Savasta v. 470 Newport AssociatesSavasta v. 470 Newport Associates
In an action for the dissolution of a limited partnership, and an accounting and a distribution of the partnership profits and assets, the plaintiffs appeal, as limited by their brief, from so much of a judgment of the Supreme Court, Westchester County (Zeck, J.), entered July 13, 1989, as, after a nonjury trial, dismissed the complaint.
Ordered that the judgment is affirmed insofar as appealed from, with costs.
In 1967, the plaintiffs’ predecessors in interest purchased vacant land in Harrison, New York and erected a two-building apartment complex known as 470-480 Halstead Avenue. In November 1973 they sold this property to a corporation owned by a general partnership, the defendant 470 Newport Associates (hereinafter Associates) for $5,800,000, and a purchase money mortgage for $1,835,704 was executed. Title to the property thereafter passed to Associates. When Associates had difficulty making payments on the principal of the mortgage, the parties entered into an agreement effective July 15, 1977, wherein the plaintiffs were made limited partners and given a 20% interest in the profits. The plaintiffs’ interest as limited partners was to terminate on January 31, 1985. The relevant portion of this agreement which is the subject of dispute on appeal is paragraph four which states, in relevant part, that "should the partnership prior to January 31, 1985, dispose of by sale or otherwise the two properties known as Newport Towers, 470-480 Halstead Avenue, Harrison, New York, then this partnership shall terminate upon any partner hereto giving notice to that effect to the other partners”.
Associates created a corporation known as 470 Owners Corp. (hereinafter Owners) and transferrеd its sole asset, the apartment complex, to Owners. On November 10, 1982, the properties were converted to cooperative apаrtments and, at the closing, the original mortgage held by the plaintiffs was paid to them together with interest.
On March 3, 1983, the plaintiffs signed a letter stating that their receipt of $45,073.32 was the full amount owing to them at that time representing their 20% share of the partnership profits. This letter specifically stated that the plaintiffs had examined the accounting methods utilized by the general
Thereafter, the plaintiffs received monthly accountings and payments of thеir 20% share of the profits from the partnership. No complaint was registered to these 18 separate accountings or payments. However, on September 6, 1984, the plaintiffs sent the general partners a purported notice of termination of the limited partnership pursuant to paragraph four of the agreement. The general partners continued to remit payments to the plaintiffs until January 31, 1985, when the limited partnership terminated pursuant to its terms.
The plaintiffs claim that the cooperative conversion constituted a "disposition by sale or otherwise” and insist that they are entitled to have the partnership terminated and that they receive a 20% interest in the assets of the partnership upon dissolution. We disagree.
As noted by the trial court, the relevant phrase triggering the right to terminate the partnership was disposition "by sale or otherwise” and, by transferring the apartment complex to an entity, Owners, which was wholly owned by the partnership, there was no disposition as urged by the plaintiffs. "Disposition” implies the parting with, alienation and giving uр of property. A sale is defined as an absolute or conditional transfer or contract to transfer property including title and consists of the passing of title from the buyer to the seller (see, Black’s Law Dictionary [5th ed 1979]; DeSimon v Ogden Assocs.,
Associates did not dispose of the property after it was converted to cooperative ownеrship. It still held the property through its 100% interest in Owners. The plain language of the agreement states that the property must be "disposed of’ before the right tо terminate could arise and the partnership continued to own the property under a different form. The apartment corporation, Owners, was merely a conduit through which ownership of the individual units could be transferred to parties seeking to purchase apartments through the sale of shares. The making of the contract of sale for the transfer of the real property from the sponsor (Associates) to the apartment corрoration (Owners) was not a taxable event separable for gains tax purposes from the overall conversion (see, Mayblum v Chu,
Further, where an option is to be exercised and there is no time limit set forth in the agreement, such аn option must be exercised within a reasonable time (see, Stauss v Title Guar. & Trust Co.,
Finally, the plaintiffs, by their own conduct, waived their right to terminate the partnership and are estoppеd from termination of the partnership. Waiver requires that the party to be estopped be aware of certain facts and, being aware оf them, elect not to take advantage of them (see, Glenesk v Guidance Realty Corp.,
The plaintiffs herein accepted the benefits of the agreement for 22 months after the conversion and, even on appeal, do not dispute that thе amounts paid to them as their 20% share of cash-flow profits were accurate. At his deposition, the plaintiff Savasta stated that, as of Septеmber 6, 1984, the date of the termination letter, there had been no undistributed profits realized by the partnership to which he was entitled. Both limited partners testifiеd that they intended to be bound by their execution of the March 3, 1983, letter which specifically stated that the general partners’ accounting was cоrrect and that the $45,073.32 was the full amount owed to them at the
We have examined the plaintiffs’ remaining contentions and find them to be without merit. Thompson, J. P., Sullivan, Harwood and O’Brien, JJ., concur.