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GLAZER v. KURMAN (03/13/56)

March 13, 1956

GLAZER
v.
KURMAN, APPELLANT.



Appeal, No. 268, Jan. T., 1955, from decree of Court of Common Pleas No. 7 of Philadelphia County, Dec. T., 1952, No. 7706, in case of Samuel Glazer v. Michael Kurman. Decree affirmed.

COUNSEL

Frank Kingston Smith, with him Walter T. Darmopray and Hamilton, Smith & Darmopray, for appellant.

Paul A. Liebman, with him Newman & Master, for appellee.

Before Stern, C.j., Stearne, Jones, Bell, Chidsey and Musmanno, JJ.

[ 384 Pa. Page 284]

OPINION PER CURIAM

The decree of the Court below is affirmed on excerpts from the Adjudication and Opinion of President Judge OLIVER of Court of Common Pleas No. 7, of Philadelphia County:

"This is a suit for partnership accounting brought by one partner upon dissolution of the partnership. The chancellor is concerned primarily with the years 1951 and 1952, since plaintiff assented to the correctness of the accounting made for the years 1948, 1949, 1950. For these three years there is still due plaintiff the sum of $775.05, which sum is reflected in the report made by independent auditors.

"Defendant kept the books of the company and he alone had the power to draw checks. He mingled partnership funds and personal funds in one bank account and, on this one account, drew checks to pay both partnership obligations and his own personal obligations. It requires no citation of authority to support the proposition that defendant's conduct amounted to a breach of the fiduciary duty which one partner owes to another. Because the tangled financial state of the partnership was brought about by defendant's wrongful conduct the chancellor should and will resolve all financial ambiguities against the defendant.

"However, plaintiff is not entitled to an accounting of rents received by defendant from the tenant who occupied a portion of the property owned by defendant, wherein the partnership business was conducted. This tenant occupied these premises prior to the formation of the partnership and plaintiff was aware of the tenant's existence at the time the partnership was formed. Plaintiff did not make a prompt demand for an accounting

[ 384 Pa. Page 285]

    of rentals received from this tenant. Instead, he manifested an acceptance of the situation and was satisfied to have defendant collect these rents personally.

"The parties agreed, at the suggestion of the court, to have independent auditors selected by them check the books of the partnership for the years 1951 and 1952. A firm of certified public accountants was selected by counsel for both parties to make this audit. This firm made a report of its audit to the chancellor. Defendant filed exceptions and, as a result of these exceptions, a second audit and report was ordered and made. The agreement between counsel to have independent auditors check the books of the partnership and make a report thereon was not in writing nor was it made in open court. However, it was made in the presence of the chancellor in his chambers in the course of a full discussion of the matters in controversy. Therefore, although the chancellor cannot simply file the auditors' report and dispense with a formal adjudication (cf. Cohen v. Pucci, 378 Pa. 571). The chancellor will in the main accept and be guided by the auditors' second report.

"On January 9, 1953 (after the dissolution of the partnership) defendant informed plaintiff that the rent defendant charged the partnership for the use of his building had been raised $50 per month, retroactive to January, 1950. He sought to justify this increase by the terms of the contract of partnership which provided that defendant could increase the rent in the event he made new building improvements. Defendant maintained that he had personally paid for improvements made in 1949, and that he therefore was entitled to the rent ...


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