Audino v. Lincoln First Bank of Rochester, 1

• Decision Date: 07 November 1984
• Docket Number: No. 2,No. 1,1,2
• Citation: 481 N.Y.S.2d 928,105 A.D.2d 1091
• Parties: Anthony AUDINO, Louis P. Attoma, John C. Ninfo, Francis C. Regan, and Raymond C. Shaheen, as Co-Partners in a Partnership known as Nortonian Nursing Home, Respondents, v. LINCOLN FIRST BANK OF ROCHESTER, as Executor of the Estate of James H. Hamill, Appellant. ActionKatherine Hamill GIORDANO and Lincoln First Bank of Rochester, as Executors of the Estate of James H. Hamill, Deceased, Appellants, v. Louis P. ATTOMA, John C. Ninfo, Francis C. Regan and Raymond C. Shaheen, as Co-Partners doing business under the name of Nortonian Nursing Home, and Sadie Audino and Robert Camilleri, as Co-Executors of the Estate of Anthony Audino, a Deceased Partner of said Nortonian Nursing Home, Respondents. ActionAppeal
• Court: New York Supreme Court — Appellate Division

Page 928

481 N.Y.S.2d 928

105 A.D.2d 1091

Anthony AUDINO, Louis P. Attoma, John C. Ninfo, Francis C.

Regan, and Raymond C. Shaheen, as Co-Partners in a

Partnership known as Nortonian Nursing

Home, Respondents, v. LINCOLN FIRST BANK OF ROCHESTER, as Executor of the Estate

of James H. Hamill, Appellant. Action No. 1.

Katherine Hamill GIORDANO and Lincoln First Bank of

Rochester, as Executors of the Estate of James H.

Hamill, Deceased, Appellants, v. Louis P. ATTOMA, John C. Ninfo, Francis C. Regan and Raymond

C. Shaheen, as Co-Partners doing business under the name of

Nortonian Nursing Home, and Sadie Audino and Robert

Camilleri, as Co-Executors of the Estate of Anthony Audino,

a Deceased Partner of said Nortonian Nursing Home,

Respondents. Action No. 2. Appeal No. 1.

Supreme Court, Appellate Division,

Fourth Department.

Nov. 7, 1984.

Branch, Turner & Wise by John Branch, Rochester, for appellants (Appeals 1 & 2).

Chamberlain, D'Amanda, Oppenheimer & Greenfield by Louis D'Amanda, Rochester, for respondents (Appeals 1 & 2).

Before HANCOCK, J.P., and CALLAHAN, DOERR, DENMAN and O'DONNELL, JJ.

MEMORANDUM:

The decedent, James H. Hamill, was one of six partners in the operation of a nursing home in Rochester. Lincoln First Bank of Rochester ("Lincoln First") appeals from a judgment compelling it as Hamill's executor to transfer decedent's interest in the partnership to the surviving partners (upon payment to the estate of $30,000 plus interest) pursuant to the buy-out clause contained in paragraph 10 of the partnership agreement dated March 6, 1975. The judgment followed a joint trial of the surviving partners' specific performance action and a cross-action brought by Lincoln First and decedent's widow seeking, among other things, to assert rights on behalf of the deceased partner on dissolution of the partnership pursuant to paragraph 12 of the partnership agreement or, alternatively, pursuant to Partnership Law ( § 73). For reasons stated hereinafter, we modify the judgment by reversing the grant of specific performance and dismissing that complaint. We also reverse the dismissal of the second cause of action in the cross-action and grant relief on that cause of action as specified hereafter.

The provision in the March 6, 1975 agreement pertaining to purchase and sale of a deceased partner's interest, insofar as relevant, is as follows:

"10. DEATH

"A. Upon the death of any Partner the surviving Partner or Partners shall purchase and the estate of the deceased Partner shall be obligated to sell his entire interest or share of the decedent in the Partnership as provided herein.

B. Upon the death of any Partner the surviving Partners (or one or more of them) shall give notice in writing of their election to purchase the decedent's entire Partnership interest. Said notice shall be given to decedent's executor or administrator within three (3) months after decedent's death, or within the period of two (2) months after such executor or administrator shall qualify, whichever period occurs first. The decedent's entire Partnership interest shall then be purchased at the price and the manner hereinafter provided, and the Partnership shall be conducted by the successor Partnership comprised of the surviving Partners.

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D. Each surviving Partner shall have the option to purchase a pro rata share of the decedent's entire Partnership interest, based upon that surviving Partner's share of the profits and losses. Any surviving Partner may elect not to purchase the percentage of the decedent's entire Partnership interest allocated to him, provided that the remaining surviving Partner shall elect to purchase his share or that portion of his share which he does not desire. In the event the remaining surviving Partners do not elect to purchase the entire interest allocated to any surviving Partner not desiring to purchase his pro rata share, his election not to purchase his pro rata share shall be null and void.

E. Upon notification by the surviving Partners of their election to purchase decedent's entire Partnership interest, simultaneously with delivery to the decedent's executor or administrator of the purchase price as hereinabove determined in the form of a certified check or bank cashier's check, together with duly executed promissory notes for the balance of said purchase price, the decedent's executor or administrator shall deliver to the Partners who have thus elected to purchase free from any liens or encumbrances or rights of others therein."

James Hamill died on January 22, 1977 and Lincoln First qualified as executor on February 2, 1977. It is uncontradicted that no notice as required by paragraph 10(B) was ever given, and, indeed, the surviving partners did not assert their claimed rights under the March 6, 1975 agreement until sometime after October 9, 1981, when they first "discovered" that agreement.

In granting specific performance, the court rejected the executor's contention that the right of the surviving partners to purchase the share of a deceased partner under the agreement was an optional right which could be invoked only in compliance with the notice provisions of paragraph 10(B). To the contrary, the court construed the buy-out provision as being mandatory and held that the obligation on the executor to transfer the share of the deceased partner was unconditional and not defeated by the failure of the surviving partners to give notice pursuant to paragraph 10(B). The purpose of the notice requirement, the court reasoned, was "to determine which of the surviving partners will purchase the deceased partner's interest. It is not, as the estate claims, to determine if any of the...