Case ID: sc-eq_11/html/0423-01.html
Source: Caselaw Access Project
Author: {"author": "*Chancellor Johnston", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Wm. Seabrook vs. Rose, and Others.
    Bill by joint owners of a steamboat against another joint owner and his attaching creditors, the joint owner, defendant, having been the agent of the company, and being a balance due from him to the company, on which plaintiffs claimed lien on his shares : — Held, that the plaintiffs as creditors in possession, were entitled to the lien in preference to the attaching creditors. [*553]
    The question considered whether owning a ship employed in trade, by several in distinct shares, constitutes a partnership. Ch. De Saussure’s opinion, that this is a partnership, and carries with it all its legal incidents. [*555]
    Heard before Chancellor De Satjssure, Charleston, January Term, 1836, who delivered the following decree :—
    The bill was filed by Wm. Seabrook, and others, joint owners of the steamboat or steamer “William Seabrook,” to have an account from M’Kenzie, also a joint owner of two shares in said steamer, who acted as the agent of the company at Augusta, and was indebted to the concern for a balance alleged to be due by him to them. The bill states the case fully, with which a copy of the agreement of the parties was filed. By this instrument, each of the subscribers agreed to pay one thousand dollars per share, for as many shares as he took, for the purpose of building and fitting up a steam packet for the conveyance of passengers and freight. And it was agreed, “that no share should be transferred, or assigned, without notice being first given to a majority of the stockholders of the owner’s intention to transfer. ”
    The bill was taken pro confesso as to M’Kenzie, who was one of the joint owners, and also agent of the company at Augusta, and who, it is allowed, is indebted to the company for moneys received in the course of the agency. He is insolvent. The creditors of M’Kenzie, and of M’Kenzie & Co., (which includes Merriman,) *issued attachments against the property of M’Kenzie as an absent debtor. L 0!:>4r
    The answers of Messrs. Rose and Bonnell, the attaching creditors, insist upon their rights to a priority under the attachments. They deny that the plaintiffs have a right to retain the amount of the shares of M’Kenzie in the steamboat “William Seabrook,” either under the general doctrine of partner, or as creditors in possession. On the face of the instrument, the contracting parties are to be joint owners of the steamer, “The William Seabrook,” according to their respective shares.
    The only feature in the agreement which might vary the contract, is the clause, that no transfer or assignment should be made without notice being first given to a majority of the stockholders, of the owner’s intention to transfer. This does not appear to me to be such an agreement as would amount to what is called a limited copartnership, (even if such were allowed by our laws,) restraining the exercise of any powers which joint owners have over their shares. It is a mere agreement to give notice of an intended assignment. If the part owner should make such transfer without notice, he may be responsible to the other owners for breach of the contract, but the assignment would be good as to third persons. The case then stands on the general ground of a joint ownership. There is, however, no proof of any assignment, and the creditors of Mr. M’Kenzie are not claiming under an assignment, but under attachments against an absent debtor, owner of certain shares in the steamer Seabrook.
    
      The plaintiffs insist that they are entitled to a lien on the shares owned by M’Kenzie, for the alleged balance due by him to them as agent of the joint owners.
    1. On the general principles of copartnership.
    2. As creditors in possession.
    The first may be called a vexed question. The decisions by judges of the highest character have differed. In Doddington v. Hallet, 1 Yes. 491, the part owners of a ship, filed their bill against the representative of a deceased partner, on the ground that they had a specific lien upon what should be due to the deceased partner for his share. Lord Hardwicke, upon great deliberation, decided that they had such a lien, on the ground that a ship may be the subject of partnership as well as anything else.
    Mr. Belt, in his supplement to the cases in Yesey, sen., p. 491, .¡..-.-l ^states that the decision, by Lord Hardwicke, in Doddington v. -I Hallet, that “part owners in a ship are partners, and liable in solido, for all goods furnished and repairs,”, has been overruled on great consideration by Lord Eldon, in the case Ex parte Young, 2 Yesey & Beames, p. 242. And on examining that case, it appears that Mr. Belt is correct in so stating it.
    The case Ex parte Young is indeed precisely the case we are now considering. The petitioners were part owners of a ship with other persons, two of whom became bankrupt. The bankrupts were also managing owners, and in that character were indebted to the petitioners, and the other owners of the ship, £28T, on balance of accounts, for the freight and earnings of the ship, after taking credit for the outfit amounting to £2234, which sum the bankrupts had not paid, and the other owners were obliged to pay it. The petition prayed the application of the proceeds of the share of the bankrupts in the ship, freight, &c., towards satisfaction of the sums due to the petitioners and the other owners.
    After an argument by the ablest counsel, Lord Eldon stated that the difficulty in the case arose from the decision of Doddington and Hallet, by Lord Chancellor Hardwicke, which was directly in point. Lord Eldon at first said he doubted, though there was great difficulty in the case, and the inclination of his mind was against the doctrine of Lord Hardwicke, which he knew was his most deliberate opinion, after great consideration; and there was no decree in equity contradicting that. Afterwards, in a few days, Lord Eldon said, that after great consideration, he mast decide against the case of Doddington v. Hallet.
    It is exceedingly embarrassing to a judge, administering the justice of the country, to find such able and learned Chancellors differing in opinion so widely, and indeed so directly opposite. With much hesitation, I should feel myself, however, under such circumstances, at liberty to follow that opinion which, in my judgment, was most consistent with sound principles ; and it does appear to me, that the judgment of Lord Hardwicke is the most so, on the point in question — for I concur with him in opinion, “ That a ship may be the subject of partnership as well as anything else, the hire and earnings thereof being proper subject for trade ; and letting a ship to freight as much a trade as any other ; then it appears plainly to be a partnership among them, and the ship itself to be part of the subject thereof.”
    
