Post v. Kimberly

9 Johns. 470 | Court for the Trial of Impeachments and Correction of Errors | 1812

Thompson, J.

The rights of the parties in this case have been considered as depending principally upon the question of partnership, between Kimberly & Brace and Archer & M‘Conehey. The appellants cannot, either on principles of law or equity, resist the decree against them, without establishing such partnership. It cannot, in my opinion, with any plausibility, be contended that the respondents and Archer & M‘Conehey were, as between themselves, partners in the purchase of the outward cargo of the Elisabeth. For a partnership is a voluntary contract between two or more persons, for joining together their money, goods, or labour, &c. upon some agreement respecting them. It is, therefore, a relation between parties created by contract, and as it respects their relative rights among themselves, must depend upon the terms of such contract. There is in this case not only the want of any positive proof of such agreement, but the door is shut against every presumption of its existence, by direct proof to the contrary. Archer & M'Conehey both testify that Kimberly & Brace were owners of one fourth part of the cargo separately and distinctly from the other three fourths owned by themselves. Whatever concern, if any, they had in the purchase, was in the character of agents. The payment for the one fourth was made by Kimberly & Brace on their own separate account. In addition to which, it is also proved that Kimberly refused to purchase, or become responsible for any part of Archer 8c M'Coneheys proportion. Such a concern, in no respect whatever, partakes of the nature of a partnership. Each house was to purchase and put on board the Elisabeth its aliquot part, without the concern or responsibility of the other. Suppose one or morp of the pipes of brandy purchased by Kimberly 8c Brace had sprung a leak, or been lost in the transportation from the store-house to the schooner, no part of the loss would have fallen upon Archer & M'Conehey. There was, at all events, no joint risk, until the goods were oji board the schooner. The language of Lord Kenyon, in the case of Sheriff v. Wilkes, (1 East, 51.) may with peculiar force be applied here : “ That.it is hard enough for one partner, in any case, to be able to bind another without his knowledge and consent, but it would be carrying the liability of partners for each other’s acts to a most unjust,” and, I would add, alarming extent, to consider transactions like this as creating a partnership.

This case is very analogous to that of Saville v. Robertson and another, (4 Term Rep. 720.) where several persons, who had no general partnership, nor any connexion with each other in trade, formed an adventure to the East Indies, each one to bring in his own share, and it was held not to be a partnership as to the purchase of the goods, so brought into the adventure. It was likened to the case of several persons agreeing to enter into partnership, each bringing in a stipulated sum of money, and each borrowing his proportion of different persons, in which case it would be impossible to say that the persons advancing the money could maintain actions against all the partners, for the several proportions lent to each.

It may, however, be necessary to inquire, whether Kimberly & Brace have so conducted themselves as to become responsible to the appellants for the part of the cargo furnished by Archer & M'Conehey. For if not, I am not aware of any principles of law or equity that will authorize them to apply the property of Kimberly & Brace to the payment of their demand against Archer & M‘Conehey. It is, unquestionably, a settled rule of law, that al-l though with respect to each other persons may so limit their engagement, as not to be regarded in law as partners, yet, as to their transactions with the rest of the world, they may be liable to be charged as such, if they have permitted such other persons to use their credit, or hold them out to the world as jointly liable; Otherwise great frauds and impositions might be practised. This rule of law, however, is for the protection and security of those who are ignorant of the true relation in which persons with whom they deal may stand to others, more or less concerned with them. For where a partnership is a limited one, and confined to a particular business or transaction, and persons who deal with it know it to be such, the partnership is not bound beyond the terms of it, by the act of one partner in relation to his own private concerns. This principle has been recognised by the supreme court, in a variety of cases, and is undoubtedly the settled rule of law. (2 Johns. Rep. 300. 4 Johns. Rep. 254.) In this view of the case, it becomes a fit subject of inquiry, how far the appellants were apprized of the concern which Kimberly 8c Brace had with Archer & M'Conehey in this adventure.

But here an objection is raised, in limine, to the admissibility of any evidence on this subject, because it is not alleged in the respondents’ bill in chancery. It would, I think, be a sufficient answer, that no objection to this testimony was made injthe court below. Both parties have examined witnesses to that point. But independent of this consideration, no allegation of notice was necessary in the bill. The bill alleges that the respondents were separately interested in, and owners of, one fourth part of the adventure or cargo. This the appellants deny, and insist that it was a partnership concern with Archer Sr M‘Conehey.; but allege that they did not know thatr any person besides Archer Sr M‘Conehey had any interest in the adventure* This is matter, then, set up in the answer; and the truth or falsity of it may be inquired into, as matter of fact, precisely within the ru¡e ]aid down, by Mr. Justice Spencer, in the case of James v. M‘Kernon. (6 Johns. Rep. 559.) He says it makes no difference whether a defendant has, by way of avoidance, set up a distinct and independent fact, or merely denied the matter in the bill. If the existence and verity of the fact, thus set up by the defendant, be controverted, the defendant must prove it, and the complainant may examine witnesses to disprove it. But the fact being made out by the defendant, the complainant could not impeach it, on the ground of fraud, if not charged in his bill. If the proof, as to the notice was admissible, the fact appears to be established by Archer & M'Conehey.

