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The Issue in this Case is Whether Petitioner’s Petition for Reconveyance Should be Granted.

A New York Probate Lawyer said that, petitioners are who are, respectively, the suspended co-executor and the temporary co-administrators of the Estate of the decedent (hereinafter the estate). Respondent is the suspended co-executor of the estate. Petitioners commenced these proceedings to remove respondent as co-executor and to surcharge him for his self-dealing with respect to an estate asset consisting of a partial interest in a limited partnership known as North Shore Mart. Petitioners appeal and respondent cross-appeals from an order of Monroe County Surrogate’s Court, which, following a reference of factual issues on respondent’s accounting, confirmed the report of the referee and made additional determinations on issues not addressed by the referee.

A New York Will Lawyer said that, insofar as pertinent to this appeal, the Surrogate ordered respondent to reconvey to the estate administration a 36.4285% interest in North Shore Mart; ordered that such reconveyance be in the nature of a limited partnership interest rather than a general partnership interest or tenancy in common; denied the estate’s request for reconveyance of an additional 6.0715% interest in the partnership; awarded the estate a judgment of $1,152,645.82 plus interest, representing (after offset) the estate’s interest (36.4285%) in amounts diverted by respondent from the partnership to himself and his wife; denied without prejudice the estate’s claim to recover tax benefits (for partnership losses) that the estate would have realized but for respondent’s misappropriation of its interest in the partnership; denied the estate’s request to recover for the unnecessary interest expense incurred by the partnership as a result of his diversion of partnership assets; deferred the estate’s request for an award of attorney’s and accountant’s fees; denied the estate’s request for an award of punitive damages; denied the estate’s request for costs and disbursements; and ordered respondent to pay one-half of the referee’s fees.

A Long Island Probate Lawyer said that, on appeal the estate contends that it is entitled to reconveyance of a 42.5% interest in North Shore Mart; that such reconveyance must be in the form of a general partnership interest or tenancy in common; that it is entitled to a judgment equal to 42.5% of amounts diverted from the partnership by respondent; that the estate is entitled to other amounts, including a proportionate share of interest paid as a result of unnecessary borrowing by the partnership and compensation for tax benefits the estate would have realized but for respondent’s misappropriation; and that it is entitled to additional relief, including attorney’s and accountant’s fees, punitive damages, referee’s fees, and costs and disbursements. On his cross appeal, Saul challenges the Surrogate’s award to the estate of a money judgment and of an interest in the partnership at its present value.

A Queens Probate Lawyers said that, this proceeding arises out of an intricate scheme of self-dealing by which respondent misappropriated the estate’s interest in North Shore Mart, a partnership that owns and operates a shopping center in Great Neck, Long Island. The background facts of this litigation appear in our prior opinion in this case. In that opinion, we held that respondent was guilty of self-dealing in purchasing from the estate a 19.643% partnership interest owned by the decedent at the time of his death, and in fraudulently concealing an additional 16.7855% partnership interest that Saul nominally owned but that in fact belonged to the decedent. We set aside the “release and discharge”, by which respondent purported to purchase the estate’s interest in the partnership, because of Saul’s failure to obtain the beneficiaries’ informed consent to the transaction; 3 imposed a constructive trust for the benefit of the estate on an aggregate 36.4285% interest in the partnership; ordered a reconveyance of that interest to the estate; and remitted the matter to the Surrogate for an accounting designed to “assess the value of (the estate’s) interests and determine what adjustments are necessary to place (the estate) in the same position (it) would have been had the misappropriation not occurred”.
A Nassau Estate Administration Lawyer said that, pursuant to our order and to a subsequent order and decree of the Surrogate, respondent filed an accounting and supplemental accounting for the period 1974 through June 1987 during which he managed the partnership. Petitioners raised objections to the accountings, and a lengthy hearing was conducted before a referee to resolve factual issues and to effectuate this court’s order. As a result of that accounting and reference, additional acts of self-dealing by respondent have come to light. Those acts include Saul’s 1979 purchase of an additional 12.143% interest in the partnership formerly owned by Jerome Ornstein. Although respondent made that purchase in his own name, he used partnership funds, i.e., funds belonging proportionately to the estate. Additionally, it was revealed that respondent diverted partnership funds, including funds belonging proportionately to the estate, to pay himself partnership distributions and management fees and to pay his wife, leasing commissions. The findings of the referee and Surrogate concerning those acts of self-dealing are not substantially challenged by Saul, and we would not disturb them in any event. The relevant facts will be set forth in the discussion of the various contentions raised by the parties.

