Kentucky Distilleries & WareHouse Co. v. Louisville Public Warehouse Co.

DENISON, Circuit Judge

(after stating the facts as above). Under Liberty Oil Co. v. Condon Bank, 260 U. S. 235, 43 S. Ct. 118, 67 L. Ed. 232, by the filing of the cross-petition by the Warehouse Company, asking that the other claimant to the fund be brought into court and that it have directions how to pay, this action at law became practically one in equity, and should have been transferred to the equity calendar, with reformed pleadings, disposed of as an equity ease, and reviewed as an equity case. It is true that the money was not paid into' court, nor was payment offered, and that the court made no order bringing Brown in; but he came in, and, in the lack of any suggestion at that time that such payment ought to be made, these facts do not interfere with the transformation of the controversy from one at law into one in equity. As to the form of review, it would seem that the only difference is that, if the review is at law, the conclusion of the trial judge must be accepted, if it was supported by any evidence, while, if the review is in equity, we would exercise our own judgment upon the facts. This difference is quite immaterial in this case, for the entire record is before us, as if upon an equity appeal, and we see no obstacle in the way of deciding the merits. Section 10, Act Peb. 13,1925 (Comp. St. § 1649b).

The controlling question plainly is whether the majority of the owners had power to bind the whole body of owners as to such a matter as this compensation to Brown. It is the claim of Brown that this pool or syndicate, while not a partnership, was a joint adventure, and that the rule of binding all by the action of the majority applies as well to joint adventurers as to partners; it is the answer of the Kentucky Company that the five parties to the contract were the joint adventurers, so that the owners as a class became only one of such joint parties; it is the reply of Brown that there may be a joint adventure within a joint adventure, and that within such subclass the same rule as to the powers of the majority would apply.

If for the purpose of- the opinion, these general claims by Brown be accepted, they are still not sufficient. While a majority of partners has implied power to bind the minority in matters within the scope of the business, yet this implication cannot prevail when it is inconsistent with limitations which are created by the partnership agreement; and those limitations may be express, or may be implied from an exclusive enumeration of granted powers. Here we find that the very elaborate contract carefully provided that the majority of the owners should have power to bind all the owners as to the selection of a committee member and as to a distribution plan which might later be taken up. This express enumeration of powers tends to negative any intent .that there should be other1 powers; but this might not of itself be enough to control the case. We find, also, that the entire matter of the compensation to be paid for services in selling the whisky was delegated to the general committee. This leaves no room for any implication that the majority of the owners could fix that compensation at a greater or lesser amount. We cannot say that the giving of this' entire power to this committee was not deliberate and purposeful. It was an impartial committee, representing the four interests which would be affected by the allowance of selling commissions. Any individual owner might well prefer to intrust his interests' on the subject to such a committee, rather than to a meeting of owners, which might be dominated by some owners having special interests. This probability is emphasized by the fact that owners entering the pool did not know who their associates might turn out to be, or into what sort of unsatisfactory hands the majority of the owners’ pool might fall. It might be dominated in number by a group of small owners with a small stake in expense questions, or, in amount, by two or three large owners, having personal relations with some expense claimant. Further, there was no seeming reason why the other profit sharers should not share also in all selling expense.

These considerations only confirm the con-elúsion, at which we cannot hesitate, that all the owners agreed, in effect, that no selling expenses should be allowed, except such as were approved by the joint committee, and hence that there could remain no such implied power as that upon which defendant Brown must and does rely.

There seems no necessity for any special proceedings in thé District Court on account of the interpleader theory. The judgment will be reversed with directions to enter a judgment in favor of the Kentucky Company against the Warehouse Company for the sum of $4,375 and such interest, if any, as the District Court may determine. The Kentucky Company will recover the costs of this appeal. Its costs in the court below will also be awarded against both defendants. If the Warehouse Company had filed a proper bill of interpleader, it would 'have been entitled to its costs out of the fund up to the point of getting its discharge order; but it did not take that course.