Archer says the respondents were interested in, and owners of, one fourth part of the outward and return cargo, and of the proceeds and avails thereof, separately and distinctly from Archer & M‘Conehey; and that at the time of the shipment to Laguira, he informed Russell that the respondents were interested in one fourth part of the schooner and cargo; and he thinks it was known to Post, but is not certain on that point. M‘Conehey says the respondents were separately interested in, and owners of, one fourth of the vessel and cargo; and that when he was about purchasing the cargo, for the schooner, in New-York, he informed the appellants that they were, or were to be, so interested. The credit of these witnesses has been examined into, and fully established. It must, therefore, be considered as proved that the appellants knew, at the time of the shipment, of the interest of the respondents in the adventure; and if they are chargeable with knowledge of the special and limited nature of the respondents’ interest and concern, there can be no possible grounds, according to the doctrine contained in the cases already cited, upon which the respondents can be made liable for the advances to Archer & M‘Conehey, to purchase their proportion of the cargo.

The conduct of the appellants throughout shows that they did not consider Kimberly & Brace responsible to them. If there was a partnership between Archer S’ BBConehey and the respondents, in any part of this adventure, it was in the outward cargo only; and that partnership commencing with the shipment on ¡board the Elizabeth. And I am inclined to think, that thus far they are to be considered partners. They thus became jointly interested in the cargo, in proportion to their respective shares. A loss of any part of it, during the voyage, must have been borne by them at the same rate, and they were jointly interested, in the like proportion, in the profit or loss, on the sales at Lagvira. This view of the subject reconciles what might otherwise appear to be an inconsistency in the testimony of Archer, who, though he swears that the interest of the respondents in the proceeds and avails of the cargo, was separate and distmct from that of Archer & M‘Conehey, yet that the cargo was sent to E güira as partnership property, in which the parties had an undivided interest, as to profit and loss, according to their respective proportions of interest, before mentioned. . But this partnership did not extend to the return cargo. A partnership being matter of contract between parties, they may limit and modify it at pleasure. There is, therefore, no incongruity in admitting a partnership in the outward cargo, and not in the return cargo, if such was the agreement of the parties, or the necessaiy inference of law, from the facts proved. It is true, that the proceeds of the outward cargo was to be invested in a return cargo. But there was no agreement to share in profit or loss, on the return cargo 5 nor any provision for a joint sale on its arrival in New-York. It is, necessarily, therefore, to be inferred, that each party was to take his share of the coffee, and dispose of it, at pleasure, without any community of interest, as to profit or loss. Here, then, was the want of one of the most essential requisites of a partnership. For a joint concern in the future sale is necessary to constitute a partnership, otherwise there is no communion of profit and loss. Tide was the principle which governed the decision in the case of Coope and others v. Eyre and others. (1 H. Bl. 48.) The same doctrine was recognised and sanctioned by the supreme court in the case of Holmes v. The United Insurance Company. (2 Johns. Cas. 331.) With respect to the return cargo, the rights and interests of the respondents, and Archer & M'Conehey, are to be viewed precisely in the same light as if they had sent out cash to Laguira, to be invested in a cargo of coffee, to be divided between them on its arrival in New-York. If this be the true character of this transaction, as I am persuaded it is, there is no ground, in my opinion, for the claim set up on the part of the appellants. But admitting a partnership to have commenced with the shipment of the outward cargo, and continued throughout the adventure, it would give no legal right to the appellants, to apply the respondents’ proportion to the payment of the separate debts of Archer Sr M(Conehey, contracted before the commencement of the partnership.

'The law is well settled that if a person takes a partnership security from ope of the partners for what is known at the time to be the particular debt of the partner who gives such security, the copartner is not holden. This was the rule laid down by the supreme court, in the case of Livingston v. Roosevelt, (4 Johns. Rep. 271.) and is in conformity to numerous adjudged cases there referred to, both in the equity and common law courts in England. The knowledge in the creditor that the partnership name is given for the individual debt of one partner, renders the transaction, in judgment of law, fraudulent and void. And this rule is not confined to securities given, but extends to payments actually made.. Lord Ellenborough, in the case of Swan v. Steele, (7 East, 213.) says, that if a creditor of one of the partners collude with him, to take -payment or security for his individual debt out of the partnership funds, knowing, at the same time, that it is without the consent of the other partner, it is fraudulent and void. So in the case of Field and another, in the court of exchequer, in England, (4 Ves. jun. 396.) it was held, that a separate creditor of a partner has no right against the joint property of the partnership, any further than the separate interest of that partner.

