Loots Dreyfus Corp. v. ACLI International, Inc.

72 A.D.2d 712, 421 N.Y.S.2d 591, 1979 N.Y. App. Div. LEXIS 13902

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: November 20, 1979
• Status: Published

Opinion

Judgment, Supreme Court, New York County, entered February 27, 1979, which granted plaintiffs a judgment of $1,243,957 with interest of 6% per annum from January 1, 1974 to the date of judgment, together with costs and disbursements, and dismissed the defendants’ counterclaims, unanimously modified, on the law, to the extent of reducing such judgment from $1,243,-957 to the sum of $142,355 with interest of 6% per annum from January 1, 1974, and, as so modified, affirmed, with costs and disbursements to defendants. Pursuant to a written partnership agreement dated as of June 30, 1971, between plaintiff L. D. Commodity Corp. and A. C. Israel Special Services, Inc. (the predecessor of defendant ACLI International Commodity Services, Inc.) a new partnership was formed, known as Louis-Dreyfus & A. C. Israel Commodity Co. Plaintiff L. D. Commodity Corp. is a subsidiary of plaintiff Louis-Dreyfus Corporation and defendant ACLI International Commodity Services, Inc., is a subsidiary of ACLI International, Inc. The new partnership endeavored to and had as one of its purposes, the obtaining of a clearing membership on various commodities exchanges. Prior to obtaining such membership, the partners agreed to transact business independently and to pool and divide commission income less expenses. Rules of the Chicago Board of Trade Exchanges prohibited a clearing member from sharing commissions and required that an individual be a member or partner of a business for that business to obtain clearing membership status. To overcome those objections a new superseding partnership agreement dated as of April 12, 1972 was entered into between plaintiff Gerard Louis-Dreyfus, individually, and the two corporations which were partners in the prior partnership. The new partnership known as Louis-Dreyfus & A. C. Israel Commodity Co. obtained clearing membership on several exchanges. As to exchanges for which it did not obtain clearing membership, the new partnership employed defendant ACLI International Commodity Services, Inc., to clear transactions. The new partnership dissolved as of December 31, 1973 and the plaintiffs commenced this action seeking 50% of ACLI International Commodity Services, Inc.’s commissions. The predicate for this claim was that prior to the two written partnership agreements, there was an oral agreement between the parent corporations and their subsidiaries whereby they each agreed to a 50% distribution of commissions to the two Dreyfus corporations. In article 9.7 of each written partnership agreement it is provided that such agreement "constitutes the entire agreement, and supersedes any and all prior agreements and understandings, between the Partners with respect to the subject matter hereof.” On this record it is clear that a partnership involving only the subsidiaries was contemplated so as to shield the parent corporations from unlimited liability as partners for any losses that might occur. Conspicuous by its absence is any understanding between the parties as to sharing of losses relevant to the terms of the alleged oral agreement. The parties to this action are extremely sophisticated businessmen and entities. Neither fraud nor unjust enrichment has been demonstrated. Accordingly, as there is no justification on this record, in view of the aforesaid, for awarding plaintiffs a 50% share of business generated by the partnerships and cleared by ACLI International Commodity Services, Inc., the judgment awarded to plaintiffs, except for the sum of $142,355 admitted by defendants to be due to plaintiffs, may not stand. Apart from this modification, the remaining issues were properly determined by Trial Term. Concur&emdash;Bloom, J. P., Lane, Markewich, Lupiano and Ross, JJ.