43 Ky. 453 | Ky. Ct. App. | 1844
delivered the opinion of the Court.
In 1838, Hewitt, Ruffner & Co. and L. G. Sturdevant and John Wilson, agreed to build, and did build and fit out the steamboat Hugh L. White, near the City of Louisville, tobe employed on the western waters, in carrying freight and passengers for profit; Hewitt, Ruffner & Co.
On the 15th of April, 1840, Hewitt, Ruffner & Co. filed their bill charging the foregoing facts, and alledging that Wilson and Sturdevant were giving out in speeches, -that they had not parted with their interest, and were setting up claim to the same, to the annoyance of the .complainants and the purchasers. They charge a partnership in the building and business of the boat, a large balance in their favor, and pray a settlement of the whole -concern, and that the purchasers may be quieted in their purchase, and general equitable relief afforded. They further prayed an attachment against the boat, which was .granted, and levied on Wilson and Sturdevant’s interest in the same, the boat then lying at the wharf at Louisville.
Woods, Stacker & Co. claiming title to Sturdevant’s interest, intervened, and upon their petition were made defendants, and answering, set up their purchase from Sturdevant for a balance, which they alledge he owed them for iron purchased, amounting to $7406 62 cents, and exhibited Sturdevant’s bill of sale for one third of the boat, bearing date the 19th April, 1840, at Nashville. They make their answer a cross bill against the complainants and their vendees, and Wilson and Sturdevant, and pray that they may have and be quieted in their purchase, and for a general settlement of the accruing profits of the boat after their purchase. They admit their knowledge of the previous sale of the boat to Quarrier, Bell, and Bradford, and their possession, but controvert the indebtedness of Sturdevant to the complainants, or their knowledge thereof, except about $900, paid by them .for him on the insurance of his part of the boat. They contend that. Sturdevant held as a tenant in common, and resist the complainant’s lien upon the boat, &c.
Quarrier, Bell, and Bradford answered the bill and cross bill, insisting on their purchase of the whole boat for a full consideration, and for an abatement in the price if their title to the entire boat should not be sustained.
Upon the hearing, the Chancellor determined, in accordance with the principle settled by Lord Hardwick in the case of Wedlington vs Hallett, (1 Ves. Jr. 497-99,) that as between the original parties or their representatives, that the complainants had a lien on the boat for the excess of their advancements over their share on the account settled for building and fitting out the boat, but that Woods, Stacker & Co. had purchased Sturdevant’s one-third, without notice of the lien, and held the same as innocent purchasers, for a valuable and adequate,consideration, and the lien was not enforcible against that interest in their hands, but that they be quieted in its uninterrupted enjoyment. He further decreed that Quarrier, Bell, and Bradford be quieted in the enjoyment of four-sixths of the boat; and having, upon the Master’s report, settled the accounts between the original part owners, he decreed Sturdevanf to pay to the complainants $5055 95, and after crediting Wilson with his share of the proceeds of the sale to Quarrier, Bell, and Bradford, decreed him to pay to the complainants, $1613 04, and divided the costs in a manner not necessary to be noticed.
The complainants have appealed to this Court, and Wilson has filed cross errors.
It is unquestionably true, that in the general, part owners of a ship or boat, hold as tenants in common, and the part of either is not liable to a balance of accounts as between joint tenants and partners. But Lord Hard-wick determined, in the case above referred to, that a joint owner of a ship was entitled to a lien as against the administrator or general creditor, upon the share of his intestate, a co-builder and fitter out of the vessel, for any excess of advances over his aliquot part. And in the case of Smith vs DeSilva, (Cowper, 469,) Lord Mansfield, in effect, sustained the same principle. But the
The decision of Lord Hardwick, as applicable to the facts of the case before him, seems to us to be founded upon the clearest principles of equity. The facts of the case before him justified the determination only, and he can be regarded only as deciding, though his reasoning went farther, that the administrator of an intestate part owner of a ship had not a right to take his share and apply it to the claims -of his general creditors, free from the costs and expenses incurred by a'co-builder and fitter out of the vessel, over his share: but that he was entitled to a -lien on the vessel for his excess of advances, settled upon the principles of a partnership, as to the building and fitting out.
And what reason, propriety, or justice would there be in allowing a general creditor to receive and bear away the proceeds of that part or interest in a ship which was in part or in whole built, erected, and rendered valuable by the extra advances of a co-builder, and which might never have existed or been made valuable but for those extra advances ?
The decisions that have been cited, as conflicting with the decisions of Lord Hardwick and Lord Mansfield, are all post-revolutionary decisions, and have no autborita
But from the facts in this case, we do not feel authorized to restrict the complainants lien on the boat to the balances in their favor on the building account only.
