Hanschell v. Swan

Cohen, J. In September, 1894, the American brig, “John H. Crandon ” of Hew York arrived at Barbadoes, W. I., seeking employment and consigned to the plaintiff, a merchant residing on that island. The defendant is a citizen andvesident of this state. His father, also' a resident of Mew York, died in January, 1894, leaving a will, admitted to probate in Kings county, whereby he appointed the defendant and two others, his executors. The executors received letters testamentary in Eebruary, 1894, and one-thirty-second of the brig “ Crandon ” passed into their possession, as a part of the estate of Swan, Sr., deceased. The defendant, being a shipping merchant, continued to act as the managing agent of the “ Crandon,” and the voyage on which she went to Barbadoes was made at his instance. The master of the “ Crandon,” finding himself in want of funds while awaiting charter at Barbadoes, applied to the.plaintiff for money alleged by him to be necessary for wages, supplies and repairs and the port charges of his brig. The plaintiff thereupon paid certain hills incurred by the captain and advanced him some cash; the bills and cash together amounting (with the plaintiff’s commission) to $714.78 (or £150 9s. — 306 — 8d.), for which, sum the master - gave a draft payable ten days after his vessel’s arrival at port of discharge in Europe and for the payment thereof pledged his “ vessel, her freight and owners.” The “ Crandon ” obtained a charter for Bremen, but having met with disaster .while crossing the Atlantic, put into Bermuda in distress, was there repaired with money raised upon bottomry, on her arrival in Bremen was sold, and, her proceeds being absorbed by maritime liens prior to the draft above referred to-, the plaintiff, as the holder thereof, was left no recourse other than, a shit against the. owners of the “ Crandon.” Tins action is upon the draft given by the master; the defendant 'is sued individually, as one of the “ Crandon’s ” owners, and judgment is demanded for the full amount of the instrument in suit. By commission to Barbadoes, the plaintiff has shown the circumstances under which this draft was given; he has also introduced as his own'witness the late master of the “ Crandon,” from whose testimony I find as a fact, that the cash received by him from the plaintiff, covered by the draft in. suit, and amounting to $414.20, was given without any knowledge or inquiry on the part of the plaintiff as to the necessity of so large a sum for the purposes of the ship; that thé master told plaintiff that he wanted this money for labor and repairs, for necessaries for the ship and for crew’s wages; that, as matter of fact, the master applied $314.20 of the moneys received either in extinguishment of his own existing claim for wages or in payment of claims for his future services, and actually expended this $314.20 for -his own personal use and gratification; the remaining $100 he applied to the payment of the crew or for their necessities. I further find that the master of the “ Crandon ” did not need more than $100¡ cash at Barbadoes for the necessities of his ship and crew, in addition to' the hills paid for him by the plaintiff and included in the draft in suit, and that the balance of the cash advanced, $314.20, was improperly obtained and wrongfully expended. There is no direct evidence as to what would have been a usual and reasonable amount to cover the disbursements of .a ship of the “ Crandon’s ” size at Barbadoes, but a comparison -of the amount advanced the “ Crandon ” with the advances to other vessels touching at Barbadoes and consigned to the plaintiff and the fact that $300 of the $414.20 was given the “ .Crandon’s ” master at one — 307 — time and after $114.20 had been paid out 'in small sums, leads me also to find that the plaintiff, by the extravagance of the master’s demands, should have been roused to an inquiry that would at once have, revealed the impropriety of the last advance of cash. I find the facts to be as hereinabove set forth and, in so doing, have considered as admitted in evidence all the,answers to all the interrogatories addressed to the witness McCormick, some of which were provisionally excluded at the trial. Both parties have moved for the direction of a verdict, the plaintiff demanding the face of his draft, with interest^ and the defendant claiming that since his decedent owned but one-thirty-second of the brig and appointed by his will three executors, all of whom qualified, he is hable, under the act of Congress of June 26, 1884 (commonly known as the Dingley Act), for but one-ninety-sixth of the amount justly found due by all the owners. Under these circumstances the duty is imposed upon the court of ascertaining the facts of the case as well as the law applicable thereto, its findings of fact having the force and effect of thei verdict of a jury. Shultes v. Sickles, 147 N. Y. 704. Both parties to this action have assumed