Whitley v. Klauber

• Citation: 417 N.Y.S.2d 959,69 A.D.2d 99
• Parties: Harry T. WHITLEY, Plaintiff-Appellant, v. John L. KLAUBER, M.D., David Klein, Stanley Kogut, Lucille Kram, Pauline Kram, Theodore Kram, Laurence Kraut, Milton Kruk, Stephanie Kruk, Eydie Gorme Lawrence, Steve Lawrence, Theodore Lazar, Helen Lazar, Abraham I. Liebowitz, Pearl Liberman, Tony Lieberman, E. G. Marshall, John H. McCormick, Jean McCormick, I. Meyerson, Claudio Morell, Mercedes Morell, Irving Moskowitz, Paul Moskowitz, Edwin R. Nagel, Stanley Neslon, Harry Paperstein, Olive Paperstein, John E. Paplin, Ralph M. Pepe, Eleanor Pepe, Ervin A. Popa, Ist-Van Rabovsky, Nora Kovach, John Raitt, Phyllis M. Rhinelander, Norman D. Riker, Samuel J. Ribman, Hyman Rosen, Hyman Rosen and Dr. William Snyder, Trustees for Rina Helen Berman, Harold Rosenfeld, Louis Rosenstein, Milton Roshberg, Sue Roshberg, Minnie Rothbart, Abraham Sadick, Paula Sadick, William Savage, Kalman A. Schildkraut, Walter Schmidt, Carl Schreuer, Martin Schwartz, Diana E. Seaman, Estate of Arthur X. Shapiro, Morris M. Silverman, Henry Simpson, Victor B. Spector, Gerald Starr, Rafael Stein, Maria Stein, Leonard Stone, Hannah Stone, Julius Sugal, Albert A. Turet, Silvia Turet, Ed Wergeles, Merry Wergeles, Elizabeth H. West, Vincent West, Margaret P. Wyer, Jack Wilkenfeld, Vivienne Wilkenfeld, Sadelle Wise, Jurgen Worthing, Claire Worthing, Daniel T. Alagna, Robert E. Barrett, Nat Berger, Gerrard Berman, Lawrence Joseph Berman, M.D., James Billello, Joseph Blitstein, William A. Borst, Mildred Bromberg, Alfred Bromberg, James A. Brunn, Louise Lewis, Ethel Campbell, Daniel Chait, Abraham Citrin, Rose J. DeHoust, Walter DeHoust, Ann Dorfsman, Louis Dorfsman, Solomon Eisenstark, Barbara Eisenstark, Lawrence Fialkow, Morris Fialkow, Ernest O. Platt, Miriam S. Frank, Robert P. Frenzel, Fania Friedman, Louis Friedman, Rose Friedman, Dr. Wendell D. George, Roslyn Gladstone, Phemia Goldman, Abraham H. Greenberg, Ken Greengrass, John Gregory, Elizabeth Gregory, Sonia Gross, Betty Growald, H. Wilson Guernsey, Al
• Decision Date: 10 July 1979
• Court: New York Supreme Court Appellate Division

Page 959

417 N.Y.S.2d 959 69 A.D.2d 99 Harry T. WHITLEY, Plaintiff-Appellant,
v.
John L. KLAUBER, M.D., David Klein, Stanley Kogut, Lucille
Kram, Pauline Kram, Theodore Kram, Laurence Kraut, Milton
Kruk, Stephanie Kruk, Eydie Gorme Lawrence, Steve Lawrence,
Theodore Lazar, Helen Lazar, Abraham I. Liebowitz, Pearl
Liberman, Tony Lieberman, E. G. Marshall, John H. McCormick,
Jean McCormick, I. Meyerson, Claudio Morell, Mercedes
Morell, Irving Moskowitz, Paul Moskowitz, Edwin R. Nagel,
Stanley Neslon, Harry Paperstein, Olive Paperstein, John E.
Paplin, Ralph M. Pepe, Eleanor Pepe, Ervin A. Popa, Ist-Van
Rabovsky, Nora Kovach, John Raitt, Phyllis M. Rhinelander,
Norman D. Riker, Samuel J. Ribman, Hyman Rosen, Hyman Rosen
and Dr. William Snyder, Trustees for Rina Helen Berman,
Harold Rosenfeld, Louis Rosenstein, Milton Roshberg, Sue
Roshberg, Minnie Rothbart, Abraham Sadick, Paula Sadick,
William Savage, Kalman A. Schildkraut, Walter Schmidt, Carl
Schreuer, Martin Schwartz, Diana E. Seaman, Estate of Arthur
X. Shapiro, Morris M. Silverman, Henry Simpson, Victor B.
Spector, Gerald Starr, Rafael Stein, Maria Stein, Leonard
Stone, Hannah Stone, Julius Sugal, Albert A. Turet, Silvia
Turet, Ed Wergeles, Merry Wergeles, Elizabeth H. West,
Vincent West, Margaret P. Wyer, Jack Wilkenfeld, Vivienne
Wilkenfeld, Sadelle Wise, Jurgen Worthing, Claire Worthing,
Daniel T. Alagna, Robert E. Barrett, Nat Berger, Gerrard
Berman, Lawrence Joseph Berman, M.D., James Billello, Joseph
Blitstein, William A. Borst, Mildred Bromberg, Alfred
Bromberg, James A. Brunn, Louise Lewis, Ethel Campbell,
Daniel Chait, Abraham Citrin, Rose J. DeHoust, Walter
DeHoust, Ann Dorfsman, Louis Dorfsman, Solomon Eisenstark,
Barbara Eisenstark, Lawrence Fialkow, Morris Fialkow, Ernest
O. Platt, Miriam S. Frank, Robert P. Frenzel, Fania
Friedman, Louis Friedman, Rose Friedman, Dr. Wendell D.
George, Roslyn Gladstone, Phemia Goldman, Abraham H.
Greenberg, Ken Greengrass, John Gregory, Elizabeth Gregory,
Sonia Gross, Betty Growald, H. Wilson Guernsey, Al Haller as
Trustee of Lynne Haller Trust, Rita Haller as Custodian for
Joan Haller Under the New York Uniform Gifts to Minors Act,
Zoltan Harris, M.D., Ralph Heymann, Robert Hoenig, M.D.,
Cranston W. Halman, M.D., Irwin Horowitz, Debbie Horowitz,
Berly Ingram, Nancy Jeffrey, Peter J. Josselson, Julian
Kane, Muriel Kane, George Kieves, Defendants-Respondents. Supreme Court, Appellate Division, First Department. July 10, 1979.

