In Re Williams' Estate. Williams v. Bugbee. *, 3195.

• Citation: 53 A.2d 719
• Decision Date: 27 October 1932
• Docket Number: No. 3195.,3195.
• Parties: In re WILLIAMS' ESTATE. WILLIAMS et al. v. BUGBEE. *
• Court: New Jersey Prerogative Court

53 A.2d 719

In re WILLIAMS' ESTATE.

WILLIAMS et al.

v.BUGBEE. ^*

No. 3195.

Prerogative Court of New Jersey.

Oct. 27, 1932.

Proceeding in the matter of the Estate of Richard H. Williams, deceased, by Richard H. Williams, Jr., and others against Newton A. K. Bugbee, Comptroller, involving liability for transfer inheritance tax. From an adverse determination, the plaintiffs appeal.

Affirmed.

Robert E. Burke, for appellants.

William A. Stevens, Atty. Gen., and William A. Moore, of Trenton, for respondent.

BUCHANAN, Vice Ordinary.

In assessing transfer inheritance tax in respect of the estate of Richard H. Williams, the Comptroller included among the assets of decedent's estate (upon which the tax was computed) an item of $194,912.47 as a part of decedent's interest in the partnership of Williams & Peters. Appellant contends that this item was not a part of decedent's taxable assets. Whether or not the Comptroller erred in so including it, is the sole question at issue in this appeal. No question is raised as to the method of arriving at the valuation of the item, or the accuracy of the computation of such value.

Decedent at the time of his death, (April 28, 1923) was a member of the partnership aforesaid,-which had earlier consisted of four members, to wit, Richard H. Williams (the decedent), Samuel T. Peters, Richard H. Williams, Jr. and Harry T. Peters. Samuel T. Peters had died in 1921, and thereupon a new partnership agreement was entered into on November 4, 1921, under which the estate of the said Samuel T. Peters was continued as a partner together with the three surviving partners. This was to continue until January 1, 1925. The capital account of the partnership belonged equally to Richard H. Williams and the Samuel T. Peters estate, and this was not to be withdrawn during the period. Salaries of $30,000.00 each for the two younger men and of $60,000.00 for Richard H. Williams were provided. Profits (and losses) were to be shared in the proportions of 15% each by the junior partners and 35% each by Richard H. Williams and the estate of Samuel T. Peters. It was specifically provided that if any partner should die before the termination date,-January 1, 1925,-the business should continue to be carried on by the remaining partners and the estate of the partner so dying should be continued in the business until that date.

This was the partnership agreement in force at the time Richard H. Williams died, April 28, 1923. (It was modified after his death, but that of course is of no materiality on this inquiry,-the value of his interest is to be determined as of the date of his death.)

Under it, as will be observed, Richard H. Williams had an interest of 50% in the partnership capital, and 35% in the profits, which continued, notwithstanding his death, until January 1, 1925. (His salary of course terminated at his death.)

The comptroller, in computing the value of his interest in the partnership, included his 50% interest in the capital account, his interest in several special accounts, and the item, now in dispute, of $194,912.47,-which was the sum fixed by the Comptroller as the value, or rather as part of the value,-as of the date of decedent's death,-of the decedent's interest or right to continue to share in the profits of the firm until January 1, 1925.

The business of the firm was the selling of coal for certain large coal companies, under agency contracts, for which sales it received percentage commissions. Some of these agency contracts (called the Western contracts) were to expire and did expire about six months after decedent's death,-but in that time the firm collected commissions of $310,457.00 for sales made under them. The other contracts which were also to expire in November 1923, were assigned to the United States Distributing Co. on March 27, 1923 (a month before decedent's death), under an agreement whereby the latter company was to pay to the firm a flat sum of $125,000.00 per year for five years and also a commission of 1 1/2% on all coal sold up until the termination of the agency contracts in November, or until the end of an extension of such contracts, if the coal companies agreed to extend them. The firm of Williams and Peters, in addition to assigning the contracts and their good will (exclusive of the firm name) were to use their...