To apply those principles to the case before us. The demand of the appellant was against Archer & M‘Conehey alone. Kimberly Sr Brace were clearly interested in the return cargo, and that fact was known to the appellants. With this, knowledge, the funds of the partnership came into their hands; and before the payment of the bills, which constituted the funds, they admit the respondents gave them notice of their interest, and demanded of them their proportion of the proceeds of the return cargo. Under thesé circumstances, the application of these funds to the payment of the demands of the appellants against Archer & M'Conehey, was unauthorized in law. The receipt of the bills was not itself a payment, nor could it in any way affect the appellants’ remedy against Archer & M'Conehey. These bills not having been paid, nor any release or discharge given to the respondents, it was nothing more than a pledge, as a security for the demand, and which was in no way binding upon the respondents. One of several partners cannot pledge the partnership fund for his individual debt so as to bind his copartners. But the appellants have not even this pretext as a shield, for M‘Conehey says the remittance was made fdr the benefii of the whole concern, and denies altogether any intention of applying the respondents’ proportion to the reimbursement or payment of the appellants, but meant only to deposits the whole with them, until he himself should come and make the necessary arrangements respecting the application of the three fourths belonging to him and Archer. The omission to mention any thing in his letters on tliis subject, affords no inference against him. All the letters respecting the bills were written within the space of twenty days. None of the bills were payable under ninety days after sight, and he probably expected to be in Nerv-York before they fell due. Besides, he was writing to persons whom he had previously informed of the interest of the respondents in this adventure, and it would have been superfluous again to repeat it.

It was suggested, though not much pressed on the argument, that the respondents’ remedy, if any they had, was complete at Iaw?' and, therefore, not proper for a court of chancery. It by no means follows, even admitting the remedy complete at law, that the court of chancery has not also jurisdiction. It cannot be denied, at tills day, but.that there are many subjects upon’whicli courts of law and equity have concurrent jurisdiction. Matters of account form one class of this description of cases, with respect to which the court of chancery has a very broad jurisdiction, as the course of proceeding in that court has been considered peculiarly well calculated for the settlement of accounts, if they are in any degree long and complicated. This objection ought not to be very favourably received in this stage of the cause. Pleas to the jurisdiction of a court, being rather objections of form, ought to be interposed at the earliest opportunity. The party ought not to be suffered to wade through a tedious and expensive litigation, and then, in the very Iasi stage of the cause an objection tobe made to the .jurisdiction of the court, especially where the subject matter of the controversy is within such jurisdiction. This question was discussed and examined very much at large, in this court, in the casé of Ludlow v. Simond, (2 Caines’ Cases in Error, 1.) where it will be found that the principles above suggested aré recognised and supported by numerous authorities.

In whatever light, therefore, the subject is viewed, it appears to me, that even applying to the case the most rigid rules of law. applicable to partnership transactions, the respondents are entitled to recover one fourth part of the proceeds of the return cargo. This is manifestly consonant to the real justice and equity of the case. That one fourth part both of the outward and return cargo did, in fact, belong to the respondents, is not denied. And jg snfgcjenfly proved that this was within the knowledge of the appellants. No false colours were held out to them to procure the advances made to Archer & M'Conehey. The advances were made altogether upon the credit of Archer S' McConehey, whether the appellants knew or did not know of the interest of the respondents in the adventure. If the advances were made, under a promise and expectation of being reimbursed out of the proceeds of the return cargo, and under an ignorance of the respondents’ interest, three fourths of the whole proceeds is all they could have looked to for a reimbursement, according to the admissions in their answer. For they say, that the advances were made on the promise of Archer & M'Conehey, that the return cargo, being the avails of property purchased by means of their advances9 should be deposited with them. This could only extend to three fourths of the return cargo, for no more was purchased by means of their advances. The other fourth was purchased by means of advances made by Kimberly & Brace.. Giving the appellants three fourths, will put them precisely in the same situation as if the respondents had had no concern in the adventure, for the outward cargo would then have been one fourth less in value. The appellants, in their answer, do not pretend that their advanees, and responsibilities, for the cargo of the Elisabeth, exceeded 12,000 dollars, and their own witness, Grinnéll, swears it was about 11,000 dollars. And they admit that they have received upwards of 14,000 dollars. Upon their own showing, therefore, they have been more than reimbursed for their advances. . The adventure of the Hiram, with which the respondents had no concern whatever, ought to be laid out of view. If would be extremely unjust to throw any part of that loss upon Kimberly & Brace. I think, therefore, the equity of the case is clearly with the respondents, and that this equity is supported by the strict and technical rules of law ; and, of course, that the decree ought to be affirmed.

