
    WILLIAM A. BUTLER, Plaintiff and Respondent, v. WILLIAM J. H. BALLARD, WILLIAM HALLEY, and LUCIUS MOORE, Defendants and Appellants.
    I. PARTNERSHIP.
    1. Accounting between partners.
    
      (a) SOME HAVING OVERDRAWN AND OTHERS UNDER-DRAWN.
    (1) As to each partner who has underdrawn, all the others are liable to him for their respective portions of the amount of the underdraft ; and as to each partner who has overdrawn, he is liable to all the others for their respective portions of such overdraft.
    (a) Insolvency of overdrawing partners, effect of.
    
    1. Does not affect the application of above principles.
    Example op accounting on above principles.
    1. Ballard, Butler, Halley, and Moore, were in partnership, their
    respective interests being 40, 22, 20, and 18, per cent.
    Ballard overdrew....................$15,248.08
    Halley overdrew..................... 11,966.51
    --$27,209.59
    Moore drew -$17,922.82 less than his
    capital and his share of the profits;
    that is, underdrew by..............$17,922.82
    Butler drew $9,286.77 less than his
    capital and his share of the profits;
    that is underdrew by...............- 9,286.77
    _ ,, ,. --$27,209.59
    _ ,, ,. On the accounting:
    Butler was charged in favor of Moore,
    with 22$ of $17,922.82............. $8,942.84
    Moore was charged in favor of Butler,
    with 18$ of $9,286.77.............. 1,671.62
    Balance in favor of Moore against Butler $2,271.22
    Ballard was charged in favor of Moore,
    with 40$ of $17,922.82............. $7,169.12 •
    Also with 18$ of $15,248.08 .......... 2,743.74
    Balance in favor of Moore against Ballard 9,912.86
    
      
      Decided January 7, 1878.
    Halley was charged in favor of Moore,
    with 30$ of $17,933.83............$3,584.56
    Also with 18$ of $11,966.51.......... 3,153.98
    Balance in favor of Moore against Halley 5,738.54
    Amount of Moore’s underdraft........ $17,933.63
    Moore was charged in favor of Butler, with 18$
    of $9,386.77 (credited above).
    Ballard was chaiged in favor of Butler,
    with 40$ of $9,386.77.............. $3,714.70
    Also with 33$ of $15,343.08.......... 3,353.48
    Balance in favor of Butler against Ballard $7,068.18
    Halley was charged in favor of Butler,
    with 30$ of $9,386.77.............. $1,857.35
    Also with 33$ of $11,966.51......... 3,633.63
    Balance in favor of Butler against Halley 4,489.98
    $11,558.16
    This includes the balance of the sum above charged against Butler in favor of Moore, after crediting above sum charged against Moore in
    favor of Butler.............................. 3,371.33
    Amount of Butler’s underdraft____ $9,386.94
    Halley was charged in favor of Ballard,
    with 40$ of $11,966.51............. $4,786.61
    Ballard was charged in favor of Halley,
    with 30$ of $15,343.08............. 3,048.63
    Balance in favor of Ballard against Halley____ $1,737.99
    Judgment was given:
    In favor of Moore against Butler, for........... $3,371.33
    In favor of Moore against Ballard, for....... 9,913.86-
    In favor of Moore against Halley, for........... 5,738.54
    In favor of Butler against Ballard, for.......... 7,068.18
    In favor of Butler against Halley, for.......... 4,489.98 ’
    In favor of Ballard against Halley, for.......... 1,737.99
    Held,
    Correct.
    Before Curtis, Ch. J., Van Vorst and Freedman, JJ.
    
      Appeal from order confirming referee’s report and overruling exceptions.
    This action is brought for an accounting between partners.
    The parties to the action were members of a limited copartnership under the name of Ballard, Halley & Co., from January, 1869, to December 31, 1874, when the same expired by limitation.
    The plaintiff and the defendants, 'Ballard and Halley were the general partners, and the defendant Moore, the special partner.
    The plaintiff contributed $15,000, the= defendant Moore $25,000 ; the defendants Ballard and Halley contributed nothing. The profits and loses were to be divided between the partners as follows : To Ballard forty per. cent., to Halley twenty per cent., to Butler twenty-two per cent., to Moore eighteen per cent.
    The general partners were each permitted to draw from the profits stipulated sums for living expenses.
    The business was a profitable one, but after payment of all the firm debts, it appeared that by reason of overdrafts and bad debts, all the general partners had more than anticipated their share in the profits, and that there did not remain sufficient funds to repay the capital contributed, and all of the partners their shares in the assets.
    On defendant’s motion it was referred to Henry J. Scudder, Esq., referee, to take and state the account between the parties.
    The referee made his report, whereby, after finding and reporting the sums due to Butler and Moore, and by Ballard and Halley, he found and reported as follows:
    
      “First, the sums due to Butler and Moore must be paid by all the partners in the percentage proportions of their interests.
    
