Nirdlinger v. Bernheimer — 70 N.Y. St. Rep. 268

Majority

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Hannah Nirdlinger et al., Pl’ffs, v. Meyer A. Bernheimer et al., Resp’ts, et al., App’lts.

(Supreme Court, General Term, First Department,

Filed November 15, 1895.)

Headnote

Tenants in common—Dealings between.

Where several persons buy land, taking title in the name of one of them, to manage, etc., a purchase by him from one of the others is not presumptively fraudulent; nor is he compelled to show affirmatively, in order to sustain the transaction, that it was just and fair as in the case of trustee- and cestui que trust.

Appeal from a judgment, entered in favor of the tenants.

James W. Hawes and L. M. Linde, for app’lts; Geo. H. Yea- man, for resp’ts.

Prior to December, 1855, Mayor Arnold, the firm of Bernheimer Bros., composed of Isaac Bernheimer, Herman Bernheimer, and Simon Bernheimer, and the firm of Arnold, Nusbaum & Nirdlinger, composed of Simon W. Arnold, Ernst. Nusbaum, and Jacob Nirdlinger, purchased certain lands in Minnesota, the said Mayor Arnold and the said two -firms having a. one-third interest each in the enterprise. The title was taken partly in the name of Isaac Bernheimer, partly in the name of Simon W. Arnold, and partly in the joint names of the two. The title subsequently, and before the commencement of this action, became vested solely in Isaac Bernheimer. On the 24th of December, 1855, the parties interested in the enterprise entered into an agreement for the purpose of avoiding any doubts or uncertainties in regard to the rights of the several subscribers in the said lands, and to make the same secure to all the subscribers, their heirs and assigns. In that agreement, Isaac Bernheimer and Simon W. Arnold declared that they held the said lands and premises in trust for the-purpose of superintending, managing, selling, and conveying the same, and any part thereof, from time to time, and upon such terms as in their judgment should seem best; and for the purpose of collecting and receiving the rents and profits thereof, which they were to divide and pay over, together with the proceeds arising from such sales, between the several subscribers, in the proportions mentioned ; and also for the purpose of making partition and division of the said premises between these subscribers, and to grant and convey, by good and sufficient deed of conveyance^ the part or portion set off and allotted to each subscriber individually, their heirs and assigns, or otherwise, as might be agreed upon by the parties. While Jacob Nirdlinger was a member of the firm of Arnold,'Nusbaum & Nirdlinger, at Philadelphia, Frederick Nirdlinger was a subpartner with Jacob, but was not a member of the firm. On the l7th of January, 1859, the partnership between Jacob Nirdlinger and Frederick Nirdlinger was dissolved, and thereupon they executed an instrument in writing declaring that the said Frederick Nirdlinger and the said Jacob Nirdlinger were equally interested in said Minnesota lands. On the 1st of February, 1859, the parties to the instrument of the 24'h of De

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cember, 1855, executed another instrument in respect to certain portions of their land, defining their interests, etc., therein. Frederick Nirdlinger died intestate in 1873, before the commencement of this action. In November, 1882, this action was commenced by the plaintiffs, as his heirs and widow, to establish their right in the lands in question. Isaac Bernheimer never seems to have been apprised of the interest of Frederick Nirdlinger in the portion which he supposed to belong to Jacob Nirdlinger, except just prior to the commencement of this action. In July, 1887, Jacob Nirdlinger and wife conveyed his interest in the lands in question to Isaac Bernheimer, for the consideration of $9,000. On the 19th of November, 1889, judgment was rendered in this action, holding that Frederick Nirdlinger had an interest in the property and assets, and, to ascertain what the interest was, the plaintiffs had a right to an accounting as against Bernheimer. From that interlocutory judgment, Bernheimer appealed to this court, where it was reversed. ' 11 N. Y. Supp. 609 . From such reversal- the plaintiffs appealed to the court of appeals, and- in April, 1892, the court of appeals reversed the judgment of the general term, and sustained the referee. 30 N. E. 561 .

In February, 1893, the appellant Augusta Nirdlinger and others served a supplemental answer, claiming relief as against their co-defendant Isaac Bernheimer, the' object of this answer be- ' ing to set aside and vacate the deed of Jacob Nirdlinger to Isaac Bernheimer, and to hold him responsible for large sums of money alleged to have been realized from sales by him of the lands in question, and converted it to his own use, and for fraudulent concealment of the real amounts alleged to have been received by him. Bernheimer replied, and the issues raised by these pleadings as between the defendants were the main issues which were disposed óf before the referee. The grounds upon which it was sought to set aside and vacate the deed from Jacob Nirdlinger to Isaac Bernheimer were that it was obtained by fraud, and that Jacob Nirdlinger was incapable of the transaction of business at the time of the making of the deed. Upon the trial before the referee of the issues raised by the supplemental answer, the same was dismissed upon1 the merits, and the issues raised by the said answer were adjudged and determined against the appellants, the widow and heirs and administrator of Jacob Nirdlinger. The referee also passed the accounts of Isaac Bernheimer and his executors. From -this judgment this appeal is taken.