Spencer, J.

The first point arising in this case is, whether Kimberly & Brace, in judgment of law, were partners with Archer & M‘Conehey, in the purchase of the outward cargo of the schooner Elisabeth. If such limited partnership existed, the decree pronounced in the court of chancery cannot be supported. The basis of that decree is, that Kimberly S' Brace had a distinct and independent interest in one fourth of the outward cargo, and had a right to call on the appellants, into whose hands the proceeds of the return cargo came, to. account with, and pay to them, the one fourth part of those proceeds. If this principle was incorrect, and if the respondents were partners in the outward cargo, and jointly liable with Archer S' M‘Conehey to the appellants, for the advances made to them, then, so far from having any equity on their side to call out of the appellants’ hands the money received by them, (assuming it at present to be the proceeds of the outward cargo,) they would be liable, as dormant partners, for the credit given by the appellants to Archer & M'Conehey.

[His honour here stated the pleadings and evidence in the cause.]

These are the material facts in considering whether the respondents and Archer & M‘Conehey were partners in the adventure, including the purchase of the cargo.

It is a principle that will not be denied, that to entitle a party to recover money of another, he must have a superior right to it. It is not enough for a man to show that he has sustained a loss; he must go further, and establish a paramount right to the money he claims. As it regards the appellants, they have equal equity with the respondents. The appellants have advanced their money to Archer & M'Conehey, looking to the return cargo of the Elizabeth, to be refunded, and, in my opinion, they have a right to keep what they have acquired in the regular course of business, to the full extent of their responsibilities for, and advances to, Archer & M'Conehey.

Was the purchase of the outward cargo a partnership concern between the respondents and Archer ai M'Conehey? I think it was, and that all the authorities support me in this opinion.

A partnership is defined to be a community of interest between two or more, and a sharing of profit and loss. Again, it is defined to be the voluntary association of two or more persons, in sharing the profits and bearing the losses of a general trade, or a specific adventure. Watson (on Part. 40.) says, “ there may be special partnerships, which are formed for a particular concern in a single dealing or adventure. Thus two merchants may join in sending out a cargo of goods to a foreign country; as to this adventure they have all the rights and are subject to all the liabilities of partners^ but thé relationship of partners ceases with it, and at no time extends to their other concerns.” Again, he says, “ if several either build or purchase a ship, they are part owners and partners as to this concern;” that is, they are tenants in common, as respects each other, and partners, as regards third persons, if the ship be employed, in whatever concerns her outfits, or the transactions with other persons relating to her. Again, Puffendorf ^* defines a partnership, “Contractus societatis est, quo duo pluresve infer se pecuniam, res aut operas conferunt eo fine, ut quod inde redit lucri inter singulos pro rata dividatur.”

To constitute a partnership in a particular purchase, or in a single concern, there must either be a joint undertaking to pay, or an agreement to share in the profits and loss.

A case much relied on by the respondents’ counsel was Saville v. Robertson and another; (4 Term Rep. 720.) and it was supposed to establish the principle, that the partnership between the respondents and Archer Sc M‘Conehey did not begin until after the purchase of the outward cargo. That case was shortly this; several persons, unconnected as partners in trade, formed an adventure to the East Indies, and it was agreed that they should provide a cargo of goods for the intended voyage, to a specific amount, and each was to bring in his own particular stock, and as to these goods the concerned were to share in profit and loss. One Pearce owned the ship, which, was valued at 3,750Z. which he put in, as his part of the adventure. And it was agreed that one should not be bound for any goods or stores ordered or shipped for the other, and Pearce was to be at liberty to ship what goods he pleased over and above the ship and outfit, leaving room for the goods to be shipped by the others. After this agreement, the plaintiff in the suit supplied copper to sheath the Ship, and furnished "other, copper, Iby Pearce’s orders, as part of the cargo. It . was admitted;'that the copper for sheathing was a partnership concern, and it was held by the court that the partnership as to the cargo, did not commence till all the parcels of the cargo were delivered on board. Mr. Justice Ashhurst held, that the partnership began immediately, and that the several persons who embarked in the adventure were legally liable for the copper sold Pearce for the cargo. He says a partnership is a joint undertaking to share in the profit and loss, and that it was a joint concern in the ship as well as the cargo. If this cáse be law, xvhieh i think may be well doubted when other cases ate compared with

It, there is yet one striking difference between if and the case before us; here, the outward cargo was purchased in gross, without any designation as to the persons furnishing it; there, each one was to bring in his own particular stock. Again, with respect to the copper furnished for sheathing, though it was laid out on the ship belonging to Pearce, yet it was admitted on all hands, that the whole were bound to pay for it, as partners. Now why were they answerable for that copper? Undoubtedly, on the ground that it was furnished for a subject in which they were jointly concerned, and had not the agreement between the parties in that case required each to bring in his own particular stock, they would have been held to have been partners. Had the adventurers in that case employed one person to purchase the whole stock, as in this ease, they would, ipso facto, have been partners.

