## Facts

- Sylvan Levy and Louis Leavitt entered an informal joint venture in June 1919 to purchase and resell approximately 2,500,000 pounds of U.S. government surplus bacon.
- Levy paid Leavitt $50,000; Leavitt acknowledged receipt in a letter stating Levy would receive 20% of net profits or bear 20% of net losses.
- The parties made no formal contract and did not agree on financing details or whether Leavitt would receive compensation or interest.
- The venture was effectively to be managed by Leavitt; Levy was not obligated to perform services or make further contributions.
- Leavitt used Levy’s funds plus additional money he provided or borrowed to finance the purchase.
- The U.S. government indicted Leavitt under the Lever Act and seized the bacon, preventing delivery to buyers.
- After Leavitt obtained a favorable judicial determination, the bacon had deteriorated; efforts to sell, including attempts abroad, failed, and authorities destroyed the bacon as unfit for consumption.
- The United States later indemnified Leavitt for the loss; in the ensuing accounting Leavitt claimed (1) compensation for his services and (2) interest on money he advanced or borrowed beyond Levy’s contribution.

## Issues

1. Whether a managing participant in a joint venture may recover compensation for services from a co-venturer absent an express agreement.
2. Whether, in an equitable accounting, a joint venturer may recover interest on funds personally advanced or borrowed to finance the venture absent an express agreement for interest.

## Decision

- The Court of Appeals modified the judgment and, as modified, affirmed.
- Leavitt was not entitled to compensation for managing the joint venture in the absence of an express agreement.
- The court allowed interest in part for funds Leavitt advanced or borrowed beyond what was contemplated as his own capital contribution, rather than denying interest entirely.

## Legal Principles

- A joint venturer (like a partner) is not entitled to remuneration for services rendered to the venture absent an express agreement providing for compensation.
- Profit-and-loss sharing is ordinarily treated as the consideration for participants’ efforts unless the agreement provides otherwise.
- In an accounting, equity may permit reimbursement of interest (or its equivalent) on additional financing personally advanced or borrowed by one venturer beyond the expected capital share, to prevent unjust enrichment of the other venturer.
- Indemnity received in place of venture property is treated as a substitute fund for accounting, subject to proper deductions for allowable expenses and charges.

## Conclusion

The court applied partnership-style rules to an informal joint venture: the managing venturer could not claim a salary without an explicit agreement, but equity required a limited allowance of interest for extra funds he advanced or borrowed to finance the transaction, and the accounting of the government indemnity was adjusted accordingly.


Levy v. Leavitt, 257 N.Y. 461, 178 N.E. 758 (N.Y. 1931)