      “Second.—The sums due by Ballard and Halley must be paid to all the parties in like proportions, and thus each partner will have in the form of a claim upon one or all the others as the result may determine, just his share of the whole” sum.
    “Thus there is due to Moore $17,922.82.
    “Of this Ballard must pay 40 per cent, or $7,169.12 -Butler must pay 22 per cent, or 3,942.84 (a) Halley must pay 20 per cent, or 3,584.56 Moore pays to himself or retains 18 per cent, {d)
    
    “There is due to Butler $9,286.77
    “ Of this Ballard must pay 40 per cent. $3,714.70 Halley must pay 20 per cent. 1,857.35 Moore must pay 18 per cent. 1,671.62 (e) Butler pays to himself or retains 22 per cent. (5)
    “Ballard must then distribute the sum he has drawn in excess, viz : $15,243.08, and this will be distributed as follows :
    To Butler 22 per cent. = $3,353.48
    To Halley 20 per cent. = 3,048.62
    To Moore 18 per cent. = 2,743.74
    And he retains 40 per cent, as his own share or proportion.
    “ Halley must then distribute the sum he has in excess, viz: $11,966.51, and of this
    Ballard takes 40 per cent. = 4,786.60
    Butler takes 22 per cent. = 2,632.63
    Moore takes 18 per cent. == 2,153.98
    And Halley retains 20 per cent, as his own.
    “ The account will then stand:
    Butler will owe to Moore $3,942.84
    Moore will owe to Butler 1,671.62
    Deducting the latter we have $2,271.22 for which, with interest from January 1, 1875, Moore is entitled to judgment against Butler.
    
      “Ballard will owe to Butler the sum
    of...........$3,714.70
    3,353.48 (c)
    $7,068.18
    to Moore the two sums of . $7,169.12
    2,743.74 (/)
    $9,912.86
    to Halley $3,048.62
    “Halley will owe to Butler the two
    sums:..........$1,857.35
    2,632.63 (c)
    $4,489.98
    to Moore the two sums of . $3,584.56
    2,153.98 (/)
    $5,738.54
    to Ballard . . . $4,786.61
    
      As Ballard owes Halley 3.048.62
    there will be due--
    by deduction $1,737.99
    from Halley to Ballard, for which, with interest from January 1, 1875, the latter should have judgment against the former. Moore is entitled to judgment against Ballard for $9,912.86, with interest from J anuary 1, 1875, and to judgment against Halley for $5,738.54, with interest from January 1, 1875.
    “Butler is entitled to judgment against Ballard for $7,068.18, with interest from January 1, 1875, and to judgment against Halley for $4,489.98, with interest from January 1, 1875.
    “ The cash on hand, and all moneys hereafter realized, should be divided according to the proportions herein recognized ; and as received, should be paid by the receiver to the creditor parties.” *
    * Provision for the repayment of item (a), and the payment of item (5), is made by items (c); and provision for the repayment of item (d), and payment of item (e), is made by items (/).
    The result is that Ballard and Halley are made ultimately liable for the amounts due Butler and Moore, in the proper proportions according to their respective interests; while Halley is made liable to Ballard for the excess of his overdraft over that of Ballard.
    It will be seen that by the principle adopted on the accounting, with above result, Butler is obliged to pay to Moore, out of the sum he had drawn (although he had not drawn as much as he was entitled to), ^3,371.22; and to accept, in place of this sum, a claim against Ballard and Halley.
    The court held, that even if Ballard and Halley were, as alleged, insolvent, the principle adopted was the correct one.
    The efEect, it will be observed, is to produce equality between Butler and Moore, according to their respective interests, both as to the amounts actually received by them in cash on account of their respective shares, and as to the amounts which must rest as to each in the shape of claims against Ballard and Halley.
    The report of the referee was confirmed at special term, and defendant’s exceptions thereto overruled.
    From the order entered thereon, defendants appeal.
    
