Estate of Friedman , 251 Wis. 180 ( 1947 )

This is a special proceeding in the estate of Abe Friedman, deceased, commenced on August 9, 1945, by the service of a petition and order to show cause on the defendants and respondents, Harry W. Friedman, executor, and William H. Orenstein. Judgment was entered on the 2d day of August, 1946, dismissing the petition of Celia Friedman upon the merits.

The defendant, William H. Orenstein, in 1940 was employed by Abe Friedman at a salary of $25 per week. He continued as such employee until January 5, 1943, when they entered into a partnership agreement. This partnership continued until the death of Abe Friedman on September 18, 1944. On the 26th day of May, 1943, Abe Friedman executed his will and testament, which was subsequently admitted to probate. By paragraph 8 of the will, Abe Friedman provided as follows:

"I hereby give and grant to such executor [Harry W. Friedman, his brother] full authority to bargain, sell and convey all or any part or parcel of my estate, real or personal, at any time and upon such terms as to him may seem just and proper, and to convert real estate into personalty, and for that purpose to issue all proper deeds and conveyances with or without warranty, and for that purpose to make all proper engagements and contracts in his discretion, and do all the things aforesaid without application to or order of any court, and at such price and upon such terms as in his discretion may seem best; and to invest' and reinvest the proceeds of the property so sold in such other property, securities, or investments as by him may be deemed proper, without application to or order or authority of any court and without the necessity of complying with the trust fund laws of the state of Wisconsin."

The partnership agreement already referred to contained the following clause:

"Fourteenth: That it is the express intention, aim and direction of the parties hereto, that upon the death of one of the partners, the said partnership shall not be deemed dissolved thereupon, nor shall said business be stopped or ceased in any way or manner for any reason whatsoever, but the personal representative of the partner so dying, shall immediately succeed to his interest in the partnership, and shall stand in his place with respect to said deceased partner's share and profits in the business of the partnership, and such personal representative shall have the same rights and powers and shall be subject to the same duties and liabilities, as the deceased partner would have possessed and would have been subject to, but for his death. . . ."

There was a further provision as to what procedure should be taken if the deceased partner's widow should desire to sell her interest. This provision is not material upon this appeal.

About two weeks after the death of Abe Friedman, there was a family council at the home of Celia Friedman, at which William Friedman, the father of the deceased, Harry Friedman and Hyman Friedman, brothers of the deceased, Mrs. Orenstein, sister of the deceased, Attorney Bernard Soref, Mrs. Karlitsky, mother of the widow, and Abe Karlitsky, brother of the widow, were present with the widow. Subsequently and on October 10, 1944, at the request of Soref, the widow signed a waiver so that the will could be probated. At that time, Harry Friedman, the executor, made it clear that it was his intention to continue the partnership. For the first two weeks after her husband's death, the petitioner received a check for $65 a week signed by William H. Orenstein, the surviving partner. This was the amount which was drawn by Abe Friedman prior to his death. After the will was read, the widow received a check for $45 per week, in accordance with the agreement entered into with William H. Orenstein, the surviving partner, and Harry Friedman, the executor.

Some time after October 10, 1944, the executor changed his mind about continuing the business and entered in negotiations with Orenstein for the sale of the testator's interest. On March 30, 1945, the inventory was filed and contained the following item:

"A sixty-seven per cent interest in the assets of all kinds of Friedman Tobacco Company, a copartnership, appraised at $16,300."

On the same day that the inventory was filed, the executor filed a petition asking for permission to sell the decedent's interest in the Friedman Tobacco Company to William H. Orenstein. Concurrently therewith an offer by William H. Orenstein to purchase said interest for the sum of $16,500 was filed. Without giving any notice a hearing was had on the petition on the same day that it was filed and an order was given authorizing and approving a sale to William H. Orenstein, and was signed by the court on March 30, 1945. This entire transaction was had without any notice to and without the knowledge, consent, or approval of Celia Friedman, the widow.

On April 2, 1945, the executor executed a bill of sale of the decedent's interest in the partnership to William H. Orenstein. This proceeding was begun to set aside the sale by the executor to Orenstein on the ground that the executor and Orenstein entered into a conspiracy to defraud the petitioner; that in furtherance of such conspiracy they caused the offer to purchase and the petition and order allowing the executor to sell to be executed and filed and approved by the court through false and fraudulent representations made to the court. The details of this conspiracy and the manner in which it was carried out are set out at great length.

It is also alleged in the petition that the executor caused appraisers to be appointed who were not qualified to make an appraisal of the business of the type conducted by the Friedman Tobacco Company and that all of the facts pertaining to said business were not submitted to the appraisers. Upon all of the matters set out in the petition, the petitioner sought to have the sale by the executor to Orenstein vacated and set aside; the executor removed; the letters testamentary issued to Harry W. Friedman revoked; an accounting had and that further proceedings be taken in the matter of the estate of Abe Friedman.

