On appeal from the Superior Court, Chancery Division, Hudson County.
Dreier, Shebell and Stern. The opinion of the court was delivered by Shebell, J.A.D.
Plaintiff, John J. Pascale, Sr., appeals the Chancery Division's refusal after trial to set aside certain transfers he had made to his son, David P. Pascale. The then seventy year old plaintiff asserts that this son stood in a confidential relationship whereby plaintiff relied upon him to handle his finances and to arrange for the handling of his legal affairs. Plaintiff contends that because of his attorney BSB's conflict of interest and that attorney's relationship with David, plaintiff was denied independent advice of counsel and as a consequence made an immediate gift of his business and property without retaining control or a right of revocation.
The basic factual findings of the trial judge are supported by the record and may not be disturbed. Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 484 (1974). Those facts as are relevant to the issue before us reflect that appellant founded a tool and die business around 1939 which was later incorporated under the name Quality Tool & Die Company, Inc. ("Quality"). He also founded a second company, Majoda Tool & Die Company, Inc. He brought his son, the defendant David, into the business on a full time basis around 1971. His older son, John, Jr., had been in the business for several years prior to David's association.
In 1972 appellant's wife instituted a divorce action against him and the two sons chose sides, John, Jr. siding with the
mother, and David with the father. As a result, plaintiff did not see John, Jr. again until 1978 when their differences apparently were ended by John, Jr. asking his father's forgiveness. Prompted by the divorce action, plaintiff signed a stock certificate purporting to transfer ownership of his shares in Quality to David with the endorsement being backdated to October 16, 1968. It is claimed that the stock certificate and the corporate books have been lost, although David produced at trial a photocopy of the stock certificate signed by his father.
There has been no determination of either the effect of the signing of the certificate by the father or whether there was actual delivery of the certificate; however, a report filed in the matrimonial action pursuant to court order asserts that the stock of Quality and Majoda were transferred from plaintiff to David on October 16, 1968. There was no change of responsibilities or control following the purported transfer. Up to 1979 the father seemed to be in control with David handling office work and managing accounts.
David and his wife received many gifts from plaintiff over the years including valuable real estate, cash, jewelry, fur coats, automobiles and the like. For several years the father registered assets jointly in his name and David's as joint tenants. David handled his father's personal affairs including check writing, personal bills, safe deposit boxes, securities and the like. Late in 1975 the Internal Revenue Service made a tax deficiency claim against the father and his companies which caused him to retain an attorney. That case was settled in January 1979; however, in the interim plaintiff requested that this attorney undertake estate planning on his behalf. As plaintiff did not want to be bothered with the details of either the IRS claim or his estate planning he directed his attorney to communicate with David and his accountant, JBS.
As early as 1977 a recapitalization plan was suggested by the father's attorney. This plan, as later developed, proposed the transfer of land owned by the father in Hoboken to Quality and
the converting of common stock into three classes: preferred as well as voting and non-voting common. The common stock was to be classified in such a way that plaintiff would retain the voting stock with the non-voting stock going to David. Unquestionably plaintiff desired to leave his business assets to David and to avoid estate and inheritance taxes. The recapitalization proposals, however, were premised upon plaintiff's ownership of the Quality stock.
On May 9, 1979 a meeting was held between the father's attorney, an associate of his attorney, his accountant and David ...