Court Opinion

ID: 5500640
Source: CourtListenerOpinion
Date Created: 2022-01-10 02:58:58.849386+00
Date Added: 2024-06-11T08:33:55.102898
License: Public Domain

Merwin, J.
The contention of the appellants is that the decision of the referee, so far as he holds that the tenth clause of the will is revoked by the contract of June 14,1889, is erroneous. The, theory of the respondents is that the provisions of the contract are wholly inconsistent with that part of the will, and therefore amount to a revocation within section 48, tit. 1, e. 6, pt. 2, of the Revised Statutes. 4 Rev. St. (8th Ed.) 2549. The theory of'the appellants is that the contract is not wholly inconsistent, and also that it is not a valid instrument. The real question in substance is whether the New Orleans church shall under the will share in the future avails of the business, or whether under the contract they shall be paid to the estate generally and be distributed as general assets, thus in effect benefiting the residuary legatee, or, if the residuary bequest is invalid, then going to the next of kin. By section 47 of the title above referred to it is provided that a conveyance, settlement, deed, or other act of a testator, by which his estate or interest in property previously devised or bequeathed by him shall be altered - but not wholly divested, shall not be deemed a revocation of the devise or bequest of such property, but such devise or bequest shall pass to the devisee or legatee the actual estate or interest of the testator which would otherwise descend to his heirs or pass to his next of kin, unless in the instrument by which such alteration is made the intention to revoke is declared. Section 48 is as follows: “But if the provisions of the instrument by which such alteration is made are wholly inconsistent with the terms and nature of. such previous devise or bequest, such instrument shall operate as a revocation thereof, unless such provisions depend on a condition or contingency, and such condition be not performed or such contingency do not happen. ” So that, in the present case, although the testator was not wholly divested of his interest in the property, still the contract, if valid, would operate as a revocation if its provisions were wholly inconsistent with the terms and nature of the bequest. The testator at the time of making the will was the' entire owner of the patents there referred to. A partnership then existed between him and Saville that was engaged in selling and operating cotton compressors manufactured under the patents. The testator had a two-thirds interest in the business and Saville a one-third, and the patterns, tackle, and machinery were owned by the firm in the same proportion. This partnership was formed in September, 1885, but whether for any definite time does not appear. By the will Saville is given an undivided half of the patents, patterns, tackle, etc., in consideration that he will carry on the business of making and selling machinery under the patents for ten years after the testator’s decease and pay annually to the New Orleans church one-half of the net avails and profits; Saville at the end of the ten years to become the absolute owner of the patents and the business of making and selling them. By the contract the partnership was to continue for the definite period of five years from May 1, 1889. By its terms Saville became the owner of one-third of the patents. The profits and losses were to-be divided for the first two years in the proportion of two-thirds to Steers and one-third to Saville, and thereafter equally. In case of death of either before the expiration of the five years the firm business was to be continued by the survivor to the end of the term, the profits and losses to be divided in the same proportion as if both had lived, and at the close of the term there was to be a division in the same proportion of all the assets, profits, and losses then existing, except that the firm name, good-will, and patents should become the sole property of the survivor, and he might thereafter continue the business for his own benefit in the firm name. If, however, Saville was the survivor *402and should continue the business, it was agreed that he should pay the estate of Steers a royalty of $3,000 for every compress sold. Both the will and the contract related to the business of making and .selling machinery under the same patents. The will provided for a ten-years term and the final ownership by Saville of the patents and the business. The contract, in the contingency of Saville being the survivor, provided for the same result at the end of five years, with a provision on his part to pay the estate of Steers a royalty for a further period of five years. The will provided for the payment by Saville of one-half the net profits to'the Yew Orleans church for the ten years; the contract provided for the payment to Steers or his estate of two-thirds the profits for two years and one-half for the balance of the time. The contract" covered the whole subject. The continuance and closing up of the business, the division of the assets and profits,, and the final ownership of the patents were all provided for. The patents expired in 1898, before the termination of the operation of the contract. Yothing was therefore left for the will to act upon. It may therefore be well said that the provisions of the contract are wholly inconsistent with the terms and nature of the bequest. There would seem to be no doubt about the intention of Steers. The situation had materially changed after the date of the will. There was a change in the ownership, and the firm had become financially embarrassed. Very clearly the design of Steers was that the contract should take the place of the provision of the will. The estate is entitled to have the contract, if valid, carried out. Saville himself is in the attitude of claiming benefits under it. It is not claimed that the Yew Orleans church can take the proceeds under the contract. See Beck v. McGillis, 9 Barb. 59, and cases there cited. McNaughton v. McNaughton, 34 N. Y. 203.