The case of Hoare v. Dawes (Doug. 371.) is also relied on to show that there was no partnership in this case. In the purchase of the outward cargo, in that case, several persons employed the same broker to purchase a lot of tea, of which they were to have separate shares, the lots being too large for any one dealer, and the question was, whether all the employers were partners, and answerable for the whole; and it was held that they were not, but that it was an undertaking with the broker by each for a particular quantity. Lord Mansfield observes, “there is no undertaking by one to advance money for another, nor any agreement to share with one another the profits or loss.

The next case is that of Cooper and others v. Eyre. (1 H. Bl. 37.) There a number of persons agreed together to buy up oil, and the defendants were to have for their shares, each one fourth of the oil. During the treaty, they declared it was a common concern between them and Eyre 8r Co. in whose names the purchases were made, without any information to the vendor that the defendants had any concern; and whether this constituted those who had so associated together partners, was the question. The court were divided on the point. Wilson, Justice, maintained that they were all answerable as partners. The other judges held it not to be a partnership. Gould, Justice, said the true criterion was, whether they were concerned in profit and loss. Heath, Justice, said, “ in truth they were not partners, inasmuch as they were only interested in the purchase of the commodity, and not in the subsequent disposition of it.” Lord Loughborough staled, that “ in order to constitute a partnership, a community of profits and loss is essential; the shares must, be joint, though it is not necessary they should be equal; if the parties be jointly concerned in the purchase, they must also be jointly concerned in the future sale.”

The cases of Hoare v. Dawes, and Cooper v. Eyre, are very distinguishable from the present. The adventurers never had a community of interest, for the purpose of a joint future sale, or in the profit or loss attending the future sale. In the case before us, there was a perfect community of interest. The cargo was purchased jointly, though to be paid for separately, and it was to be resold by the concern, and the respondents were to share in the profit and loss of the future sale, in proportion to their interest, with Archer & M‘Conehey. Had the tea, in the one case, and the oil, in the other, been purchásed with a view to resell jointly, and to share in the profit and loss, can there be a doubt, from what fell from all the judges, that those cases would have been adjudged partnerships ?

But the case of Holmes v. The United Insurance Company, (2 Johns. Cas. 239.) is supposed to be an authority for the respondents. That case was an insurance on the cargo of a ship; for the plaintiff’s interest, as might appear. The cargo actually shipped belonged to the plaintiff and four others; one eighth of the ship and of the outward and return cargoes belonged to the plaintiff and four others, and these four had no concern in the insurance effected by the plaintiff. The insurance was directed on the plaintiff’s account. The plaintiff’s actual interest in the cargo on board, including the premium, was 14,200 dollars. The, plaintiff had directed a shipment of goods at Calcutta, which failed, and the action was brought to recover, as a return premium, the difference between the defendant’s subscription, and the inte* rest of the plaintiff, on the ground of a short interest.

The opinion of the court was delivered by the present Chief Justice, and it contains a very clear and lucid, exposition of the several cases already cited. He stated it as a test of a partnership, that there must be a reciprocal chain and agreement of the parties to unite their stock, and to share in all risks of profit and loss. And he observes, that “ it is a strong and decisive fact in the case, that there was no agreement between the parties to share in the future sale of the return cargoand stress was laid on the manifest intention of the plaintiff to insure on his own account.

I perfectly accord in the decision of that case, for it was ap- . parent that Holmes intended only to insure his own interest; that he was over insured, by not getting goods at Calcutta, and the court did right to make every possible intendment against a partnership set up for the purpose of pocketing a premium for a risk never contemplated by either party; but the case is too loosely stated, as to the manner of conducting the business between Holmes and the other part owners of the cargo, to be cited or relied upon, as establishing a general criterion on the question of partnership, where partnership or not is the very gist of the inquiry.

The case of The Assignees of Nixon v. Brush (2 Caines’ Rep. 298.) bears on the case before us; Nixon and Brush agreed to be equally interested in a vessel and cargo, equipping for a foreign voyage. Nixon advanced more than his proportion ; and on the winding up of the business, a suit was brought for the balance; several objections were raised, all of which were overruled, except one, that an action would not lie at law, on the ground that there existed a partnership between Nixon and Brush. That objection was considered insurmountable, and we turned the plaintiff round to a court of equity. And, though I differed from the rest of the court in that decision, I admitted that all the owners might be answerable to third persons.

If the joint undertakers in a voyage are not, even as respects themselves, partners, it is utterly inconceivable why the plaintiff should be denied redress in a court of law, for an uncontroverted balance of accounts.