      *The definition of a partnership seems to include a joint interest in this species of property, as well as any other kind. Mr. L Carey, in his Treatise (in the Law Library), states that a partnership may be generally defined to be “ a voluntary association of two or more individuals for the purpose of lawful trade, in which each person is to receive and bear his proportional ratio of profit and loss.” The interest of each partner in the partnership is his share in the surplus after a settlement of the co-partnership accounts : and that interest alone is liable to the separate creditors of each partner — 20 Johns. Rep. 611. It does not appear to me, I confess, that there is any solid reason why ships should not be, as Lord Hardwicke stated, a subject of co-partnership. To make that species of property, and the interests of different persons in it, an exception to the rule, and out of the reach of the rules and principles applicable to other kinds of personal property (and in some cases even of real property) held in co-partnership, seems to me only'to multiply distinctions and exceptions in the broad system of principles, and to increase difficulties and litigation.
    I am relieved in some measure from my difficulties, in this conflict of authorities and principles, by the American decision. In Nicoll v. Mumford, 4 Johns. Chan. Rep. 522, it was held by the Chancellor, professedly on the later English authorities, that ship owners were tenants in common, and were not to be considered as partners, not liable for each other in solido, nor entitled in the settlement of accounts, on the principle of partnership ; the doctrine of Lord Hardwicke, in Doddington v. Hallet, being considered as overruled by the modern decisions, and by the universal understanding of the commercial world. But, when (as Chancellor Kent states in his admirable Commentaries, 3 vol. p. 40) the case of Nicoll v. Mumford came to be examined in the Courts of Errors, in New York (20 Johns. Rep. 611), the doctrine of Lord Hardwicke was considered by the majority of the judges to be the better doctrine, and they decided accordingly, and reversed the decree of the Chancellor. The case of Lamb v. Durant, in 12 Mass. Rep. 54, was decided on the ground, that vessels as well as other property might be held in strict partnership, with all the control in each partner incident to commercial co-partnerships.
    Even lands may be made the subject of co-partnership, and subject to the rules applicable to those connexions. — (See 3 Kent’s Com. 38, in which he cites various decisions which establish that.) *See 11 r*??* Mass. Rep. 469, and 2 Munford, 381; and Winslow v. Chiffelle, L State Rep. in Equity, 25, (1824,) which decided that in case of a mill held in co-partnership, that it was subject to be applied like other partnership property. And even Lord Tenterden (see Abbott on Shipping, 81,) gives to the ownership of vessels one of the essential attributes of a partnership. Chancellor Kent (3 v. 38) considers those decisions as an entire subversion of the equity doctrine now prevalent in England. This is undoubtedly true; and I am content to be supported by Lord Hardwicke and the American Courts.
    The result is, that I am of opinion the plaintiffs are entitled to the relief which they seek by their bill, on this ground ; and I am inclined to think also on the ground of creditors in possession, as against the attaching creditors. It is therefore ordered and decreed, that it be referred to the Commissioner or Master to examine the accounts between the parties, and to report whether any sum, and how much, is due by M’Keuzie, as agent, or otherwise, to the co-partnership — and that the two shares held by him in the steamer William Seabrook, be held liable for such amount, and the costs of the suit.
    Defendants appealed on the following grounds :—
    1. That by the decree, an account is ordered to be taken between A. M’Kenzie, and the owners of the William Seabrook, as partners. Whereas in point of fact there was no agreement of partnership.
    2. That the decree declares the attaching creditors of M’Kenzie, to be entitled to no more than the residuum that may be coming to him as a partner in the stock held by the owners of the William Seabrook, after the payment of all such sums as he may be indebted in to the company. Whereas, seeing that M’Kenzie is a tenant in common with Seabrook, of two shares in the steamboat, and that Rose has got a lien on those shares by his attachment, it follows necessarily, as a legal conclusion, that Rose is entitled to the money for which those shares may be sold, and that if any account is to be taken, it should be confined to the earnings and disbursements of the boat, since the attachment.
    
      Petigru, for appellant.
    
      King, contra.
   *Chancellor Johnston

delivered the opinion of the Court. J The Court does not feel prepared to give an opinion on the first point discussed by the Chancellor who tried this cause. The question is not, really, as it has often been conceived to be, whether a ship may be the subject of partnership ; for no doubt any species of property whatever, may be held in partnership. But the question is, whether a ship, owned in distinct shares and employed in trade, is, as between the owners, partnership property, or liable to be so regarded by creditors, beyond certain specified limits. On this point the Court gives no opinion, because it is entirely satisfied that the plaintiffs are entitled, as creditors in possession, to the decree they have obtained.

The motion is dismissed.

Chancellors Johnson and Harper, concurred.