in argument that, the master of the “Orandon,” by pledging not only his vessel and freight, but “ her owners,” rendered such owners hable for whatever sums the plaintiff was justified in advancing; and that this hability nothing but the Dingley Act can lessen or destroy. It may well be doubted whether such results flowed from the transaction under consideration. The instrument in suit is a “ master’s draft,” which is but an abbreviated form .of bottomry. The Pride of the Ocean, 3 Fed. Repr. 162. If the master of the “ Orandon ” had not specifically pledged the credit of his owners, no liability would have attached to them beyond the amount of assets coming into their hands and growing out of the hypothecated vessel and freight. The Virgin, 8 Peters (U. S.), at p. 554. If, as a part of the bottomry transaction, the master had drawn a draft on his owners payable absolutely, the attempted hypothecation would have been invalid. Stainbank v. Fenning, 11 C. B. 51; Greeley v. Smith, 3 W. & M. 234, Fed. Cases, No. 5750; and it has been frequently held that, if a bottomry bond be given and a bill drawn on the owners for the same amount, the bill must share the fate of the bond. The Hunter, 1 Ware. 249, Fed. Cases, No; 6904; Maitland v. The Atlantic, Newb. 514; Fed. Cases, No. 8980. — 308 — It is not perceived that uniting in one instrument the .hypothecation of the vessel with the draft on the owners, personally, changes the principal of the cases cited; if the “Crandon” had been lost before, arrival at her “port of discharge,” the plaintiff would have wholly lost his money; and this is the essential feature of the transaction under review.that renders it a clear case of bottomry; he has by the creation of prior liens lost the security of the vessel and freight, as thoroughly as if the “ Clandon ” had sunk outright, and it is. questionable, in view of the language of the court in The Virgin, supra, and of Taney, Ch. J., in Naylor v. Baltzell, Tan. 55; Fed. Cases, No. 10061, whether he has not lost his recourse against the owners with the loss of hen on the vessel;' whether the owners’ liability has not vanished with their ownership, or, to vary the statement, whether it is within the power of a shipmaster to add, to a valid marine hypothecation of his vessel and freight, any pledge whatever of his owners’ personal credit, beyond the proceeds of the hypothecated property coming into- their hands. As, however, no decision has been brought tó my attention precisely covering the facts here presented, I shall assume, with the parties litigant, that the “ Crandon,” having arrived at a port of discharge in Europe, and the plaintiff having lost his hen upon her by no fault of his, he is entitled to pursue her owners under the language of the draft. . . By common law the authority of a master in a foreign port is limited by the necessity of the case, and he cannot make the owners responsible for money not actually necessary, although he may pretend:that.it is. Grant v. Norway, 10 C. B. 665. This severe rule has been modified in instances where the lender neither knew, nor had reason to suspect, that the money loaned was not necessary, the Grapeshot, 9 Wall, at p. 141; The Lulu, 10 id. at p. 202. In this case, it being my opinion that the last advance (of $300) obtained by the master was given under circumstances that should have aroused to inquiry any prudent man accustomed to- shipping, I disallow it, and hold that the master’s act rendered the owners of the “ Crandon ” liable at common law for no more than $414.78. It remains to ascertain by what law this contract is to be interpreted;' the plaintiff contending that Barbadoes being a British dependency and no proof of foreign law having been offered, the common law is to be applied, by which one part owner, or person liable as such, is responsible in solido for debts lawfully incurred by the shipmaster. — 309 — The first portion of this proposition is directly opposed to the judgment of Story, J. (in Pope v. Nickerson, 3 Story, 465, Fed. Cases, No. 11274), wherein it was held that the master in a foreign port has no power to bind his owners personally beyond the authority given him by them, which must be limited to their express instructions, or such as are to be implied from the law of the country whence the ship hails and where her owners reside; for there the authority is given, and by that law it is to be interpreted. It is supposed that the judgment, in Liverpool, etc., Steam Co. v. Phenix Ins. Co., 129 U. S. at p. 458, et seq., has overruled Justice Story’s decision, has displaced the “ law of the flag ” as applicable to this case, and substituted the assumed law of Barbadoes, that being the locus contractus. It is sufficient to observe that the case last cited arose from a contract of affreightment, and holds only that the parties to such a contract, made in New York, by New York shippers with a shipowner regularly transacting business there, “ must be presumed to have submitted themselves to the law there prevailing” (p. 459) and does not in terms, or by indirection, overrule Pope v. Nickerson, supra, on the point judicially decided therein, which point is directly applicable to the proposition now under discussion. Nor is the case of The Scotia, 35 Fed. Repr. 907, opposed to the decision of Justice Story. "That case involved the enforcement of a maritime lien, and it may well be admitted, that the “ Crandon’s ” captain lawfully pledged his vessel at Barbadoes (perhaps in defiance of the law of his flag), and thereby created a lien enforcible in the admiralty courts of every country, without raising any presumption that'his owners, personally and individually, must by his act “ be presumed to have submitted themselves to the law there prevailing.” Pope v. Nickerson, supra, has been referred to with distinct approval by our own Court of Appeals (King v. Sarria, 69 N. Y. at p. 33), and I am satisfied, both on principle and authority, that the contract here to-be enforced is governed by the law of New YorTe, of which the general statutes of the Congress of the United States are an integral part. What protection, therefore, does the “ Dingley Act ” afford to this defendant, who, if not entitled to its benefits, must respond for the full amount used for necessaries? Before approaching the merits of this branch of the case, the plaintiff asserts that, because the defendant has not pleaded the “ Dingley Act,” he is entitled to none of its benefits. — 310 — . Upon the record before me, I do not find it necessary to decide the point thus raised, which is based on the peculiar nature of the act in question, for I do not understand the plaintiff to- assert that» this court ordinarily needs proof of the existence of a general statute of the national Congress. The complaint herein alleges that defendant individually was an “ owner ” of the “ Crandon ” and it shows no other ground of liability than such ownership. This-allegation the answer denies. Under these pleadings the plaintiff has not. even attempted- to prove the alleged ownership. His evidence and argument both show that the real ground on which the defendant is sought to be charged is, that being one of the executors of a part owner, he used a portion of his decedent’s estate, i. e., the brig.“ Crandon,” in a business venture.not even begun by the decedent and not necessary for .the settlement of such decedent's estate. He is, therefore, liable individually,, on the -engagement of his agent, the shipmaster, as if he weire in his own right a part owner 'of. the brig. Austin v. Munro, 47 N. Y. 362; Thompson v. Whitmarsh, 100 id. 35. This is true, but it does not make -the defendant individually an owner. The defendant, however,- has not moved for a dismissal of the complaint On the ground of this.material variance between allegation and proof, and the court must, therefore, consider the- cause of action disclosed by the evidence and gave such decision as is warranted thereby; to do otherwise would be error. Knapp v. Simon, 96 N. Y. at p. 292; Holcomb v. Campbell, 118 id. 46. One, who propounds a complaint fatally defective, can hardly.complain of an answer sufficient to. defeat his complaint; and, without deciding' that under any circumstances it is necessary to plead that portion of the statute in question on which the defendant relies, I shall consider whatever application it may have to the facts here proven. The act is as follows: “ That the individual liability of a shipowner, shall be limited, to the proportion of any hr all debts and'liabilities that his in- ■ dividual share of the vessel bears to the whole; and the aggregate liabilities of all the owners of a‘vessel on account of the- same shall not exceed the value' of such vessels- and freight pending.” Act June 26, 1884, § 18, Supp. Rev. Stat. U. S., vol. I, p. 443. It is urged 'that this statute does not affect the liability of ’a •shipowner for1 his personal contracts; and this is true (Laverty v. Clausen, 40 Fed. Repr. 542, and cases cited; McPhail v. Williams, — 311 — 41 id. 61), but the contract under consideration is not the personal contract of this defendant or any owner! of the brig “ Crandon.” The plaintiff paid the bills and advanced the money covered by the draft in suit upon the request of the “ Orandon’s ” captain alone and “ without the privity or knowledge of this defendant, or the other owners, and without any contract with them, except so far as the master had implied authority to bind them as part owners for necessaries.” Whitcomb v. Emerson, 50 Fed. Repr. 128. It is further edntended that, as this statute has frequently been held to be in pari materia with the limited Liability Act of 1851 (U. S. Eev. Stat., §§ 4283, et seq.), it is necessary, in conformity with the practice under that statute, to prove and surrender the value of the vessel out of which the claim in suit arose (or of the defendant’s