I pay no regard to the opinion of M‘Conehey, when he says the goods were not sent to Laguira as partnership property, in contradiction to the fact to which he also testifies, “that the owners were only interested in the profits and loss thereof, according to each one’s proportion of property on board.”

Archer & M‘Conehey differ in their testimony as to the laying in of the outward cargo. The respondents in their bill, and by that they must be concluded, allege, in express terms, “ that the cargo was purchased and laid in, by Archer & M'Conehey for themselves and the respondents together, and in gross.”

It appears to me, from a review of the cases, that Watson is correct in saying “that when two merchants join in sending out a cargo of goods to a foreign country, as to this adventure, they have all the rights, and are subject!» all the liabilities, of partners.”

It cannot be admitted, for a moment, that the appellants’ ignoranee of the fact, that the respondents were concerned in the adventure when the credit was given to Archer & M'Conehey, for the outward cargo, will affect their rights; there is not a case to be met with which does not say that dormant partners, though unknown to the person giving the credit at the time, are equally answerable as though known. And in the case of Hoare v. Dawes, Lord Mansfield says, “the law respecting dormant, partners is not disputed; that they are liable when discovered.”

The result of my opinion, therefore, is, that the respondents were liable to the appellants, for the advances made to Archer & M‘Conehey, for the purchase of the outward cargo, and that, therefore, they have no title to get back what by law they would have been compelled to pay, had it not been paid.

There is another ground, perhaps, more decisive. If we admit that the respondents were not partners, so far as relates to the putting in the outward cargo, they assuredly became so when it was put on board. There was, then, a perfect community of interest, and ad agreement to share profits and loss, in proportion to their respective interests; and the case so much relied on, of Saville v. Robertson and another, (4 Term Rep. 720.) decides, that the partnership commenced when the cargo was put on board. Assuming this to be so, then M‘Conehey, as one of the partners, had a complete control over the return cargo; this he disposed of, and remitted from Norfolk to the appellants bills to the amount of 12,000 dollars. This act of M‘Conehey was binding on the respondents, as his partners in that adventure. To hold otherwise would, in fact, be maintaining that the sale of the return cargo by M‘Conehey was a tortious act, so far as regards the respondents’ share, and that they could maintain trover against the purchasers in Norfolk. The bills of exchange were remitted to the appellants, clearly for the purpose of paying their debt. This is manifest from M‘Conehey’s letters and from his testimony. The bills were received in the regular course of business, as cash, and the pre-existing debt was the consideration for them.

It is to me a novel and extraordinary idea, that if one partner sells the partnership property, and with the proceeds pays his own debt, that his copartners shall pursue this payment, and recover it back from the persons who had a right to receive it. The same remarks are applicable to the coffee sent on to the appellants from Norfolk. If a man should tortiously take my property and sell it, and with the money pay his creditor, it might as well be contended, that I could recover the money thus paid, as that the respondents can recover the money which has, in the regular course of mercantile business, come into the hands of the appellants. On this ground, therefore, I am satisfied that the decree is wrong.

With respect to the notice given of the respondents’ interest in the cargo, it is apparent from the bill, that it is not alleged as a ground of relief that the appellants had notice of the respondents’ interest, until after they had acquired a right in the bills and in the coffee ; and whatever the appellants may have insisted on in their answer upon the subject of notice, it was not a point in issue between the parties, for the respondents’ benefit. If the appellants could have proved that no notice was given, their answer would have allowed them to have done so by way of defence. If they have failed in proving this, the respondents cannot claim that they have proved notice, as a ground of equity on their side, because they have not made it a substantive ground in their bill; and the case of James v. M‘Kernon warrants this doctrine. We are, then, bound to consider the appellants as having received actual payment, in bills and coffee, of their debt, without notice that the respondents had any concern in the return cargo, and this takes away all equity on the part of the respondents.

The only remaining point is, as to the jurisdiction of the court of chancery; and I must confess that I perceive no colour for it. The respondents claim on the ground that the appellants have received money to their use. Had a discovery been necessary, the bill might have been entertained for that purpose, but the bill is for relief also. If the well known boundary between courts of equity and law has been broken in upon by the present bill, as it seems to me it has, the bill ought, for that reason, to have been dismissed. If the court below ought to have dismissed it, this court should do it. Though not a stickler for forms, yet I am for keeping courts within their jurisdiction; and am very much opposed to transferring questions of purely a legal nature to a court of equity.

I cannot subscribe to the doctrine, that because courts of equity have a concurrent jurisdiction, in matters of account, with courts of law, that a jurisdiction shall be assumed, under the notion of settling accounts, when the only matter of account is to ascertain how much a quantity of coffee sold for.