The main question presented upon this appeal is as to the correctness of the referee’s ruling in refusing to find the contract of sale and the deed of conveyance made by Jacob Nirdlinger to Isaac Bernheimer, for one-half of his interest in the money and lands belonging'to said trust, to be fraudulent, and procured by Bernheimer from Jacob Nirdlinger by fraudulent representations and concealment, and that the same were unfair, inequitable, and unjust, and ought in equity to be set aside.

After an examination of the evidence pertinent to this issue contained in this voluminous record, and a careful consideration of the arguments and briefs of counsel submitted upon the hear

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ing of this appeal, we might very well rest our decision upon the grounds stated by the referee in his opinion. It seems to us that the whole structure which has been built up by the appellants rests upon a false assumption of the relations which existed between Jacob ISTirdlinger and Isaac Bernheimer. They aré likened to those existing between a trustee and cestui que trust, strictly speaking. Upon an examination of the relations of the parties to this enterprise, it will be seen that the sole relation which existed between them was that of partners in this real-estate enterprise, and that the sole duty which each partner owed to the other was that of fair dealing. One partner could not take any secret or unlawful advantage of the situation to the detriment of the others • but, in his dealings with the others in reference to the copartnership property, there is no presumption of fraud; neither is he compelled to show affirmatively, in ■ order to sustain the transaction, that it was just.and fair as in the case of a trustee and a cestui que trust. One partner has the right to buy out the interest, of his copartner in the joint enterprise; and, unless he misleads him or deceives him by some action upon his part, the fact that he has made a good bargain will not avoid the transaction. We-think that, when these principles are applied to the transaction between Jacob ISTirdlinger and Isaac Bernheimer in regard to the-purchase by Bernheimer of Nirdlinger’s interest, there is no difficulty in coming to a conclusion. There is no evidence whatever of the suppression by Bernheimer of a single fact from the knowledge of ISTirdlinger. He threw open his books to ISTirdlinger and his agents, one of whom was an expert accountant. Hirdlinger had independent advice. He employed his own counsel. Bernheimer refused to fix a price, and refused to make any representation in regard to the lands; and it was only at Nlrdlinger’s repeated solicitations that Bernheimer finally made-the purchase. It is also to be observed that ISTirdlinger made bis own investigation in regard to the value of this land. It is true, it is claimed, on the part of the appellant that these investigations were originally made some time before the sale was actually completed, and that there bad been a change in the condition of these lands during the intervening period ; but he sought information again after the expiration of this time, and before the transfer was made. It .is also claimed that, prior to the transfer, there were sales made of which Jacob Nirdlinger was ignorant; but these transactions were spread upon Bernheimer’s books, and Nlrdlinger’s agent had access to those books, and must have been aware of those sales. If Bernheimer was procuring a sale of these lands at a price1 so-much below their value, why could not ISTirdlinger have sold them to some one else? There, was nothing in the way, if this was so desirable a bargain, and these lands were of so great value, to-prevent him from finding other purchasers than Bernheimer.

It sought to impeach this sale by expert testimony in regard to the value of these lands where the whole title could be acquired by the purchaser,, which character of evidence is of but little weight in determining what was the value of a small undivided interest in, these lands. We might discuss in detail the evidence-

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which has been offered, but it would serve no useful purpose. Upon this general question, we can only state the impressions which the facts appearing upon the record have made upon our minds; and we can but repeat that Bernheim owed no active duty to Nirdlinger, and that there is no presumption of fraud because of their relations. They were simply partners in this enterprise, and Bernheimer had as much right as any stranger to purchase from Nirdlinger his interest in the lands if the latter desired to sell it. There is no evidence to be found throughout this record that Bernheimer was anxious to purchase. It was Nirdlinger whb was urging him to purchase, Bernheimer refusing to make any representations, and finally acceded to the reiterated urgent appeals upon the part of Nirdlinger that he should buy. We are not aware that under such circumstances a partner purchasing his associate’s interest in the partnership stock can be branded with fraud.

Upon the question which is presented to us in respect to the accounts of Isaac Bernheimer, as passed by the referee, we see no reason to differ from the conclusion arrived at by him.

Upon the whole case, we are of the opinion that the judgment appealed from should be affirmed, with costs.

All concur.