Levy v. Leavitt

Sylvan Levy (plaintiff) invested $50,000 in return for a 20 percent interest in a partnership intended to purchase over two million pounds of bacon from the United States government for purposes of resale. Louis Leavitt (defendant) receipted the payment and confirmed that Levy would receive 20 percent of the net profits or would be subject to 20 percent of net losses. It was agreed that Leavitt would manage the venture and that Levy would not perform any services for the partnership or make any additional capital contributions. Levy and Leavitt did not make any agreements regarding compensating Leavitt for his activities on behalf of the partnership or requiring Leavitt to make a capital contribution to the partnership. Leavitt purchased the bacon using the capital contribution from Levy as well as money Leavitt had borrowed on his own behalf and then provided to the partnership. After purchasing but before selling the bacon, Leavitt was indicted on charges of violating the Lever Act, and the bacon was seized by the US government. By the time Leavitt was exonerated, the bacon was impossible to sell despite Leavitt’s extensive efforts to find buyers. Leavitt successfully sought indemnification of the loss from the US government. In the accounting, Leavitt attempted to obtain compensation for his efforts to sell the bacon and sought interest on the money he had provided or secured to purchase the bacon. The trial court denied Leavitt the ability to receive compensation for his efforts on behalf of the partnership and to receive interest on the money he had obtained to finance the purchase of the bacon. Leavitt appealed.