Brief Fact Summary. Plaintiff, the Administratrix of the estate of Thomas Cauble, appeals from the trial court’s judgment awarding her a judgment for a deceased partner’s share in the partnership based on the book value of the assets without a share in the profits made by the surviving partner after the death of the deceased partner.
Synopsis of Rule of Law. Upon death, the representative of the deceased partner’s estate is entitled to proper accounting based on the market value of the assets and the right to elect whether to discontinue the partnership.
The second election rests partly on the use of the outgoing partner's assets in the conduct of the business his right to profits ends when the value of his interest is properly paid to him.View Full Point of Law
Whether the trial court erred in using the cost or book value instead of the market value to determine the value of the partnership assets?
Whether the trial court erred in not awarding Plaintiff a share of profits made by Handler after Cauble’s death?
Whether the trial court erred in charging the court appointed auditor’s fee in the amount of $1800.00 solely to Plaintiff?
Held. Reverse and remanded.
Yes. The partnership assets value should be based on the market value.
Yes. At Plaintiff’s election, she may receive profits made by the surviving partner after the death of a partner.
Yes. Court costs are typically paid by the partners in proportion to their interest in the business.
Under section 38(1) of UPA (1914), the representative of the estate of the deceased partner may elect to have the partnership assets liquidated, the debts paid and the share of each partner paid to her. Under section 42 of UPA (1914), the representative has a right to share in the profits, if she elects to do so, if the other partner continues to operate the business after dissolution.