to pre[508]pare balance sheets and statements, and reports as to the contents of the firm’s books and accounts. The accountant proceeded with such employment in accordance with his understanding and conception of the agreement of the partners for liquidation, and prepared a draft of such an agreement and furnished it to the parties, who accepted it, without signing, and with no objection as to its correctness. After making up this draft, the accountant “wrote up the books” of partnership. He assumed that capital losses were to be borne in the same ratio as profits were shared, and that the respective interests of the partners were in the same ratio. He therefore charged off the books of the firm as losses one-third of certain items to the defendant and two-thirds to the plaintiff. The accountant reported the defendant to be indebted to plaintiff in the sum of $24,578.96, which account the court found to be accurate and correct, that it had been properly made up and computed on correct principles, and that the accountant had no reason to believe it was otherwise. Subsequently, the accountant prepared certain balance sheets showing the accounts between the parties, and the firm’s assets and liabilities. After the first report of the accountant, and prior to making up the books of the partnership, plaintiff and defendant made certain payments between themselves, and there were a number of transactions which we assume the trial court understood, although the court admitted that it had “an awful time with the figures”.