It is further claimed by the appellants that the contract, so far as it provides for the continuance of the business by the survivor with a division of the profits and losses for the full term, is void. This question is not raised in the answers of the' appellants or by any request for findings. We will, however, assume that the question is before us. The cases of Ross v. Hardin, 79 N. Y. 84, Bank, of Newburgh v. Bigler, 83 N. Y. 52, and Stewart v. Robinson, 115 N. Y. 328, 22 N. E. Rep. 160, 163, are cited on the subject. It is not claimed that either of these cases decides the question. At most they "suggest some doubts. In the Boss-Case the action was brought to recover the value of services rendered by plaintiff at the request of defendant’s intestate, in the care of certain property intermediate the death and the appointment of an administrator. Church, C. J., in the opinion says: “It is very clear, I think, that a person cannot by a contract supersede or contravene the laws in respect to the management and devolution of property in cases of intestacy. The statute has provided a mode of doing this by will, but the requirements of the statute must be complied with.” He, however, sees no reason why a party may not make a valid contract- for the care of his property from his death to the appointment of an administrator. This question, however, was riot passed upon, the plaintiff being beaten upon another ground. In the Bank of Newburgh Case it was held that a surviving partner had no authority to bind the estate of the deceased partner by new accommodation indorsements, or by renewal of old indorsements of that character made in the lifetime of the deceased, although there was a provision in the articles of partnership that the survivor should continue to carry on the business for the benefit of both parties for a specified time after the death; it being said that the authority thus conferred, if held to be operative, would not be sufficient. In the Stewart Case there was a provision like the one in the present case, and the question was whether the estate generally of the deceased was liable for new debts contracted by the survivor. It was held not, it being said to be not necessary to determine the question raised by the respondents that the agreement was not valid for any purpose. In Re Laney, 2 N. Y. Supp. 443, the agree*403ment was that in case of the death of any of the parties before, the expiration of the term, which was seven years, the copartnership should not be dissolved, but be continued by the survivor under the same firm name to the expiration of the term, and the share of the deceased partner in the profits be paid to his representative. One of the partners died in about two years. In an accounting by his administrator, who was also one of the survivors, it was expressly held that the agreement was valid, and the account was settled on that basis. It was said that under the agreement it was the duty of the survivors to continue the business for the benefit of the estate of the deceased as well as for their own benefit during the time fixed by the articles, and that by virtue of its prescribed contribution to the capital stock the estate is entitled to its share of the profits according to the provisions of the contract. This case was affirmed by the court of appeals without opinion. 119 N. Y. 607, 23 N. E. Rep. 1143. In Scholefield v. Eichelberger, 7 Pet. 594, it is said that there is no doubt that the liability of a deceased partner as well as his interest in the profits of a concern may by contract be extended beyond his death. This doctrine Judge Story indorses in Burwell v. Mandecille’s Ex'r, 2 How. 576. In Wild v. Davenport, 48 N. J. Law, 137, 7 Atl. Rep. 295, it was held that a stipulation in partnership articles that upon the deatli of a partner his capital shall remain in the business until the expiration of the prescribed term is binding as well upon the estate of the deceased as upon the surviving partner. Many other cases are to the same effect. Gratz v. Bayard, 11 Serg. & R. 41; McNeish v. Oat Co., 57 Vt. 316; Goodburn v. Stevens, 5 Gill. 22. And so are the text-books. Story, Partn. § 319a,• T. Pars. Partn. (2d Ed.) 469. Lindl. Partn. 866. We must therefore assume, I think, that the parties had a right to make the contract in question, and that it is operative, unless there is something in the further objection by the appellants that the contract attempts to create an illegal suspension of the absolute ownership of personal property, and also an unlawful accumulation “of the interest, income, or profit of personal property,” in violation of the provisions of title 4, c. 4, pt. 2, of the Be-vised Statutes. 4 Bev. St. (8th Ed.) 2516. We are, referred tono case which sustains the proposition that the statute referred to applies to an ordinary contract for a partnership, or for the continuance of the business of a partnership by a survivor to the end of a term. While all the partners are alive they have full control and there is no suspension of absolute ownership. Upon the death of one, the survivors become the legal owners of the assets,—take them, not as trustees, but as survivors holding the legal title, subject to the equitable right of the representatives of the deceased partner to have the assets applied according to the terms of the partnership. Williams v. Whedon, 109 N. Y. 333, 16 N. E. Rep. 365. So that in the present case there was no suspension of absolute ownership. The survivor, either alone or in connection with the representatives of the deceased, could transfer the absolute title. Inalienability can only exist when there are no persons in being who can convey a title. Wetmore v. Parker, 52 N. Y. 459, 460. See, also, Garvey v. McDevitt, 72 N. Y. 563; Murray v. Murray, 7 N. Y. St. Rep. 394. The power to convey at any time existed; the time when to convey depended upon the exigencies of the business. Hor was there any direction for the accumulation “of the interest, income, or profit of personal property” within the statute. There was nothing to prevent the division of profits, if any were earned, before the expiration of the term. It was therefore within the control of the survivor and the representatives of the deceased. There might never be any profits to divide. If there were any, it would hardly be proper to call them the profits of personal property. They would be the profits of the business, and depend very largely on the skill and energy of the partner in charge. In fact, in this case the main elements apparently would be the skill of the survivor on the one hand and the value of the patents on the other. It follows that the contract was valid. Ho other questions are presented by the appellants. The judgment should be affirmed. All concur.