Kremelberg v. Thompson

• Decision Date: 13 July 1917
• Citation: 103 A. 523,87 N.J.Eq. 655
• Parties: KREMELBERG et al. v. THOMPSON et al.
• Court: New Jersey Supreme Court

103 A. 523

87 N.J.Eq. 655

KREMELBERG et al.

v. THOMPSON et al.

Court of Errors and Appeals of New Jersey.

July 13, 1917.

Minturn and Kalisch, JJ., dissenting.

Appeal from Court of Chancery.

Bill by Harriet Ella Kremelberg and others against Edith K. Thompson and others. Bill dismissed, and complainants appeal. Affirmed.

The following is the opinion of Vice Chancellor Stevens in the court below:

This is a bill for an accounting. The complainants are the children of John D. Kremelberg, late of the city of Baltimore. The defendant is the daughter and sole heir at law of J. George Kremelberg, deceased, a brother of John. The effort is to charge George's estate with a sum amounting to several hundred thousand dollars, on the theory that he failed to account for property derived from his brother, which, it is said, he held in trust for complainants. The property in respect of which this trust is alleged to have arisen was, if I understand complainants' position aright, John D. Kremelberg's share of the good will of a commission business carried on by him in New York and Baltimore, which after his death came into the hands of George, and thereafter, it is said, produced large profits. The defendant denies the existence of any trust unperformed. The facts are these:

John D. Kremelberg was at the time of his death, in May, 1882, a commission merchant, engaged in the business of exporting tobacco. The Baltimore firm was known as J. D. Kremelberg & Co. Of this, John D. was almost sole owner, his son Frederick having a small but unknown and negligible interest that had been given to him by his father. The New York firm was known as Kremelberg & Co. It consisted of John D. Kremelberg, whose interest was 20 per cent., of J. George Kremelberg, whose interest was 40 per cent. and of Adolph Engler, whose interest was also 40 per cent. The business had no fixed capital, but John had allowed a part of his profits to remain undrawn, and this constituted the capital for both firms. Other than this, they had no capital and no property. At the time of John's death, the business appears to have been fairly profitable, and John was reputed to be wealthy. His estate, however, realized only $136,000, of which $50,000 came from the sale of the house in which he lived. His will, made eight years before he died, contained the following clauses:

"I give, devise and bequeath to my brother, George, and my son J. Frederick, in equal proportions, all my interest in the following business houses, namely, Kremelberg & Co., New York, J. D. Kremelberg & Co., Baltimore, Kremelberg, Schaefer & Co., New Orleans [this last-named firm had ceased to exist at his death], and in the assets and property of every kind of said houses or firms. * * * It is my will and I hereby direct that all my just debts and funeral expenses and the entire interest to which my wife may be entitled in my estate real and personal, shall be paid out of the proceeds of the rest and residue of my estate above mentioned, so that my interest in the business houses and firms above mentioned and devised to my brother George and my son J. Frederick shall remain wholly undisturbed and be in no way interfered with.

He appointed his brother George, his son Frederick and his friend Samuel H. Tagart his executors. Of these only Tagart qualified. He was a prominent Baltimore lawyer and a personal friend of the family. None of the persons who took an active part in the settlement of John's estate, except John's daughter Ella, are alive. His two sons died a few years after their father. The complainants base their case upon documents, of whose contents, it is said, complainants were until recently ignorant, and these I will take up in the order of their dates. The first is the notice sent out by the surviving partners:

"Baltimore, May 31, 1882—Sir, it is our painful duty to inform yon of the death of our highly esteemed senior partner, Mr. J. D. Kremelberg, on the 24th instant at Philadelphia, where he had gone for medical advice.

"The business in Baltimore, New York and Louisville will be continued as heretofore. "Yours very respectfully,

"J. Fred Kremelberg,

"George Kremelberg, I New York.

"Ad. Engler, J

"Julius Wille, Loqisville."

