Misner v. . Strong

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The case made by the complaint was that on the 24th of March, 1899, the plaintiff and two of the defendants owned a steamer called the "N.K. Fairbanks," as tenants in common, each owning a third thereof; that during the season of navigation of 1899 said steamer, then called the "Eliza H. Strong," under the management of one of the defendants earned large sums of money; that the defendants not only refused to account to the plaintiff therefor, but denied that he was the owner of any interest in the vessel or that he was entitled to any part of the moneys earned by her. The relief demanded was that the plaintiff be adjudged the owner of an undivided third of the vessel; that an accounting be had between him and the defendants; that they be decreed to pay him such sum as should be found due by reason of the earnings; that the vessel be sold and one-third of the proceeds paid to the plaintiff and the balance to the defendants according to their respective interests. The defendants pleaded in substance a general denial and made no demand for affirmative relief.

The referee found that from and after the 24th of March, 1899, the plaintiff was the owner of an undivided third of the vessel; that during the season of navigation of 1899 the vessel earned $27,363.63, but that the defendants had paid out for rebuilding her, running expenses, insurance, etc., the sum of $35,050.31; and that the defendants had at all times refused to account to the plaintiff for the moneys so earned. On stating the accounts between the parties he found that the plaintiff was indebted to the defendants to the extent of one-third of the difference between the receipts and disbursements, amounting to $2,562.23. As a conclusion of law he found that the plaintiff was entitled to a judgment decreeing that he was owner of an undivided third of the vessel, with costs. The plaintiff, therefore, had judgment establishing his ownership. He also had an accounting, but, as the balance was against him, of course, he could recover no part of the earnings as they were all expended in paying for the vessel, the expense of rebuilding, running, etc. It is to be observed, however, that through his part of the earnings and the balance found against him, he has been required to pay one-third of the entire cost of the vessel and of all expenditures connected with her.

There was evidence tending to show that after the defendants, or one of them, had purchased the hull of the vessel, which had been burned to the water's edge, they proceeded to rebuild her, and on reaching a point where their money and credit were exhausted, applied to the plaintiff for relief. According to the testimony of the plaintiff, corroborated by that of other witnesses, a verbal agreement was thereupon made that if he would lend his credit to the extent of $5,000 and help the defendants procure a loan for that amount they would give him a one-third interest in the vessel and that the loan should be paid out of her earnings if they were sufficient for the purpose. On March 24th, 1899, a mortgage on the vessel was given to a bank to secure the loan. It was signed by the plaintiff and the defendants and recited that they were the sole owners of the vessel. A written proposal for the loan signed by the plaintiff and the defendants stated that they were rebuilding the boat and that the money was needed to complete her. She was insured in the name of the plaintiff and defendants jointly, and contracts were made in their names for finishing her. The plaintiff mortgaged his individual real estate to secure the loan and the bills for materials and labor were paid by the checks of the plaintiff out of the proceeds of the loan. On the 26th of May, 1899, the defendant Strong, who then appears to have owned all of the vessel except the part owned by the plaintiff, executed a bill of sale to the plaintiff of an undivided fourth of the vessel and filed it for record in the United States Custom House at Buffalo. This, however, was without the knowledge or consent of the plaintiff who never accepted it, as he claimed he was entitled to a one-third interest. After March 24th, 1899, the plaintiff spent a large part of his time in working on the vessel, until she was finished.

There was other evidence to support the theory of the plaintiff, and there was evidence introduced by the defendants to support the theory that they were the sole owners. The referee, upon sufficient evidence, found in favor of the plaintiff and the Appellate Division affirmed his judgment, all of the justices apparently being of the opinion that the action was well brought and well decided, but one of them dissented upon the ground that the referee erred in a ruling relating to evidence.