I trust that I have advanced nothing alarming in this opinions and that I shall not be suspected of contending, that if several persons ship wheat to market, having no community of interest, nor not being to share in common the profits and loss attending its sale, that the mere circumstance of the carrier’s intermingling it will create a partnership. But I do insist, that in the various points of vjew jn wjj¡cjj j ]ja.ve been able to consider this case, the decree is erroneous, and that, therefore, it ought to be reversed, with directions that the bill be dismissed.

Kent, Ch. J.

It is a fact in the case, that Kimberly & Brace were owners of one fourth part of the cargo on board of the Elisabeth, and that it was purchased with their money. It is a further fact, that the proceeds of this one fourth part, as well as of the residue of the cargo, came to the possession of Post & Russell, and was appropriated to pay debts due to them from Archer & M‘Conekey. The .very statement of these facts shows that the apparent equity of the case is with Kimberly & Brace; for their property ought not to be taken from them to pay the debts of third persons, without their consent. Every man of plain, good sense, will at once see the justice of this conclusion, and he will immediately adopt it, unless restrained by some principle of law, or some technical rule of commercial policy applicable to the case, by which Archer & M'Conehey were enabled to bind and legally transfer the property of Kimberly & Brace.

I have examined the case with a view to such a rule, and I find none that applies.

1. Here was not, according to my view of the case, a partnership between Kimberly & Brace and Archer & M‘Conehey, so as to render the disposition, of the return cargo by M‘Conehey binding, as the act of a partner, on Kimberly & Brace. This was considered by the counsel for the appellants as the most prominent point in the cause, and, therefore, it deserves the more attention. No person ought to be involved in the responsibilities of a copartnership, unless it be by his own consent and agreement,' or unless his conduct be such as to deceive the world, and induce others to act under the belief that he is a partner. In this case, there was not only no partnership in fact, but none in appearance. If we examine the transaction from the beginning to the end of it, there will not be found the requisite evidence of a partnership association. There was no agreement that the first purchase should be made upon a joint credit, nor was there, any agreement to be jointly concerned in the final result of the adventure. Kimberly & Brace advanced their own money for the purchase of their one fourth of the outward cargo, and Archer & M'Conehey acted only as the common agents, in making the purchase. There was clearly no partnership in the purchase of the outfit, and it was so far like the case of Saville v. Robertson and another. (4 Term Rep. 720.) There was no more of a partnership act in this purchase, than there was in the case of Hoare v. Dawes, (Doug. 371.) where a broker was employed by a number of persons to purchase a lot of tea, of which each was to have his separate share, and it was held that they were not partners in the tea, because there was no undertaking by one to advance money for another, nor any agreement to share with one another in the profit or loss.

Nor do I think that a partnership existed after the cargo was shipped for Laguira, so as to affect this case, because there was no agreement to share jointly in the ultimate profit and loss of the voyage. The appellants were bound to show, affirmatively, such an agreement, and we are not to infer it, merely because the contrary is not expressly shown. The parties had no previous partnership or previous connexion with each other in trade, and we are to make no intendment in favour of the partnership, so as to supply the absence of facts. The supercargo was authorized to sell the outward cargo, and with the proceeds of it to buy a return cargo, and so far the loss and profit of that outward cargo might be joint and mutual; and I am willing to admit, for the sake of argument in this case, that there was a partnership responsibility so far as respected the charge of transporting and selling the outward cargo; but there the partnership terminated, and we have no proof, nor ought we to presume any, that the return cargo was purchased for joint profit and loss, and that they were to share jointly in its disposition. The parties were distinct commercial houses, and each house would undoubtedly have been entitled to its distinct, aliquot share or proportion of the return cargo, on its arrival at New-York, and to have disposed of it, as each party thought proper, on his own account and risk. Kimberly & Brace would have taken to themselves the one fourth of the return cargo. Thus in the case of Coope and others v. Eyre and others, (1 H. Bl. 37.) several persons entered into an agreement to purchase a quantity of oil in the name of A. only, and each was to receive his distinct share, and it was held not to create a partnership. Because the sale was to be joint at Laguira, (and that is the only thing that looks like a partnership in the whole case,) it does not follow that the subsequent sale was to be joint. As the separate shares in the outfit were held by them as tenants in common, the sale of that cargo was necessarily joint; and so it is, if several persons send their wheat together in one sloop to market, with directions to the cap^ain to sell it for the benefit of each, but their respective proportions of interest in the proceeds have never been considered as liable for each other’s debts.

