
    In the Matter of the Judicial Settlement of the Accounts of John Howard Foote, Ex’r.
    
      (Supreme Court, General Term, First Department,
    
    
      Filed December 31, 1891.)
    Executors and administrators—Partnership.
    Testator was a silent partner with, the executor, having put in a capital, upon which he was to receive ten per cent, and it was agreed ¡hat he should not share in the profits or losses unless the net profits exceeded $22,000 in any year, which did not occur. On testator’s death his parner reduced the interest on said capital to six per cent, and included the amount of testator’s contribution of capital in his inventory as executor. Held, that these acts amounted to a liquidation, and authorized the surrogate to charge the executor with said sum without deduction for bad debts, although no actual settlement of the partnership accounts had been, made.
    Appeal by the executor, John Howard Foote, from certain, parts of the decree of the surrogate settling his account.
    
      Miron Winslow, for app’lt, John Howard Foote; Henry Galbraith Ward, for resp’ts, Jennie H. Leavitt and others.
   Barrett, J.

The executor (Foote) and the deceased (Leavitt); were partners. Consequently, Mr. Foote occupies the dual position pf surviving partner of the firm and personal representative-of the deceased. As executor, he accounted below for the proceedings with regard to Mr. Leavitt’s estate. This is an appeal taken by him as executor, first, from so much of the decree of the surrogate settling his accounts as charged him with $30,000, that being Mr. Leavitt's contribution to the capital stock of the firm, as money in his (Foote’s) hands as executor; and, second,, from so much of the decree as refused to allow- any deduction, from this sum for certain bad debts of the firm.

The opinion of the learned surrogate upon this last question,, which is to be found between folios 132 and 136 of the case, is. quite satisfactory, and we concur in the construction which he-has there given to the articles of copartnership. Any further discussion upon this head would only be a multiplying of words or a repetition of the learned surrogate’s thought in other forms o£ expression. We think he has clearly demonstrated that as between the partners Mr. Leavitt was only to share such losses as; might occur after the division, in any one year, of an excess of. net profits over and above the sum of $22,000. This view is in. precise accord with the terms of the articles of copartnership and. is entirely in harmony with the very special arrangement upon which Mr. Leavitt contributed his $30,000 and became a silent, partner with Mr. Foote.

The question first stated, however, calls for a little further consideration. It is true that the facts of this case are not exactly like those of Baucus v. Stover, 89 N. Y., 1. There one of the executors named Barr was liable to the deceased upon a liquidated, demand, namely, a promissory note for $4,561.91. It was held. that, upon the final accounting of the executors, the surrogate should have charged this executor Barr with the Balance due upon: his debt as so much money in his hands. The contention here,. however, is that the partnership affairs must be settled and the extent of Mr. Foote's indebtedness as surviving partner thus as■certained before he can bv charged as executor with such liquidated sum; in other words, that as surviving partner he must first account to himself as executor. Assuming the correctness cf this view, we think that, as matter of fact, Mr. Foote’s acts since the death of his partner have amounted to a liquidation, and that by such acts he has bound himself to pay the specific sum with which he has been charged by the learned surrogate. As we have .seen, the capital which Mr. Leavitt contributed to the firm was not, as between himself and Mr. Foote, subject to the losses of ihe business generally. Indeed, Mr. Foote did not attempt to ■charge him with any such losses during his lifetime. Mr. Leavitt was to and did receive ten per centum upon his .capital of -$¡30,000, and this ten per centum under the articles was charged '■to the general expense account of the house. This continued without deduction until Mr. Leavitt died. Then the ten per centum stopped and the credits of interest were reduced by Mr. Foote to six per centum, and placed in another account Upon his examination, Mr. Foote was asked the following questions and ■gave the following answers:

■ *' Q. So that after his death the stock account was closed ? A. Hot closed, but his credits of interest after that date were to be ■at the rate of six per cent.
Q. Why were they not kept in the same account as the contribution of capital ? A. I was informed by counsel that would not be the proper way.
■“ Q. Mr. Foote, as I understand it, you closed up Mr. Leavitt’s account under the articles of partnership October 1, 1886, and from, that time on treated it as an indebtedness to the estate, bearing ■six per cent interest ? A. Yes."

It is evident from this that Mr. Foote understood that he was "thereafter liable for the amount of Mr. Leavitt’s capital, with or•dinary interest, and in fact he was so liable under the articles of copartnership. For Mr. Leavitt was not to share in the profits of the firm until they amounted, in some one year, to $22,000 net, .and it appears that the net profits never reached that sum in any •one year. Thus, Mr. Leavitt had his ten per cent throughout, ■and Mr. Foote had all the profits throughout. It followed that, upon Mr. Leavitt’s death, there were, as between the partners, neither profits nor losses to be ascertained, and that Mr. Leavitt’s legal representatives were entitled to withdraw the specific sum ■of $30,000. There were no losses in the business generally which •could have impaired the capital, and the bad debts now sought to be charged against Mr. Leavitt’s capital were simply losses affecting the profits which went to Mr. Foote. The latter gentleman plainly recognized this by retaining the $30,000 at six per cent, ■and treating it as a personal indebtedness. This conclusion is reinforced by the fact that when he filed his inventory as executor he stated therein that Mr. Leavitt’s interest in the firm was of the par value of $30,000 and of the appraised value of $30,000. "These statements were based upon his understanding that that sum was due and payable, and was then, upon the face of his-books, drawing lawful interest like any ordinary debt.

We think, therefore, that upon the facts this case comes within-the principle of Baucus v. Stover, supra, and Matter of Consalus, 95 N. Y., 340; and that the decree of the surrogate charging Mr. Foote with the sum in question, without deductions for bad debts, was right.

As this appeal was taken for the benefit of Mr. Foote personally, we think he should be charged personally with the costs.. They should not come out of the estate because .of his unsuccessful effort to reduce the estate for his own benefit.

The decree of the surrogate should therefore be affirmed, with, costs, to be paid by John Howard Foote, personally.

Van Brunt, P. J., and Daniels, J., concur.  