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Eisenberg v. Finston

Decided: March 24, 1952.

AUGUSTA NAIDECH EISENBERG, PLAINTIFF-APPELLANT,
v.
HENRY FINSTON AND IDA FINSTON, HIS WIFE, AND DAVID NAIDECH AND FRANCES NAIDECH, HIS WIFE, DEFENDANTS-RESPONDENTS



Jacobs, Eastwood and Freund. The opinion of the court was delivered by Eastwood, J.A.D.

Eastwood

Hyman Naidech died in October, 1929, leaving to his widow, plaintiff in this action, certain real property and a business operating under the name of New Jersey Coal and Supply Company, located at Nutley, New Jersey. On October 15, 1931, the business was incorporated under the aforementioned name and Mrs. Augusta Naidech (now Eisenberg) controlled 80 per cent of the stock, with other qualifying shares of stock being issued to some of the defendants. The plaintiff is the mother of Ida Finston and David Naidech, and Henry Finston is the nephew of the plaintiff and husband of Ida, one of the named defendants.

Subsequently, on June 24, 1937, the corporation was dissolved and the business run as a partnership by the plaintiff and the defendants, Henry Finston and David Naidech,

under which arrangement the parties shared equally in the profits of the business.

In the summer of 1949, approximately 20 years after the death of plaintiff's husband, plaintiff's children remonstrated with her concerning her announced intentions of marrying Louis Eisenberg, and unsuccessfully tried to dissuade her. Finally, plaintiff agreed to convey her real property to her two children, Ida Finston and David Naidech, and the business to Henry Finston and David Naidech, for a consideration of $10,000. There is testimony that one of the reasons therefor was to prevent her proposed husband from obtaining an interest in the property upon their marriage.

Thereafter, Henry Finston and David Naidech operated the business as partners until Henry became dissatisfied with the manner in which David was conducting himself and his failure to assume his proper share of responsibility. In August, 1950, Henry demanded a dissolution of their partnership, which was followed by efforts to settle the breach between them with the aid of counsel. No satisfactory settlement was reached. Thereupon, the plaintiff instituted this action to set aside the transfers of title of October 24, 1949.

The Chancery Division found in favor of the defendants and against the plaintiff on the matter of the validity and propriety of the documents under contest. Plaintiff appeals from the ensuing judgment. There were issues decided between the defendants on cross-claim and counterclaim which will not be discussed here, because they do not form a part of this appeal nor are they material to it.

Plaintiff contends that the deed and bill of sale should be set aside; that undue influence was exerted upon her by persons in confidential relationship to her; that she did not have independent advice of counsel; that she lacked a thorough understanding of the effect and consequences of her acts, and that the transaction was an improvident one.

Defendants, Henry and Ida Finston, deny the contentions of the plaintiff and assert that there was no error in the trial court's determination; that the transaction was fair

and fully understood and was made in accordance with plaintiff's expressed intention and for valuable consideration; that the action was not instituted in good faith, but is a belated and fraudulent scheme to deprive them of their property, when plaintiff's son, David, was found to have been embezzling monies from the partnership of Finston and Naidech. Defendants, David and Frances Naidech, have not participated in this action; hence all reference to the defendants shall be considered to apply to the Finstons except where specifically designated to the contrary.

Succinctly stated, we find that the issues involved in this appeal to be: (1) Was there a relationship between the defendants and the plaintiff which placed them in a dominant position over her in effectuating the transfers; (2) did the plaintiff fully understand the purport and effect of the transaction; (3) was ...


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