Oteri v. Scalzo

• Decision Date: 16 May 1892
• Citation: 36 L.Ed. 824,12 S.Ct. 895,145 U.S. 578
• Parties: OTERI v. SCALZO
• Court: U.S. Supreme Court

145 U.S. 578

12 S.Ct. 895

36 L.Ed. 824

OTERI v. SCALZO.

May 16, 1892.

STATEMENT BY MR. CHIEF JUSTICE FULLER.

Vincenzo Scalzo and the firm of Randazzo and Di Christina composed of Vincenzo Randazzo and Antonio Di Christina, aliens, filed their bill of complaint against Joseph Oteri, a citizen of the state of Louisiana, in the United States circuit court for the eastern district of Louisiana, June 11, 1885, alleging that on June 24, 1884, complainants entered into a contract of corporatnership with defendant to carry on a general commission business and import fruits from Europe, as set forth, under the firm name of Joseph Oteri & Co. that Scalzo, Di Christina, and Oteri went to Europe thereafter in the summer of 1884 to make arrangements for such copartnership, and, after various contracts had been made in the firm name, Scalzo was authorized by his copartners to remain a longer time to make additional contracts, which he did; and that thereafter consignments under said contracts coming to Joseph Oteri & Co. were declined by Oteri against the protest of complainants, who were obliged to care for and protect the same. It was further averred that on October 7, 1884, defendant, in violation of the contract of copartnership, ('and with malice, without cause, probable or otherwise, and in bad faith, for which orators reserve their action for damages,') after said contracts had been made in good faith for the firm, and before any partnership assets or capital had been used, wrote to various parties in Italy that all contracts made for the firm should inure to his private benefit, and he would not recognize his firm therein; that Oteri had refused to make or cause to be made, as the general manager of the affairs of the firm, monthly trial balances as agreed upon, notwithstanding complainants' demand; that defendant had vilified and traduced their character and injured their credit and business reputation, and refused to carry out contracts for the firm, made with his knowledge and consent; that he held in his hands complainants' money amounting to $10,000, and refused to return the same, although duly demanded; and that 'they are entitled to be refunded their said capital, with legal interest from the 24th day of June, 1884.'

The bill further alleged that, apart from the acts of the defendant in refusing various consignments made to the firm under their contracts in Europe, they were not aware until a short time since of his fraudulant act in declining and refusing to carry on the contract of copartnership. Complainants further set up misconduct as to a cargo, in respect of which defendant declined to attend to the interests of the firm, and involved complainants in loss and damage to the consignors in a large sum, as they were obliged to protect the consignment and save themselves from further loss, the proceeds being paid over to Oteri for the benefit of the consignor. Complainants charged that they were ignorant as to the partnership affairs; that defendant declined to give any knowledge of or concerning the same; that defendant had converted the funds of complainants to his own use, and had not held the same to the credit of the partnership; and that the capital should be deemed to be taken as a part of the assets of the partnership liable to the claims of the creditors thereof, if any existed, or be refunded to complainants with interest, if there were no creditors. Complainants then prayed as follows: '(1) That a receiver may be appointed to take charge of all partnership books and papers and accounts, goods and effects, and to collect the debts due thereto, and to preserve and dispose of the same under the direction of the court. (2) That said Joseph Oteri may be required to bring into this court, to be deposited to the credit of this cause, the aforesaid sum of fifteen thousand dollars, and such other sum as may be in his hands arising from profits thereof or thereon, either in the business of said copartnership (if any) or from the use thereof by said Joseph Oteri. (3) That the said Joseph Oteri may by injunction be restrained from using the name of said copartnership, negotiating any bill or note in said copartnership name, or contracting any debt whatsoever on account thereof, or in any manner intermeddling therewith. (4) That said partnership may be decreed to be dissolved as if the same had never been made, by reason of the acts of said defendant; that an account of its business may be taken under the direction of this court, and that its legal liabilities may be paid and charged against the said Joseph Oteri, and that the capital of your orators, with interest, be restored to them in the premises, or otherwise, at the discretion of the court; and for general relief.