The inventory of testator's tangible property, made in July, 1882, does not appraise or even refer to testator's interest in the two firms. The paper next in order of date is a deed from Frederick Kremelberg to his Uncle George, dated on December 4, 1882, by which, in terms that are absolute and unconditional, he transfers to him all his "estate, right, title, interest, claim, and demand whatsoever in and to all the property devised and bequeathed * * * by the aforesaid item of said last will and testament"; that is, the item giving John's interest in the business houses above mentioned. Contemporaneously, George executed a trust deed as foilows:

"Know all men by these presents, that whereas, by deed of even date herewith, perfected before the execution hereof. John Frederick Kremelberg conveyed and assigned to me all the interest bequeathed to him in and by the will of his father, the late John D. Kremelberg, in and to the business houses Kremelberg & Co., New York. J. D. Kremelberg & Co. Baltimore. Kremelberg, Schaefer & Co., New Orleans, and in the assets and property of every kind of said houses and firms: Now I hereby declare that the said assignment and conveyance to me was made and that I now hold the said property in trust for the said John Frederick Kremelberg, Elizabeth Virginia Kremelberg, Harriet Ella Kremelberg, John Diedrich Kremelberg. Anna Maria Kremelberg, and Mary Augusta Kremelberg, in equal proportions share and share alike."

The only explanation offered as to why this trust deed was made was Frederick's dissipated habits. It is one of the two deeds on which this action is based. The other trust deed bears date of May 4, 1883, and reads as follows:

"Know all men by these presents, that whereas John D. Kremelberg, late of the city of Baltimore, deceased, in and by his last will and testament dated the 18th of September, 1874, among other things, devised and bequeathed as follows, 'I give, devise and bequeath to my brother George and my son J. Frederick, in equal proportions all my interest in the following business houses, namely Kremelberg & Co., New York, J. D. Kremelberg & Co., Baltimore, Kremelberg, Schaefer & Co., New Orleans, and in the assets and property of every kind of said houses or firms;' now for divers good causes and valuable considerations me thereunto moving, I do hereby declare that I hold and possess the one half part of the property devised and bequeathed to me in and by the aforesaid clause or item of said will in trust for John Frederick Kremelberg, Elizabeth Virginia Kremelberg, Harriet Ella Kremelberg, John Diedrich Kremelberg, Anna Maria Kremelberg, and Mary Augusta Kremelberg, in equal proportions, share and share alike and agree with them to grant and assign the same to them whenever requested so to do, I paying to Messrs. Branker and Charles Martin each 15 per cent. of the profits of said half part of the property devised and bequeathed to me as aforesaid and holding the other 20 per cent. thereof to my own use."

The first question is, What did the property so bequeathed and held in trust consist of? What the parties thought at the time it consisted of is not doubtful. On the day before the second deed was executed, Mr. Tagart swore to his first account, and in that account he charged himself with the following items: "Deceased interest in firm of Kremelberg & Co., $19,577.91; deceased interest in firm of J. D. Kremelberg & Co., $31,980.74." The firm's books show, and it is conceded, that these figures represent the precise amount of the accumulated earnings left by John in the two firms named, for use as capital.

If these earnings constituted the whole of John's interest in the two firms, the complainants have no case, for the money has been fully accounted for. The insistment is that Mr. Tagart's account is wrong, in that he failed to charge himself with the value of the good-will, and that George has, by the two deeds above set out, declared a trust in respect to it as well as of the money, and is now chargeable, not with its market value at the time of John's death, but with the earnings of both firms, made after their execution as far as those earnings are attributable to John's interest. I have already said that this was made up of the entire interest in the Baltimore concern, and of a one-fifth or, it is said, a greater interest in the New York concern. These earnings cover a period of 30 years, and amount, it is asserted, to over $580,000. The rather startling claim is made that they belong to the defendants, less an allowance for management.

The question that arises on this contention is, Was there a good will that was valuable? John Kremelberg died at the age of 55. He appears to have begun business as a commission merchant in New York in 1863. When he began in Baltimore does not appear, nor does it apnear what profits he made between 1863 and 1882. All that is fairly inferable from the testimony is that he lived well and was reputed wealthy.

The good will of an established business like Wanamaker's or Altman's is, no doubt, very valuable and may long survive its creator. The good will of the business of a successful professional man, practicing alone, if good will it may be called, dies with him. He is employed because of his personal ability and reputation.

The good will of the business of a commission merchant, originating with himself and carried on without fixed capital for 15 or 20 years, would seem rather to resemble that of a doctor or lawyer than...