Court Opinion

ID: 8803064
Source: CourtListenerOpinion
Date Created: 2022-11-26 14:38:59.037929+00
Date Added: 2024-06-11T17:03:59.107029
License: Public Domain

SATER, District Judge
(after stating the facts as above). [1] The correctness of the trial court’s ruling depends on whether Henslee was the owner of, or a mere holder of a lien against, the steamer French. The crudely drawn instrument which Jacobs signed and delivered to Henslee, when the latter parted with his-money, is the product of a young man, inexperienced and unskilled in the preparation of legal documents. It first certifies that there is due from Jacobs to Henslee $3,500, which is to be used solely to purchase the steamer. It then declares that the parties have agreed that Henslee shall own the boat until he is paid $1,500 in cash and given a note with approved security for the remaining $2,000. Jacobs did not have absolute control of the $3,500. His right and authority to expend or use it was restricted to the accomplishment of a single purpose — the purchase of the French. He was the instrumentality through which that vessel was to be bought. If he did not effect a purchase, he was, by necessary implication, to return the money to Henslee. 1 f he purchased, Henslee instanter became the owner, and at the same time Jacobs’ option to purchase sprang into existence. His liability to Henslee for the $3,500, which liability was akin to, if not precisely that of, an agent, would by the express and necéssarily implied terms of the contract terminate when the steamer was bought, or, in case of failure from any cause to purchase it, when the money was redelivered to Henslee. Had the contract provided that Jacobs by the purchase should become the owner, then there would have been an absolute indebtedness from him to Henslee; but, as Ilenslee was at tlie time of the purchase to become the owner, there could *612not be, after the purchase was made, an indebtedness to him from Jacobs, for the reason that Henslee’s ownership and Jacobs’ indebtedness could not coexist. It was within the contemplation of both that the boat could be bought for $3,500, and that through a corporation, whose forming Jacobs purposed, the $1,500 would be promptly paid, at which time a note with approved security was to be delivered. The ownership of the boat would then pass to Jacobs' or his nominee. The intent to effect such an organization remained wit]i Jacobs until the boat was destroyed, and was in Henslee’s mind as late as November 11th, as evidenced by his letter of that date in which he characterized himself as “owner” of the boat.
At the time the contract was made, Henslee knew or learned of Jacobs’ ownership of the Alma. It is not shown by a preponderance of the evidence that such ownership influenced Henslee in his dealings with Jacobs. If, however, he made inquiry as to the status of the Alma, he must have learned that it was incumbered by mortgage, which incumbrance, as disclosed by subsequent events, rendered worthless the subsequently acquired lien given on it. That Henslee, with his business experience, should permit the title to the boat to pass to Jacobs and should loan what was regarded as the full amount of the purchase price on property to be used in a business, with which property and business he was unfamiliar, and should accept ho evidence of the creation of and of his right to a lien other than an unrecordable instrument, is improbable. It was more consistent with good business practice that he himself should take title to the property and become and remain its owner until Jacobs should acquire it by purchase. That such was his agreement is reinforced by his complaint, early expressed, about the bill of sale having been made to Jacobs, instead of himself. His solicitude for the consummation of the original proposed scheme, designed to relieve him of the ownership of the boat, and that it should not become indebted while his ownership continued, stimulated him to inquire as to the boat’s business on substantially every trip it made. He knew it was losing money and that Jacobs was without means to meet its obligations. The situation was such as to spur him to action. He therefore took a bill of sale whereby he divested Jacobs of all indicia of title and lodged the same where it rightfully belonged —in himself. To secure the enrollment of the boat, he made oath that he was its sole owner and that Jacobs was its master, and consequently acting under the owner’s authority. He inquired personally and by letter as to the boat’s liabilities, informed certain of the creditors that he was its owner, directed some of them to furnish it nothing more except on his order, and, in his own name as owner, insured the vessel. His activities, which were such only as an owner would display, continued even after the boat’s destruction, and can be reconciled only with an intention on his part to satisfy the claims against it. Not until some time after it had burned did he ever assert that Jacobs was its owner and himself a mere lienholder. The original agreement between them was at some time returned to Jacobs, and at no time did Henslee hold any instrument, negotiable or nonnegotiable, evidencing an indebtedness to himself from Jacobs. The logic of the situation required the return of the contract, because the purchase of the boat relieved *613Jacobs of liability for the $3,500, and, on account of the option contained in it, he was entitled to its possession.
[2] We are not unmindful that the mortgage given on the Alma recites that it is to secure a debt from Jacobs to Henslee for a cash loan of $3,500 secured by a bill of sale on the steamer French. This is not necessarily inconsistent with Henslee’s ownership of that vessel. The amount named in a mortgage is not conclusive as to the indebtedness, actual or contingent, that it secures. Jacobs had persuaded Henslee into an enterprise with the like of which the latter was unacquainted. If Jacobs should take over the boat, Henslee was justly entitled to compensation for the use of his money from July 25th until it should be returned to him, to the money paid for insurance, to protection against the boat’s indebtedness and such expense as might reasonably be necessary for its care, maintenance, and disposition. If the option should not be exercised, and the boat be sold for less than enough to satisfy all accrued and accruing claims and expenses over and above the amounts necessary to make Henslee whole, he would necessarily sustain a loss. Whatever may be said as to whether there rested on Jacobs any legal obligation to Henslee, there was an unmistakable moral obligation to protect him against loss. That Jacobs was actuated by such a worthy motive appears from his expressed willingness that Henslee should own the French, and should, in addition thereto, have a mortgage on the Alma, until the arrangement originally made could be carried out. That Henslee understood the purpose of the mortgage to be such only as is above mentioned is evidenced by his subsequent acts and declarations of ownership, and his subsequent efforts to ascertain the boat’s indebtedness in contemplation of its payment. Having regard to all the facts and circumstances disclosed, we are constrained to hold that he was the owner of the French from and after the date of its purchase by Jacobs through Berry at Wheeling, and that the master and the trial court reached the correct result.
[3] The libelants all proceeded against the owner in personam. This they were at liberty to do. Admiralty Rules 12 and 13 (29 Sup. Ct. xl); section 4, Act June 23, 1910, 36 Stat. 605 (Comp. St. 1916, § 7786). Limitation of Henslee’s liability as owner of the vessel to the value of the wreck, under section 18, Act June 26, 1884- (23 Stat. 57, c. 121 [Comp. St. 1916, § 8028]), was abandoned in the course of the trial, and does not, therefore, require consideration.
This case, on account of its own peculiar facts, is easily differentiated from any mentioned in the briefs. A review of the cited cases is consequently deemed unnecessary.
The trial court is affirmed, and will make distribution of the insurance fund in accordance with the views above expressed.