Brief Fact Summary. Abraham Hillowitz was the partner in an investment club. He executed a partnership interest with the club and named his wife the beneficiary of the interest at his death. The District Court held the agreement was valid but the Appellate Division reversed the decision.
Synopsis of Rule of Law. A partnership agreement that provides for a payment of the partner’s interest to a beneficiary upon his death is valid even though it does not comply with the statue of wills.
Issue. Whether a partnership agreement that transfers a partner’s interest to a beneficiary upon his death is valid even though it does not comply with the statute of wills.
Held. Yes. Partnerships are third party beneficiary contracts. They are similar to other instruments which are contractual in nature but need not conform to the statute of wills to dispose of gifts at death. Examples of such agreements include (1) a contract to make a will, (2) an inter vivos trust in which the settler reserves a life estate, and (3) an in insurance policy.
A partnership agreement which provides that, upon the death of one partner, his interest shall pass to the surviving partner or partners, resting as it does in contract, is unquestionably valid and may not be defeated by labeling it a testamentary disposition.View Full Point of Law