On the petition for rehearing as to which a second oral argument was had, we have reconsidered this matter in the light of a more complete record. We conclude that a different result is required.
A brief chronological calendar of the history of this litigation is essential to a proper understanding of the problems involved in this appeal:
Complaint filed June 11, 1954 Receiver appointed February 27, 1957 Judgment (appealed from in first appeal) February 21, 1958 Order confirming receiver's sale April 14, 1958 Decision on first appeal October 15, 1959 Judgment December 29, 1960 Judgment and order distributing March 14, 1961 partnership assets (appealed from in second appeal) Notice of appeal April 14, 1961
There have been two trials in the lower court and appeals taken from the judgments therein rendered. Our Supreme Court has commented on the highly confused record
This case has taken on the proportions of a 1,000-piece jigsaw puzzle with several pieces missing in the record before us. We have undertaken to examine the entire record of all proceedings, judgments, and orders in order to supply the missing pieces. This "sifting and sorting" was for the further purpose of determining what matters had become res adjudicata since the first appeal.
We shall reconsider the errors alleged by appellants in the same order as they appeared in our opinion filed April 28, 1965.
SALE OF PARTNERSHIP PROPERTY
Appellants have called to our attention the fact that, although the order confirming the sale of partnership property was embodied in the abstract of record on the first appeal, the sale occurred after the judgment from which the first appeal was taken. We agree that the propriety of the conduct of the sale was not required to be raised on the first appeal since the question arose subsequent to the judgment appealed from.
We still hold, though for a different reason, that appellants are barred from raising the question. The order confirming the sale was a final order from which an appeal lies. A.R.S. § 12-2101, subsecs. C and E, as amended; Shortle v. McCloskey, 38 N.M. 548, 37 P.2d 800, 801 (1934); see Redman v. White, 85 Ariz. 82, 84, 331 P.2d 1096 (1959).
ALLOWANCE OF SALARY
For the reasons set forth in our original opinion concerning the allowance of salary to Lee Hurst, we reiterate that an allowance of $6,000 per year for 1951 and 1953 is affirmed. The sum of $12,000 for salary is a partnership obligation.
VALUE OF APPELLANTS' SHARE
On the second appeal, appellants argued at great length concerning the erroneous computation of the value of their share. This court agreed that appellants were entitled to recover the value as of the date of dissolution, March 31, 1954. Therefore we remanded the matter for a proper determination of value, rejecting both the "sale price" value set by the trial court and the "book" value in the master's accounting report. (The issue of value was not expressly litigated nor was it referred to the master for determination.)
The above-quoted provisions of the judgment when read together are capable of but one construction. The plaintiffs were awarded one-half of the then-existing partnership property, after payment of partnership obligations, and nothing remained to be done other than liquidation of the assets and distribution of the proceeds in equal shares. Examination of appellants' briefs filed in the first appeal discloses no assignment of error relative to the equal division of partnership assets.
The mandate of the Supreme Court on the first appeal stated that the judgment appealed from was reversed and remanded with instructions (1) to grant a new trial with respect to the issue of "living or managerial" expenses or remuneration owed to appellee, and (2) to modify the judgment by allowing to appellants interest on the value of their share of the partnership assets utilized by appellees after the date of dissolution. Reading these instructions in the light of the written opinion of the court, we interpret this to mean that in all other respects the judgment was affirmed. The appellants' interest in the partnership property had been finally determined in the February, 1958 judgment, and any objection to the determination should have been raised on the first appeal. As stated by our Supreme Court in Paramount Pictures, Inc. v. Holmes, 58 Ariz. 1, 117 P.2d 90, 91 (1941), quoting from Arizona-Parral Min. Co. v. Forbes, 16 Ariz. 395, 146 P. 504, 506 (1915):
Therefore, we retract our holding that the value of appellants' share must be computed as of the date of dissolution. The matter is res adjudicata.