We must be careful not to carry the doctrine of constructive partnership so far as to render it a trap to the unwary. We must in this, as in other cases, look to the entire transaction, in order to judge correctly of its nature and tendency. If there be no previous general partnership, nor any purchase for a particular adventure, on a joint credit, nor any agreement to share jointly in the ultimate profit and loss of that adventure, nor any act imposing themselves upon the world, as partners, I humbly presume that there is no law or justice that would hold them liable as partners, beyond the particular expenses of the carriage and sale of the outward cargo. To make the property of one party in the return cargo, answerable for the separate debts of the other, party, appears to me to be both unreasonable and illegal. The profit and loss of the voyage was never to be joint and mutual. The eventual gain or loss of one party might be very different from that of the other, because each house was to act for itself in the disposition of its proportion of the return cargo. There is nothing in the case to contradict this conclusion, and this fact is with me decisive against the pretension of a copartnership.The interest of each party was never blended into one common stock of profit and loss, but preserved its distinct character, subject to its own profit and loss at the conclusion of the adventure. Doris amara suam non intermisceal undam.

2. If the act of M‘Conehey was not binding on Kimberly & Brace, as the act of a partner, I know of no circumstances in the. case to prevent Kimberly & Brace from compelling Post & Russell to account for one fourth of the proceeds of the return cargo. One fourth came to their possession, and they insist upon a right to appropriate it, under the direction of M‘Conehey, to pay his debts and those of the firm of Archer & M'Conehey, but M‘Conehey had no authority to pledge this property of Kimberly & Brace ; and Post & Russell had no right to apply it to their own use, if they were informed to whom it belonged. Their debt was originally created on the credit of Archer & M'Conehey, and not of Kimberly & Brace. The bills of exchange were not taken, in the course of business,' as cash. There was no consideration given for the bills when they were received. They were deposited with Post S' Russell, by M‘Conehey, to be collected and appropriated to the payment of their prior demands against M‘Conehey and his partner. The receipt of the bills was not, of itself, a payment, and the notice which they admit to have received before the bills fell due and were paid, was sufficient to put them upon inquiry. If they afterwards passed the amount of the bills and the proceeds of the coffee to the credit of Archer & M'Conehey, they did it at their peril. It is, therefore, in this view, an immaterial fact, whether Post S' Russell had notice, at the commencement of the voyage, of the interest of the respondents; though I am of opinion that the weight of evidence is decidedly in favour of the allegation that they had such notice. And if that be the fact, (which, I think, is the weight of the evidence, and the point was sufficiently in issue,) then it becomes perfectly immaterial whether there was or was not a partnership. If there was one, yet the engagement of M'Conehey to bind the property of his copartners, without their consent, for his own private debts, was fraudulent as to him, and void (to say no more) as to Post & Russell, who took the engagement under such knowledge. But it is sufficient for this case, that they had notice while the bills remained in their hands to collect, and before they were due dr paid. The subsequent receipt of the money by them on the bills, and on the coffee, formed the ordinary case of money received to another’s Use, and for which they ought to account.

Supposing they were liable to the respondents, it has not been made a question, either in the court below, or upon the argument here, whether chancery had not jurisdiction of the cause. Nor could there have been any doubt upon this point, if the question had been raised, for the court of chancery has a concurrent jurisdiction with the courts of law, in all matters of account, and so it was understood and decided by this court, in 1805, in the case of Ludlow v. Simond. (2 Caines’ Cases in Error, 1.)

With respect to the coffee, there is some obscurity hanging over the case, and it is impossible to know exactly the truth. I am satisfied, however, with the relation of the master of the Elisabeth, who says, that the coffee was the proceeds of the outward cargo, and that the bill of lading which M'Conehey signed and gave to Grinnell was given with reluctance; and he says he always believed the bill of lading was given for property then on board the Elisabeth, belonging to the owners of the cargo shipped from New-York. M'Conehey also says, that no part of the cargo purchased at Laguira, was purchased or shipped for Grinnell. As this was a voyage to the Spanish colonies, and probably a smuggling trade, it may account for some mystery and double dealing in the transactions at Laguira. I am well convinced that Kimberly & Brace are as much entitled to their proportion of this coffee as of the residue of the return cargo. The law and the equity of the case are equally with the respondents, and the decree ought to be affirmed.

March 10th, 1812.

Lewis, Senator, was of opinion that the decree of the court of chancery ought to be reversed, and gave his reasons.

Tayler, Senator, was of opinion that the decree of the court below ought to be affirmed, and gave his reasons.

A majority of the court^* being of opinion that the decree of the court below ought to be affirmed, it was, thereupon,

Ordered, adjudged and decreed, that the decree of the court of chancery be affirmed, and that the petition of appeal be dismissed; and it was further ordered and adjudged, that the respondents recover interest on the sum reported by the master to be due to them from the appellants, from the time the said report was confirmed; and also that the respondents recover 150 dollars, for their costs, &c. and that the record be remitted, &c.

Judgment of affirmance.

* Puff. lib. 5. cap. 8.

* For affirming, 14; for reversing, 12.

Case Details

Case Name: Post v. Kimberly

Court Name: Court for the Trial of Impeachments and Correction of Errors

Date Published: Mar 15, 1812

Citation: 9 Johns. 470