Nexsen v. Ira Haupt & Co.

44 Misc. 2d 629, 254 N.Y.S.2d 637, 1964 N.Y. Misc. LEXIS 1221
CourtNew York Supreme Court
DecidedDecember 9, 1964
StatusPublished
Cited by3 cases

This text of 44 Misc. 2d 629 (Nexsen v. Ira Haupt & Co.) is published on Counsel Stack Legal Research, covering New York Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nexsen v. Ira Haupt & Co., 44 Misc. 2d 629, 254 N.Y.S.2d 637, 1964 N.Y. Misc. LEXIS 1221 (N.Y. Super. Ct. 1964).

Opinion

Mario Pittoni, J.

Defendant, Ira Haupt II, as sole surviving executor of the last will and testament of Ira Haupt, moves to dismiss the complaint on the ground that New York has no jurisdicition over this defendant and on the further ground that plaintiff cannot sue the executor because, prior to the commencement of this action, he failed to comply with the laws of the State of New Jersey.

Defendant is a foreign executor appointed by the Surrogate of Monmouth County, New Jersey, After Ira Haupt’s [630]*630death, June 13, 1963, his executors, on July 2, 1963 procured an order from the Surrogate directing creditors to present proofs of their claims against decedent’s estate on or before January 2, 1964, and on January 3, 1964 an order was made barring creditors who had failed to present their claims within the time required.

Plaintiff is a limited partner of Ira Haupt & Co., securities brokers and members of some stock and commodities exchanges.

The partnership was formed pursuant to a written agreement of limited partnership on April 1, 1960, under the laws of the State of New York, among plaintiff Nexsen, Ira Haupt, the deceased, Ira Haupt II, individually, as a general partner, and a number of other general and limited partners. A copy of the agreement was filed with the New York County Clerk, pursuant to the Limited Partnership Act. (Partnership Law, art 8.) Paragraph 3 of this agreement provides as follows; “ The Limited Partnership shall conduct its business in the City of New York, New York, and such other places as the Limited Partnership may thereafter determine.”

The main office of the partnership from the time of its organization until the present has been at 111 Broadway, New York City, New York.

Ira Haupt’s capital contribution to the partnership was $1,100,000 and also his memberships in various stock and commodities exchanges.

Plaintiff, for his contract capital, contributed securities valued at approximately $360,000, and later loaned the partnership certain securities then valued at approximately $245,000.

The partnership agreement stated plaintiff was to receive interest on his contract capital and on his loan and also a guaranteed minimum amount of participation in profits of at least $10,000 per year. These items were expenses of the business. In addition, the agreement stated that the general partners “jointly and severally agree furthermore to make good any deficiency in the contract capital contribution of any limited partners due to losses suffered by the limited partnership ’ ’ (par. 14 [3] of agreement). The agreement further provided that in the event of Ira Haupt’s death his interest was to continue as previously, subject to all the terms and conditions of the agreement, as though he were still alive, for a period, which in this case, continued to December 31, 1963, the termination of the agreement (par. 21). It also provided that all general partners would remain liable for their respective share of losses, liabilities, obligations or contingencies occurring at any time during their status as general partners, including [631]*631the period after their death, to which they were subject by the terms of the agreement, and in the case of Ira Haupt, for the balance of the agreement (par. 22). It also said that the agreement was binding upon, and for the benefit of, the respective heirs and legal representatives of the parties thereto, and that it was made and should be governed by the laws of the State of New York in all respects, including matters of construction, validity and performance (par. 42).

In the Fall of 1963, the partnership was suddenly faced with serious financial difficulties, and as a result thereof, on November 25, 1963, the general partners (including the Haupt estate), the New York Stock Exchange and various bank creditors, entered into an agreement by which the partnership’s business operations and assets were turned over to the New York Stock Exchange. This agreement also contained a provision that it was a contract made under and to be construed in accordance with the laws of the State of New York. The power of attorney annexed to this agreement provided the liquidator could do anything that the general partners, including the Haupt estate, could do as a partner.

On March 8, 1964 the general partners (including the Haupt estate), the Stock Exchange and the creditor banks entered into an agreement amending the November 25, 1963 document and providing for a substitution of the liquidator. Included in that amendment was a provision that the contribution of Ira Haupt remained at the risk of the business, subject to the claims of creditors.

Thereafter, the Haupt estate consented to the filing of a petition under chapter XI of the Bankruptcy Act (U. S. Code, tit. 11), but this petition was dismissed and the partnership was adjudicated a bankrupt. Meanwhile the partnership is being operated by the successor liquidator subject to the order of the Federal Referee in Bankruptcy.

The first problem is the question of jurisdicition over the estate of Ira Haupt, pursuant to CPLR 302 (subd. [a], pars. 1, 2) which states as follows:

“ § 302. Personal jurisdiction by acts of non-domiciliarie,s. (a) Acts which are the basis of jurisdicition. A court may exercise personal jurisdicition over any non-domieiliary, or his executor or administrator, as to a cause of action arising from any of the acts enumerated in this section, in the same manner as if he were a domiciliary of the state, if, in person or through an agent, he:
“ l! transacts any business within the state; or
“ 2. commits a tortious act within the state ”.

[632]*632This statute must be interpreted reasonably and according to its plain language. Therefore, the word ‘ ‘ executor ’ ’ means the executor of a foreign or nondomiciliary estate, and includes an executor who on behalf of his estate or whose decedent during life " transacts any business within the state ”, or that executor or whose decedent ‘ ‘ commits a tortious act within the state ”.

Let us first consider the language of paragraph 1 of subdivision (a) “transacts any business within the state”. In Steele v. De Leeuw (40 Misc 2d 807, 808), I said “ the transaction of business test, as set forth in the new statute, requires considerably less than the contacts required in this State under the doing business test of the former procedure.” Here, the original contract dated April 1, 1960, which is the core of this case, was executed by plaintiff and Ira Haupt, the deceased, in New York and was for the conduct of business in New York; in fact, business thereunder was conducted primarily in New York City. After Haupt’s death, his executors, as representatives of his estate, transacted further business in New York by executing a number of agreements with and affecting plaintiff, especially that of November 25, 1963 wherein they agreed to permit the Stock Exchange to operate and control the partnership, and also that of March 8, 1964 when they reiterated that the Ira Haupt capital contribution in the partnership continued at the risk of the business and subject to the claims of creditors.

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Bluebook (online)
44 Misc. 2d 629, 254 N.Y.S.2d 637, 1964 N.Y. Misc. LEXIS 1221, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nexsen-v-ira-haupt-co-nysupct-1964.