A court of equity has jurisdiction of an action for an accounting and to establish the facts which entitle a party to that relief. If the plaintiff owned an interest in the vessel as a tenant in common he had a right "to an account of all the earnings and profits of the ship by all the part-owners." (Story on Partnership, § 449.) "Cases of account * * * between part-owners of ships and between owners of ships and the masters fall under the like considerations. They all involve peculiar agencies, like those of bailiffs, or managers of property, and require the same operative power of discovery and the same interposition of equity. Indeed, in all cases of such joint interests, where one party receives all the profits, he is bound to account to the other parties in interest for their respective shares, deducting the proper charges and expenses." (1 Story's Eq. Jur. § 466, citing Abbott on Shipping, B. 1, ch. 3, §§ 4, 10, 11, 12; Doddington v. Hallett, 1 Ves. Sr. 497;Ex parte Young, 2 Ves. Beam. 242; Drury v. Drury, 1 Ch. Rep. 49; Strelly v. Winson, 1 Vern. 297; Pulteney v.Warren, 6 Ves. 73, 78; Field v. Craig, 8 Allen, 357.) As the right of the plaintiff to an accounting was denied by the answer, upon the ground that he was not a part owner, the first duty of the referee was to settle the question of ownership and then proceed with the accounting. (Id.; Dyckman v. Valiente,42 N.Y. 549; Mumford v. Nicoll, 20 J.R. 611; Pomeroy's Eq. Jur. §§ 186, 1391, 1421.)

The verbal agreement that if the plaintiff would lend his credit and help negotiate a loan for $5,000 he should have a third interest in the vessel, was performed by him, and such performance vested title in him, which was recognized by the defendants for a while, but repudiated when they thought he had received too much. The vessel was neither enrolled nor in the water, but was upon stocks and in process of reconstruction when the agreement was made and carried into effect. She then had no record under the shipping laws, for she had been destroyed, except as to her hull, and required a new enrollment, which, upon completion, she received, as well as a new name. Under these circumstances there was no necessity for a written transfer of title, as she was not in existence as a completed vessel capable of enrollment. An unfinished vessel can be transferred by verbal agreement and the full performance thereof, the same as any other chattel or tangible article of personal property. The Statute of Frauds was not available as a defense because it was not pleaded. (Crane v. Powell, 139 N.Y. 379.) Moreover, the plaintiff was in the position of a purchaser who had paid the whole of the purchase money down, for he did all that the contract required as the entire consideration on his part. He was not to pay money for his share of the vessel, but was to do a certain act and he did it. The statute is satisfied by money paid or money's worth received in payment. Its object is "to have something pass between the parties besides mere words, and, hence, to constitute a payment of purchase money within the spirit of the provision, the buyer must part with something of value by way of consideration." (Artcher v. Zeh, 5 Hill, 200.)

Assuming that the referee erred in receiving evidence of a conversation between the plaintiff and defendants during an effort to compose their differences, we think that the error did no harm under the circumstances. The evidence objected to was that at an interview between the parties, during which a compromise was discussed, the plaintiff asked what interest they intended to give him, and the answer was one-fifth. The plaintiff said the agreement was one-third and the defendants said that was too much. As the trial was before a referee, in effect sitting as a chancellor, the liberal rule that prevails in courts of equity should be applied if the facts will permit. (Sweet v. Henry,175 N.Y. 268.) The evidence simply tended to prove that the defendants had stated in private conversation when a compromise was expected, what they subsequently stated as witnesses at the trial. When Mrs. Misner, the wife of the plaintiff and sister of the defendant Strong, was upon the stand she testified to various admissions made by him to her. She said that on one occasion when they were looking at the boat she remarked, "Will, Ma keeps asking what interest we are to get in the boat; have you told her? Don't she know?" He said, "Well, we had talked it over and decided they all thought a sixth would be enough for him but I thought as he had been a good fellow, I would give him a fifth." She said, "Well, you better do as you agreed," and he made no reply. When Mr. Strong was on the stand, referring to this conversation he repeated it in substance as Mrs. Misner had given it except that he denied her last remark, to wit, "Well, you better do as you agreed." The evidence objected to, therefore, simply anticipated what the defendants admitted when the case was with them. In view of this and other evidence to the same effect and of the fact that Mr. Strong on May tenth, 1899, executed a bill of sale to the plaintiff for an undivided fourth interest in the boat and filed it in the custom house, we think the testimony of an admission, even for the purpose of a compromise, that he had offered one-fifth of the vessel to the plaintiff who insisted on a third, could have had no material bearing on the result. The referee did not follow the admission in his findings but found a different interest which depended wholly upon other evidence.

I find no reversible error in the record and think that the judgment should be affirmed, with costs.