Case ID: ad2d_26/html/0812-01.html
Source: Caselaw Access Project
Author: {"author": "", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

In the Matter of the Arbitration between Leo Hubert et al., as Trustees, et al., Respondents, and Richard S. Merians, Appellant, and Bernard Goodman et al., Respondents.
   Order and judgment (one paper) confirming award of arbitrators unanimously reversed, on the law, on the facts and in the exercise of discretion, and the application is remanded to Special Term for the purpose of giving notice and a hearing to those limited partners who have not appeared on the proceeding, without costs and without disbursements to any party as against the others. On this application to confirm the award of arbitrators, respondent-appellant has raised several objections. The arbitration was had by some 12 limited partners out of 194 against the general partners. The arbitrators made an award dissolving the partnership and providing for the formation of a corporation to which the real estate, the sole asset of the partnership, is to be conveyed. The limited partners are to receive the stock of this corporation in proportion to their interests in the partnership. Provision is also made for paying the expenses of the proceeding. With the exception noted below, we find no difficulty with the award, nor with the procedures to initiate the arbitration or to confirm the award. The exception is the absence of the several limited partners whose investment is being affected without their being heard. As the rights of a limited partner are not subject to adjudication by means of a representative action (Millard v. Newmark & Co., 24 A D 2d 333), it is essential that before any award affecting their rights can he implemented, they should be heard. Had the arbitrators made provision for bringing in or notifying the absent partners, this situation would have been obviated. The failure, which the record shows is understandable and which we do not criticize, does not vitiate the award and can properly be remedied on the motion to confirm (Matter of Rabinor [Pashman], 23 A D 2d 741). We therefore remand the application to Special Term to require respondents to give notice of the application to confirm to the limited partners who have not appeared, in such manner as Special Term shall direct. Upon return of the motion to confirm, if no limited partner objects the award should be confirmed. If there is objection, Special Term shall make such disposition as is called for, including, if necessary, remand to the arbitrators to pass on the objections of the objecting limited partner or partners. Concur — McNally, J. P., Stevens, Steuer and Capozzoli, JJ.