Knowlton v. Reed

Tenney, J.

— Relief is sought of the Court, as a Court of equity, in this case, as one of partnership, under the jurisdiction conferred by R. S., c. 96," § 10. It thus becomes important to ascertain, whether the plaintiff’s intestate and the defendants held the relation of partners to each other in the contracts between them, and the transactions referred to in the bill, answers, proofs and agreement; and whether the property that is claimed in this suit was such as can be treated as the effects of a partnership.

“ The true nature, character and extent of the rights and interests of partners, in the partnership capital stock, funds and effects are to be ascertained by the doctrines of law applicable to that relation, and not by mere analogies furnished by joint tenancy, or by tenancy in common.” Partners are joint owners and possessors of all the capital stock, funds and effects, belonging to the partnership, as well those acquired during the partnership, as those which belonged to it, at the time of its first formation and establishment. So that whether its stock, funds or effects be the product of their labors or manufactures, or be received or acquired by sale,"bargain or otherwise, in the course of ‘their trade or business, there is an entire community of right therein between them; each has a concurrent title in the whole, or, as Bracton says, Tenet totum in communi, et nihil separatim per se.” Story on Park § 91..

"Every partnership is founded in a community of interest, but every community of interest does not constitute a partnership.” Story on Part. § 3. “ There is no survivor-ship in cases of partnership.” Story on Part. § 90. “ There is no doubt, that by the principles of the common law, the death of any one partner will operate as a dissolution of the partnership, however numerous the association may be, not only as to the deceased partner, but as between all the .survivors. Story on Part. § 317. “Although as to future dealings, the partnership is terminated, by the death of one partner, yet for some purposes, it may bo said to subsist, and the rights, duties and authorities of the survivors remain, so far as is necessary, to enable them to wind up and settle the affairs of the partnership. They have therefore, a right to receive the debts, due to the partnership; and on the other hand to apply the partnership assets and effects'in discharge of the debts, and other obligations due from it.”. Story on Part. § 344.

“The act of each partner in transactions relating to the partnership, is considered the act of all, and binds all. He can buy and sell partnership effects, and make contracts in reference to the business of the firm, and pay and receive; draw and indorse, and accept bills and notes.” 3, Kent’s Com. § 43, p. 17, 1st ed. “With respect to the power of each partner over the partnership property, it is settled, that each one, in ordinary cases, and in the absence of fraud on the part of the purchaser, has the complete jus disponendi of the whole partnership interests, and is considered to be the authoi’ized agent of the firm. Ho can sell the effects or compound or discharge the partnership debts.” tl A like power in each partner exists in respect to purchases on joint .account, and it is no matter with what fraudulent views the goods were purchased, or to what purposes they were applied by the purchasing partner, if the seller be clear of the imputation or collusion. 3 Kent’s Com. p. 20.

“ A partner may pledge, as well as sell the partnership effects, in a case free from collusion, if done in the usual mode of dealing, and it has relation to the trade, in which' the partners are engaged, and when the pawnee has no knowledge that the property was partnership property. 3 Kent’s Com. p. 22.

“Partners differ from mere part owners of goods and chattels in several respects. The latter are either joint owners or tenants in common, having a distinct, or at least an independent, although an undivided interest in the property, and neither can transfer or dispose of the whole property, or act for the others in relation thereto ,• but merely for his own share, and to the extent of his own several right and interest.” Story on Part. § 89.

“In tenancy in common each party has a separate and distinct, although an undivided interest, and possesses (as it is technically expressed,) the whole of an undivided moiety of the property and not an undivided moiety of the whole property.” Story on Part. § 90.

“ If a part owner sells, he can sell only his undivided right. The interest of part owners is so far distinct, that one of them cannot dispose of the share of the others, and this may be considered as a settled principle.” 3 Kent’s Com. § 45, pp. 116 & 117, 1st ed.; Story on Part. § 90.

“There is no survivorship between tenants in common, but the share of the deceased tenant in commpn goes to his personal or real representative.” Story on Part. § 89.

In the case of Livingston v. Lynch, 4 Johns. Ch. R., 573, the Chancellor says, “ one partner may pledge the credit of the others to any amount, and each partner commits his entire rights to the discretion of each of his co-partners.” Put with tenants in common, “ each has a distinct, though undivided interest, in the establishment, and an entire dominion over his own share or proportion of the property; but without any right or power to bind the interest or regulate the enjoyment of the property of the other members;” and in the same ease it is said, “ so, the provision, that the shares of each of those members should, on his death, descend t& his heirs, was founded entirely upon the contemplation of a tenancy in common.” Dwinel v. Stone, 30 Maine, 384.

