Goergen v. Nebrich

Supreme Court, Special Term, New York · 1958 · Corporations

12 Misc. 2d 1011 (1958)

Updated August 22, 2026

CorporationsPartnership dissolutionLiquidation of partnership assetsAccountingpartnershipdissolutiondeath of partnerincompetency

Facts

The plaintiff and Peter C. Nebrich had entered into a partnership agreement and a joint business valuation and optional buy and sell agreement in 1952. In 1957, the plaintiff obtained an interlocutory judgment dissolving the partnership because Nebrich was incompetent, and the Appellate Division affirmed the dissolution but held that liquidation could not proceed under the buy-sell agreement because the dissolution was not pursuant to the partnership agreement. Thirteen days after that appellate decision, Nebrich died. The plaintiff then argued that Nebrich's death now required liquidation under the buy-sell agreement, while the defendants argued that the assets had to be sold publicly.

Issue

When a partnership has already been dissolved by court decree on the ground of a partner's incompetency, does the later death of that partner make the dissolution one by death so as to require liquidation under a buy-sell agreement? If not, must the court order a public sale of the partnership assets, or may it instead permit the surviving partner to purchase the deceased partner's interest at an appraised value?

Rule

A partnership dissolved by prior court decree remains dissolved as of the date of that decree, and a subsequent death of a partner does not change the cause of dissolution or make applicable a buy-sell agreement that would apply only if dissolution occurred under the partnership agreement. After such a dissolution, the deceased partner's legal representative is entitled to a full accounting and the decedent's share of the net assets, but the court, acting under the Partnership Law, may allow the surviving partner to purchase that interest at appraised value rather than compel a public sale, so long as the estate is fully protected.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Buffalo, Maya Ortiz and Colin Mercer operated a custom furniture partnership. A New York court entered an interlocutory decree dissolving the partnership because Colin had become incompetent; two weeks later, before liquidation, Colin died. Their agreement provided that if the partnership dissolved upon a partner's death, the survivor could buy the decedent's interest at a contract formula price.

Which is the strongest argument about whether the contract formula now governs liquidation?

Explanation. The controlling rule is that once dissolution has already occurred by court decree, it is a fait accompli as of that date. A later death does not recharacterize the cause of dissolution so as to trigger a contractual buy-sell provision that applies only when dissolution occurs under the agreement. Liquidation therefore proceeds under the Partnership Law rather than the death-based contract formula.