Opinion
Argued March 29th, 1870
Decided June 23d 1870
Charles Tracy for the appellants.
Edmund Randolph Robinson for the respondent.
I concur, in the main, in the opinion of SUTHERLAND, J., in the court below, in favor of the new trial. But it was claimed by the counsel for the defendant on the trial, and the court so decided, "that the plaintiff was, as shown by the proof, a part owner of the ship, and that therefore the sale of it without his assent by the other part owners, under the circumstances proved, was not a conversion of it, it not being destroyed; or at all events not such a disposition of it as entitled him to equitable relief." I think upon authority it is well settled, that the disposition of the ship made by the other part owners was a conversion, for which the plaintiff could, as part owner, maintain an action to recover his interest therein.
It is not necessary for one part owner in an action against his co-owners for a conversion, to show that the property has been destroyed; but it is enough, if it appear that they have sold it as their own exclusive property, ignoring his right to it. ( Weld v. Oliver, 21 Pick., 559, 563.) Or he may, in case the purchaser should also sell and deliver the property as his own, maintain trover against such purchaser for the subsequent conversion. (Id.) In that case the property in question was a ship, and the decision is precisely in point to show that in such a case as this, an action can be maintained. The same doctrine is contained in Collyer on Partnership, p. 1019, and Abbott on Shipping, marginal paging 100, and note 1, near the end of the page, and is supported by several decisions in our courts. ( Wilson v. Gibbs, 3 J.R., 175, 178, 179; Hyde v. Stone, 9 Cowen, 230, 232; Gilbert v. Dickinson, 7 Wendell, 449, 450; Farr v. Smith, 9 Wendell, 338; Mumford v. McKay, 8 Wendell, 442, 444; White v. Osborn, 21 Wendell, 72, 75; 2 Kent's Com., 5th ed., 351, note d.)
There is no doubt, then, that upon the pleadings and proofs a cause of action existed in favor of the plaintiff against the defendants for the conversion of the ship; and the question is whether it should have been an action at law for the conversion, or whether, under the circumstances of the case, the more appropriate remedy was a suit in equity. If the exact interest of the plaintiff in the ship, and the exact amount which he was entitled to recover of the defendants could be ascertained and determined without an accounting, the appropriate remedy would be at law. As, for instance, if he owned one-half, or one-fourth of it, there would be no difficulty, unless there were charges upon it remaining unpaid, in dispensing complete justice in an action of trover. But it is quite clear, as well on the averment of the complaint as upon the testimony, that the rights of all the parties can be justly determined only in a suit in equity.
It is true, that upon the evidence as it stands, and which, under the present appeal, wherein if the order of the court below is affirmed, it is final, it is established that the plaintiff has paid $4,598.95, on the 1st of January, 1861.
It also appears, that the contract price of the ship was $122,000, but whether to complete it, actually cost more or less than that amount, is entirely uncertain upon the evidence, and cannot be ascertained without an accounting; and what is quite as material, it will require an accounting to ascertain the amounts paid by the several subscribers to the stock of the steamship company which was first incorporated, and for whose use it was contracted to be built. Because the plaintiff's interest in the vessel would be the proportion which his $4,598.95 bore to the whole amount paid by all the subscribers, and not the proportion which the $4,598.95 bore to the whole cost of her, if borrowed money was used in payment, for if a profit was made on money borrowed and used in the construction, he would have a right to share in that profit in the proportion, which, what he paid in, bore to what was actually paid in by himself and all the others of the joint owners. And, therefore, to arrive at a correct result, as to the respective interests, an account must be taken of what all the other subscribers paid in, and what further amount was borrowed and actually used in the construction, and also for how much the vessel at any time was actually sold by those who were her original joint owners, or was afterward sold by them and the steamship company which was organized without the consent and to the exclusion of the plaintiff.
This is not a case in which the defendants can claim to limit the plaintiff's recovery to what witnesses will testify to have been the value of the vessel when she was turned over to the "Cuba and New York Steamship Company," of which all the defendants became stockholders, but the plaintiff has a right to treat them as his trustees, and to compel them to account for all the profits which they made out of his property of which, as his joint owners, they assumed the control and disposition, and that too as well after the covenant of the action as before, for equity administers justice to the time of the trial.
