Kanzler v. Smith, s. 221, 222.
| Decision Date | 11 May 1938 |
| Docket Number | Nos. 221, 222.,s. 221, 222. |
| Citation | 123 N.J.Eq. 602,199 A. 35 |
| Parties | KANZLER v. SMITH et al. (two cases). |
| Court | New Jersey Supreme Court |
Syllabus by the Court.
1. The testator made a will leaving all of his property to his widow, and did not provide therein for any issue he might have. A daughter being subsequently born, the will was void. R.S.1937, 3:2-15, 4 Comp.St.1910, p. 5865, § 20.
2. Upon the death of one partner, the articles of agreement not providing otherwise, it is the duty of the surviving partner to liquidate the partnership assets and pay to the deceased partner's legal representative the proper share of the net proceeds.
3. A corporation improperly acquiring partnership assets must account for the real value of the property received.
4. A corporation formed by a deceased partner's widow and the surviving partner, thereby defrauding the infant daughter of the deceased partner, must be dissolved and the assets disposed of in a proper manner; the corporation and the incorporators being liable to pay to the guardian of the infant the proportionate share in equity to which she was entitled upon the death of the deceased partner.
5. On the facts of this case in determining true value of partnership assets at the time of formation of the corporation, the Court of Chancery should determine the same by competent proof as to what would have been the true value upon liquidation, including the value of good will, if any.
Appeal from Court of Chancery.
Suit by George Kanzler against Mary A. Smith, Smith & Kanzler, Inc., and others, involving the proper disposition of assets of a partnership. From the decree rendered, the complainant and the last-named defendant appeal.
Decree remanded.
Melvin J. Koestler, of Elizabeth, for Smith & Kanzler.
Samuel Koestler, of Elizabeth, for complainant-appellant. John J. Stamler, of Elizabeth, for Mary A. Smith and others. Merritt Lane, of Newark, for Mary Patricia Smith. Benjamin Nohemie, of Elizabeth, for Benjamin W. Kanzler and others.
The dispute before the court concerns the proper disposition of partnership assets. George Kanzler and Patrick J. Smith established a business in asbestos products and were equal partners. The concern prospered because of the industry and personal service of both partners. The original contributions to the business was the skill, time, and diligence of the partners. As profits grew they were turned back into the business. On August 25, 1930, Smith died leaving what purported to be his last will and testament. His daughter, Mary Patricia Smith, was, however, born in 1921 after the execution of this will. It was therefore void under R.S.1937, 3:2-15, 4 CompSt.1910, p. 5865, § 20. Notwithstanding, it was probated by the surrogate of Union county, and the widow named as executor and sole beneficiary therein proceeded to act under the authority improperly granted. Kanzler, the surviving partner, and the widow caused a corporation to be formed to take over the business of the partnership issuing stock against the book value of the partnership assets as of the close of business, December 30, 1930. Mrs. Smith became treasurer of the new corporation, and the corporation has paid her dividends on the stock as well as a salary. The corporation has also redeemed a portion of the preferred stock issued. The infant daughter, the will being void, was entitled to two-thirds of the estate left by her father. The probate of the will, the formation of the corporation, and the other acts of the widow in seizing her husband's entire estate was obviously improper, and for such acts she was rightly held to account.
The adjudication below that the infant was equitably entitled to two-thirds of the net personal estate of her deceased father, and that he was entitled to one-half of the net value of the partnership assets, was entirely correct. The court found that because of the transfer of partnership accounts to Smith & Kanzler, Inc., the corporation became liable to the infant for one-third of the net value of the partnership assets as of that time, except to the extent that payments have been made. The decree further directed the corporation to pay the value of one-third of the partnership assets...
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Dugan v. Dugan
...as an element in determining value for purposes of liquidation. Blut v. Katz, 13 N.J. 374, 99 A.2d 785 (1953). In Kanzler v. Smith, 123 N.J.Eq. 602, 199 A. 35 (1938), the Court of Errors and Appeals held that the legally contemplated liquidation of partnership property upon the death of a p......
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...but not all, seek to incorporate a partnership and transfer the assets of the partnership to the new corporation. Kanzler v. Smith, 123 N.J.Eq. 602, 199 A. 35 (E. & A.1938); Height v. Democratic Women's Luncheon Club of N.J., 131 N.J.Eq. 450, 453, 25 A.2d 899 (Ch.1942); Great Council, etc.,......
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Blut v. Katz
...the value for purposes of liquidation, where the partnership agreement does not eliminate it by express terms. In Kanzler v. Smith, 123 N.J.Eq. 602, 199 A. 35 (E. & A.1938), the Court of Errors and Appeals said the liquidation of the partnership property in accordance with law does not cont......
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Reed's Estate, In re
...co-executor, is occasioned by apprehension that arises from the decision of our former Court of Errors and Appeals in Kanzler v. Smith, 123 N.J.Eq. 602, 199 A. 35 (1938). As to the right of an executor to contest a will, see In re Babcock, 112 N.J.Eq. 374, 164 A. 407 (E. & A.1932) and Green......