Case ID: ad_99/html/0460-01.html
Source: Caselaw Access Project
Author: {"author": "Hatch, J.: Van Brunt, P. J. (dissenting): Ingraham, J. (dissenting in part):", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Cecelia L. Slater and John J. Slater, as Executors, etc., of John Slater, Deceased, Respondents, v. James Slater, Individally and as Executor, etc., of John Slater, Deceased, Respondent, Impleaded with Cecelia L. Slater, Widow of Said Deceased, and Cecelia L. Slater, Daughter of Said Deceased, Appellants.
    
      Extra allowance in an action to compel an accounting and the sale of certain firm assets — what affords a basis t7ierefor—w7io is a successful party — on w7iat t7ie allowance should be computed.
    
    In an action brought by the executors of a deceased partner against the surviving partner to compel an accounting and a sale of the partnership assets, the principal issues involved were whether the firm name constituted an asset of the partnership or passed to the surviving partner, and whether the surviving partner, who had been appointed receiver pendente lite, was entitled to compensation.
    The action was tried at Special Term and resulted in a judgment adjudging that the right to the firm name passed to the surviving partner, and also that the surviving partner was not entitled to any compensation for his services as receiver.
    Upon an appeal to the Appellate Division that court decided that the surviving partner was not entitled to compensation as receiver and that the partnership name was a firm asset.
    Both parties appealed to the Court of Appeals and that court also held that the firm name was a partnership asset. Both the Appellate Division and the Court of Appeals awarded costs to both parties, payable out of the partnership fund.
    The rights of the parties having been thus determined the litigation was settled and a corporation formed to take over the partnership business with a capital of §100,000, divided equally between the parties in interest.
    The value of the tangible partnership assets was upwards of §100,000, while the value of the good will and the firm name was from §200,000 to §300,000.
    
      Held, that it was proper for the court, over the objection of the widow and a daughter of the deceased partner, to grant an extra allowance of §1,000 each to the plaintiffs and to the surviving partner;
    That the subject-matter of the litigation had a sufficient money value to justify the granting of such an allowance;
    That the contention that the surviving partner should be regarded as an unsuccessful party, and hence not entitled to an extra allowance was sufficiently answered by the fact that both the Appellate Division and the Court of Appeals awarded costs to both parties, payable out of the partnership fund;
    That on a motion for an extra allowance made in an action for a partnership accounting the amount for which judgment is obtained is the amount involved, hut where no judgment is entered establishing the value of the subject-matter of the litigation then the basis of the extra allowance is the value of the assets or interest involved;
    That in such an action the allowance is based upon the proportion of the assets to which the moving party has shown himself to be entitled and not upon the total of the assets.
    Van Brunt, P. J., and Ingraham, J., dissented.
    Appeal by the defendants, Cecelia L. Slater, widow of John Slater, deceased, and another, from an order of the Supreme Court, made at the blew York Special Term and entered in the office of the clerk of the county of Hew York on the 20th day of June, 1904, granting an extra allowance to the plaintiffs and the defendant, respondent.
    
      John L. Lindsay, for the appellants.
    
      John A. Garver, for the plaintiffs, respondents.
    
      James W. Hawes, for the defendant, respondent.
   Hatch, J.:

This action was brought by the executors of the will of John Slater, deceased, against James Slater, the surviving partner of the firm of J. & J. Slater, the testator composing the other member of the firm, to compel an accounting and sale of the partnership assets. Aside from the firm name, the partnership assets were of the value of $100,000 and upwards. The principal issue involved in the litigation, however, did not involve so much the tangible property of the copartnership, but related to the question as to whether or not the firm name constituted an asset of the partnership to be valued and sold for the benefit of all, or whether its exclusive use passed to the surviving partner, so as to prevent right in any other person to purchase or make use of it and conduct the business thereunder as a going concern. After a trial at Special Term the court rendered a judgment holding that the right to continue the use of the firm name passed and belonged exclusively to the surviving partner. Pending the litigation the latter had been appointed a receiver to continue the business. In the interlocutory judgment entered upon the decision of the court no compensation was allowed to the receiver for his services. From the interlocutory judgment appeals were taken by both parties. The plaintiffs appealed from so much of the judgment as held that the right to use the firm name was not a firm asset, and the defendant appealed from so much of the judgment as refused him compensation as receiver. This court sustained the plaintiffs’ contention that the receiver was entitled to no compensation, and upon the other question it held that the partnership name constituted a part of the good will of the .firm, and was, therefore, an asset which might be sold or assigned ; that the right to the use of such name did not pass to the survivor unless he purchased and continued the copartnership business; that if sold to any one else than the survivor, the name could only be used as successor to the firm of J. & J. Slater, but if the surviving partner desired to engage in the same business, either alone or with others, he had the right to purchase and continue the business under the firm name. (Slater v. Slater, 78 App. Div. 449.) An application by both parties for leave to appeal to the Court of Appeals was granted and the court certified the legal questions involved in the action. The Court of Appeals unanimously held that the firm name was a part of the good will of the firm, was, therefore, a partnership asset and that it could be sold without any limitation or restriction upon its use to a purchaser in the same way and with like effect as in the case of all the other assets of the firm, the only limitation upon the right of use by a purchaser being that he would be required to make the real facts a matter of public record in order that it should appear who the members of the firm were. (Slater v. Slater, 175 N. Y. 143.) The rights of the parties having thus been determined, a settlement of the litigation was had, which resulted in the formation of a corporation under the name of J. & J. Slater with a capital of $100,000 divided equally between the parties in interest. Subsequently this motion was made for an extra allowance pursuant to the provisions of section 3253 of the Code of Civil Procedure. The widow and a daughter of the deceased were allowed by consent to intervene for the purpose of opposing the motion, otherwise it was unopposed. The court granted an extra allowance of $1,000 each to the plaintiffs and to the defendant James Slater, and from the order entered thereon this appeal is taken.

