Tisdale v. Grant

12 Barb. 411, 1852 N.Y. App. Div. LEXIS 30

Opinion

Willabd, P. J.

If the plaintiff and Kellogg were merely part owners of the steamer Francis Saultus, and she was not a portion of their partnership stock or capital, there can be no ground for upholding a lien on the boat in favor of the plaintiff against the defendants, for the charges which accrued while the plaintiff and Kellogg were owners. The general relation between ship owners is that of part owners, and not partners. Part owners are tenants in common, and not joint tenants. Bach has his distinct, though undivided interest. Ho one can dispose of the interest of the other. (Story on Part. § 417.) It is otherwise with respect to partners; each can dispose of the entire subject, (3 Kent's Com. 153;) but the assignee takes subj ect to all partnership accounts. (Nicoll v. Mumford, 4 John. Ch. Rep. 522.) The assignee of the part owner of a vessel is entitled to his part, or the proceeds thereof, without being subject to any general balance of account between the owners. (Ib. Collyer on Part. 666, 687. Mulden v. Whitlock, 1 Cowen, 290.)

With respect to partners, it may be laid down as a general principle, that each of the partners has a specific lien on the partnership stock, not only for the amount of his share, but for moneys advanced by him beyond that amount, for the use of the copartnership. (Coll, on Part. 65. Story on Part. § 441.) In Dodington v. Hallet, (1 Ves. sen. 407,) Lord Hardwicke extends this doctrine to part owners of ships, holding in a case where one of several part owners died without paying his portion of the expense of building and fitting óut a ship, that the other part owners had a specific lien on his share, for the moneys which they had laid out on his account. But Lord Eldon, after great consideration, overruled this decision of Lord Hardwicke, being of opinion that part owners of a ship, being tenants in common and not joint tenants, have not by analogy to partners, a lien on the shares of each other. (Ex parte Young, 2 Ves. & Beame, 242. Ex parte Harrison, 2 Rose, 76. Coll, on Part. 666, a.) Judge Story gives his preference to the doctrine laid down by Lord Hardwicke, as most consonant to equity, and as founded in principle, "public policy and convenience. He treats cases' of .this sort as a species of partnership, with reference to the adventure upon which the ship is to be employed; and, therefore, the repairs, outfits and other expenses incurred to accomplish the enterprise, are deemed to be made on joint account, and intended to be governed, as to rights and liens, by the rules o"f strict partnerships. (Story on Part. § 444.) Chancellor Kent followed, the rule of Lord Eldon in Nicoll v. Mumford, (4 John. Ch. Rep. 522,) but his decree" was modified by the court of errors, and the rule adopted by Lord Hardwicke was sustained. (20 John. Rep. 611, same case.) Ch. J. Spencer, in delivering the prevailing opinion in the court of errors, said, that he did not intend to overrule the distinction between partners in goods and merchandise and part owners of a ship. The former are joint tenants, and the latter are, generally speaking, tenants in common; and one can not sell the share of the other. “ But I mean to say,” he observes, “ that part owners of a ship may, under the facts and circumstances- of this case, become partners as regards the proceeds of the ship; and if they are to be so regarded, the right of one to retain the proceeds, until he has paid what he has advanced, beyond his proportion, is unquestionable.” In that case the question arose between the part owner, who had made the advances for outfits, repairs and expenses, and received the whole avails of vessel and cargo, and the assignees under the insolvent act, of the other part owner. There was a strong equity in favor of treating the vessel as well as cargo as the partnership stock, and thus enabling the part owners, by whose means the fund- had been acquired, to be reimbursed, before the creditors of the insolvent part owner could be permitted to come in for a share.

The case of Dodington v. Hallet, (supra,) before Lord Hardwicke, presented an equally strong case in favor of the application of the partnership rule. The question did. not arise between one part owner, and a purchaser from another part owner, as in this case ;• but between one part owner and the personal representatives of a deceased part owner." The rule of determination was the same as if both part owners had been before the court, and one prayed an account against the other. Lord Hardwieke held that a ship may be the subject of a part-, nership, as well as any thing else. And he thought in that case, it appeared plainly there had been a partnership between the parties.

The present case differs widely from Dodington v. Hallet and Nicoll v. Mumford. The question here arises between the plaintiff, a former part owner, and his own vendee, who was also the purchaser from the other part owner. There is no evidence that the boat was the subject of the partnership between the plaintiff and Charles W, Kellogg, from whom the defendants purchased. The defendants purchased not a share in a partnership, but the forty-six-fiftieths of a steamboat. They took the delivery of it in presence of the plaintiff; and the latter was expressly asked if there were any bills against the boat, and he replied that there were none, except to the amount of two or three hundred dollars for current expenses, and that there were funds enough on board to discharge those bills. After such a declaration, under such circumstances, he should be forever estopped from setting up any claim by way of lien. It is precisely one of .those cases where the doctrine of estoppel in pais applies. The representation of the plaintiff, in effect that the boat was unincumbered, influenced the conduct of the defendants in completing the purchase. They had a right to act upon it; and whether true or false, the plaintiff should not now be permitted to controvert it. (1 Cowen & Hill’s Notes, 200, et seq. where many of the cases are collected.)

