Birnbaum v. Birnbaum

• Decision Date: 08 March 1991
• Citation: 569 N.Y.S.2d 532,171 A.D.2d 1074
• Parties: Matter of Janice S. BIRNBAUM, Petitioner, and Ilene L. Flaum and Central Trust Company, as Coadministrators, C.T.A. and Trustees of the Estate of Bernard P. Birnbaum, Appellants-Respondents, v. Saul I. BIRNBAUM, Respondent-Appellant. Matter of Ilene L. FLAUM, Appellant-Respondent, v. Saul I. BIRNBAUM, Respondent-Appellant, and Janice S. Birnbaum, Respondent.
• Court: New York Supreme Court — Appellate Division

Page 532

569 N.Y.S.2d 532

171 A.D.2d 1074

Matter of Janice S. BIRNBAUM, Petitioner,

and

Ilene L. Flaum and Central Trust Company, as

Coadministrators, C.T.A. and Trustees of the

Estate of Bernard P. Birnbaum,

Appellants-Respondents, v. Saul I. BIRNBAUM, Respondent-Appellant.

Matter of Ilene L. FLAUM, Appellant-Respondent, v. Saul I. BIRNBAUM, Respondent-Appellant, and Janice S. Birnbaum, Respondent.

Supreme Court, Appellate Division Fourth Department.

March 8, 1991.

Fix, Spindelman, Turk, Himelein & Shukoff by Norman Spindleman, Rochester, for appellants-respondents, Ilene L. Flaum and Central Trust Co.

Schlam, Stone & Dolan by John Keigher (Richard H. Dolan, of counsel), New York City, for respondent-appellant, Saul I. Birnbaum.

MacKenzie, Smith, Lewis, Michell & Hughes by Carter Strickland, Syracuse, for respondent, Janice B. Birnbaum.

Before DENMAN, J.P., and BOOMER, PINE, LAWTON and DAVIS, JJ.

MEMORANDUM:

Petitioners, as temporary coadministrators of the Estate of Bernard P. Birnbaum (the Estate), appeal from that portion of an order and decision of the Surrogate that awarded the Estate a 25% interest in two partnerships and directed a dissolution of those partnerships and liquidation of the Estate's interest therein. The Estate contends that the Surrogate erred in applying partnership principles to this constructive trust proceeding by limiting the value of the partnership interests that the Estate is entitled to recover, and that the court improperly usurped the authority of the coadministrators in directing liquidation of the Estate's interests in the partnerships.

Respondent Saul Birnbaum cross-appeals from so much of the same order as awarded the Estate a money judgment in the amount of $329,207.22 plus interest. He contends that a money judgment should not have been summarily awarded to the Estate because there are questions of fact with respect to the issues of timeliness, ratification, and determination of partnership profits.

Addressing the Estate's first contention, we conclude, as we did in a previous appeal between these parties on precisely analogous facts (see, Matter of Birnbaum v. Birnbaum, 157 A.D.2d 177, 185-188, 555 N.Y.S.2d 982), that the valuation formula set out by the Surrogate is proper irrespective of whether the case is decided under partnership principles or principles of constructive trust. Under Partnership Law § 73, when a partner dies and the partnership is continued without settlement of accounts between the estate and the surviving partners, the estate:

"[M]ay have the value of [the decedent's] interest at the date of dissolution ascertained, and shall receive as an ordinary creditor an amount equal to the value of his interest in the dissolved partnership with interest, or, at (the estate's) option * * * in lieu of interest, the profits attributable to the use of his right in the property of the dissolved partnership." (Matter of Birnbaum v. Birnbaum, supra, at 187, 555 N.Y.S.2d 982.)

As we made clear in our prior decision, the term "profits" is employed in its broadest sense to include accretions or accumulations in the decedent's share of the capital of the partnership, i.e., the appreciation in value of the decedent's partnership interest (Matter of Birnbaum v. Birnbaum, supra). Thus, in these circumstances, the estate of the deceased partner is entitled to receive the value of the decedent's interest as determined as of the date of dissolution (death) or the date of judgment, at the estate's election (Matter of Birnbaum v. Birnbaum, supra). Therefore, if the Estate so chooses, it is entitled to the present appreciated value of its 25% interests in the partnerships. In that connection, we conclude that, contrary...