The particular contention raised by the intervenors, who are the appellants, is that it is not made to appear that the subject-matter of the litigation had any money value, and, therefore, that it could not be made the basis upon which to grant an extra allowance. In similar cases it has been held that in an action for a partnership accounting the amount for which judgment is obtained is to be considered the amount involved (Hagenbuchle v. Schultz, 69 Hun, 183); but where no judgment is entered establishing the value of the subject-matter of the litigation, then, by the terms of section 3253 of the Code of Civil Procedure, the basis for the extra allowance proceeds upon the value of the asset or interest involved (Proctor v. Soulier, 8 App. Div. 69), and may be shown by affidavit or the pleadings and papers contained in the record. (Hayden v. Matthews, 4 App. Div. 338; affd. on appeal on opinion below, 158 1ST. T. 735.) The computation, however, is to be made in an action for an accounting of the partnership affairs upon the proportion of the assets to which the, moving party has shown himself to be entitled and not upon the total of the assets. (Hasbrouck v. Marks, 58 App. Div. 33; affd. on appeal, 170 N. Y. 594.) It appeared by the averments of the complaint that the value of the partnership name was worth at least the sum of $100,000, and in the affidaxdt submitted by the attorney for James Slater a computation is made of the value of the tangible assets of the copartnership, the amount of its net profits and the capitalized value of the whole business based thereon, and from such evidence it is deduced that the value of the good xvill and the firm name was from $200,000 to $300,000. It also satisfactorily appears from the papers submitted that the profits of the business during the period covered by the litigation were about $95,000; that as the result of the litigation and the organization of the corporation the total income to the estate of the decedent will amount to about $13,000 per annum. The basis would, therefore, seem to be sufficient upon which to found an extra allowance. (Hudson River Telephone Co. v. W. T. & R. Co., 135 N. Y. 393.)

It has been suggested that inasmuch as James Slater contended that he as survivor took the exclusive right to the use of the firm name and was defeated in such claim and also defeated in the claim which he made for compensation as receiver, that he is to be regarded as the unsuccessful party, and, therefore, not entitled to an extra allowance. Both this court and the Oourt of Appeals, however, took a different view, as upon each appeal costs were awarded to both parties, payable out of the partnership fund, so that each party to the litigation so far as costs are concerned has been recognized by the courts as standing upon an equal footing, and this being their status, there is no ground for making distinction in awarding the extra allowance. The amounts allowed are clearly within what has been fairly established as the value of the good will of the business.

It follows that the order should be affirmed, with ten dollars costs and disbursements.

Patterson and Laughltn, JJ., concurred; Ingraham, J., dissented in part.

Van Brunt, P. J. (dissenting):

I do not think that there was any foundation for any allowance.

Ingraham, J. (dissenting in part):

I concur with Hr. Justice Hatch, except so far as to affirm the order granting an allowance to the defendant James Slater. The whole litigation resulted from the claim of James Slater that he, as surviving partner, was entitled to the continued use of the firm name of J. & J. Slater and to continue the business of that firm as survivor. He has been defeated in his claim, and the advantageous settlement has resulted from such defeat. Under such circumstances the costs of the litigation made necessary by the unfounded claim of James Slater should not be paid for out of the copartnership property. The fact that he avoided the liability for costs is no reason why he should be granted an extra allowance for the services rendered by his counsel in asserting his claim.

I think, therefore, that the order should be modified by affirming the allowance to the plaintiffs, and denying the motion of James Slater for the allowance, with ten dollars costs and disbursements of this appeal to be paid to the appellants by James Slater.

Order affirmed, with ten dollars costs and disbursements.