Aldecoa v Warner, Barnes August 6, 1910 ALDECOA & CO.,plaintiff-appellant, vs. WARNER, BARNE & CO., L!D.,"efen"ant-appellee.

TORRES, J.: DOCTRINE: #t is a $ule %f la& gene$all' %(se$ve" t)at )e &)% ta*es +)a$ge %f t)e ,anage,ent %f an%t)e$-s p$%pe$t', is (%un" i,,e"iatel' t)e$eafte$ t% $en"e$ a++%unts +%ve$ing )is t$ansa+ti%ns. an" t)at it is al&a's t% (e un"e$st%%" t)at all a++%unts $en"e$e" ,ust (e "ul' su(stantiate" (' v%u+)e$s. FACTS: /laintiff Al"e+%a & C% is a $egula$ +%lle+tive ,e$+antile ass%+iati%n %$gani0e" in R/, $egiste$e" in ,e$+antile $egist$', an" at p$esent in li1ui"ati%n Defen"ant Wa$ne$, Ba$nes & C%., Ltd. is a 2%int st%+* ,e$+antile fi$, %$gani0e" in Englan", $egiste$e" in t)e ,e$+antile $egist$' %f 3anila, an" )as "%ne an" is still "%ing (usiness in R/. Wa$ne$ Lt". a+1ui$e" t)e (usiness %f Wa$ne$, Ba$nes & C%. & assu,e" all its assets, lia(ilities & %(ligati%ns. o Wa$ne$ C%. is in t)e (usiness %f pu$+)asing )e,p in t)e pue(l%s %f Legaspi an" !a(a+%, Al(a' f%$ t)e pu$p%se %f ($inging it t% 3anila t% sell it f%$ e4p%$tati%n Al"e+%a (e+a,e inte$este" in t)e sai" (usiness %f Wa$ne$ C% & f%$,e" a joint-account artners!i &5 it ag$eeing t% s)a$e e1uall' in t)e gains an" l%sses. ept. 66, 19078 Al"e+%a9s legal $ep$esentative in li1ui"ati%n file" a etition "or #anda#us in C:# 3anila against Wa$ne$, Ba$nes & C%., Lt". +%n+e$ning t)e $en"e$ing %f a++%unts pe$taining t% t)e ,anage,ent %f t)e (usiness %f a 2%int-a++%unt pa$tne$s)ip . o $RA%ER: Wa$ne$ $en"e$ a++%unting. +%$$e+t its e$$%$s & %,issi%ns %n a++%unt $en"e$e". pa' su,s n%t +$e"ite" t% Al"e+%a an" f%$ &$it %f ,an"a,us t% fi4 te$, &5n &5+ Wa$ne$ Lt" is t% li1ui"ate t)e (usiness & sell t)e p$%pe$ties "ist$i(uting t)e p$%+ee"s (et&een t)e, Bot! a&ree t!at8 /a$tne$s)ip &as esta(lis)e" t)$%ug) ve$(al ag$ee,ent &)e$e(' t)e' s)%ul" s)a$e e1uall' t)e p$%fits an" l%sses %f t)e (usiness %f gat)e$ing an" st%$ing )e,p in Al(a' an" selling it in 3anila f%$ e4p%$tati%n, an" t)at Wa$ne$, Ba$nes & C%., Lt"., &as t)e ,anage$ %f t)e sai" 2%int-a++%unt pa$tne$s)ip. Disa&ree#ent 'et( t!e arties: o :#R !. Date &)en t)e pa$tne$s)ip &as f%$,e" an" (egan (usiness in Al(a' ;A8 De+. 1, 1<9<. W8 =une >0, 1<99? o ECOND. W)et)e$ t)e ,anaging fi$, "i" $en"e$ a++%unts, "ul' ve$ifie" (' v%u+)e$s, %f its ,anage,ent f$%, t)e "ate %f t)e %$gani0ati%n %f t)e pa$tne$s)ip. o !@#RD. W)et)e$ e$$%$s an" %,issi%ns, p$e2u"i+ial t% Al"e+%a & C%., e4ist in t)e pa$tne$s)ip (%%*s an" in its a++%unts, an" &)et)e$, in t)e ,anage,ent %f t)e sai" (usiness, f$au"ulent a+ts &e$e +%,,itte", als% t% Al"e+%a-s in2u$'. an", o :OAR!@. W)et)e$ t)e pa$tne$s)ip p$%pe$t' s)%ul" (e in+lu"e" in t)e li1ui"ati%n %f t)e sai" (usiness an" in t)e a++%unts appe$taining t% t)e 'ea$ 190>, &)en t)e e4isten+e %f t)e pa$tne$s)ip +a,e t% an en". FIRST( DATE $ARTNERS)I$ WAS FOR*ED De+. 