
    In the Matter of the Estate of Abraham Hillowitz, Deceased. Selma Wernick et al., as Executors of Abraham Hillowitz, Deceased, Respondents; Mary Hillowitz, Appellant.
    Argued April 4, 1968;
    decided May 16, 1968.
    
      
      Bernard Meyerson and Harry Z. Kaufman for appellant.
    I. There is nothing in the Partnership Law or Decedent Estate ■ Law that prevents partners from contracting as to disposition of the share of a partner upon his death. (Matter of Hillowitz, 24 A D 2d 891 ; Shubert v. Lawrence, 27 A D 2d 292; Lanier v. Bowdoin, 282 N. Y. 32; Matter of Karlinski, 180 Misc. 44 ; Matter of Mildrum, 108 Misc. 114; Gabay v. Rosenberg, 26 A D 2d 687, 19 N Y 2d 899.) II. The Appellate Division erred when it reversed the findings of the Referee and Surrogate and made a new finding that the use of joint moneys would not make decedent’s share of the partnership a jointly held asset due her by right of survivorship.
    
      Robert A. Smith and Floyd Jaffee for respondents.
    I. Paragraph 15 of the partnership agreement represents an attempted testamentary disposition which is void because not executed in compliance with section 21 of the Decedent Estate Law. (McCarthy v. Pieret, 281 N. Y. 407; Salesky v. Hat Corp. of America, 20 A D 2d 114; Matter of Mildrum, 108 Misc. 114.) II. Decedent destroyed the joint ownership of funds in a joint checking account held with respondent-appellant Mary Hillowitz to the extent of his withdrawals from said account. (Matter of Suter, 258 N. Y. 104; Matter of Bricker v. Krimer, 13 N Y 2d 22; Matter of Rabinowitz, 5 Misc 2d 803; Matter of Murphy, 23 A D 2d 866.) III. Policy considerations in the field of estate administration and taxation dictate the rejection of respondent-appellant’s tracing of funds argument. IY. Respondent-appellant has not proved that the $2,800 invested by decedent in partnership was derived from a joint checking account.
   Chief Judge Fuld.

This appeal stems from a discovery proceeding brought in the Surrogate’s Court by the executors of the estate of Abraham Hillowitz against his widow, the appellant herein. The husband had been a partner in an “ investment club ” and, after his death, the club, pursuant to a provision of the partnership agreement, paid the widow the sum of $2,800, representing his interest in the partnership. "In the event of the death of any partner,” the agreement recited, “his share will be transferred to his wife, with no termination of the partnership.” The executors contend in their petition that the above provision was an invalid attempt to make a testamentary disposition of property and that the proceeds should pass under the decedent’s will as an asset of his estate. The widow maintains that it was a valid and enforcible ‘contract. Although the Surrogate agreed with her, the Appellate Division held that the agreement was invalid as “an attempted testamentary disposition ” (24 A D 2d 891 ).

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. (See, e.g., Gabay v. Rosenberg, 29. A D 2d 653, 654, following remission, 19 N Y 2d 899; Matter of Eddy, 175 Misc. 1011,1016, affd. 262 App. Div. 1015, affd. 290 N. Y. 677; Shubert v. Lawrence, 27 A D 2d 292, 296; Matter of Karlinski, 180 Misc. 44, 48; Matter of Mildrum, 108 Misc. 114, 116; McKinnon v. McKinnon, 56 F. 409, 412; Balafas v. Balafas, 263 Minn. 267, 276; see, also, Lanier v. Bowdoin, 282 N. Y. 32, 38, 40; 1 Rowley, Partnership [2d ed., 1960], pp. 704-705.) We are unable to perceive a difference in principle between an agreement of this character and one, such as that before us, providing for a deceased partner’s widow, rather than a surviving partner, to succeed to the decedent’s interest in the partnership. (See, e.g., Faggelle v. Marenna, 131 Conn. 277, 280; see, also, Wild v. Davenport, 48 N. J. L. 129, 136; Lindley, Partnership [12th ed., I960], pp. 458-459.)

These partnership undertakings are, in effect, nothing more or less than third-party beneficiary contracts, performable at death. Like many similar instruments, contractual in nature, which provide for the disposition of property after death, they need not conform to the requirements of the statute of wills. (See, e.g., Matter of Fairbairn, 265 App. Div. 431, 433, mot. for lv. to app. den. 291 N. Y. 828.) Examples of such instruments include (1) a contract to make a will (see, e.g., Ga Nun v. Palmer, 216 N. Y. 603, 610; Phalen v. United States Trust Co., 186 N. Y. 178, 184; Gilman v. McArdle, 99 N. Y. 451, 461); (2) an inter vivos trust in which the settlor reserves a life estate (see, e.g., Matter of Ford, 304 N. Y. 598; City Bank Farmers Trust Co. v. Cannon, 291 N. Y. 125; City Bank Farmers Trust Co. v. Charity Organization Soc., 264 N. Y. 441; and (3) an insurance policy. (See, e.g., Hutchings v. Miner, 46 N. Y. 456, 460-461; Johnston v. Scott, 76 Misc. 641, 648; Ambrose v. United States, 15 F. 2d 52; see, also, Ward v. New York Life Ins. Co., 225 N. Y. 314; Note, 53 A L R 2d 1112.)

In short, members of a partnership may provide, without fear of running afoul of our statute of wills, that, upon the death of a partner, his widow shall be entitled to his interest in the firm. This type of third-party beneficiary contract is not invalid as an attempted testamentary disposition.

The executors may derive little satisfaction from McCarthy v. Pieret (281 N. Y. 407), upon which they heavily rely. In the first place, it is our considered judgment that the decision should be limited to its facts. And, in the second place, the case is clearly distinguishable from the one now before us in that the court expressly noted that the facts * * * indicate a mere intention on the part of the mortgagee to make a testamentary disposition of the property and not an intention to convey an immediate interest ’ ’ and, in addition, that the named beneficiaries ‘1 knew nothing of the provisions of the extension agreement ” (p. 413).

The order of the Appellate Division should be reversed, with costs in this court and in the Appellate Division, and the order of the Surrogate’s Court reinstated.

Judges Burke, Scileppi, Bergan, Breitel and Jasen concur with Chief Judge Fuld; Judge Keating concurs in result in the following memorandum: I concur in reversal but find it difficult to distinguish McCarthy v. Pieret (281 N. Y. 407), and am not prepared to overrule that authority. I prefer to rest reversal on the ground that respondent widow is entitled to interest in the partnership by right of survivorship as set forth in the second opinion of the Surrogate (51 Misc 2d 666).

Order reversed, etc. 
      
      . Following its initial determination that the agreement was invalid, the Appellate Division remitted the case to the Surrogate’s Court for further proceedings on an issue not here relevant and, following such remission, again found in favor of the executors and against the widow and directed her to deliver the subject asset to the executors. The present appeal, before us as of right, brings up for review the prior Appellate Division order (CPLR 5501, subd. [a], par. [1]; see Matter of Hillowitz, 20 N Y 2d 952).
     