J. A. WOLFSON, PLAINTIFF AND APPELLANT, VS. SIDNEY C. SCHWARZKOPF, DEFENDANT AND APPELLANT.

The
defendant was formerly a clerk in the law firm of Wolfson &
Wolfson, and, through the sheer force of his industry and ability, was
admitted as a partner July 16, 1917, and continued as a member of the
firm until November 15, 1921. Some time in 1921, he made a trip to the
United States during which time he drew heavily on the firm, resulting
in a large overdraft.

The record is conclusive that up to
that time there existed a warm and close personal friendship between
the members of the firm, and that it was doing a very substantial
business. Largely on account of the large overdraft of the firm in the
bank incurred by the defendant upon his trip to the United States, a
few days after his return the following agreement was signed by the
respective partners:

“Dissolution agreement

“Whereas
the undersigned entered into a partnership agreement on July 16, 1917,
and dissolved same by mutual consent on November 15, 1921:

“The following settlement is agreed to—

“1.
S. C. Schwarzkopf hereby sells his entire interest in the firm,
including all participation of whatsoever kind and nature in and to any
and all fees, to J. A. Wolfson, in consideration of fifteen thousand
pesos (P15,000), which amount shall forthwith be credited to S. C.
Schwarzkopf’s overdraft: Provided, however, That in those
unfinished cases which S. C. Schwarzkopf takes over for his future
clients, said S. C. Schwarzkopf shall give due credit for the services
rendered by the old firm prior to the date of dissolution (November 15,
1921) and when said S. C. Schwarzkopf collects the fees, he shall pay
J. A. Wolfson for such prior services: And provided, further, That in the case of ‘Fulton Iron Works Company vs.
Binalbagan Estates, Inc.,’ the future fees, whatever they may be, shall
be divided fifty per centum (50%) to J. A. Wolfson and fifty per centum
(50%) to S. C. Schwarzkopf;

“2. S. C. Schwarzkopf agrees,
free of charge, to render such assistance as he may be called upon to
render to wind up pending cases where his special knowledge of such
cases is considered requisite.

“Manila, P. I., November 21, 1921.

pp.		“JOS. N. WOLFSON
(Sgd.)		“J. A. WOLFSON
		“J. A. WOLFSON
		“SIDNEY C. SCHWARZKOPF”

As
a result of some sharp correspondence between them, the plaintiff
brought this action in which he alleges the execution of the
dissolution agreement, and that after deducting the P15,000 therein
mentioned, there is a balance due and owing him of P17,772.62, with
interest, and he prays for a corresponding judgment, and as a second
cause of action asks for an accounting, and when made, that plaintiff
have a further judgment for the balance that may be shown due and owing
upon such accounting, and he also prays for judgment in a third cause
of action for the further sum of P2,497.61, with interest from December
7, 1921, at the rate of 9 per cent per annum and costs.

For
answer the defendant makes a general and specific denial of all the
material allegations of the complaint, except those which may be
hereinafter admitted, and as a special defense, alleges in substance
that all of the books and accounts of the firm were kept under the sole
supervision of the plaintiff, and that the defendant relied upon the
statements of account of the partnership as they were rendered and
certified from time to time by the plaintiff. That previous to the
execution of the dissolution agreement plaintiff represented and
warranted to the defendant that the business assets of the firm would
not exceed P50,000. That such representations were false and that
plaintiff knew them to be false when made. That after the defendant
discovered that they were false, he made a demand upon the plaintiff in
writing for a written statement showing and disclosing the status of
the business of the firm, and that he be given access to the books of
account, for the purpose of having them checked and corrected.

As a second special defense, defendant alleges that the firm books of
account are in the exclusive possession of the plaintiff, and defendant
prays for an accounting of all of the firm business from July 15, 1917,
to November 15, 1921, and as a counterclaim defendant alleges that on
November 15, 1921, defendant delivered to the plaintiff five bonds of
the Manila Golf Club worth P500, with interest coupons attached, with
the agreement that the plaintiff should retain the same for the
defendant and collect any matured interest. That demand has been made
and plaintiff has failed and refused to deliver the bonds to this
defendant, and that they are now of the reasonable value of P580.
Defendant prays for judgment that plaintiff take nothing by his
complaint, and that on account of fraud, the dissolution partnership
agreement be set aside and held for naught, and that plaintiff be
required to render a just, true and accurate accounting of all of the
firm business, and that pending the suit, he be restrained from
removing any of the books of account, vouchers, and letters concerning
the firm business from the firm office, and that this defendant have
the right to examine the accounts of the firm business through an
authorized public accountant. That upon the rendition of the accounts,
defendant recover from plaintiff such an amount as may be found justly
due and owing, and that defendant have and recover judgment for his
Manila Golf Club bonds, or their value, P580, and costs.

During the taking of testimony, different admissions were made by the
respective parties, and the court later rendered judgment against the
defendant upon the first cause of action for P17,772.62, with interest
at 9 per cent from November 3, 1922, for P10,765.47, with legal
interest from November 3, 1922, for P900 to be delivered by the
defendent to the plaintiff whenever such amount is at defendant’s
disposal. The defendant is further ordered to deliver to plaintiff
stock certificate for P1,000 of the Isuan, Inc., and stock certificate
for P500 of the Haight’s, Inc. The, court denied the defendant’s right
to accounting and rendered judgment in his favor and against, the
plaintiff for the delivery of the five Manila Golf Club bonds, or their
value, P500.