interest in such vessel) and then limit the plaintiff’s recovery to the value so proven. This interpretation of the statute confessedly does violence to the apparently plain meaning of the first sentence of section 18; but it is argued that unless (in this case) the defendant shows what one-thirty-second of the “ Crandon ” was worth and limits the plaintiff’s recovery (and all other just claims) to' that amount, he may be compelled to continue paying to other plaintiffs one-thirty-second parts of their several claims until his share in the “ Crandon ” becomes a trifle compared to the aggregate of judgments against him. Or, it is said, ,a claim for $32,000' may bé pressed against the owner of one-thirty-second of a vessel worth $3,200,— and the question is asked, shall such owner of an hundred dollar share be compelled to pay $1,000? Doubtless the claims against the owners of :a vessel may vastly exceed the value of their vessel and it is true that the results above indicated may occur, if the owners are sufficiently ill-advised to suffer them and rely only on the first sentence of section Í8, supra; but it seems plain that, under the second sentence thereof, proceedings may be taken analogous to those long familiar under the act of 1851, supra, to bring all the creditors of the shipowners into concourse, distribute to them the value of the ship and her freight, Or of the Shares of those owners taking the proceedings, and by injunction restrain future suits or demands. Eor is it doubtful that a single part owner of vessel property may in a proper case limit his liability, as above indicated under the second sentence of section 18, to the valué of his own interest. If, in the case last supposed, one person owned the whole of a vessel wprth $3,200, he — 312 — would under the.first sentence of section 18 be obliged to pay the whole of a claim of $32,000; which would obviously compel him to institute proceedings under the second sentence of the statute,—• and if an individual owning an entire ship can pursue this course^ there is no reason, and nothing in the statute considered in its intirety, .preventing an owner, of but a small fraction of a ship> limiting his liability to the whole world to the value of his fractional ownership. ' Doubtless the portion 'of the act of 1884 now under consideration might be mine clearly expressed; but, while believing its correct interpretation to be as above indicated, it is for the purposes of this case sufficient to quote the language of Webb, J., in the Giles Loring, 48 Fed. Repr. at p. 474: “ This statute was evidently designed to modify in some way the liability previously imposed .by law, and to relieve shipowners of some portion of that liability. * * * Relief in this way is-not in terms made to depend upon the condition that the owners ' are in position to take advantage of the 'other portion of the statute, and be discharged of all liability beyond the value of their shares of the vessel. The burden of a,part owner, who can free himself from debt or obligation by the surrender of his interest in the vessel, did not more urgently appeal to be lightened thah that of him who must respond to the full extent of the liability, however small the value o'f his property. * * * That end would be promoted by discharging part owners from a liability. in solido for the-debts-of each other. A construction giving such discharge is consistent with the language of the act, conforms with the inten- ' tion of Congress and regards strictly the defect to be corrected.” In this case the claim is confessedly of a nature capable of being limited; the defendant has apparently taken no steps to ascertain whether there are other claims against him arising out of Ms conduct with-the brig “ Crandon ” and is content to rest upon the partial ¡and entirely new protection afforded to sMpowners by the first sentence of section 18 of the act of 1884. To tMs protection he is entitled, and if hereafter other claims are presented, it will then be time enough for Mm to consider whether he should not seek the perfect discharge afforded to him, upon surrender of the value ' of Ms decedent’s interest, by the second, sentence of. the act in question. This is in accord with the judgments- in Whitcomb v. Emerson, supra, and Warner v. Boyer, 74 Fed. Repr. 873. — 313 — I cannot, however, accede to the defendant’s proposition that he is liable under the Dingley Act for but one-ninety-sixth of the amount herein allowed. Executors receive the estate of then* decedent by the same will, for the same time, and with the right of survivorship. They are, therefore, joint.tenants seized, per my et per tout, and the defendant as such joint tenant is liable as if he had owned in his own right as large a share of the brig “ Oran-don” as did his decedent. A verdict in favor of the plaintiff is directed for one-thirfcy-second of $414.78, with interest, amounting in all to $15.68. Ordered accordingly.