1, 1<9<8 Al"e+%a (e+a,e inte$este" in t)e sai" (usiness %f Wa$ne$ C% & f%$,e" a 2%int-a++%unt pa$tne$s)ip &5 it Alt)%ug) ent$ies s)%& t)e pa$tne$s)ip t% )ave +%,,en+e" %n =une >0, 1<99, its %pe$ati%ns s)%ul" )ave +%,,en+e" an" "i" +%,,en+e %n De+. 1, 1<9<, %n &)i+) "ate t)e 2%int-a++%unt pa$tne$s)ip +%,,en+e". SECOND: NON-RENDERIN+ OF ACCO,NTS Wa$ne$ Lt" is t)e su++ess%$ t% all t)e $ig)ts an" %(ligati%ns %f Wa$ne$ C%, a,%ng &)i+) is t)at %f (eing past & +u$$ent ,anage$ %f t)e sai" 2%int-a++%unt pa$tne$s)ip an" is o'li&ed to render accounts su orted '- roo"s, and to li.uidate t!e 'usiness As ,anage$, it negle+te" t% +%,pl' &it) its "ut' espe+iall' p$es+$i(e" in Art( /01 o" t!e Code o" Co##erce . #ts "ut' is in)e$ent t% its p%siti%n as ,anage$ %f t)e 2%int-a++%unt pa$tne$s)ip, &)i+) is t)at %f $en"e$ing an a++%unt &it) v%u+)e$s, #n spite %f t)e "e,an" ,a"e up%n it, Wa$ne$ Lt" "i" n%t $en"e$ a++%unt an" )as als% e4p$essl' "enie" t)e $ig)t %f Al"e+%a t% e4a,ine t)e v%u+)e$s, +%ntenting itself &it) f%$&a$"ing +%pies %f t)e ent$ies in its (%%*s, &)i+) ent$ies +%ntain e$$%$s an" %,issi%ns ;"is+usse" in t)$ee? T)IRD( ERRORS 2 O*ISSIONS, FRA,D,3ENT ACTS 3anage$s & gene$al pa$tne$s %f Wa$ne$ C%., a$e als% ,e,(e$s & "i$e+t%$s %f Wa$ne$ Lt"., an" a$e t)e sa,e %nes &)% a",itte" Al"e+%a as a pa$ti+ipant in B %f t)e (usiness. !)e' unla&full', ,ali+i%usl', an" +$i,inall' +%nspi$e" &it) t)e pe$s%ns &)% &e$e ,anaging t)e +%,,e$+ial fi$, %f Al"e+%a f$%, 1<99 t% 190>, t% "ef$au" t)e latte$ %f its inte$est in t)e sai" 2%int-a++%unt pa$tne$s)ip. !)e' (%ug)t t)e silen+e %f sai" ,anage$s &it) $espe+t t% t)e %pe$ati%ns %f t)e 2%int-a++%unt pa$tne$s)ip "u$ing De+. 1, 1<9<, t% =une, >0, 1<99, an" als% &it) $espe+t t% t)e e$$%$s an" %,issi%ns in t)e a++%unts $elating t% t)e se+%n" se,. %f 1<99, an" t)%se $elating t% 1900 t% 190>. ai" f$au"ulent a+ts &e$e n%t *n%&n t% t)e pa$tne$s %f Al"e+%a until its ,anage$s, in +%llusi%n &it) t)e ,anage$s %f Wa$ne$, )a" +ease" t% )%l" t)ei$ p%siti%ns, until afte$ t)e >1st %f De+., 1906, B' $eas%n %f t)is +%nspi$a+' t% "ef$au" Al"e+%a, Wa$ne$ )ave (een (enefite". #t +ann%t f%$,ulate its +lai,s &it) e4a+tness until Wa$ne$ Lt". $en"e$s an a++%unt, a++%,panie" (' v%u+)e$s sin+e t)e$e ,a' (e g$eate$ e$$%$s f%un" if v%u+)e$s &e$e t% (e e4a,ine" E$$%$s an" %,issi%ns f%un" in t)e ent$ies %f t)e (%%*s *ept (' Wa$ne$ Lt" as ,anage$ %f t)e 2%int-a++%unt pa$tne$s)ip a$e as f%ll%&s8 o ;a-d? =ul' 10 C De+. 66, 1<99. De+. >1, 1<99. Ap$. >0, 1900. =an. >1, 1901 8 Wa$ne$ Lt". +lai, pu$+)ase %f )e,p (ut "% n%t give t)e p$i+e $e+eive" f$%, t)e sale t)e$e%f an" ,e$el' +$e"it it at a +e$tain pes%s a pi+ul ;e4. 1> pes%s5pi+ul?, &)en t)e ave$age ,a$*et p$i+e at t)at ti,e &as )ig)e$ ;e4. 16 pes%s5pi+ul? t)us in2u$ing Al"e+%a t% +e$tain a,%unts as "iffe$en+e o (e? /$%fit f$%, t)e p$essing %f )e,p $eali0e" in 3anila &as %,itte" (' Wa$ne$ Lt" in t)e a++%unts in2u$ing Al"e+%a in t)e su, %f /1D9,0<D.16 o (f? Outstan"ing a++%unts a$e "e(ite" in t)e su, %f /E6,E10.