The issue in this case is whether petitioner’s petition for reconveyance should be granted.
A primary contention of the estate is that, for the purposes of imposing a constructive trust, ordering a reconveyance, and awarding a money judgment, the estate is entitled, as a consequence of Saul’s purchase of the Ornstein interest, to a greater interest in the partnership than the 36.4285% interest awarded by the Surrogate. As we previously held, at the time of his death in 1976, he had legal and beneficial interests in the partnership totaling 36.4285%. Respondent’s subsequent self-dealing (purchase of the decedent’s legal interest and concealment of his equitable interest) left respondent with a 72.857% interest.
The estate bases its claim for a greater interest in the partnership on the fact that respondent purchased the Ornstein interest with partnership funds, including funds that rightfully belonged to the estate. The estate asserts that it is entitled to an additional 6.0715% interest in the partnership, for a total interest of 42.5% (36.4285% plus 6.0715%). In seeking reconveyance of one-half the interest purchased by the respondent, the estate asserts that respondent and the decedent traditionally had participated equally in such buy outs. We cannot presume, as the estate contends, that if respondent had not deprived the estate of its ownership interest, the estate would have participated equally with respondent in the Ornstein purchase. Nonetheless, the fact remains that Saul made that purchase with partnership funds that belonged proportionately to the estate. We thus conclude that the estate is entitled to an additional 4.4235127% interest in the partnership. That figure is based upon the proportion of the Ornstein interest that Saul purchased with funds that rightfully belonged to the estate (12.143% X 36.4285%). Adding that interest to the interest that we previously held was owned by the estate, we find that the estate is properly entitled to reconveyance of a 40.852012% interest in the partnership (4.4235127% + 36.4285%). The order must be modified accordingly. Re-computation of the estate’s interest in the partnership will affect the amount of the money judgment awarded to the estate, as will be discussed infra.
Similarly, the Surrogate properly rejected the estate’s claim that it is entitled to a general partnership interest and, more particularly, that it is entitled to a voice in the dissolution and winding up of the partnership. Although the decedent was a general partner in North Shore Mart at the time of his death, it is well established that the representative of a deceased partner is not entitled to participate in or interfere with the continuation or winding up of the partnership by the surviving partners. The representative’s only right is to demand an accounting from the surviving partners upon completion of the winding up of the partnership affairs. Since the Surrogate’s order awarding the estate a limited partnership interest satisfies the estate’s rights in that regard, there is no need to disturb that portion of the order.
More fundamentally, in these circumstances, nothing in the Partnership Law limits the estate of a deceased partner to the value of that partner’s interest on the date of death. To the contrary, Partnership Law § 73 provides that, when a partner dies and the business is continued without any settlement of accounts between the estate and the surviving partners, the estate “may have the value of (the decedent’s) interest at the date of dissolution ascertained, and shall receive as an ordinary creditor an amount equal to the value of his interest in the dissolved partnership with interest, or, at (the estate’s) option in lieu of interest, the profits attributable to the use of his right in the property of the dissolved partnership.” Because the partners did not dissolve the partnership but continued it after decedent’s death, thus breaching their fiduciary duty to the estate to account for the decedent’s interest, the estate is entitled to receive the value of decedent’s interest as determined on the date of dissolution or the date of judgment, at the estate’s election. Moreover, as expressly directed by the Surrogate, the estate is entitled to receive the profits attributable to respondent’s use of the estate’s interest in the partnership, including appreciation in the value of that interest.
Finally, even if the Surrogate’s decision contravened partnership principles (which it does not), this case is governed by principles of fiduciary obligation and constructive trust. As we held on the prior appeal, respondent is guilty of self-dealing in acquiring and/or concealing the estate’s interest in the partnership. Facts that since have come to light in this litigation and in the parallel proceedings make clear that his self-dealing rises to the level of actual fraud. His fraud in divesting the estate of its interest in the partnership was compounded by his purchase of the Ornstein interest with partnership funds, including funds belonging proportionately to the estate, and by his diversion of approximately $3,000,000 in partnership assets to himself and his wife. Our prior decision and other authorities governing constructive trusts establish that, under these circumstances, the estate is entitled to recover the present appreciated value of its misappropriated interest in the partnership. Contrary to Saul’s argument, restoring the estate to the position that the decedent was in at the date of his death is not the objective of a constructive trust.
Thus if the defendant has made a profit through the violation of a duty to the plaintiff to whom he is in a fiduciary relation, he can be compelled to surrender the profit to the plaintiff. So also where the defendant wrongfully uses the property of the plaintiff in making a profit, he can be compelled to surrender the profit. The defendant will not be permitted to retain the profit in such cases even though there has been no loss to the plaintiff. The defendant should not be permitted to enrich himself by retaining the profit, and will therefore be compelled to surrender it to the plaintiff. In these cases, the effect of enforcing a constructive trust is not merely to put the parties in statu quo.
The “profit” that the fiduciary must be ordered to surrender can include the appreciation in the value of the misappropriated property. As the Surrogate held in this case, it would be totally untenable from an equitable and any other standpoint to permit benefits, which are substantial and impressive over the passage of this time, to inure to the perpetrator of the wrongdoing, in this instance respondent. Equity demands that the party aggrieved by the misconduct, in this instance the estate, be the beneficiary of the appreciation.

Thus, we affirm that portion of the Surrogate’s order directing Saul to execute a reconveyance of a presently valued limited partnership interest to the estate, but modify, as indicated supra, to award the estate a 40.852012% limited partnership interest.
Accordingly, the court held that the order unanimously modified on the law and as modified affirmed with costs to petitioners, and matter remitted to Monroe County Surrogate’s Court for further proceedings.
If you wish you to file a reconveyance, seek the help of a Nassau Estate Litigation Attorney and Nassau Estate Attorney at Stephen Bilkis and Associates.

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