Rice v. Watkins , 85 Cal. App. 2d 44 ( 1948 )

SHINN, Acting P. J.

I concur in the reversal of a part of the judgment and affirmance of the remainder. It seems to me that in the effort to analyze and explain a simple ease to the trial court nothing was developed except confusion.

I do not understand the theory óf the judgment. I cannot reconcile it with the findings or any rule of law or mathematics. The facts established by the findings are the following: Plaintiff contributed $1,500 of capital and defendant contributed $4,118.46; each partner was to have his capital investment returned to him; defendant was to receive a salary, payable out of net profits, and thereafter the profits were to be equally divided. Plaintiff’s contribution of $1,500 has been returned to him, and the court found that defendant’s contribution of $4,118.46 has been returned to him. Upon these facts any excess would be profit. Defendant earned salary of $16,885, and he was therefore entitled to draw from the profits of the business this amount, plus the amount of his contributions, or a total of $21,003.46. He has withdrawn $15,596.33, leaving a balance due him of $5,407.13. Defendant says that the court erred in finding that his capital had been returned to him, but the finding appears to be fully supported by the evidence. Defendant is entitled to receive $5,407.75 from the proceeds of the sale of the assets before there is any division of profits, whether this sum represents unpaid salary or part salary and part contributions which have not been returned to him. If the amount for distribution is less than the balance of defendant’s unpaid salary he will have to lose the difference, since his salary is payable only out of profits. The results of any accounting for the period subsequent to the date of the original judgment should be treated on the same basis.

The judgment based on the accounting is erroneous. If a division “upon a pro rata basis as the said interests of each bears each to the other” means in the proportions which the share of each bears to the whole, and I suppose it does, it is inconsistent with the findings.

Defendant’s entire salary of $16,885 is included in the total amount which forms the basis of his proportionate interest in the total assets which, roughly speaking, amounts to three-fourths thereof. This ignores his right to receive his total salary before there is any division of profits. The difference in the results reached by applying the true method and the method of the judgment would be of little consequence if the proceeds prove sufficient to pay the claims of both partners in full, but if, for example, the proceeds for distribution amounted to only $5,407.13, defendant, as we have shown, should receive all of it and there would be nothing to divide with plaintiff.