>6, &)ile %nl' /6,769.6D a$e +$e"ite" o ;g? 19008 An"ul' in+lu"e" an ite, %f net a++%unt &)i+) s)%ul" (e st$i+*en %ut, as it "%es n%t pe$tain t% t)is (usiness. @alf %f su, s)%ul" (e +$e"ite" t% Al"e+%a o ;h? De+. 66, 1<998 Wa$ne$ Lt". "e"u+te" f$%, t)e p$%fits an insu$an+e p$e,iu, &5+ is %(taine" in +%llusi%n &5 Al"e+%a9s ,anage$s. in2u$ing Al"e+%a o ;i? De+. >1, 190>8 A +apital %f /E0* ($%ug)t in (' Al"e+%a &5+ (ea$s E F inte$est &as un"ul' +$e"ite" t% t)e 2%int-a++%unt

;j) De+. >1, 19068 Al"e+%a +)a$ge" &it) 6 ,%nt)s- inte$est f%$ allege" l%sses &5+ &as in+%$$e+t sin+e a++%unts s)%& n% l%sses, (ut p$%fits o ;*? :%$ ent$ies in 1906 & 190>, Wa$ne$ Lt"., &$%te a l%&e$ p$i+e t% 1ualit' ite,s &5+ )as )ig)e$ p$i+es f%$ &5+ B ,ust (e +$e"ite" t% Al"e+%a Gave "corriente buenaH ;+u$$ent g%%"?, t% t)e g$a"e &)i+) &as +lassifie" as "abaca su eriorH ;supe$i%$ )e,p? . /$i+e %f "corriente ordinario" ;+u$$ent %$"ina$'?, t% t)e )e,p ,a$*e" as "corriente buena" ;+u$$ent g%%"? /$i+e %f "segunda su erior" ;se+%n" supe$i%$?, t% &)at is "corrienteH %$ H+u$$ent,H o ;!? !%tal +%st %f p$%pe$ties ;instea" %f +as) +apital? ($%ug)t (' Wa$ne$ Lt" ;!%tal8 /<6,E00.? is %,itte" f$%, t)e a++%unts. /16*8 1 galvani0e"-i$%n-$%%fe" &a$e)%use, &it) )e,p p$ess. 1 )%use %f st$%ng ,ate$ials an" t)e l%t %n &)i+) it stan"s, in !a(a+%, /6.E*8 1 s,all &a$e)%use %f st$%ng ,ate$ials, in !a(a+%, &%$t) /66*8 1 &a$e)%use %f st$%ng ,ate$ials, &it) p$ess. an%t)e$ &a$e)%use %f st$%ng ,ate$ials. an" 1 )%uses %f st$%ng ,ate$ials, t%get)e$ &it) t)e l%ts %n &)i+) t)e' a$e (uilt. /E0*8 D &a$e)%uses &it) > )e,p p$esses, an" 1 )%use %f st$%ng ,ate$ials, &it) t)ei$ +%$$esp%n"ing l%ts FO,RT)( 3I4,IDATION !)e %pe$ati%ns )aving (een +l%se" %n De+. >1, 190>, Wa$ne$ Lt"., )as n%t $eali0e" up%n t)e assets %f t)e fi$, (' selling t)e p$%pe$t' &)i+) +%nstitutes its +apital. #t $efuses t% fu$nis) Al"e+%a t)e "%+u,ents $e1ui$e" f%$ t)ei$ e4a,inati%n an" ve$ifi+ati%n, an" als% $efuses t% $eali0e t)e fi$, assets (' selling t)e &a$e)%uses, )%uses, an" %t)e$ p$%pe$t' &)i+) +%nstitute t)e +apital /RAIER8 :%$ C%u$t %$"e$ Wa$ne$ Lt". t%: o Ren"e$ t% t)e +%u$t an a++%unt, a++%,panie" (' inv%i+es, $e+eipts, an" v%u+)e$s %f t)e Al(a' (usiness, (eginning De+. 1, 1<9<, t)e "ate %n &)i+) t)e pa$tne$s)ip &as f%$,e", an" +%$$e+ting in it t)e e$$%$s an" %,issi%ns o Wa$ne$ Lt". t% +$e"it an" pa' Al"e+%a t)e su,s allege" t% (e "ue t% Al"e+%a up%n t)e su,s %,itte" an" f%$ t)e "iffe$en+e (et&een t)e a,%unts in+%$$e+tl' "e(ite" an" +$e"ite", f$%, t)e $espe+tive "ates %n &)i+) t)e' s)%ul" appea$, if +%$$e+tl' ente$e". o Afte$ a++%unts )ave (een $en"e$e" an" "is+usse", 2u"g,ent (e ente$e" f%$ an' (alan+e &)i+) ,a' appea$ in fav%$ %f t)e Al"e+%a in+lu"ing t)e su,s +lai,e" /RAIER8 :%$ &$it %f ,an"a,us t% fi4 