We think that the facts in the record before us justify the conclusion that the parties concerned were partners; that the boat was built and fitted out by them as partners, to be used and employed by them in the trade and business of freighting and carrying passengers, for profit, as limited partners; that they were partners in the boat and in the trade and business, each to be entitled to a share of the profit and subject to a share of the loss, ratably with the interest which he held in the boat; that the boat was built by them jointly, as the instrument of their trade and business, and the means of carrying it on, and was the capital stock or foundation of the same.
That a ship or steamboat may be the subject of partnership, as well as any other personal chattel, we think cannot be doubled. Why may it not be held as partnership property as well as a stage coach, a wagon or any other chattel used or employed in the business of commerce.or trade?
Even real estate may become partnership property, as a store house, brew house, or ware house, when purchased with the partnership funds, or acquired, as we presume, by purchase or erection, as a part of the capital slock, and with a view to a partnership trade or business, and when so held, though held in joint tenancy, in law, and subject to the jus accrescendi, yet equity will treat it as a tenancy in common, and as forming a part of the partnership fund, and subject to distribution as such: 3 Kent’s Com. 14.
That the parties, concerned in interest in the boat, were partners in the business of freighting and carrying passengers, and built and fitted out the boat with a view to, and as the instrument of that business, is deducible from the following facts in the record.
Wilson also, in his answer, speaks of the parties as a joint concern, and it is made manifest by the answer of both Wilson and Sturdevant, that the parties in the contract for building looked to the future business of the boat as the source of their profits, under the superintendence of two of the company, the one as commander, the other as engineer or clerk.
It also appears that the parties, previous to the commencement of business with the boat, settled up their building account, as a partnership concern, and placed the result on the boat books — the very books which were to be used in the business upon which the boat was about to enter, as the source of their expected profit — by which Wilson and Sturdevant are set down as debtor to the boat, (by which we understand the boat company,) the sums which each, respectively, had fallen short in the building account, and the complainants credited.with their excess of advances on the same account.
From these facts we infer that the parties were jointly interested in the building and fitting out the boat; were joint contractors, and were consequently looked to and chargeable in solido, by workmen and materialsmen; were as partners, though, by the agreement among themselves, each was to be responsible among themselves, only for his ratable amount according to the quantum of his interest in the boat. And it may have been, and was most likely stipulated among themselves that Wilson and Sturdevant, out of their services and the earnings of .the boat,
That the parties, and especially the complainants, understood that they held a lien on the boat and its earnings, for any balances that were or might be owing them, is manifest; otherwise it cannot be believed that they would have permitted Sturdevant and Wilson, who are most likely irresponsible, to depart with and remain in the possession and control of the boat so long, without taking from them an express lien upon theirinterest as the means of securing them. They never could have believed that, by the terms and nature of the contract between the parties, that Wilson had an unincumbered interest of one-sixth in the boat, which he had a right to sell, at discretion, vesting an absolute title in the purchaser, free from any claim or lien in their favor, for the large advances made on his share. • Nor can it be believed that they would have trusted to Sturdevant’s individual responsibility for the balance which he had failed to pay, had they not relied upon the contract of co-partnership as af. fording them ultimate security, on winding up the business of the concern. Yet such would have been their condition, if the terms of association be regarded as conferring on each a mere tenancy in common in the boat and its earnings.
That they relied on the contract and terms of connection, as affording them a lien on the boat, is inferable from the fact that Wilson assigned over to them his policy of insurance on his interestin the boat, as the means of their indemnity in case it was lost. The boat they looked to as their indemnity if not lost, and its value in damages upon the policy assigned to them, if lost. That same precaution which induced the taking of the assignment of the policy, as a security, would most likely have impelled them to take an express lien upon the boat, as their security, had they not believed that by the terms of association between the parties, they were already entitled to a lien upon the general settlement of accounts.
Without pursuing the facts further, we are satisfied that the parties were partners in the building and running
But though we regard the parties as partners, in the building and business of the boat, we do not regard either as possessing the power to sell the whole boat without the consent of his co-partners. The boat was built and fitted out not to sell, but to be used in the business of freighting and carrying passengers for profit, superintended and controlled by two of the firm, to that end. From the nature and object of the association, and character of the property, and uses and purposes to which it was to be applied, the power in either party to sell the whole boat cannot be implied. Either cannot be divested of his interest without his authority or consent. The sale, therefore, by the complainants, to Quarrier, Bell, and Bradford, did not pass the title of Sturdevant, or divest him of his interest in the boat. But though it did not pass his title, it purported to pass the title in the whole boat, and for a consideration for the whole, and full possession was delivered, and the purchasers took and held the entire possession and control, claiming the absolute title to the whole against the whole world, and so held and claimed at the time of the sale by Sturdevant, of his interest, to Woods, Stacker & Co. The question arises, therefore, whether Sturdevant’s sale passed any title to his vendees-?