While the conduct of the executor and Orenstein is characterized as fraudulent and the whole proceeding set out with great particularity, it is nowhere alleged in the petition what the true value of the interest of the estate was. However, the matter of value was considered by the trial court. It also appears from the findings of the trial court that there were outstanding claims, including taxes, amounting to approximately $7,000. The court filed findings of fact and conclusions of law, from which the allegations of fraud made by the petitioner were found not to be sustained; and found specifically that the failure of the executor to consult the widow of the testator in making the sale and the failure to give her notice the sale was tactless but was not wrong or fraudulent and did not result in any harm or loss to the estate whatsoever. As a matter of law, the court concluded that the appraisal was at the fair and reasonable market value of the sixty-seven per cent interest of the testator in the partnership and the sale was fairly, honestly, and properly made; that the clause in the partnership agreement did not preclude the testator from giving his executor the power of sale contained in paragraph 8 of the will; that the widow's rights under paragraph 14 of the partnership agreement never accrued to her, since the executor sold the estate's interest in the partnership pursuant to the power given to him by the will; that the executor was not required under the power of sale to give notice to the petitioner.

The court further found that the order authorizing the sale of the sixty-seven per cent interest of the estate in the partnership was lawful and properly granted and that the petition of the widow should be dismissed upon the merits. An order was entered accordingly on August 2, 1946, from which the petitioner appeals. It is considered that in the interest of the proper administration of estates, reference should be made to the finding of the trial court to the effect that the order of March 30, 1945, was lawfully and properly granted. This is an ex parte order. This matter was dealt with in Will ofRobinson (1935), 218 Wis. 596, beginning at the bottom of page 605, 261 N.W. 725. We do not consider here what effect the voluntary appearance of the executor and the surviving partner may have had as to matters in which both were interested. Certainly, an ex parte order without notice of hearing to anyone could in no way conclude the petitioner or affect her rights. It is elementary law that in order to bind a party by an order or judgment, there must have been a notice and a hearing at which the party to be bound may appear and be heard. While this is of no materiality in this case, we feel that reference should be made to it.

The testator entered into a partnership agreement with Orenstein on January 5, 1943. His will was executed on the 26th day of May, 1943. It is contended by the petitioner that by the terms of the will the petitioner was given a specific legacy amounting to forty-seven per cent of the fractional interest of the testator in the partnership business. It is contended that because this legacy is specific, the interest of the widow under the will could not be disposed of under the power of sale continued in the will. There is no doubt that a partner may provide by his will that the partnership shall continue notwithstanding his death. Without considering the rights of the surviving partner or the rights of the personal representative of the deceased partner, it is clear that those rights were subject to the provisions of the will of the deceased partner. By the terms of the will the deceased partner conferred upon his executor a very broad and comprehensive power of sale which .applied to his interest in the partnership. We find no authority for the proposition that this power of sale was limited by any provision in the partnership articles to the contrary.

The will speaks as of the date of the testator's death. The testator was an able and competent businessman and made the provision in his will after the execution of the partnership agreement and therefore must have had clearly in mind the effect of the power contained in the will upon his interest in the partnership. He gave a fractional interest in the partnership to others than his widow. In addition to that, there were debts of the estate which must be paid. The contention that the bequest to the widow in any way operated to suspend the power contained in the will cannot be sustained.

It is clear, as the trial court held, that under the power of sale contained in the will the executor had ample authority to dispose of the testator's share in the partnership business without applying to the court for authority to do so.

We shall not consider many of the questions raised by the petitioner on this appeal for the reason that there is no competent proof in the record that the interest of the estate of the testator was worth more than the amount paid to the executor by William H. Orenstein. There was expert testimony to the effect that the eighty vending machines and the vending-machine route as of March 30, 1945, had a value of between $8,000 and $9,000. The only other testimony offered as to the value of the partnership business was that of a certified public accountant who based his valuation on a computation made from the books of the partnership. We shall not state the method adopted by the accountant by which he arrived at the conclusion that the partnership business was worth somewhere between $70,000 and $100,000. Suffice it to say that the witness testified that the good will might be valued at $65,000. There is no testimony in the case as to the existence or the character and extent of the good will of the partnership. Apparently the accountant merely assumed that the good will was a very valuable asset of the partnership without any proof to that effect. While the court did not comment upon the testimony of the certified public accountant, it apparently disregarded it. Certainly there is nothing in the evidence from which it can be said that the finding of the trial court as to the value of the sixty-seven per cent interest of the testator in the partnership is against the great weight and clear preponderance of the evidence.

If we should assume, which we do not, that there was evidence of misconduct which would warrant a court in vacating the sale, there is no substantial evidence that the petitioner suffered any damage by reason of the sale. There is no evidence that a bidder would or could be produced who would pay more if the sale was set aside. While this is not a judicial sale, being a sale under a power conferred upon the executor by the will, nevertheless it will not be set aside unless it appears that the price was clearly inadequate to the damage of the petitioner. The inadequacy of the price must be established by competent proof. It cannot rest upon mere allegations of wrongful conduct in this case, whether the petitioner was wronged depends almost entirely upon the value of the interest of the estate in the partnership. The trial court approved the sale and the entire transaction and acquitted the respondents of any fraudulent representation or conduct.

By the Court. — Order affirmed.