a te$, &it)in &)i+) Wa$ne$ Lt". is t% li1ui"ate t)e (usiness, selling t)e p$%pe$ties af%$e,enti%ne" an" "ist$i(uting t)e p$%+ee"s (et&een t)e, Warner5s A#ended Ans6er 6it! Counterclai# =%int-a++%unt pa$tne$s)ip &as f%$,e" (et&een t)e, %n 7une 18, 9:;; &5 ag$ee,ent t)at B %f t)e $esults, &)et)e$ l%sses %$ gains, appe$taine" t% Al"e+%a. #t a",its t)at Js ai" (usiness +%ntinue" un"e$ t)e ,anage,ent %f Wa$ne$, as ,anage$ %f t)e sai" 2%int-a++%unt pa$tne$s)ip, until De+. >1, 190>. @%&eve$, it "enies all t)e %t)e$ allegati%ns +%ntaine" in t)e sai" pa$ag$ap)s. De"enses: o :#R !. Du$ing t)e pe$i%" t)at t)e sai" 2%int-a++%unt pa$tne$s)ip e4iste", Wa$ne$, $en"e$e" t% Al"e+%a 2ust an" t$ue a++%unts %f its t$ansa+ti%ns as ,anage$ %f t)e sai" pa$tne$s)ip, &)i+) a++%unts )ave (een app$%ve" (' t)e Al"e+%a, &it) t)e e4+epti%n %f t)%se in 190>, an" as t% t)e latte$, t)at t)e sa,e &e$e %(2e+te" t% (' Al"e+%a fi$, s%lel' up%n t)e g$%un"s ,enti%ne" in +lause ;*?, &)i+) %(2e+ti%ns a$e &)%ll' unf%un"e". o ECOND. 3%$e t)an D 'ea$s )ave e4pi$e" (et&een t)e ti,e t)e allege" $ig)t %f a+ti%n a++$ue" t% Al"e+%a an" t)e "ate %f t)e filing %f t)e +%,plaint. $ra-er: A(s%lve" f$%, t)e +%,plaint, &it) t)e +%sts against Al"e+%a Wa$ne$ Lt". ,%ve" f%$ a "is,issal %f t)e +ase CFI ;De+. 66 190<?8 Dis,isse" +%,plaint &it) $espe+t t% t)e petiti%n f%$ t)e $en"e$ing %f an a++%unt, ve$ifie" (' inv%i+es et+., pe$taining t% t)e pe$i%" +%,p$ise" "ro# t!e 'e&innin& o" t!e 'usiness to Dec( 19, 9;8/ o #t )%&eve$, %pene" t)e 6n" pe$i%" %f t)e t$ial &it) $espe+t t% t)e a++%unt f%$ t)e 6!ole -ear 9;81 Al"e+%a file" a &$itten e4+epti%n an" ann%un+e" )is intenti%n t% f%$&a$" t)$%ug) $egula$ +)annels, a (ill %f e4+epti%ns o #t als% ,%ve" f%$ a ne& t$ial %n t)e g$%un" t)at t)e evi"en+e "i" n%t 2ustif' t)e 2u"g,ent $en"e$e", &)i+) &as %penl' an" ,anifestl' +%nt$a$' t% t)e &eig)t %f t)e evi"en+e an" t% la& C:# "enie" ,%ti%n t% &)i+) e4+epti%n &as ta*en (' Al"e+%a !)us, Al"e+%a "ul' file" a p$%pe$ (ill %f e4+epti%ns &)i+) &as +e$tifie" t% an" f%$&a$"e" t% C, t%get)e$ &it) all t)e "%+u,enta$' an" %$al evi"en+e p$%"u+e" at t)e t$ial. ISS,E: W)et)e$ Al"e+%a is entitle" t% a &$it %f ,an"a,us against Wa$ne$ t% $en"e$ a++%unting %n t)ei$ 2%int a++%unt pa$tne$s)ip, +%$$e+t its e$$%$s & %,issi%ns %n a++%unts $en"e$e", pa' su,s n%t +$e"ite" t% Al"e+%a an" t% li1ui"ate t)e (usiness & sell t)e p$%pe$ties "ist$i(uting t)e p$%+ee"s (et&een t)e,K ;E$$%$s %n t)e a++%unts, f$au" (' ,anage$s, & a+1uisiti%n %f p$%pe$t' ,ust fi$st (e p$%ve". as t% $en"e$ing a++%unts C as+e$tain fi$st "ate &)en pa$tne$s)ip +%,,en+e" (ut t)at (et. =une >0, 1<99 t% De+. >1, 1906 )as (een $en"e$e"? RATIO: LThe resent state of this cause resu!ting fro" the rendering of #$% judg"ent "a&es it i" ossib!e for S# to decide in a fina! "anner the 'arious issues brought u and contro'erted b( the !itigants, for, though it be granted as ro'ed that )arner Ltd has in fact rendered accounts ertaining to the (ears fro" June *+, ,-.., to /ec. *,, ,.