Schuler v. Birnbaum

• Decision Date: 26 May 1978
• Citation: 405 N.Y.S.2d 351,62 A.D.2d 461
• Parties: Joseph SCHULER, Respondent, v. Janice S. BIRNBAUM and Saul Birnbaum, Co-Executors of the Will of Bernard P. Birnbaum, Deceased, Appellants.
• Court: New York Supreme Court — Appellate Division

Page 351

405 N.Y.S.2d 351

62 A.D.2d 461

Joseph SCHULER, Respondent, v. Janice S. BIRNBAUM and Saul Birnbaum, Co-Executors of the Will of Bernard P. Birnbaum, Deceased, Appellants.

Supreme Court, Appellate Division,Fourth Department.

May 26, 1978.

Wegman, Mayberry, Burgess, Feldstein & Speranza, Rochester, for appellants (Richard Mayberry, Rochester, of counsel).

Nixon, Hargrave, Devans & Doyle, Rochester, for respondent (Sherry Kraus, Rochester, of counsel).

Before MARSH, P. J., and SIMONS, DILLON, HANCOCK and DENMAN, JJ.

SIMONS, Justice.

In 1965 plaintiff and Robert Hurlbut formed a partnership with defendants' testator with the intention of constructing and operating a nursing home in Corning, New York. Preliminarily, the architectural firm of Corgan & Balestiere was retained by the partnership to prepare nursing home plans for submission to the appropriate state agency together with the partnership's license application. The license was not granted by the State and the partnership was abandoned.

In 1965 Corgan & Balestiere sued plaintiff for services rendered in preparing the plans and the claim was settled in 1975. Mr. Hurlbut approved the settlement and paid his pro-rata share of the debt and legal expenses. Decedent did not approve the settlement or reimburse plaintiff and plaintiff commenced this action to recover $2,475.12, representing one third of the settlement and legal expenses. Defendants' answer was a general denial and the affirmative defense of the Statute of Limitations. Thereafter, defendants moved to dismiss the complaint. Special Term denied the motion to dismiss and granted a cross-motion by plaintiff for summary judgment. On appeal defendant contends that this action at law, prior to an accounting between the partners, is improper and should be dismissed, that the action is time-barred, and that questions of fact exist which preclude summary judgment.

Generally, courts will not interfere in internal disputes between members of a partnership, preferring instead that the partners settle their differences among themselves or else dissolve and go out of business settling their affairs at that time by a final and full accounting with all partners joined (see Lord v. Hull, 178 N.Y. 9, 13, 70 N.E. 69, 70). In this way, premature piece-meal judgments between partners which may later require adjustment when all the business of the partnership is reviewed are avoided. Thus, it is the general rule that partners cannot sue each other at law for acts relating to the partnership unless there is an accounting, prior settlement, or adjustment of the partnership affairs (Lord v. Hull, supra; Arnold v. Arnold, 90 N.Y. 580; Cohen v. Erdle, 282 App.Div. 569, 126 N.Y.S.2d 32). One exception to this rule permits a partner to maintain an action at law against his co-partner when no complex accounting is required or when only one transaction is involved which is fully closed but unadjusted (Auld v. Estridge, 86 Misc.2d 895, 900, 382 N.Y.S.2d 897, 900, aff'd 58 A.D.2d 636, 395 N.Y.S.2d 969, mot. lv. to. app. den., 43 N.Y.2d 641, 401 N.Y.S.2d ---, 371 N.E.2d 830; see also Roberts v. Astoria Med. Group, 43 A.D.2d 138, 350 N.Y.S.2d 159; McCabe v. Queensboro Farm Prods., 13 A.D.2d 674, 213 N.Y.S.2d 456; Bigelow v. McMillin, 251 App.Div. 456, 296 N.Y.S. 533).

The evidence before the court upon the motion for summary judgment established that the parties had formed a partnership to operate a nursing home, that the partnership was abandoned after it failed to obtain a state license, and that the retention of the architects and filing of the license application was the sole business transacted by the partnership. This...