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Grober v. Kahn

Decided: July 7, 1965.


Kilkenny, Gaulkin and Lewis. The opinion of the court was delivered by Kilkenny, J.A.D.


[88 NJSuper Page 346] Plaintiff sued in the Chancery Division essentially to establish his interest in a joint venture and for an accounting of the assets of the joint venture. He also sought a partition of industrial real estate which, along with some personalty, had been acquired from Camden Forge Company in the name of defendant Herman Kahn and which

plaintiff claimed really belonged to the joint venture. There were other claims for incidental relief, as more particularly set forth in his amended and supplemental complaints.

The litigation was bitterly drawn out, with about 60 motions by the parties and an 84-day trial, which produced approximately 10,000 pages of testimony and some 700 exhibits.

The trial court determined that plaintiff had a 25% interest in the joint venture and defendant Kahn family owned the other 75%, allocated 25% to Herman Kahn, 25% to his wife Gertrude Kahn, and 12 1/2% to each of his two daughters, Alice Brooks and Carol Weintraub. It was also decided that defendant Herman Kahn had taken title to the property of Camden Forge Company for the benefit of the joint venture, thus making him a trustee of that property and the joint venture beneficiary of the trust. Kahn was held liable to the joint venture in the sum of $432,400.60 plus interest (not compounded) to be computed at 6% only on the sum of $182,400.60, as hereinafter more particularly set forth. A setoff of $39,080.43 against plaintiff's 25% interest was allowed because of payments made by Kahn on account of income tax assessments against plaintiff and his wife. Kahn's two daughters were each held liable to the joint venture in the sum of $3,000 without interest.

The joint venture was ordered dissolved in a manner similar to the statutory dissolution of partnerships, and a receiver was appointed for the unsold real and personal property of the joint venture.

Thereafter, plaintiff moved for an award of counsel fees in the amount of $100,000, accountant's fees in the amount of $40,000, and appraisers' fees to be paid either out of the sum adjudged due from defendant Herman Kahn or to be charged against him personally. The motion was denied for the reasons expressed by the trial court in its reported opinion. Grober v. Kahn, 83 N.J. Super. 382 (Ch. Div. 1964).

Plaintiff appealed from so much of the Chancery Division judgment and incidental orders as (1) disallowed the application for counsel fees, accountant's fees and appraisers' fees;

(2) allowed no interest on $250,000 of the amount for which defendant Herman Kahn was held liable to the joint venture; (3) limited the interest at a straight 6%, without compounding it, on the balance of $182,400.60 adjudged by the court to be due and owing by Herman Kahn to the joint venture, and (4) stayed execution of the judgment against Kahn and the order imposing costs, conditioned upon Kahn's filing a surety company bond in the sum of $100,000. Such a bond was filed.

Defendants cross-appealed from so much of the judgment as was adverse to them, as well as from a number of rulings by the trial court at and prior to trial, alleged to be erroneous and prejudicial.

Condenser Service & Engineering Co., Inc. (hereinafter "Condenser"), a corporation wholly owned by Herman Kahn, had moved for leave to intervene as a party in the litigation, claiming ownership of the property which the trial court in its findings of February 21, 1964 considered to be among the assets of the Grober-Kahn joint venture. That motion was denied by order of the Chancery Division on March 30, 1962. Condenser did not appeal from that order until after judgment was entered, joining with defendants in their notice of appeal. It contends that the trial court erred in denying its motion for intervention.

When plaintiff failed to request and have filed a transcript of the proceedings as required by R.R. 1:2-8(e), made applicable to this court by R.R. 2:2-5, defendants moved to dismiss the appeal. We allowed the appeal to proceed without the need for Grober or Kahn to file a transcript upon their agreeing to file a written stipulation that the fact findings expressed in the trial court's written opinion would be accepted as true for the purpose of the appeal and cross-appeal, and that no argument would be made on the appeals as to evidence or testimony in the case, except that stated by the trial court in its opinion. The stipulations were filed and a transcript of the proceedings was not filed. However, Condenser has produced portions of the record to support its legal

position, not being bound by the stipulations of the parties to the main appeals.

We consider first the claims of error asserted by plaintiff.


There was no error in the trial court's staying execution of the money judgment against Kahn and of the costs imposed against him, conditioned upon his filing a surety company bond in the amount of $100,000. "The grant or denial of a stay and the extent, terms, and conditions thereof are matters resting in the discretion of the court from which the appeal is taken, or to which certification is sought, or the appellate court, to be exercised with proper regard to the particular circumstances in each case." R.R. 1:4-6, R.R. 2:4-1. The application was properly made in the first instance to the trial court and prior to the filing of any briefs on appeal. R.R. 1:4-7, R.R. 2:4-3.

There was no abuse of discretion in fixing the amount of the bond at $100,000. Plaintiff had only a 25% interest in the joint venture. A receiver had been placed in charge of the unsold realty and personalty acquired from Camden Forge Company. Meanwhile, the receiver sold the Camden Forge Company property for $435,000 and retains the net proceeds subject to the control of the court. Thus, plaintiff's 25% share in the joint venture is amply secured by the $100,000 bond and the funds in the possession of the receiver, both of which may be reached by appropriate court order. Moreover, defendant Kahn also has a 25% interest in the joint venture -- not counting the other 50% belonging to his wife and daughters -- which he cannot reach until plaintiff's rights are satisfied. Thus, plaintiff is adequately secured. R.R. 1:4-8(a), R.R. 2:4-1.


The trial court acted properly in not allowing any interest on the $250,000 received by Kahn from the sales of scrap at the Camden Forge plant, which moneys Kahn deposited

in Condenser's account with the knowledge and acquiescence of plaintiff, who was the president of Condenser. Though the proceeds of these sales belonged to the joint venture, as the trial court found, rather than to Kahn personally or his corporation, Condenser, their deposit by Kahn for use by Condenser to pay some pressing tax obligations merely created a debt due from Kahn to the joint venture. Plaintiff's official position in Condenser made him fully aware of Condenser's needs and the application of these money's to satisfy those needs. No objection was made by plaintiff or any member of the joint venture to use of this sum. On the contrary, there was obvious acquiescence therein.

Since the $250,000 was held to belong to the joint venture, its use by Kahn with the acquiescence of the joint venturers was in the nature of a loan from the joint venture to Kahn. There was no agreement or understanding between the parties that Kahn would be required to pay any interest on this sum of money. A loan of money, without any provision for the payment of interest, does not ordinarily carry with it any obligation to pay interest on the loan before the due date of the obligation. Interest is no part of a debt unless so stipulated in the contract, but it may be awarded as damages for the wrongful detention of a debt. Warren Bros. Co. v. Hartford, etc., Co., 102 N.J.L. 616, 619 (E. & A. 1926); Fidelity Mut. Life Ins. Co. v. Wilkes-Barre & H.R. Co., 98 N.J.L. 507, 510 (E. & A. 1923). Courts of equity are free to decide all questions pertaining to interest according to considerations of justice and fair dealing in the given case. The relationship of the parties herein and all of the circumstances justify the Chancery Division's denial of interest as to the item of $250,000. This action was consistently adopted by the trial court when it excused plaintiff from the payment of interest on the $39,080.43 advanced by Kahn to plaintiff to aid the latter and his wife meet their personal income tax obligations.

Plaintiff contends that interest should have been allowed on the $250,000, at least from the ...

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