+0, as found in the said judg"ent, there sti!! re"ain to be decided the four oints or 1uestions of fact before s ecified. C in effe+t, it &ill still )ave t% $e,an" t% C:# f%$ fin"ing %f fa+ts (ut it &ill "e+i"e as t% t)e issuesM FIRST( Date 6!en t!e artners!i 6as "or#ed and 'e&an 'usiness in Al'a Aldecoa: /a$tne$s)ip &as +%,,en+e", %$ &as f%$,e", %n De+. 1, 1<9<, Warner 3td(8 #t "i" n%t $e(ut evi"en+e su(,itte" (' Al"e+%a alt)%ug) it ave$$e" t)at t)e 2%int-a++%unt pa$tne$s)ip (egan %n =une >0, 1<99 SC: Wa$ne$ Lt". )as n%t p$%ve" its ave$,ent. #f %n+e $e,an"e" t% C:#, Wa$ne$ s)all still n%t %ffe$ p$%%f &it)in su+) pe$i%" as t)e +%u$t ,a' see fit, it &ill (e p$%pe$ t% fin" in a++%$"an+e &it) t)e value %f t)e evi"en+e a""u+e" (' Al"e+%a an" t% a"vise Wa$ne$ Lt". t% $en"e$, &it)in a fi4e" pe$i%", a++%unts, ve$ifie" (' v%u+)e$s, %f t)e ,anage,ent %f t)e pa$tne$s)ip (usiness an" pe$taining t% t)e 7 ,%s. f$%, De+. 1, 1<9<, t% =une 69, 1<99 #n vie& %f t)e evi"en+e a""u+e" (' Al"e+%a, if Wa$ne$ Lt". "%es n%t p$%"u+e %t)e$ evi"en+e in $e(uttal, t)e' ,ust, f%$ s%,e $eas%n, (e e4p$essl' $e2e+te" in t)e 2u"g,ent, if t)e' a$e n%t t% (e ta*en int% a++%unt in $ea+)ing t)e +%n+lusi%ns %$ in +%nsi"e$ing t)e +ase up%n t)e ,e$its. o

SECOND( W!et!er t!e #ana&in& "ir# did render accounts, dul- veri"ied '- vouc!ers, o" its #ana&e#ent "ro# t!e date o" t!e or&ani<ation o" t!e artners!i Ag$ee &5 C:# t)at Wa$ne$ Lt"., "i" $en"e$ a++%unts f$%, =une >0, 1<99, t% De+. >1, 1906, inas,u+) as t)e ve$' evi"en+e int$%"u+e" (' Al"e+%a s)%&e" t)at t)e sai" a++%unts )a" (een $en"e$e" an" &e$e a roved '- it o App$%val seen in t)e +%nte4t %f its %&n lette$s ;=ul' 67, 1907 & :e(. 19, 190>? Al"e+%a is n%t entitle" an" )as n% $ig)t %f a+ti%n t% +%,pel Wa$ne$ Lt". t% $en"e$ a++%unts ertaining to that eriod, t)e' )aving al$ea"' (een $en"e$e" an" "ul' app$%ve". )e 6!o ta=es c!ar&e o" t!e #ana&e#ent o" anot!er>s ro ert-, is 'ound i##ediatel- t!erea"ter to render accounts coverin& !is transactions? and t!at it is al6a-s to 'e understood t!at all accounts rendered #ust 'e dul- su'stantiated '- vouc!ers( CASE AT BAR: B%t) litigating pa$ties a",it t)at Wa$ne$ Lt"., &as t)e ,anage$ %f t)e (usiness %f t)e 2%int-a++%unt pa$tne$s)ip f%$,e". !)us, it is un1uesti%na(le t)at it &as an" is Wa$ne$ Lt"9s "ut' t% $en"e$ a++%unts %f t)e ,anage,ent %f t)e (usiness, as it artia!!