Nicoll v. Mumford

| New York Court of Chancery | Aug 5, 1820

The Chancellor.

The question, in this case, is, upon what principles the account between the parties shall be directed to be taken.

Stillwell and the defendant were equally concerned in the brig Phoenix and her cargo, and in the profit and loss of the voyage. There can be no doubt that the account is to be taken, as between partners, in respect to the freight and cargo; and the only difficulty is, as to ihe vessel. As far as the defendant and S. were to be considered partners, so far the defendant is to be deemed as having a lien on the partnership property, in respect to the balance that shall come due to him on the partnership account. No separate creditor of one partner can be entitled to more than the person in whose place he stands. He can only take his debt- or’s share after the other partner, qua partner, is satisfied, and has had all just allowances for debts, expenses, and advances, in that character. The interest of each partner is his share of the surplus, subject to all partnership accounts; and that interest, or surplus only, is liable to the separate creditors of such partner, claiming either by assignment or under execution. As between one partner and the separate creditors of the other, they cannot affect the joint property any further than the partner, whose creditors they are, could have affected it. This is the settled rule in cases of partnership property, and the doctrine of Lord Hardwicfce, in the leading case of West v. Skip, (1 Vesey, 239,) has received a constant sanction in succeeding cases. (Fox v. Hanbury, Cowp. 445. Field v. Clarke, 4 Vesey, 396. Dutton v. Morrison, 17 Vesey, 193.)

But a difficulty arises in the application of this doctrine to the vessel.

In Doddington v. Hallet, (1 Vesey, 497.) Lord Hardwicke so applied it, and held that part owners in a ship, were to be considered partners and joint owners, though they were, in fact, but tenants in common ; and that the distribution of the assets of one of them, being insolvent, was to be made as if joint property, and to be applied first to thejoint debts, and to be treated.as partnership property, chargeable with all debts for which either owner was liable, on account of the ship. This case was expressly overruled by Lori .Eldon, in the case ex parte Young, (2 Ves. and Bea. 242. 2 Rose, 78. note.) who held, that a ship stood upon the nice distinction 0f a tenancy in common. He ruled again, in the case ex parte Harison, ; 2 Rose’s Cases in Bankruptcy, 76.) that the owners of a ship were not interested in it as joint tenants, but as tenants in' common, and that the bankrupt’s share passes to the creditors under the.bankruptcy, without being liable, specifically, by way of lien, to the claims of the other part-owners, in respect of their disbursements and liabilities for the ship. So, also, in the case ex parte Gibson, (1 Montague on Partnership, 102. note.) it was held, that a bankrupt’s interest in the moiety of a vessel, was his separate property, and not held by his assignees, for the purpose of paying thejoint creditors of the ship.

This doctrine of a distinct separate property in a vessel between part owners, as tenants in common, seems to have had countenance from Lord Loughborough, in the case ex parte Parry, (5 Vesey, 575.) where one joint owner of a ship insured on his own account, and became a bankrupt. It was held, that though the cargo and proceeds of the voyage were joint property, the produce of the insurance on the ship which was lost, was separate property. And, perhaps, we may say, with Sir Arthur Piggot, that it is the universal understanding in the commercial world, and especially among ship-owners, that part owners of a ship are not partners. He said, that the case of Doddington v. Hal-let, was nevér acted upon; and the English usage is doubtless our usage upon this point.

I dare not, therefore, follow a case which has never had effect, and has been so authoritatively exploded. The late cases which have been referred to, are in point against the allowance of any partnership claim, or taking an account on the foot of any partnership in the vessel. And, as Mr. Belt has observed, (Supplement to Vesey, senior) in his notes on the case of Doddington v. Hallet, it was rather singular that Lord Hardwicke should have found a partnership of the ship, and each part owner liable in solido, for all advances, when the agreement stated in that case, expressly declared, that the parties agreed severally, and not jointly, and each for himself; and the short argument for the defendant, as reported in that case, states facts and principles which strike me as most weighty and conclusive on the question. The assignment then of S., of the 27th of April, 1816, and which was long before the Phcenix arrived at the Havanna, passed to the plaintiffs the right to a moiety of the vessel; and the defendant must be held accountable for that moiety, or the proceeds of it, which he has received, without making those proceeds subject to the balance which may be found due on a settlement of partnership accounts. The freight and the cargo are subject to such a balance, because as to them they were partners, but not as to the vessel. As to that, they were merely tenants in common, in like manner as if they had owned in common a warehouse, or other real property, in New-York.