We regard the boat as a personal chattel, subject to those rules of the common law applicable to other chattels, and it is well settled that no title passes by the sale or transfer of a personal chattel in ihe adverse possession of another: Waggener vs Hardin, (2 B. Monroe, 156,) and the authorities there referred to. Quarrier, Bell, and Bradford were in the adverse possession of the boat at the sale by Sturdevant, claiming and holding the entire possession, and have so held it ever since. They did not claim to hold as bailees of Sturdevant, or as co-tenants with him, but as adverse to him. He was ousted of his possession as co-tenant, and a mere title and right of possession remained, which amounted to no more than a mere chose in action or right to sue, which could not be transferred or assigned to another. To allow such transfer would be to allow' the assignment of a law suit, and
Though the assignment of a chose in action, or a right to a personal chattel, in the adverse possession of another, passes no legal title, courts of equity h.ave so far departed from the common law rule as to interpose in favor of the assignee of a chose in action-, founded upon or springing out of a contract, as the assignee of a bond, judgment, or demand for a debt or damages, and afford such assignee relief, treating him as cestui que trust, and the assignor as holding the legal title, for the use of the assignee. And courts of law have so far departed from the common law rule as to permit the assignee to sue at law, in such cases, in the name of the assignor, for the assignee’s use.
But we recollect of no case where courts of equity have interposed and afforded relief to a vendee of a personal chattel, purchased, or attempted to be purchased, when the adverse possession was in a third party.
To allow such interposition and relief would be to abolish the common law rule in every obnoxious litigated controversy, and to transfer from a court of law to a court of chancery the trial of the right of property as well as the right of possession to a mere personal chattel. If no such power exists or can be exercised by the chancellor, then the claim of Woods, Stacker & Co. cannot be sustained or regarded by the Court, and if allowed to intervene at all, he should not be allowed to litigate the title
A junior equity, combined with the legal title, without notice of a senior equity, will be protected against the senior equity, but the senior equity always prevails against thejunior, with or without notice; the senior may as well complain of the want of notice of thejunior as thejunior can complain of a want of notice of the senior.
Woods, Stacker & Co. cannot, therefore, occupy the condition of innocent purchasers, nor will the want of notice protect them as such, were it conceded, in accordance with the intimation of Lord Hardwick, in the case of Wedlington vs Hallett, supra, that notice to the vendee of the legal title, of the partnership or outstand. inglien, was necessary to protect the lien.
But were it conceded that Woods, Stacker & Co. acquired the legal title, by their purchase from Sturdevant, there is no satisfactory evidence in the record that they paid for it an adequate valuable consideration, which was necessary to constitute them innocent bona fide purchasers.
Bradford proves that he understood that the purchase was- made in satisfaction of the balance of an account for iron, owing by Sturdevant to Woods, Stacker & Co. but from whom, or how he understood it, is not stated, nor does he pretend to state that he knew, of his own knowl
The bill of sale of Sturdevant was executed after and with the full knowledge of the previous sale made by the complainants, and is not, therefore, free from the suspicion of stratagem and contrivance to defeat the complainants just claims. And it purports to be made in consideration of 7,406 dollars 62 cents, to him in hand paid. He says, in his answer, that the \sale was made for the sum of $7,400, and makes no mention of the iron account. Woods, Stacker & Co. alledge, in their answer, that the sale was made in satisfaction of a large balance owing them, on an iron account, and exhibit no account, nor make any proof of the existence of such an account.
We can scarcely believe, with this lack of proof and discrepancy between the bill of sale and answer, especially when the true condition of the property and circumstances under which the sale was made are taken into consideration, should be deemed sufficient to place them upon the high ground of innocent purchasers for a valuable and adequate consideration.
But if it be conceded that they acquired the legal title by their purchase, and gave foritan adequate consideration, we cannot admit, from the circumstances developed in this record, that they can claim protection as innocent bona fide purchasers, on the ground of a want of notice of the partnership, or of any equitable lien which the complainants could rightfully set up.
Apprised of the fact of the previous sale by the complainants, of the whole boat, and of the adverse actual possession and holding of the vendees, .under a claim of the entire interest, and of the further fact of ¿n existing controversy between the complainants and Sturdevant, in relation to the boat; they were apprised of those facts
Possession of real estate has ever been regarded as notice to a purchaser of all titles or claims, legal or equitable, which the possessor has or may set up, to shield his possession. The same rule, we think, is applicable to the possession of chattels.