( )as "%ne. Alt)%ug) Wa$ne$ Lt". )as n%t p$%ve", as it shou!d ha'e done , t)at it +%,plie" &it) its "ut' %f $en"e$ing a++%unts %f its ,anage,ent, sin+e t)e lette$s t)e,selves e4)i(ite" (' Al"e+%a, an" "ul' aut)enti+ate" as (eing &$itten (' t)e latte$, p$%ve t)at Wa$ne$ Lt". "i" $en"e$ a++%unts f$%, =une >0, 1<99, t% De+. >1, 1906, n% legal $eas%n e4ists f%$ n%t a++epting C:#9s fin"ing t)at it !ad 'een roved t!at accounts 6ere rendered ertainin& to t!e eriod #entioned and t!at t!e said accounts 6ere a roved '- t!e Aldecoa( Al"e+%a9s a+ts, in a++epting an" app$%ving a++%unts t)at &e$e $en"e$e" t% it an" &)i+) %nl' (egin &it) =une >0, 1<99, i,pl' t)at it ag$ee" t% t)e +lai, ,a"e (' Wa$ne$ Lt". t)at t)e pa$tne$s)ip +%,,en+e" %n t)e sai" "ate BA! ENEN O, %n+e t)at it is p$%ve" t)at t)e a+tual "ate %n &)i+) t)e pa$tne$s)ip &as f%$,e" &as De+. 1, 1<9<, an" t)at it is n%t s)%&n t)at Wa$ne$ Lt". )as $en"e$e" a++%unts +%$$esp%n"ing t% t)e 7 ,%nt)s su(se1uent t% t)e sai" "ate, t)e a++eptati%n an" app$%val %f a++%unts $en"e$e" sin+e =une 60, 1<99, does not e@cuse nor release t!e #ana&er o" t!e artners!i , Warner 3td(, "ro# co# l-in& 6it! its un.uestiona'le dut- o" renderin& accounts coverin& t!e a"oresaid seven #ont!s( !)e p$esu,pti%n ,ust (e sustaine" until p$%%f t% t)e +%nt$a$' is p$esente". 3%$e%ve$, t)e app$%val %f a++%unts f$%, =une >0, 1<99, t% De+. >1, 1906, DOE NO! #3/LI t)at t)e sai" app$%ve" a++%unts +%,p$ise t)%se pe$taining t% t)e 7 ,%nt)s ;De+. 1, 1<9< t% =une 69, 1<99?, (e+ause Wa$ne$ Lt", t)e a++%untant, "enies t)at t)e pa$tne$s)ip +%,,en+e" %n De+. 1st ;ave$$ing t)at it &as =une >0, 1<99?. On Wa$ne$ Lt"9s $en"e$ing t)%se a++%unts, it is t% (e resu#ed t!at it did so "ro# t!e date 6!ic! it avers &as t)at %f t)e f%$,ati%n %f t)e pa$tne$s)ip an" t)e (eginning %f t)e (usiness, an" it is t)e$ef%$e evi"ent t)at it !as not rendered accounts ertainin& to t!e A #ont!s #entioned( T)IRD( Errors and o#issions, rejudicial to Aldecoa 2 Co in t!e artners!i 'oo=s and in its accounts, and "raudulent acts 6ere co##itted in #ana&e#ent o" t!e said 'usiness, On+e t)e a++%unts $en"e$e" (' Wa$ne$ Lt"., )ave (een app$%ve", Al"e+%a is not entitled afte$&a$"s t% +lai, a $evisi%n %f t)e sa,e, ANLE it s)%&s t)at t)e$e &as f$au", "e+eit, e$$%$, %$ ,ista*e in t)e app$%val %f t)e sai" a++%unts. An"e$ t)is )'p%t)esis, Al"e+%a & C%. a$e strictl- o'li&ed to rove t!e errors, o#issions, and "raudulent acts att$i(ute" t% Wa$ne$ Lt"., in +%nne+ti%n &it) t)e a++%unts al$ea"' $en"e$e", an" app$%ve" (' t)e,, in %$"e$ t)at t)e sa,e ,a' (e $evise" in a++%$"an+e &it) la& an" t)e 2u$isp$u"en+e %f t)e +%u$ts. ;/ast%$ 's. Ni+asi%? !)e app$%val %f an a++%unt "%es n%t p$event its su(se1uent $evisi%n, %$ at least its +%$$e+ti%n, if it is p$%ve" in a satisfa+t%$' ,anne$ t)at t)e$e &as deceit and "raud or error and o#ission in it. ;A$ts. 166E, 1666, Civil C%"e.? La& >0, title 11, Et) /a$ti"a8 HThat is recise!( 2hat 2e sa( shou!d be obser'ed, in a!! other accounts that "en "a&e a"ong the"se!'es, in connection 2ith the things 2hich be!ong to the". 