In the case under consideration, on Nov. 26, 1849, W. & D. Moor, jr., made a lease to William Reed, jr., and others, embracing the plaintiff’s intestate and the defendants, of a steam boiler, steam engine and other materials with which to prepare a steam boat in California, on the conditions and terms therein expressed. Among other things therein stipulated, the said Reed and others were to have the use of the steam boat, by paying to the said W. & D. Moor, jr., one fourth part of the gross amount, that said boat and crew should earn for one year after the same should be ready for business; and the said Reed and others were to have one half part of the amount, for which said boat should sell, after one year’s operation, if the boat should be then sold; if not sold then, it was to be one half part at the time of the sale. On the 4th day of December next following, William Reed, jr., and others, the lessees of W. & D. Moor, jr., mutually contracted in writing with each other, that they would form themselves into a company to go to California; each to furnish himself with provisions, and pay the freight thereof, to pay his own passage, to furnish his clothes and bedding, and his part of the tools, for building the steam boat; to stop by said boat one year, at least, from the time that she should be ready to run, and compose the crew of the same, in tire business in which it was therein stipulated she should be employed, and to do the part allotted to him, for the benefit of all concerned, according to his best skill and judgment. It was provided that a captain and mate of the boat should be chosen by the votes of the company, to have command for one «year from the time of the readiness of the boat to runj the captain to keep the books and all accounts for the term of one year, and exhibit the same as often as once in three months, at the request of any one of the company. Each member was to be allowed equal privileges with the others. In case of sickness or bodily inability of any member to perform the ordinary duties, it was agreed, that he should have all proper care and attention at the expense of the company, equally to be divided with its members, and should be entitled to the same share during such sickness or disability, as he had a right to receive, when well; and in case of his death, his nearest relatives were to receive one half of his pay or share, so long as the company should continue together after his death. The steamboat was to receive one quarter part of her earnings, and the other three quarters were to be equally divided among the company, after paying all expenses for running the boat, and all other expenses to or upon the same during the time agreed upon, according to their contract with W. & D. Moor, jr.

The contract of W. & D. Moor, jr. with William Reed, jr. and others their lessees, was several days previous to that of. the latter among themselves. The rights obtained by the lessees under that contract were those which they held as tenants in common, and not otherwise. In the subsequent agreement, there is no provision in terms that those rights had undergone or should undergo any alteration. Nothing of the kind is implied'. It is equally silent in reference to the power of the individual members of the company, to make contracts in behalf of the whole, incur liabilities, manage the whole business, or dispose of the property on their account; no provision is made for a name of the company. The parties to the contract of Dec. 4, 1849, provided for a continuance of their common enterprise, under the same agreement, which was the basis of their association, if any members thereof should die before its completion. It was manifestly the intention, that in such an event, there was to be no survivorship between the members, but that the share of such person should go to his heirs, under the stipulation that his nearest relatives should receive one half of his share or pay, so long as the company should continue together from the time of his death; exhibiting the design that the company should continue to exist by virtue of the contract, with the same number of shares after the death of some of the members, as before; but that the share which had belonged to a member who should die, should not be treated as being so valuable afterwards, as when the owner was actively engaged as one of the company in the promotion of its objects. This provision touching the shares of deceased members/while the purpose of the company should be in progress, “ was declaring the true character and interest of tenants in common.”

The bill is framed, so that if relief can be granted according to the prayer thereof, it must be under the equity jurisdiction of the Court, over the case, as one of partnership. It is not such, and therefore cannot be maintained. Whether the merits of the case can be considered, by this Court in the exercise of the equity power conferred upon it, under a bill properly framed, it is not now important to intimate.

Where Courts of equity have unlimited jurisdiction, as in England, the ordinary remedy for part owners of a ship to obtain an adjustment of the ship’s accounts among themselves, is a suit in a Court of equity. Abbott on Shipping, part 1, c. 3, § 6, p. 145, 5th Am. ed. In this State, it has been held, that while between the joint owners of a vessel, no settlement has been made of her disbursements and earnings, 'and no balances, have been ascertained and agreed upon, one part owner cannot sustain against another an action for his proportion of the net avails. Maguire v. Pingree, 30 Maine, 50; 12 Pick. 378, and that the ordinary remedy for the adjustment of the accounts between themselves is in a Court of equity. Story on Part. § 449 ; Story on Eq. Juris. § 442 to 450. It does not follow, that if such a remedy is open to the part owners of a ship, that it could apply to such a case as that presented in the present instance, under the limited equity powers of this Court. Neither is it to be assumed, that the plaintiff may not have at law an adequate remedy. Part owners of a ship may maintain an action against other part owners of account and for the destruction thereof; “and by parity of reasoning probably for a sale of the entirety of the ship without their consent.” Story on Part. § 449; Wilson v. Reed, 3 Johns. 175. The tenant in common of a chattel may maintain trover against his co-tenant for the sale of the entire chattel without authority. But no opinion is intended to be intimated touching the appropriate remedy for the plaintiff in this case, if his intestate or the estate has been deprived of legal or equitable rights by any or all of the defendants in the present suit. Bill dismissed with costs.

Shepley, C. J., and Howard and Hathaway, J. J., concurred.