It is necessary in such a case as this to ascertain the highest price for which the defendants sold the vessel, also to ascertain the amount of borrowed money actually used in its construction, to be deducted from the whole amount for which it was so sold, and of the balance, the plaintiff will be entitled to recover of the defendants the proportion thereof which his $4,595.95 bears to the whole amount actually paid in by him and by all the other joint owners upon their subscriptions.
We must assume, for the purpose of holding this to be a proper case for equity jurisdiction, that the ship was sold without the knowledge or consent of the plaintiff; that the subscribers to the stock of " The New York St. Jago Steamship Company," were in arrears at different times in the payment of their subscriptions to the capital stock, and that the defendant Baralt, and his confederates, the other defendants, had sold the ship to the United States for $200,000; for the plaintiff offered to prove each of these statements, and they were severally objected to by defendants' counsel, on the ground that they were irrelevant; which objections were sustained by the court and to each of which the counsel for the plaintiff excepted.
I have no doubt that the testimony contained in each offer should have been admitted, and that the court erred in excluding it. It was all material and necessary in order to ascertain the true rights of the parties; and until it is ascertained how much the defendants paid, and how much the vessel was sold for, it will be impossible to tell how much the plaintiff is entitled to recover.
This, to my mind, is upon principle so clearly a case for invoking the equity jurisdiction of the Supreme Court, that I consider the citation of authorities to support it is wholly unnecessary.
The rule is, that in all cases, where it is necessary that an accounting should be had to ascertain the rights of part owners of a ship, equity has jurisdiction (Parsons on Maritime Law, 103), where it is said: "So it has been the custom for part owners of a ship to bring a bill against each other in equity for adjustment of accounts, in like manner as is done by partners." And in Mumford v. Nicoll (20 J.R., 611), it was held that where one of two part owners of a ship receives or gets possession of the whole funds of a vessel and of the voyage, he has a right to retain them until he is paid or indemnified for what he has advanced or paid more than his share for outfits, repairs or expenses of the vessel for the particular voyage or adventure." The same principle is stated in Willard's Eq. Jur. (104, 506). In 1 Story Eq. Jur. (§ 451), it is said: "The whole machinery of courts of equity is better adapted to the purpose of an account in general; and in many cases, independent of the searching power of discovery, and supposing a court of law to possess it, it would be impossible for the latter to do entire justice between the parties; for equitable rights and claims, not cognizable at law, are often involved in the contest. This is the principle on which courts of equity constantly act by taking cognizance of matters, which, though cognizable at law, are yet so involved with a complex account that it cannot be properly taken at law; and until the result of the account is known, the justice of the case cannot appear." And cases of account between tenants in common, between joint tenants, between partners, between part owners of ships, and between owners of ships and the masters fall under the like consideration (1 Story's Eq. Jur., § 465).
The complaint having stated facts which showed that for the proper settlement of the rights of the parties, an accounting would be necessary, and the proof having established the necessity therefor, it is not material that the complaint did not in terms pray for an account; for it will be allowed under a general pray for relief, when the facts stated will warrant it.
The General Term was right in granting a new trial, and its action should be affirmed. But inasmuch as the defendant appealed from the order granting the new trial, the judgment must be final for the plaintiff, and a referee must be appointed to take an account of the original cost of the ship, and whether it was sold by the Cuba and New York Steamship Company, and the price at which it was sold; and if so sold, that he report in favor of the plaintiff such proportion of the amount of such price, as the said sum of $4,598.95 bears to the whole of such original cost of the vessel. And if such vessel was not sold by the Cuba and New York Steamship Company, that then he take an account of the value of the vessel at the time when it was transferred to the Cuba and New York Steamship Company; and that he report in favor of the plaintiff such proportion of such value of the vessel, as the said sum of $4,598.95 bears to the said original cost of the vessel, with interest thereon from the time of such sale or valuation. And that upon filing the report of the referee, judgment for the amount reported be rendered for the plaintiff, with his costs and disbursements of the action.
EARL, Ch. J., read an opinion for reversal of the General Term on the ground that the action, being to wind up substantially the affairs of a corporation, the corporation should necessarily be a party, plaintiff or defendant, as should all its directors, several of which were not parties to this action.
All the judges (except EARL, Ch. J.) concurring with FOSTER, J., for affirmance.
Order affirmed, and judgment final for the plaintiff, upon the basis of FOSTER'S opinion.