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ALTMAN v. ALTMAN (06/29/81)

decided: June 29, 1981.

ALTMAN, SYDNEY A., APPELLEE
v.
ALTMAN, ASHLEY J. AND ALTMAN, ASHLEY J., EXECUTOR OF THE ESTATE OF ALTMAN, SANDRA S., DECEASED ASHLEY J. ALTMAN, INDIVIDUALLY AND AS EXECUTOR OF THE ESTATE OF SANDRA S. ALTMAN, APPELLANT



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. Civ. No. 75-02564)

Before Seitz, Chief Judge, and Rosenn and Sloviter, Circuit Judges.

Author: Seitz

Opinion OF THE COURT

Ashley Altman appeals from a judgment of the district court ordering the dissolution of five partnerships and directing that the assets of the partnerships be liquidated and distributed to the partners. Pennsylvania law governs the disposition of this diversity action.

I.

From 1952 to 1973, Sydney Altman and Ashley Altman operated a number of partnerships engaged in real estate construction and management in southeastern Pennsylvania. During this period the two brothers shared equally in the management and control of the partnerships, and through their joint efforts they built the businesses into very profitable and substantial enterprises. Sydney and Ashley received identical salaries, and each brother was permitted to charge certain personal expenses to the partnerships. The brothers agreed that the amount of such expenses would be equal. Therefore, if one brother charged more personal expenses to the partnerships, he would pay to the other brother one-half the amount by which his personal expenses exceeded those of his brother.

In January 1973, Sydney moved to Florida to establish residency in that state for the purpose of obtaining a divorce. The brothers discussed Sydney's move at this time, and they agreed that Sydney would return to Pennsylvania after his divorce and resume full-time duties with the partnerships. During the first six months after he moved to Florida, Sydney commuted to Pennsylvania every week to work for two to three days. In July 1973, Ashley suggested that Sydney need only return to Pennsylvania once a month until his divorce became final. Sydney's attorney subsequently advised him not to return to Pennsylvania until his marital problems were resolved.

Sydney told Ashley in November 1973 that he was considering retiring from the Altman businesses and remaining in Florida permanently. The brothers discussed Sydney's retirement in general terms, and Ashley agreed to consult with their Philadelphia accountant in an effort to develop a satisfactory retirement agreement. The brothers disagreed on the events that occurred after this conversation. Ashley claimed that Sydney accepted the accountant's recommendations, and that Sydney's retirement was implemented on the partnerships' books as of December 31, 1973. Sydney, however, maintained that the brothers never progressed beyond preliminary discussions until the fall of 1974, when he received a one-sided retirement proposal prepared at Ashley's direction by the partnerships' attorney.

When an agreement could not be reached, Sydney brought this action in the district court seeking judicial dissolution of the partnerships. He alleged that Ashley had violated the partnership agreements, misappropriated partnership assets, and excluded Sydney from the businesses. Ashley maintained that the partnerships had been dissolved as of December 31, 1973 because Sydney had retired on that date.

After a nonjury trial, the district court held that neither the conduct of Sydney nor that of Ashley had dissolved the partnerships prior to the institution of this suit. The court stated that under Pennsylvania law the retirement of a partner causes a dissolution only when it is tantamount to a "definite and unequivocal" expression of a will to dissolve the partnership. The court found that Sydney's desire to retire "never progressed beyond a vague general proposal," and that his absence from Pennsylvania was with Ashley's consent. In addition, the court found that Ashley's alleged exclusion of Sydney from the partnerships did not cause a dissolution because Ashley intended to retain Sydney as a partner "at least to the extent that the partnerships would continue to take full advantage of Sydney's capital interest."

The district court held, however, that Sydney was entitled to a judicial dissolution of the partnerships because Ashley violated the partnership agreements and Pennsylvania law by unilaterally paying himself certain salaries. The court found that Ashley's conduct had "progressed to a point which makes it impracticable for the partnerships to continue," and dissolution was ordered as of June 6, 1977, the date of the court's decision. In addition, Ashley was directed to pay Sydney $153,750.67 to equalize partnership distributions, salaries, and reimbursed personal expenses. Finally, the court appointed a master to liquidate the partnerships' assets and to distribute the net proceeds to the partners.

II.

Ashley argues that the district court erred in finding that the partnerships had not been dissolved as of December 31, 1973. This argument is based upon three contentions: (1) that sworn statements made by Sydney during the Florida divorce proceedings estopped him from denying he had not retired; (2) that the district court's findings of fact concerning Sydney's retirement ...


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