Fredericks v. Stein , 400 N.Y.S.2d 60 ( 1977 )

Judgment, Supreme Court, New York County, entered on May 13, 1977, granting plaintiffs motion to confirm the report of the Referee appointed herein to hear and report on the issue of an accounting between the parties, unanimously reversed, on the law and on the facts, and matter remanded for a hearing in accordance herewith, without costs and without disbursements. Following the termination of the law partnership engaged in by these parties, the defendant retained the firm’s books and records. As indicated by the Referee "Although requested to do so he [defendant] has never rendered an accounting. In the proceeding before me he has not rendered a proper accounting”. Such conduct as well as the evasive showing made by defendant before the Referee would generally not be condoned and will be treated appropriately should it continue during the course of the new hearing ordered. Such fact notwithstanding, the present record contains errors of such a serious nature that a new hearing is required so that both parties may have an opportunity to create a complete and adequate record. We are primarily concerned with the failure of the court and/or Referee to take into account the partners’ capital account before computing purported profits. In so doing they have overlooked subdivision 1 of section 40 and subdivision (b) of section 70 of the Partnership Law. It would presently appear that at the time that the partnership terminated defendant’s capital account had a positive balance of several thousand dollars whereas plaintiff’s capital account had a negative balance of several thousand dollars. Further issues appear concerning the award of interest herein and whether plaintiff withheld from the partnership fees received from one, Einbinder. Such issues should be examined de novo. Concur—Kupferman, J. P., Capozzoli, Lane and Markewich, JJ.