From this decision the plaintiff appeals,
contending that the lower court erred in allowing him interest only
from the date of the filing of his complaint.

The defendant
appeals, contending that the lower court erred in rendering judgment in
favor of the plaintiff and against the defendant, and in denying
defendant’s motion for a new trial.

JOHNS, J.:

This is an unfortunate law suit between two prominent attorneys of the
bar, who were at one time close personal friends, and for more than
four years were members of the same legal firm.

The judgment
for P17,772.62 in favor of the plaintiff is the balance due and owing
upon defendant’s overdraft after deducting the P15,000 which the
defendant received as his share in the assets of the firm. The judgment
for P10,000 is one-half of the fee of P20,000 which the defendant
admits he received from the Fulton Iron Works, as specified in the
dissolution agreement, which would be divided between them on a
fifty-fifty basis.

The real question in this case is the
legal force and effect of the dissolution agreement. As the defendant
points out in his brief, the trial court made but two findings in
substance as follows:

“First, that inasmuch
as the plaintiff had afforded defendant an opportunity to examine the
books, records and accounts of the former firm of Wolfson, Wolfson
& Schwarzkopf, and inasmuch as the latter did not avail himself of
that opportunity, he, defendant, is now estopped from complaining.

“Second,
that plaintiff upon entering into this so-called dissolution agreement
assumed the risk of collecting the amounts making up the sum of P50,000
which the plaintiff, claimed were the true assets of the former firm.”

The record shows that while the defendant was in the United States,
there was correspondence between him and the plaintiff tending to show
that the firm would be dissolved upon the return of the defendant, and
that the dissolution would be mutually satisfactory to both parties.

On November 11, 1921, plaintiff advised the defendant of his desire to
dissolve the firm, and that the defendant agreed to the dissolution and
admitted the amount which was overdrawn by him while he was in the
United States. The dissolution agreement signed on November 21, 1921,
was the result of negotiations between the plaintiff and the defendant
covering a period of several days. During all of that time the
defendant was a member of the firm, and as such had a legal right to
see and examine all of the accounts, books and records of the firm, and
the lower court found as a fact that the plaintiff had afforded
defendant an opportunity to examine them, and that he had not availed
himself of that opportunity. It will be noted that the dissolution
agreement recites that the defendant sells his entire interest in the
firm to the plaintiff for a consideration of P15,000 to be credited
upon the defendant’s overdraft. Provision is then made for any
unfinished business, and that the fee from the Fulton Iron Works was to
be divided on a fifty-fifty basis. In other words, the parties agreed
upon the lump sum of P15,000 as the amount which the defendant should
receive for his entire interest in the assets of the firm. That
dissolution agreement was a voluntary settlement between the parties of
all their mutual dealings as partners. Both of them were attorneys,
skilled in their profession, and it must be presumed that each of them
knew and understood the nature and intent of the settlement and its
legal force and effect. That rule is especially true where the parties
to a settlement are attorneys. To overcome that legal presumption, as
between attorneys in particular, the evidence of fraud should be clear
and convincing.

In this case we have had the benefit of able
and exhaustive briefs of opposing counsel, but in the final analysis,
the stubborn fact remains that the parties signed the dissolution
agreement, and that it was signed as a result of several days
negotiations between them, and that during all of that period the
defendant had the legal right to see and examine the books and accounts
of the firm, and that both parties voluntarily entered into the
agreement.

In the very nature of things, the defendant must
have had more or less knowledge of the firm business, and the agreement
upon its face shows that it was intended to be a final settlement
between the parties. It provides:

“That in
those unfinished cases which S. C. Schwarzkopf takes over for his
future clients, said S. C. Schwarzkopf shall give due credit for the
services rendered by the old firm prior to the date of dissolution
(November 15, 1921) and when said S. C. Schwarzkopf collects the fees,
he shall pay J. A. Wolfson for such prior services,” and that as to the
fees from the Fulton Iron Works, the future fees, whatever they may be,
should be divided equally between the plaintiff and the defendant. That
is to say, that the defendant was to receive P15,060 for his entire
interest in the firm as of November 21, 1921, and that in addition
thereto, as to any unfinished business which he took over for his own
personal clients, the defendant should give due credit for any legal
services rendered by the firm as a firm prior to November 15, 1921, and
when collected, he should then account to the plaintiff for the pro rata
share of the fees which had been earned by the firm as a firm. Under
the articles of partnership, the defendant had a three-tenths interest
in the firm. The settlement was made on the basis that the amount of
earned and outstanding fees of the firm on November 21, 1921, was
P50,000, three-tenths of which would be P15,000. That was more or less
of an estimate, the amount of which would largely depend upon future
collections.

As stated, both parties were
attorneys and are presumed to know their own business and the legal
force and effect of the written agreement. As found by the trial court,
the proof of fraud is not clear or convincing. It may be that either
the defendant or the plaintiff got the worst of the settlement. But the
fact remains that both parties signed the “dissolution agreement,” and
that both of them are presumed to know what they were signing, and that
it was intended as a full, complete and final settlement between them.

The plaintiff contends that he is entitled to interest from the date of
the settlement, and it must be conceded that he has made out a fairly
strong case. But all things considered, the judgment of the lower court
is affirmed. Neither party to recover costs. So ordered.

Johnson, Malcolm, Villamor, Ostrand, and Romualdez, JJ., concur.