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Richard A. Spellman, of counsel (Irving Payson Zinbarg, New York City, with him on briefs; Charles A. Scharf, P. C., New York City), for plaintiff-appellant.

Neal M. Goldman, New York City, of counsel (Stanley Plesent, New York City, with him on brief; Squadron, Ellenoff, Plesent & Lehrer, New York City), for defendants-respondents.

Before MURPHY, P. J., and KUPFERMAN, FEIN, LANE and LYNCH, JJ.

FEIN, Justice.

Plaintiff appeals from a judgment entered on an order which denied plaintiff's motion for summary judgment against defendants Daniel T. Alagna, Fania Friedman and Phemie Goldman and granted cross-motion by defendants Theodore Lazar, James A. Brunn, Louise Lewis and Lawrence and Morris Fialkow for summary judgment dismissing the complaint. The judgment dismissed the complaint as against 59 defendants listed in a schedule annexed thereto.

This appeal represents the culmination of ten years of litigation by plaintiff, attempting to recover a finder's fee in connection with the retention of plaintiff by Black Watch Farms, a limited partnership, which had entered into an agreement with plaintiff providing for a commission to be paid for assisting in the sale of the assets of Black Watch Farms. The limited partnership was formed in 1962, essentially as a tax shelter to breed pure bred Angus cattle. When originally formed, the partnership had two general partners, B. W. Farms, Inc. (BWF) and Garfield Douglas, and 108 limited partners. BWF, a New York corporation, had a 14% Interest in the limited partnership. Douglas was also a shareholder of BWF. The limited partners had a total capital contribution in Black Watch, totalling some $860,000.

In 1968, Black Watch entered into an agreement with plaintiff, whereby the partnership agreed to pay plaintiff a commission if a contract could be concluded for the sale of the partnership assets. The contract listed as one of plaintiff's prospects in connection with such sale, Berman Leasing Company, which later changed its name to Bermec Corporation (Bermec). Bermec, in May 1968, announced its intention to acquire Black Watch and an agreement was subsequently entered into between Bermec, BWF, Black Watch Farms, Inc. (Inc.), a wholly owned subsidiary of Bermec which had been formed by Bermec and designated in the agreement as the entity to accept delivery of the assets of Black Watch purchased by Bermec, and Jack Dick, general manager of Black Watch and president and a shareholder of BWF. The transaction, valued at thirty one million dollars, included an initial payment to BWF in the form of Bermec stock valued at $20.5 million, with the balance of $10.5 million to be paid within thirty days to the limited partners in the form of cash or Bermec stock. The limited partners, who held 86% Of the interest in Black Watch, eventually received Bermec

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stock, thereby effecting a transfer of the assets of Black Watch to Bermec, through its wholly owned subsidiary Inc., by exchange of thirty one million dollars in Bermec's stock. All the limited partners of Black Watch exchanged their interest in the partnership for Bermec stock. As a result of the acquisition, Inc. became the sole general partner and sole limited partner of Black Watch and distributed all partnership assets to itself.

When plaintiff did not receive the commission alleged to be due in connection with the transaction, he commenced an action in 1968 against Black Watch and BWF as its general partner. After a tortuous legal history, which included entry of two judgments, both of which were vacated, one reversed on appeal by this court (Whitley v. Black Watch Farms, 50 A.D.2d 549, 376 N.Y.S.2d 1), the action was tried before Justice Sheldon Levy, who awarded judgment to plaintiff in the sum of $1,552,034.50, representing an award to plaintiff in the sum of $993,232.60, with appropriate interest on $571,800 from July 11, 1968 and interest on $421,432.60 from January 31, 1969. Justice Levy found that BWF was "the only general partner of the limited partnership." An appeal from that judgment was dismissed by order of this court entered November 29, 1977.

During the intervening years, the parties to the agreement relating to the transfer of the assets of Black Watch had been either dissolved, were adjudicated bankrupt or had died. BWF, former corporate general partner of Black Watch, had been rendered a shell, having distributed its assets consisting of the Bermec stock which it received in July, 1968. This distribution, which occurred by the time plaintiff commenced his action against Black Watch, in effect rendered BWF insolvent. Inc., the Bermec subsidiary that acquired the partnership assets, filed bankruptcy under Chapter XI in September 1970 and was adjudicated a bankrupt. Bermec also filed under Chapter XI in March 1971. To date, the only recovery which plaintiff obtained on his $1.5 million judgment against the partnership and its general partner, BWF, was the sum of $20,983. which plaintiff received in June 1977 as a result of a claim which he filed in Inc.'s bankruptcy proceeding. No recovery was realized from the partnership, since Black Watch was dissolved in August of 1968, several months after the transfer of assets.

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