The Supreme Court Resolves a Family Business Dispute

Sipko v. Koger, Inc., 214 N.J. 364 (2013).  Sometimes, it is not clear why the Supreme Court grants review.  When the Court granted certification in this case, which involved a dispute among family members relating to close corporations, the issue presented, as phrased by the Clerk’s Office, was “Was the gift of stock to plaintiff conditioned on his continued employment and did he surrender his interest in the corporations?”  That question portended a very fact-intensive decision, rather than a discussion of legal questions of general public importance that the Court typically takes up.  And indeed, the Court’s opinion, by Justice Patterson, resolved those two issues by hewing carefully to the facts of the case as affected by the standard of review applicable to a judge’s decision in a bench trial.

One intriguing legal issue that might have seemed to be present involved the question of whether the finder of fact is free to reject uncontradicted evidence, as the Appellate Division had concluded in CPC Intern, Inc. v. Hartford Acc., 316 N.J. Super. 351, 375 (App. Div. 1998).  Justice Patterson observed that the Appellate Division in the present case had cited that case, finding defendants’ evidence on the issue of a condition to have been uncontradicted and determining that that evidence was therefore required to be accepted.  But the Supreme Court concluded that, in fact, the evidence was not uncontradicted.  In a footnote, Justice Patterson stated that, as a result, the Court had no need to decide what the standard would be in a case where one party’s evidence was uncontradicted.

Another interesting wrinkle occurred in the Court’s discussion of consideration for plaintiff’s surrender of his ownership interests.  Justice Patterson observed that “For Value Received” appeared on each of the two writings that memorialized the surrender of those interests.  The Court then noted, “however, courts often seek additional evidence of consideration.”  The only authorities for that statement as to what “courts often seek” were cases from 1900, 1930, and 1941.  Despite that, the opinion makes clear that a recitation in an agreement that consideration has been received does not conclude the issue.  The parties here disagreed as to whether there was in fact consideration, and Justice Patterson persuasively showed that consideration was lacking, agreeing with the Appellate Division in that regard.

Rule 2:12-4 authorizes the Supreme Court to grant certification “if the interest of justice requires” or “for special reasons.”  It is not often that the Court does that.  This may have been one of those instances.