3ot2ithstanding that the( "a( ac&no2!edge the sett!e"ent of the accounts bet2een the" and ro"ise ne'er to bring the" u again, if it be known in truth that he who gave the account or had the things in his keeping, concealed anything deceitfully, or committed other fraud against those who have a share in such thing, then neither the suit, nor such previous status and promise shall avail; o On the contrar(, 2e sa( that the( "a( sue hi" to co" e! hi" to re"ed( the deceit he co""itted against the", and to a( a!! the da"ages and !osses that ha'e accrued to the" b( reason thereof4 ro'ided, ho2e'er, he es ecia!!( sha!! not ha'e re aired the deceit that he co""itted." CASE AT BAR: #t "%es n%t ,atte$ t)at t)e a++%unts pe$taining t% t)e 'ea$s +%,p$ise" (et&een =une >0, 1<99, an" De+. >1, 1906, ,a' )ave (een app$%ve" (' Al"e+%a. W!enever Aldeco s!all succeed in rovin& t!at t!ere 6as error, o#ission, "raud, or deceit in t!ese accounts, t!e- #a- 'e dul- revised, accordin& to la6 . FO,RT)( W!et!er t!e artners!i ro ert- s!ould 'e included in t!e li.uidation o" t!e said 'usiness and in t!e accounts a ertainin& to t!e -ear 9;81, 6!en t!e e@istence o" t!e artners!i ca#e to an end( Wa$ne$ Lt". ag$ees t)at Al"e+%a )as n%t 'et app$%ve" t)e a++%unts t)at t)e f%$,e$ $en"e$e", pe$taining t% 190>, t)e last 'ea$ %f t)e e4isten+e %f t)e 2%int-a++%unt pa$tne$s)ip. !)us, C:# p$%vi"e" t)at t)e t$ial s)%ul" +%ntinue &it) $espe+t t% t)e sai" a++%unts in %$"e$ t)at Al"e+%a ,ig)t ,a*e su+) %(2e+ti%ns an" state,ents in $ega$" t% t)e sa,e as )e "ee,e" p$%pe$, an" a""u+e t)e evi"en+e +%n"u+ive t% p$%ve )is +lai,, in a++%$"an+e &it) la&. It is one o" t!e duties o" t!e #ana&er o" a joint-account artners!i , to li.uidate t!e assets t!at "or# t!e co##on ro ert-, and to state t!e result o'tained t!ere"ro# in t!e "inal renderin& o" t!e accounts 6!ic! !e is to resent at t!e conclusion o" t!e artners!i ( A$t. 6D> %f t)e C%"e %f C%,,e$+e8 H!)e li1ui"ati%n s)all (e effe+te" (' t)e ,anage$, an" afte$ t)e t$ansa+ti%ns )ave (een +%n+lu"e" )e s)all $en"e$ a p$%pe$ a++%unt %f its $esults.H CASE AT BAR: /a$tne$s)ip )e$ein +%n+lu"e" its t$ansa+ti%ns %n De+. >1, 190>. Wa$ne$ Lt"., t)e ,anage$ %f t)e pa$tne$s)ip, in "e+la$ing t)e pa$tne$s)ip9s t$ansa+ti%ns +%n+lu"e" an" in $en"e$ing "ul' ve$ifie" a++%unts %f its $esults, o6es t!e dut- to include t!erein t!e ro ert- and e""ects 'elon&in& to t!e artners!i in co##on( C %f pain appl'ing t)e ,e$+antile +%"e ;1<70?8 H#n +ase %f t)e li1ui"ati%n %f a +%,pan' %f t)is *in" ;"en%,inate" 2%int-a++%unt pa$tne$s)ip?, inas,u+) as t)e sale %f t)e fi$, assets is ne+essa$il' un+e$tain an" eventual, +%nsi"e$ing t)e g$eate$ %$ lesse$ selling p$i+e t)at ,a' (e %(taine" f$%, t)e p$%pe$t' an" effe+ts &)i+) +%,p$ise su+) assets, t)e p$i+e $e+eive" s)%ul" (e all%tte" in t)e sa,e p$%p%$ti%n as t)at fi4e" in t)e +%nt$a+t f%$ t)e "ivisi%n %f t)e p$%fits an" l%sses, f%$ %t)e$&ise %ne %f t)e pa$tne$s &%ul" (e (enefite" t% t)e "et$i,ent an" l%ss %f )is +%pa$tne$s.H N% pe$s%n s)%ul" en$i+) )i,self &$%ngfull' at t)e e4pense %f an%t)e$.

