Mayer v. Garvan

270 F. 229, 1920 U.S. Dist. LEXIS 771
CourtDistrict Court, D. Massachusetts
DecidedDecember 10, 1920
DocketNo. 925
StatusPublished
Cited by7 cases

This text of 270 F. 229 (Mayer v. Garvan) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mayer v. Garvan, 270 F. 229, 1920 U.S. Dist. LEXIS 771 (D. Mass. 1920).

Opinion

BINGHAM, Circuit Judge.

This is a bill in equity under section 9 of the Trading with the Enemy Act (40 Stat. at Large, c. 106, p. 411 [Comp.' St. 1918, Comp. St. Ann. Supp. 1919, § 3115%e]), brought against the Alien Property Custodian and the Treasurer of the United States. The Richard Mayer Company and the Anglo-American Cotton Company, Massachusetts corporations, Edwin Reis of Heidelburg, Germany, the estate of Ludwig Reis, late of Mannheim, Germany, and •Karl B. Strauss, a naturalized Englishman, but now residing in Germany, are also named as defendants. The plaintiff, Richard Mayer, was born in Germany. . He came to the United States in 1898 and since then has resided here. In 1912 he was naturalized as a citizen of the United States. In 1913, while in Germany, he entered into a partnership with Edwin Reis, Ludwig Reis, and Karl B. Strauss. Mrs. William Reis, of Heidelburg, was a special partner.

The partnership had its chief place of business in Germany, but it also had established houses in England and the United States. The partnership agreement provided that the German commercial and civil court laws should determine the rights of the partners and that the German court at Mannheim should be resorted to for the settlement of differences. Mayer contributed to the partnership the business that he had previously conducted in Boston, valued at about $50,000, or 200,000 marks; Edwin Reis and Ludwig Reis contributed property valued at 1,179,845.03 marks and at 1,136,867 marks, respectively; and Karl B. Strauss at 348,313 marks. The partners were to have 4% per cent, on their capital, and the profits were to be divided 271/2 per cent, to each of. the Reises, 25 per cent, to Strauss, and 20 per cent, to Mayer. Edwin and Ludwig Reis were to have a salary of 22,-[231]*231000 marks each, Strauss 20,000 marks, and Mayer 16,000 marks; and the share of each in the profits of the business was to go to increase his capital in the concern. The partnership was to begin July 1, 1913, and continue until November 30, 1915, and thereafter for periods of two years, unless written notice of termination, should be given six months before the expiration of any given period. No notice of termination was ever given.

Mayer managed the partnership business in this country, Strauss that in England, and the .Reises the business in Germany. Strauss was in Germany when the war broke out, and has since remained there. The British government seized the property and business in Eondon.

In 1914 the Boston business was incorporated under the name of the Richard Mayer Company. Eater the Anglo-American Cotton Company was incorporated. The capital of these companies was paid in from the assets of Reis & Co. in Mayer’s hands. The capital stock of the Richard Mayer Company consisted of 2,000 shares, of the par value of $100 each, and by June 8, 1915, 1,995 of these shares had been transferred to Mayer’s name. The remaining 5 shares stood in the names of different persons, apparently as nominal holders to quailify them as officers.

The Anglo-American Cotton Company was incorporated July 1, 1915. It had a capital stock of 500 shares, of a par value of $100, of which 498 shares were issued to J. Eaible, an employe and manager of the company.

In 1914 and 1915 Reis & Co. remitted money to the Boston house for the purchase of goods for export. The last of these remittances was early in 1915, and the last shipment of goods purchased therewith was in March, 1915.

Mrs. William Reis, the special partner, having died, the heirs of her estate, in 1916, called upon the firm for a declaration that she was no longer a member of the firm. This declaration had to be signed by all the partners, including Mayer. As Mayer could not be reached, the German court required the appointment of an absence trustee, and, purporting to act under the provisions of paragraph 1911 of the German Civil Code, it appointed Karl Mayer, brother of Richard, absence, trustee for Richard.

February 7, 1917, Edwin Reis, Rudwig Reis, Karl B. Strauss, and Karl Mayer, as absence trustee for Richard Mayer, entered into an agreement for the dissolution of the partnership of Reis & Co., to take effect on the outbreak of war between the United States and Germany. A copy of the contract is annexed to the bill of complaint as Exhibit B. Under this agreement the European partners were to have all the assets of the firm in Europe, and Richard Mayer all the assets in the United .States. Mayer, “in case of war,” separated himself from the firm, and renounced all claim that he had against the European assets in favor of the European partners; and the European partners did likewise, and renounced their claims against the assets in the United States. When the war broke out between the United States and Germany, the European partners took over all the European assets and treated them as their own, and themselves as the only partners [232]*232remaining in Reis & Co* The German government was requiring liquidation of partnerships where the enemy interest exceeded 30 per cent. The interest of Strauss, the British partner, was 25 per cent., and of Mayer 20 per cent., making the total enemy interest 45 per cent. It was to avoid liquidation of the firm by the German government in case of war with the United States that the dissolution arrangement was entered into.

The plaintiff had no knowledge of the appointment of his brother as absence trustee, or of the agreement of February 7, 1917, until the spring of 1919, when, on April 7, 1919, he ratified it by bringing this suit, of which the European partners had notice by registered mail. There is no evidence that the German court specifically authorized the absence trustee to enter into the dissolution agreement, or that it ratified his act.

At the date of the dissolution agreement, February 7, 1917, the American assets, according to the last report known to the German partners — that of November, 1915 — were not far from 20 per cent, of the total American and European assets. The books in America were kept in dollars; those in Germany, in marks. The partnership agreement would indicate that the ratio of marks to dollars, used in computing the capital of the firm, was about 4. It is claimed that the agreed ratio of conversion in accounts between the partners was 4.20 marks to the dollar, but I do not think the evidence warrants me in finding that this is so.

May 18, 1918, after investigation and determination as provided in the Trading with the Enemy Act, the Custodian caused the property and capital stock of the Richard Mayer Company and the Anglo-American Cotton Company to be transferred to him, arid on September 20, 1918, after like investigation and determination, he took possession of securities held by the plaintiff, but purchased with partnership funds. The property seized was the following:

2,000 shares, Richard Mayer Co..
500 shares Anglo-American Cotton Co., Cash.....$ 2,155.61
Securities taken from Lee, Higginson Co., held on Richard Mayer’s account, costing. 114,491.52
Securities taken from Mayer’s safe deposit box No.' 3722, in the First National Bank of Boston, costing.. 236,900.26
Sundry small notes taken from safe of Richard Mayer Co., costing 1,725.00

All of the property so seized was purchased with partnership assets. The actual value of the American assets has not been proved.

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Bluebook (online)
270 F. 229, 1920 U.S. Dist. LEXIS 771, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mayer-v-garvan-mad-1920.