Defendant filed a general demurrer, which was overruled by the court, and thereupon filed his answer, to which was attached a certified copy of the partnership act. Defendant admitted that Scalzo, Di Christina, and himself went to Europe in furtherance of the partnership business, but denied that Scalzo was authorized to make contracts, and averred that if he made any they were unauthorized by the firm, and not binding upon it or the defendant. He denied refusing to accept consignments coming to the firm, except that he refused to recognize or to be bound by a contract made by Scalzo with his brother in Sicily to ship fruit to the firm, which contract Scalzo had no right or authority to make; and denied that he wrote to Italy as alleged, or that monthly balances had not been furnished, or that he had vilified and traduced complainants, or converted their money, or involved them in loss and damage in respect of the sale of a particular cargo. Defendant also denied that complainants were not aware of how the partnership funds were invested, and alleged that books of account were kept which were always open to the examination of complainants, and he annexed the last trial balance from the books; a statement of the assets and liabilities of the firm; a statement of the profit and loss account; and a statement of what was due to each partner, all as of the 1st day of June, 1885. Defendant averred that since June 1, 1885, and for a long time prior thereto, he had transacted no business for the firm on account of complainants having sued for a dissolution February 4, 1885, and he alleged that the statements annexed correctly exhibited the state of the affairs of the firm at their date.

These statements showed cash on hand $3,517.26, after deducting an outstanding liability of $140, and uncollected assets to the amount of $5,029.39, including the note of one Zuccas for $2,320.75; expenses, $3,542.98; and other items of profit and loss, resulting in a loss of $2,658.74.

Oteri was credited with $5,000 and a cash item of $74.61, and debited with cash drawin, $1,465.07; one third of loss, $886.24; one third of assets uncollected, $1,676.46; and a balance of cash due him of $1,046.84.

Scalzo was credited with $5,000, and cash, $1,026.93; and charged with cash drawn, $2,197.33; one third loss, $886.24; one third uncollected assets, $1,676.47; and a balance of cash due him of $1,266.88.

Randazzo and Di Christina were credited with $5,000 and a cash item of $15; and charged with cash drawn, $1,248.75; one-third loss, $886.25; one-third assets uncollected, $1,676.46; and a balance of cash due him of $1,203.54.

The act of copartnership was annexed, signed by the parties, and stating that they appeared before a notary public, and declared that they hereby agree to enter into a copartnership for the purpose of carrying on a general commission business and the importation of fruit from Europe, and for all matters and things thereto appertaining, under the following stipulations and conditions, to wit:

'First. The partnership is to be carried on under the firm name of Joseph Oteri & Co., is to be domiciled in the city of New Orleans, and is to exist and continue for the space of two years, to be computed as commencing on and from the first day of July, eighteen hundred and eighty-four. unless sooner dissolved by mutual consent.

'Second. The capital invested in this copartnership consists of a sum of fifteen thousand dollars ($15,000.00) in United States currency, and has been contributed by the parties hereto in the manner following, to wit:

'Five thousand dollars each by said Oteri and Scalzo, and the remaining five thousand dollars by said firm of Randazzo and Di Christina.

'It is hereby agreed that, in the event more capital should be needed at any time during the existence of the contract to carry on said business, the said Joseph Oteri shall, if he deems proper and not otherwise, furnish same surplus capital thus needed, and shall be entitled to and charge interest thereon at the rate of eight per cent. per annum.

'Third. It is hereby furthermore agreed that said Oteri shall be the manager of said firm, and as such have the exclusive control and direction of its affairs, as also of signing all documents of whatsoever nature or kind, without any excep- tion or reservation whatsoever, pertaining to the business of the said firm, and be, as he is, alone entitled to sign the name of said firm on all checks, bills of exchange, acceptances, bills of lading, promissory notes, or other obligations of said firm; and that in the event of any other partner or partners infringing or violating this agreement by sending any orders to Europe or elsewhere, or by signing any other documents whatsoever, then, and in such an event, the interest of the defaulting partner or partners shall at once cease and determine.

'Fourth. That said Oteri shall, as he is hereby empowered to, delegate all or part of his powers herein by power of attorney to one or more persons wherever in his judgment he shall deem the same expedient.

'Fifth. Both of accounts shall be kept in which all the dealings and transactions of said firm shall be entered from day to day, and...