In determining whether the plaintiff has a specific lien on the boat, for the charges in question, we have a right, also, to consider the special circumstances of the case, in order to determine the equities between these parties. This was done by Lord Hardwicke, in Dodington v. Hallet, and by Ch. J. Spencer, in Nicoll v. Mumford. The boat in question was purchased by the plaintiff and Kellogg, in July, 1845, for forty-five thousand dollars. She was run about three years at a disastrous loss to the parties, when in February, 1848, the defendants, having previously acquired Kellogg’s share, became the purchasers of the plaintiff’s four-fiftieths, for two thousand dollars. At this rate the value of the boat must have depreciated to twenty-five thousand dollars. There is no evidence in the case that the sum given by the defendants was less than the fair value of the plaintiff’s share of the boat. And yet it was attempted before the referee to make the defendants chargeable with liens upon the boat to the amount of over thirty-six hundred dollars; and thus show that they had agreed to give for the four-fiftieths of the boat the sum of $5600 and upwards. If four-fiftieths of the boat was worth $5600, the whole boat was worth $70,000; a sum of $25,000 beyond her value three years before, and probably $50,000 beyond her value at that time. It can not be believed that the defendants, when they purchased of the plaintiff in February, 1848, dreamed of a lien that nearly twice exceeded the purchase price of the plaintiff’s share of the boat. This consideration alone is enough to repel every notion of á lien. It was not in the contemplation of the defendants, and but feebly asserted by the plaintiff. The agreement given by the defendants on the 11th of February, 1848, was a harmless way of submitting the legality of the demand to the decision of the courts.

If this controversy was between the plaintiff and Kellogg, for an account, the question would assume a different aspect. If the plaintiff, as between him and Kellogg, is entitled to be reimbursed for large advances, his remedy is against the latter in person. The circumstances under which the defendants became the purchasers from Kellogg, deprive the plaintiff of every pretense of justice for seeking to charge the defendants with a portion of the losses sustained by the plaintiff and Kellogg, while they ran the boat..

The liens intended to be provided for by the agreement of the 11th of February, 1848, are only such as were created by act and operation of law, and held by the plaintiff: and which were existing at the time of the said sale. This agreement may be satisfied by restricting it to such liens as were created by act and operation of law during the time that the plaintiff and defendants were running the boat together. For that period the plaintiff is not concluded by what passed between him and the defendants when they purchased from Kellogg and took the delivery of the boat. Whether any lien had been so created, while they ran the boat, would depend upon the facts in the case, as to whether they were in partnership in the boat or not, and the like. It is quite possible that the defendants might be chargeable for liens created during that time; but it is unnecessary to decide it, because the proof may be different on another trial. The referee having mingled this period with that preceding it, when the plaintiff and Kellogg ran the boat, his decision must be reversed, and the case sent back for another hearing.

It is worthy, of observation, that it no where appears how much the defendants paid or agreed to pay Kellogg for his share of the boat. The witness Kellogg, in speaking of his sale to the defendants, uses indiscriminately the terms, “ that he sold the boat,” and that he had “ sold his interest in the boat.” If he merely sold Ms interest in the boat subject to an account, the defendants have no ground to complain of the decision of the referee. "Express evidence to that effect would repel the estoppel urged by the defendants against the plaintiff. It would be an estoppel against an estoppel, and thus leave the matter at large. If he sold the boat as part owner, a different consideration would arise, with respect to the plaintiff’s remedy for his antecedent advances. As the general rule requires us to treat part owners as tenants in common, and as those who seek to make a case of partnership of the transaction must establish the fact by affirmative evidence, it would have been well, if the inquiries had been pursued further as to the nature and character of the defendant’s purchase from Kellogg. Was the contract by which they purchased, in writing ? Did they purchase the boat- as part owners, or did they purchase Kellogg’s interest, subject to an account? And bearing on both questions, how much did they give, and in what manner were they to pay? This feature of the case is remarkably bald in its circumstances. It is desirable, and, perhaps, essential to the justice of the case, that we should know more of the facts.

Again; it was urged that the plaintiff was entitled to recover on the ground of maritime lien. It is quite clear that" as" master he "had no such lien on the boat for his own salary. (3 Kent’s Com. 166.) As nearly all .the sum allowed to the plaintiff was for the captain’s salary, and as the referee did not justify its allowance on the ground of maritime lien, but on the principle-of partnership, it seems needless to review the argument on this branch of the case.

The judgment should be reversed, and a new trial ordered before the same referee, with costs to abide the event.

Cady, J.

The plaintiff claimed that he had a lien on the boat for his wages as master, and for all "his disbursements for seamen’s wages and other expenses incurred in the management of the boat from the 31st of July, 1845, until the boat was sold by the defendants. If he had such lien, no objection can be made to the report. If he had no such lien, the report' must be set aside; as the greater part of the report is to satisfy that lien.