Since the determination of value is settled, we shall consider the question of certain "unidentified deposits" in appellee's bank account prior to dissolution. Appellee Lee Hurst had deposited both partnership funds and personal funds in his own
A partner stands in a fiduciary relationship to his co-partner. Smith v. Howard, 76 Ida. 235, 280 P.2d 1060, 1063 (1955); Pacific Atlantic Wine Inc. v. Duccini, 111 Cal.App.2d 957, 245 P.2d 622, 627 (1952); Stowe v. Matson, 94 Cal.App.2d 678, 211 P.2d 591, 594 (1949). If a trustee mixes trust funds with his own, the entire commingled mass should be treated as trust property except in so far as the trustee may be able to distinguish what is his. 54 Am.Jur., Trusts § 256; Boroughs v. Whitley, Okl., 363 P.2d 150, 152 (1961); Ayers v. Fay, 187 Okl. 230, 102 P.2d 156, 161 (1940). The evidence having established that part of the money deposited in Lee Hurst's account was partnership or trust funds, it was incumbent upon the trustee-partner, Lee Hurst, to distinguish his personal funds. Boroughs v. Whitley, supra. He failed to do this and the unidentified deposits for 1951, 1952, and 1953 should have been treated as a partnership cash asset. The amounts involved are:
1951 $ 295.22 1952 6,952.87 1953 2,408.57 _________ Total $9,656.66 =========
The master's accounting report for the year 1954 excluded certain rental income and unidentified deposits. Appellants claim that one-fourth of each should have been included as a partnership cash asset since the partnership was not dissolved until March 31, 1954. However, the trial court's adoption of the report is binding unless shown to be clearly erroneous. 16 A.R.S. Rules of Civil Procedure, Rule 53(h); Smith v. Hovland (9th Cir.), 11 F.2d 9, 13 (1926). The master's exclusion of these amounts as a partnership asset may have been predicated on his determination that they were received subsequent to dissolution. Appellants having failed to show that the master's report was clearly erroneous as to this finding, we will not set it aside.
Inclusion of the above-enumerated unidentified deposits as partnership property requires that the total partnership cash assets be adjusted to $27,043.66. ($17,387.00 as fixed in the court below plus $9,656.66.)
The judgment entered on December 29, 1960, allowed interest to appellants for a period of 37 months,
We find no reason to alter our position on the allowance of costs.
Having revised our prior decision as herein set forth, no further proceedings are
Balance of share in net partnership assets $ 85,021.83 37 months interest at 6% on $85,021.83 15,729.04 ___________ Total $100,750.87 ===========
The judgment is modified to allow the sum of $100,750.87 to appellants as their distribution, effective as of March 14, 1961. The distribution shall be effected by crediting appellants with payment in full of the $5,000 due from them on the Conditional Sales Contract dated April 22, 1958 and by crediting the balance of $95,750.87 as the down payment on account of the contract for Sale of Real Estate dated February 25, 1958 whereby appellants agreed to purchase the leasehold property.
KRUCKER, C.J., and MOLLOY, J., concurring.
ON MOTION FOR REHEARING
On our own motion we are modifying our decision on rehearing, filed September 22, 1965, as to the computation of interest allowed therein to appellants. In all other respects our decision remains the same.
Re-examination of the judgments entered on December 29, 1960 and March 14, 1961 respectively, discloses that the trial court awarded interests to appellants from March 31, 1954 to February 27, 1957. The latter judgment, in addition to specifying the period for which interest was allowed, approved and ratified the master's report wherein interest was computed for 37 months. Appellees did not, either by cross-appeal or otherwise, challenge the correctness of the 37 months figure.
In view of the fact that the trial court ordered the allowance of interest for a specified period, the erroneous computation in the master's report, though accepted and approved in the same judgment, is not binding. Therefore only 35 months interest is to be added to appellants' share and their final distribution is accordingly amended as follows:
Balance of share in net partnership assets $85,021.83 35 months interest at 6% on $85,021.83 14,878.82 __________ Total $99,900.65 ==========
The judgment is modified to allow the sum of $99,900.65 to appellants as their distribution, effective as of March 14, 1961. The distribution shall be effected by crediting appellants with payment in full of the $5,000 due from them on the Conditional Sales Contract dated April 22, 1958 and by crediting the balance of $94,900.65 as the down payment on account of the Contract for Sale of Real Estate dated February 25, 1958 whereby appellants agreed to purchase the leasehold property.
The time requirements of Rule 47(a)
KRUCKER, C.J., and MOLLOY, J., concurring.