CONC3,SION: )%ul" it (e "ul' an" full' p$%ve" t)at Wa$ne$ Lt". a+1ui$e" $ealt' in t)e na,e an" at t)e e4pense %f t)e 2%int-a++%unt pa$tne$s)ip, it is 2ust t)at, in li1ui"ating t)e p$%pe$t' %f +%,,%n %&ne$s)ip, su+) $ealt' s)%ul" (e "ivi"e" (et&een t)e pa$tne$s in t)e sa,e ,anne$ as &e$e t)e p$%fits an" l%sses "u$ing t)e e4isten+e %f t)e (usiness, f$%, t)e (eginning %f t)e pa$tne$s)ip t% t)e "ate %f its "iss%luti%n. DIS$OSITIBE: C:# et asi"e. !)is +ause s)all (e $etu$ne" t% C:#, a++%,panie" (' a +e$tifie" +%p' %f t)is "e+isi%n, f%$ t)e )%l"ing %f a ne& t$ial f%$ t)e pu$p%se %f a final "e+isi%n %f all t)e 1uesti%ns inv%lve" in t)is litigati%n. /u$p%se8 :#R !. Wa$ne$ a"vise" t)at it ,ust, &it)in a fi4e" pe$i%", $en"e$ an a++%unt, ve$ifie" (' v%u+)e$s, %f its ,anage,ent %f t)e (usiness %f t)e 2%int-a++%unt pa$tne$s)ip. o A++%unting s)%ul" (e f$%, De+. 1, 1<9<, t% =une 69, 1<99, an" t% t)e 16 ,%nt)s %f 190> #: f%un" t)at pa$tne$s)ip +%,,en+e" %n De+. 1, 1<9< as allege" (' Al"e+%a OR o A++%unting $est$i+te" t% 16 ,%nt)s %f 190>, in t)e a++%unts %f &)i+) last pe$i%" ,ust (e in+lu"e" all t)e p$%pe$t' t)at is f%un" t% (el%ng t% t)e sai" pa$tne$s)ip #: p$%ven t)at pa$tne$s)ip (egan %n =une >0, 1<99 ECOND. #n t)e e4a,inati%n %f t)e a++%unts t)at ,a' (e f%un" t% )ave (een $en"e$e", t)e pa$ties ,a' allege an" p$%ve fa+ts +%n"u+ive t% t)ei$ $evisi%n %$ app$%val (esi"es availing t)e,selves %f t)e evi"en+e al$ea"' a""u+e" at t$ial. !@#RD. Wit) $espe+t t% t)e a++%unts f$%, =une >0, 1<99, t% De+. >1, 1906, al$ea"' app$%ve", C:# s)all p$%+ee" in a++%$"an+e &it) la&, "ul' +%nsi"e$ing t)e e$$%$s, %,issi%ns, ,ista*es an" f$au"ulent %$ "e+eitful a+ts t)at )ave (een allege" %$ ,a' spe+ifi+all' (e allege" in $e2e+ting t)e sai" app$%ve" a++%unts, as &ell as t)e evi"en+e int$%"u+e" (' (%t) pa$ties, an" it s)all (e +a$eful t% "e+i"e in its final 2u"g,ent all t)e issues $aise" (et&een t)e pa$ties in t)e +%u$se %f t)is litigati%n an" t% p$%vi"e su+) $e,e"ies as a$e p$%pe$ in $ega$" t% t)ei$ $espe+tive +lai,s.