The plaintiff and Charles W. Kellogg owned the boat as part owners, or as partners, and the plaintiff was master of the boat, and the understanding between him and Kellogg was that he should have a compensation for his services as master. And if, on the 11th day of February, 1848, he had a lien on the boat for his wages as captain, while he and Kellogg owned the boat, then the motion to set aside the report must be denied; if not, it must be granted. It is well settled that a master has no lien on the ship, for his wages. (3 Kent’s Com. 165 to 169.) “ He is considered as contracting personally with the owner.” If the plaintiff and Charles W. Kellogg were part owners, or tenants in common, of the boat, the plaintiff must be understood as relying upon the personal responsibility of Charles W. Kellogg for forty-six fiftieths of his wages, as master. The evidence is very strong that the plaintiff and Kellogg regarded themselves as owning the boat as tenants in common, and not as partners ; one purchased forty-six fiftieths, and the other four fiftieths of the boat. Neither of them ever claimed the right to sell the whole boat. Kellogg sold his forty-six fiftieths of the boat to the defendants. It is not a usual thing for a partner to sell an undivided part of a piece of. property belonging to the firm. The defendants must have supposed that the boat belonged to the plaintiff and Kellogg as tenants in common, or they probably would not have purchased an undivided part of the' boat from Mr. Kellogg. The plaintiff was informed that Kellogg had sold his interest in the boat. He expressed no surprise that he had sold a part and not the whole. He did not object to Kellogg’s delivering to the defendants forty-six fiftieths of the boat. He set up no claim to a lien on the boat. From the evidence in the case I should have found that the plaintiff and Charles W. Kellogg owned the boat as tenants in common, and not as partners, and that the plaintiff had no lien on the boat for his wages. " The referee, however, has decided that they owned the boat as partners; and assuming that his finding must be conclusive upon that question, then the inquiry will be, had the plaintiff, on the 11th of February, 1848, a lien on the boat, for his wages as captain, from the 31st of July, 1845, to the 27th of June, 1847

A partner is entitled to no compensation for his services, without an express stipulation to that effect; and when there is such a stipulation he must rely upon that. (Bender v. Bender, 18 Vesey, 172.) In this case Charles W. Kellogg proved that the understanding between him and the plaintiff was that the plaintiff should have a fair compensation for his services. The amount was not agreed on. The boat was managed for the benefit of the plaintiff and Charles W. Kellogg as partners, and the compensation due .to the plaintiff for his services, was a debt against the firm. What was his remedy for that debt 1 He might have filed a bill against his partner, for an account, and to be paid that debt out of the partnership funds. And if those funds were insufficient for that purpose, he might have compelled his partner to pay forty-six fiftieths of the deficiency; or he might have sold any of the partnership property, and retained the proceeds to pay himself. Or, if he had any partnership property in his hands, he might have retained it until his debt was paid. In Story’s Equity Jurisdiction, § 506, it is said that “ A lien is not in strictness either a jus in re or a jus ad rem, but it is simply a right to possess and retain property until some charge attaching to it is paid or discharged.” And in § 1243, it is said “ Another species of tacit or implied trust, or, perhaps, strictly speaking, of tacit or implied pledge or lien, is that of each partner in and upon the partnership property, whether it consists in bonds, or stock,- or chattels, or debts, or his indemnity against the joint debts, as well as his security for the ultimate balance due to him for his own share of the partnership effects.” This right of one partner to look to the partnership funds as an indemnity against the debts of the firm, and as his security for the balance which may be due to him, must be so understood as to be consistent with the rights of the other partners, and of third persons who may purchase any of the partnership prop-erty. One of the absolute rights of each partner is to sell any of the partnership property, and give a perfect title thereto, and the creditor partner can not follow that property into the hands of a purchaser, under the claim .that the firm was indebted to him, when the property was sold. When one partner sells the property of the firm, with the knowledge of the other partner, who does not object at the time, he can not be allowed to impeach the sale afterwards. In this case, say the boat was partnership property. Charles W. Kellogg, one of the partners, sold forty-six fiftieths of the boat to the defendants ; he went upon the boat with one of the defendants, informed the plaintiff of the sale, and in his presence, so far as it could be done, delivered possession of the forty-six fiftieths to the purchasers. The plaintiff made no objection to the sale. He set up no claim to a lien for wages. The possession of forty-six fiftieth parts of the boat was changed, with the assent of the plaintiff; and he afterwards recognized the defendants as the owners of. forty-six fiftieths of the boat. And if the boat had before been the partnership property of the plaintiff and Charles W. Kellogg, the title of the defendant to forty-six fiftieths of the boat was as perfect and as unincumbered as if the plaintiff had sold that portion-of the boat to them. I am, therefore, of opinion that whether the boat was partnership property, or whether it was held by the plaintiff and Kellogg as tenants in common, the plaintiff had no lien on the boat, on the 11th. day of February, 1848, for any matter or thing which he did while he and Charles W. Kellogg owned the boat; and that the report should be set aside, and the cause referred back to the referee.

[Saratoga General Term, January 5, 1852,

Hand, J. concurred.

Judgment reversed.

Willard, Hand and Cady, Justices.] —