Wilzig v. Sisselman

Majority - Botter, P.J.A.D.

Yes, the death of a partner causes a dissolution of the original partnership under the Uniform Partnership Law, even if the partnership agreement provides for the continuation of the business through a successor partnership; and no, the original management provisions do not automatically bind the successor partnership if the agreement is silent on management in such an event, leading to management being governed by default UPL rules (majority vote for ordinary matters, unanimity for non-ordinary matters). No, an attempt by some, but not all, beneficiaries to extend an irrevocable trust's termination date is not effective if it would prejudice non-consenting or remote contingent beneficiaries. The court affirmed that under N.J.S.A. 42:1-31(4) of the Uniform Partnership Law, the death of any partner causes dissolution of the partnership. However, N.J.S.A. 42:1-41 contemplates the continuation of partnership business without liquidation by a newly formed partnership. The BCA partnership agreement clearly intended for the continuation of its business, even providing for the substitution of a deceased partner's spouse or the beneficiaries of a terminated trust. Thus, Jerome's death and the beneficiaries' succession to the Trust's interest effectively dissolved the old BCA partnership and created a successor BCA partnership to continue the business without liquidation, similar to precedent established in Wild v. Davenport and Adams v. Jarvis. Regarding management, the BCA agreement explicitly named specific individuals as managing partners but was silent on what occurs to management authority if a named managing partner dies. The court held that, absent clear and express provisions in the partnership agreement limiting the management authority of partners in a successor partnership, the default rules of the Uniform Partnership Law apply. N.J.S.A. 42:1-18(e) grants all partners equal rights in management, and N.J.S.A. 42:1-18(h) requires unanimous consent for acts in contravention of the agreement or for matters not considered "ordinary." The court reasoned that management rights are fundamental and part of a partner's property rights (N.J.S.A. 42:1-24(3)) and should not be inferred as surrendered through guesswork, particularly when such an interpretation could lead to an imbalance of power among partnership factions. In contrast, the SIA agreement's clear succession plan for managers (appointing Martin L. Sisselman) would be enforced. Therefore, the new BCA partnership is to be managed according to the default UPL provisions, implying majority vote for ordinary matters and unanimous consent for non-ordinary matters. Concerning the Trust, the court found the original trust instrument irrevocable and clear that the Trust would terminate upon Jerome's death, with distribution to his children. The attempt by five of the six beneficiaries to extend the Trust's termination date was ineffective because not all beneficiaries, specifically Naomi Wilzig, consented. Moreover, the proposed extension could have prejudiced non-consenting or remote contingent beneficiaries by delaying their enjoyment of the corpus or by subjecting their inheritance to additional risks should they die before the extended termination date. Trustees (Lorraine and Selig) were also in a conflict of interest, supporting the immediate termination and distribution. The court explicitly rejected the contention that the agreement could be effective for only those beneficiaries who signed.