The next question is, whether the freight and proceeds of the cargo of the Phoenix, are subject to the unsettled balance, (if any) due to the defendant on former joint transactions between him and S., in respect to the ships Union and Orris, and in voyages by those vessels on their joint account. This pretension on the part of the defendant is quite unfounded, because the case does not afford any evidence that the defendant and S. were general partners hi trade, oí had any other or fufthef connection than what each sepafate adventure occasioned. A joint concern in the Phoenix's voyage, had no necessary connection with that of any former voyage; and to make the rule of law apply, limiting the assignees of S', to the surplus of the cargo and voyage of the Phoenix, after deducting the balance due the defendant on other transactions, it must distinctly and clearly appear that the concern in the cargo and voyage of the Phoenix, and of the former voyages and adventures, were all one, entire; subsisting, connected and continued partnership transaction. Nothing of that kind appears, or is to be inferred from the pleadings and proofs in the case. It appears by the answer, that the defendant owned only the one third of the Phoenix until a short time beforé her departure, and that S. owned the other two thirds. This inequality in that case, a2"0I'ds a strong presumption, that the parties had no fixed and settled connection as partners; and it was for the defenc*ant to have made out the fact in proof, if it had existed,

If we put the suggestion of partnership out of view, r r ’ then.the defendant has no ground to retain the proceeds of . 1 one moiety or the Fhcsnix, m discharge of any general ba~ , . * , . , , _ . , lance or accounts which he may claim and put forward by _ ^ ^ way of set-off. The right of S. to a moiety of the proceeds of the vessel and cargo, had been duly assigned to the plaintiffs in trust, for the benefit of all the creditors, and the defendant had no right, afterwards, with the knowledge of that fact, to take and appropriate those proceeds to himself. The right had vested in the assignees, in April, 1816, and most of the creditors, before September-, 1816, had come in and released S. in consideration of the assignment, and of the dividends to be received. It is in proof that the defendant knew of that assignment before he wrote the letter to Captain Green, on the L3th September, 1816, requesting him to consign the entire cargo to him, the defendant, “ to secure his advances on that and all other accounts.” -The defendant had no right, with or without the concurrence of Captain G., to seize and take possession of the share of S., which had been lawfully transferred to and vested in the plaintiffs. It was a possession acquired wrongfully, against the act and deed of the true owner; and it would seem to be impossible, upon general principles of equal justice, or with • safety, to credit and creditors in general, to give sanction to such a race of diligence, and such an act of unauthorized appropriation.

The fact of the assent of the creditors to the assignment, prior to the taking possession of the property by the defendant, may make the case more impressive, but I do not consider any express avowal of that assent as necessary to the operation of the assignment. It is settled by a series of cases, referred to in Hendricks v. Robinson, (2 Johns. Ch. Rep. 307, 308.) and to which may be added the cases of Pickstock v. Lyster, (3 Maule & Selwyn, 371.) and Brown v. Minturn, (2 Gallison, 557.) that an insolvent debtor may, at any time, before his property becomes bound by any lien, assign it over to trustees, for the benefit of all his creditors, by an act made bona fide. The assignment is to be referred to an act of duty, attached to his character of debtor, to 3 make the fund available for the whole body of the creditors, ti i , 1111 i . In the case last cited, it was held that the assignment was good against a subsequent attachment, if the creditors had assented to the assignment prior to the attachment; and the inclination of the learned judge seemed to be in favour of the validity of the assignment, even without such intervening assent, and which, I apprehend, is not indispensable. If the assignment was directly to the creditors, their assent would be necessary to give validity, in law, to the deed. But if . the assignment (as in this case) be to trustees, for their use. 3 the legal estate passes ana vests m the trustees, and Chancery will compel the execution of the trust for the benefit of the creditors, though they be not, at the time, assenting, and parties to the conveyance. This point was not necessary for decision in that case; but as far as the case went, it is equal to any other, in point of authority, derived, most justly, from the character of the judge, and the very able and accurate investigation by which bis decisions are distinguished.

I shall, accordingly, direct a reference, to take and state an account; and that, in taking the account, the defendant be charged with the net proceeds of one moiety of the brig Phcenix, sold at Havanna, and with one moiety of the net proceeds of her freight and cargo, upon the voyage, in the pleadings stated, or so much (if any) of such moiety of the freight and cargo as shall appear due to the plaintiffs, as assignees of S., after deducting the balance that may be found due to the defendant, from S., on a settlement of accounts bfetween them, in respect to their joint concern in the said freight and cargo and voyage of the Phcenix; and all further questions are reserved.

Decree accordingly.

An assignee or separate creditor of one partner is entitled only to the share of such partner, after a settlement of the accounts» and after alt the just claims' of the other partner are satisfied.

The interest of each partner is his share in the surplus, subject to all partnership accounts, &c.

And that interest alone is liable to the separate creditors of such partner,claiming either by-assignment or execution.

are tenants m joint tenants.

Where one joint owner assigns his interest in the freight and cargo of a particular vessel, on a particular voyage, the other partner, who has got possession of the proceeds of such freight and cargo, is not entitled to be allowed and paid out of them, any claims he may have against his co-partner, arising from former and •distinct voyages and adventheywerecórí cejned^Qt°gevessels^ °they not being geneval partners in trade, nor any connection existing between the difr ferent transactions or ■ voy ages,

Anmsoivent s‘£" h.is Pr°tors; and the assent of the creditors isnot necessary to gi»e legal vadeéí ° e

But if the as r^"iye"oisthe creditors,their assentisnecessai'y10 ?ive ;t legal validity»,