      Messrs. Childs & Hull, attorneys and of counsel, for appellant Moore, among other things, urged :
    —I. As Ballard and Halley are insolvent and cannot pay, the amount of their indebtedness becomes a loss to be borne by the two creditor partners, in the same proportion as the profits and losses have been divided between them heretofore, viz : as 22 is to 18. The relative proportions of Butler and Moore, the creditor partners, to each other, by the partnership agreement, was as 22-40ths or 55 per cent, to Butler, is to 18-40ths or 45 per cent, to Moore. The relative proportions of Butler & Moore to each other, being 55 per cent, to Butler, and 45 per cent, to Moore, or as 22 is to 18, Butler will owe Moore 45 per cent, of his account, and Moore will owe Butler 55 per cent, of his account. The difference between these two sums will adjust the accounts of Butler and Moore with each other, thus :
    
      45 per cent, of Butler’s acc’t, $9,286.78, is $4,179.05
    55 “ “ Moore’s “ 17,922.81, is 9,857.54
    Difference due Moore, by Butler, $5,678.49
    
      Weeks & Forster, attorneys, and George H. Forster, of counsel, for respondent, among other things, urged :
    —I. The principles which regulated the reference, are briefly stated in if Newdecker v. Kohlburg (3 Daly, 410). In taking or stating the final accounts of a copartnership, it is to be ascertained what each partner is entitled to charge in account with his copartners, each being entitled as against the other to everything he has advanced or brought in as a partnership transaction, and also what the other has not brought in, or has taken out more than he ought (cites West v. Skip, 1 Ves. Sen. 239), and then to apportion between them the profits to be divided, or losses to be made good, and ascertain what, if anything, any partner should pay to the other in order that all cross claims- may be settled (cites Lind, on Part. 828). This accounting is to be governed, however, as between the partners, by the special provisions of the copartnership agreement, and the right to a return of capital invested by each partner, is only to be destroyed by express stipulation to the contrary (3 Daly, 410, 414).
    II. Had the method suggested by the plaintiff’s exceptions been adopted, the result would have been more favorable to, the plaintiff.
    III. Defendants cannot complain of the method adopted by the referee, and the order and judgment appealed from should be affirmed, with costs.
   By the Court.—Freedman, J.

—It is conceded that the referee has correctly found the amounts withdrawn by, and the balance due to and by, the several parties to the co-partnership. It therefore appears without contradiction that there was due from all sources :

To Butler.......$9,286.77

To Mpore....... 17,922.82 .

Total......$27,209.59

On the other hand Ballard and Halley had largely overdrawn their respective accounts, and there was due

From Ballard......$15,243.08

From Halley...... 11,966.51

Total......$27,209.59

—or exactly the aggregate amount to which Butler and Moore were entitled.

The cross claims arising from this state of facts between the partners themselves, the referee determined upon the theory, (1) that the sums due to Butler and Moore should be paid by all the partners in the percentage proportions of their interests ; and (2) that the sums due by Ballard and Halley should be paid to all the partners in like proportions, and that thus each partner should have, in the form of a claim upon one or all the others, just his share of the whole sum.

It is also conceded that if this theory is applicable the computations made upon it are not open to objection.

In my judgment the theory adopted and acted upon was the correct one. It is in accordance with the principles laid down in Neudecker v. Kohlberg (3 Daly, 407), and the provisions of the articles of co-partnership in this case.

The alleged insolvency of Ballard and Halley does not call for a different apportionment. For even if such insolvency existed, the amounts overdrawn and due by them cannot, as between the partners themselves, be treated as losses within the true intent and meaning of that word as used in the articles of copartnership. Moreover, the said articles expressly provided “that at the termination of the partnership, either by death or otherwise, or • its own limitations after the payment of all the indebtedness of said partnership, there shall first be paid from the assets of said partnership, to the said parties of the third and fourth parts (Butler and Moore), the capital contributed by the said parties of the third and fourth parts, to the common stock . . . with interest, ... and, secondly, that the respective interests of all the parties hereto, in the profits of said partnership, shall be .adjusted and paid according to their respective shares of per centum in the same.”

The claim, therefore, which has been advanced by the appellants, that the amounts overdrawn by Ballard and Halley constituted losses to be borne by the two creditor partners in the proportion that the profits and losses were divided between them, is quite .untenable.

The order should be affirmed, with costs.

Curtis, Ch. J., and Van Vorst, J., concurred.  