Fleischmann v. Fleischmann — 54 A.D. 202

Majority

p. 202

Udo M. Fleischmann and Others, Infants, by Henry W. Sackett, their Guardian ad Litem, Respondents, v. Julius Fleischmann and Others, Individually and as Ancillary Executors of Charles Fleischmann, Deceased, Appellants, Impleaded with Others.

Headnote

Action by the beneficiaries to protect a trust fund, where the trustee refuses to act.

"Where a trustee, in whom exists the primary right of action to redress a fraud which has resulted in injury to the trust estate, refuses to bring the action . 'therefor, although requested to do so by the cesiuis que trustent, the latter may •bring the suit upon setting up the facts entitling the trustee to a recovery, and stating his refusal to act.

Appeal by the defendants, Julius Fleischmann and others, indi•■viduEtlly and as ancillary executors of Charles Fleischmann, deceased, from an order of the Supreme Court, made at the Few York .Special Term and entered in the office of the clerk of the county ■of'Few York on the 4th day of May, 1900, granting the plaintiffs’ motion for an inspection.and.discovery of the books of the firms of ■Gaff, Fleischmann & Co. and Fleischmann & Co.

The cpmplaint in this action alleges that the plaintiffs’ father, Maximilian Fleischmann, died September 1, 1890, being at the time ■of his death in partnership with his brother, Charles Fleisch- • •mann; that the will of Maximilian Fleischmann bequeathed his household furniture to his widow, Johanna Fleischmann, and -directed the residue of his property to be distributed in the same .manner as if he had died intestate. He further directed that his interest in the partnership business should be allowed to remain . therein and the business be continued as long as should be agreeable to his widow, J ohanna • Fleischmann, and his brother, ' Charles Fleischmann. After Johanna Fleischmann and Charles Fléisch:mann, who were nominated as executors, had qualified,, Charles Fleischmann, individually and as executor of the last will and testament of Maximilian Fleischmann-, deceased, entered into an agreement with Johanna Fleischmann, as executrix of said last will and testament, by which Charles Fleischmann agreed to continue the partnership agreement theretofore existing between himself and Maxi- ■ milian Fleischmann. Thereafter Charles Fleischmann obtained a transfer "from Johanna Fleischmann, as executrix of Maximilian

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Eleisehmann, deceased, of all interest in what was known as the western business of the partnership.

Charles Eleisehmann died before the accounts of the other branch of the partnership business were settled, and this action is brought to obtain an accounting in respect to the partnership assets and set aside, upon the ground of fraud, certain instruments relating to the partnership business, exécuted by Johanna Eleisehmann to Charles Eleisehmann.

The complaint further alleged that the plaintiffs requested the defendant Johanna Eleisehmann, as executrix of Maximilian Fleischmannj to enforce the rights of the beneficiaries under the will of Maximilian Eleisehmann, and that she refused to do so.

C. Bainbridge Smith, for the appellants.

Henry W. Sackett, for the respondents.

The facts show that the objection that there was laches in making •the application was not well taken. The point principally relied upon on the argument of this appeal was that the plaintiffs had no standing in court to maintain this action, and that for that reason no good could be accomplished by permitting them to have the order for the discovery, the learned counsel for the appellants insisting that the right of action was in Johanna Fleischmanfi, as executrix of Maximilian Eleisehmann, and that the plaintiffs, as beneficiaries under his will, had no rights except such as they could obtain from her upon an accounting. That the right of action primarily was in Johanna Eleisehmann may be admitted, but it is alleged in the complaint that Johanna Eleisehmann having been appealed to to bring this action Tefused to do so. That being the situation, the plaintiffs would be entirely remediless unless they could resort to the court to enforce the alleged right, if they were forbidden to resort to the aid of the court to obtain the right which they alleged was taken away from them by the fraud practiced upon their representative, hut which that representative refuses to try to obtain. It does not need the citation of authorities to show that when a trustee, in whom is the primary right of action to redress a wrong to the estate of which his cestiois gtie trustent are beneficiaries,

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refuses to bring suit that the beneficiaries are not left remediless,, but may come into court and set up not only the facts which entitled the trustee to a recovery, but the fact that the trustee refuses: to 'bring suit and that they are, therefore, compelled to sue to obtain; that relief which should have been obtained for them by' their rep?resentative and the guardian of their interests. The plaintiffs, therefore, are properly in court.

It is objected that the facts sought to be discovered are not material because the object of the discovery is to ascertain the good will of the firm of Fleischmann & Co., the appellants claiming that, that good will was. not a part of the assets of the partnership after the death of Maximilian Fleischmann. The plaintiffs undoubtedly .claim to be entitled to a share of the good will as a result of the; original contract between Maximilian and Charles Fleischmann, by which the partnership was not to expire upon the death of either partner, but was to be continued by his personal representatives.. What effect that agreement, which was partially carried into effect,, might have had upon the good will it is not necessary here to-consider. The plaintiffs seek this discovery not only to ascertain, the value of the good will, but to learn what the assets of the firm were at the time of the death of Maximilian Fleischmann and subsequently, and what had become of them and of the profits which, had been earüed by the plaintiffs after his death and which were-carried on under the several arrangements with Johanna Fleischmann. For these purposes the books are clearly material, and because' they are material the order should be affirmed, with ten; dollars costs, although the plaintiffs may have asked more than they are entitled to.

Van Brunt, P. J., Patterson, O’Brien and McLaughlin, JJ., concurred.

Order affirmed, with ten dollars costs and disbursements.