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Sorokach v. Trusewich

Decided: October 13, 1953.


On appeal from the Superior Court, Appellate Division.

For modification -- Chief Justice Vanderbilt, and Justices Heher, Oliphant, Wachenfeld, Burling, Jacobs and Brennan. Opposed -- None. The opinion of the court was delivered by Wachenfeld, J. Heher, J. (dissenting in part). Heher, J., concurring in result.


The plaintiff instituted this action as executrix of her husband's estate, seeking a determination and payment of his share of the assets of a partnership of which he was a member in his lifetime. He was formerly a stockholder of the corporation formed in 1932 bearing the name Arrow Clothing Co., Inc., having six equal shareholders. The corporation was dissolved in 1943 and a partnership was formed known as the Arrow Clothing Company, consisting of the former shareholders as equal partners, carrying on the same business as the predecessor corporation.

On December 8, 1943 two agreements were signed by the partners, one a partnership agreement, the other an insurance agreement retroactive to June 1, 1943.

The Arrow Coat & Suit Company was organized in 1948 and was subject to the same agreements. Although separate books were kept, the business was treated as one entity, both partnerships engaged in performing labor and adding accessories to materials furnished by their customers, the first making men's clothing and the latter women's clothing.

The plaintiff's husband died October 1, 1950, possessed of a one-sixth interest in both partnerships. After his death the surviving partners continued the two enterprises and the plaintiff qualified as executrix on October 19, 1950.

The agreements will again be referred to, but generally provide, amongst other things, that full, just, true and accurate accounts were to be kept; that the life of each partner was to be insured for $10,000 with the partnership as sole beneficiary; that premiums were to be charged as an expense of the business; that upon dissolution before death of any partner, the life insurance policy was to become the property of each partner; that upon the death of any partner and within 30 days thereafter, an audit of the books was to be made and inventory taken and net worth or value of the deceased partner's interest determined; that in the event of death, the enterprise was to continue and no value was to be placed on good will in determining the net worth of the partner; that the interest of the decedent partner

was to be paid within 30 days; that upon payment of the sum determined as above, release was to be made by personal representatives of the partner's interest in all the assets, including good will and trade name.

As of September 30, 1950 the book value of a one-sixth interest was $12,493.71. To this figure the remaining partners added the amount of inventory and offered the plaintiff $14,000. It was refused and litigation was instituted. She was awarded $13,112.52, the Chancery Division determining, in part, that the machinery should be valued in accordance with the amount appearing in the books of the company, which amount represented cost less depreciation. The court rejected the plaintiff's suggestion that the machinery be given its market value.

As to profits, it decided the plaintiff was not entitled to a share of them because the partnership agreement provided otherwise, the conclusion being that because of the deceased partner's illness and his consequent inability to work, he was not entitled to share in the profits of the company after the distribution of June 30, 1950.

The Appellate Division affirmed in toto in a per curiam opinion, but a dissent was filed relating solely to the question of the valuation of the equipment, concluding the machinery should be given its fair market value and not its book value.

The appeal is taken as a matter of right under our Constitution of 1947, Article VI, Sec. V, par. 1, which provides, inter alia, that appeals may be taken to the Supreme Court "(b) In causes where there is a dissent in the Appellate Division * * *," and under Rule 1:2-1(b), now R.R. 1:2-1(b). The query is made whether, under these circumstances, the single question on which the Appellate Division divided is presented for review and consideration or whether the entire cause and all matters involved may be re-adjudicated.

Limitations in this respect are encountered where the case comes here by way of certification, as we have held it is there confined to the specific questions certified. Liberty

Title & Trust Co. v. Plews, 6 N.J. 28 (1950). Where the appeal is one of right because of the presence of a constitutional question, the result is otherwise and this court will consider all questions presented by way of cross-appeal, even though they are not such as in and of themselves would give the ...

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