Quarrier, Bell, and Bradford, by their purchase, are entitled to all the titles, liens, or rights, legal or equitable, that their vendors were or are entitled to as a shield ‘ to their purchase and possession, and notice of all such rights wjll be implied against the subsequent purchasers from Sturdevant, as they were furnished with the facts by their knowledge of the possession and ownership, and
Upon the whole, we think that they can stand in no better condition than Sturdevant, if, under the circumstances of their purchase, while the boat was adversely held by others, they be allowed to intervene at all. The controversy must be settled as if the original contracting parties were the holders of the boat, and the only parlies interested, except so far as the sale to Quairier, Bell, and Bradford has effected a change in their titles, interests, and relations. And as the boat was doing a losing business and involving the owners deeper and deeper in debt, and Sturdevant, at the time of the sale, was behind more than the whole value of his interest in the boat, estimated at its fair value, and his interest equitably subject to its payment; andas the complainants and Wilson, ownérs of two-thirds of the interest, concurred in or con'sented to the sale; and as the sale was effected at from three to six thousand dollars more than it was worth, and in all reasonable likelihood, more than the largest amount above what it would have commanded had it been sold under a chancery decree, for ready cash, to raise the balances due from Wilson and Sturdevant, we think the sale ought to be confirmed, and the proceeds applied to liquidating those balances and settling up the affairs of.the concern. That has been done in the sale which a Chancellor would have done, had the case been before him, and more advantageously done for all parties, than if it had been done under his order or decree, and should not be disturbed at the instance of either Sturdevant or his vendees. And as the amount of Sturdevant’s interest in the consideration will more than cover the balance due from him, including the sum for freight, applied in the
In relation to the question raised on the cross errors of Wilson, we would remark, that it appears in proof that Hewitt, acting for Hewitt, Ruffner & Co. declared, just before the sale of the boat, that Wilson should lose nothing by the sale, and would consent to it, and with this declaration upon his lips he went to the opposite side of the Cumberland river, to where the boat was lying to see Wilson on the subject, and returned stating that Wilson was willing for the sale, and would surrender the boat to the purchasers at Nashville. Wilson contends that he was induced to consent to the sale upon the promise of Hewitt that he should lose nothing by it. The facts are sufficient, as we think, to justify the presumption that the promise was made to Wilson, and he was induced to consent to the sale and to give up the boat in consequence of it. It is difficult to understand what was meant by the promise. It was a losing business to continue running the boat, as had been demonstrated by previous experiments; and in this respect Wilson, as well a.s the other partners, would gain by the sale. But the promise must have been intended to mean something, and we incline to the opinion that it should be construed as meaning, that Wilson, who was largely indebted on the building account, should lose nothing, or be required to pay nothing on that account, more than would be derived from the proceeds of the sale; or that he should not be chargable with the excess of the balance due from him, over and above the amount of his share of the proceeds of the sale. And with this understanding of the declaration and promise of Hewitt, we think that he and his firm, for whom he acted, especially as complainants in dquity seeking a decree against Wilson, ought not to be allowed to recover the amount of this excess from Wilson. Deducting, therefore, the amount of this ex. cess, which is $1184 58 cents, from the amount of the decree of the Chancellor against him, a balance will be left of only $428 46 cents, which sum alone should have been decreed against'him in favor of the complainants.
It is, therefore, the opinion of the Court, that the decree of the Chancellor be reversed, upon the errors assigned by the complainants, as well as the cross errors of Wilson, and that the cause be remanded, that a decree may be rendered quieting Quarrier, Bell, and Bradford in their title to the boat Hugh L. White, and that they be decreed to pay the balance of the amount, if any yet due and unpaid upon their purchase of the same, and that the sum of $5055 95 of the amount, be set apart or paid to the complainants, Hewitt, Ruffner & Co. in satisfaction of that amount due to them from Sturdevant upon the settlement of the -partnership accounts in the boat, and that the balance of the one-third of the proceeds of the sale of the boat, Sturdevant’s interest in the same, be decreed to Woods, Stacker & Co. arid such other and further decree over in their favor against Sturdevant, as may be equitable, not inconsistent with this opinion; and that a decree may be rendered in favor of Hewitt, Ruffner & Co. against Wilson, for $428 46 cents, as the balance due from the latter to the former, on the settlement of the boat account, and that costs be decreed as may be equitable and proper; and the plaintiffs in error are entitled to their costs in this Court, and Wilson is entitled to his costs on his cross errors.
