Conery v. Clark

Buchanan, J. An appeal is taken, on motion, by Dyas, another by Yeatman, from a judgment of distribution of tho proceeds of a steamboat. There were a great many claimants for wages, materials, supplies, &c., but the appellants only named in their appeal bond, as obligees, the following parties, E. Conery, Cobb, Wood & Co., Bryan & Robinson, R. Yeatman Co. and R. G. ICyle S Co. A motion is now made for the dismissal of the appeals on the ground, that a number of other parties to this concurso hare not been made parties to the appeal. On examination of the record, we find that those parties are not interested in maintaining the judgment which is appealed from. That judgment allots the whole fund arising from the sale of the steamboat, to the obligors above named, in preference to the other claimants. Under that judgment, therefore, the parties named in this motion to dismiss, are entitled to nothing, and, consequently, will lose nothing by its reversal. Buie dismissed. Cole, J. This is an appeal from a judgment of distribution of the proceeds of sale of the steamboat B. L. Cobb. The correctness of the different claims is not contested; the only question is to the privilege and rank of the creditors, in the distribution of the funds in the hands of the Sheriff. Dyas & Co. and John Yeatman have appealed; they contest only the precedence of rank allowed over them to E. Conery, Cobb, Wood & Co. (assignees of Shaw & Zunts), R. Yeatman tj* Co., R. G. Kyle & Co. and Bryan & Robinson. It appears that Lewis Northern built the steamboat for account of himself and Kelly §• Co., and at the time of the seizure was master and owner of three-fourths thereof. She was registered by Northern in the names of R. L. Cobb and J. B. Evans of Kentucky, as owners, to protect her, as is alleged, from certain old debts then existing against Northern, of which Dyas § Co., a part of the present appellants, hold one. Afterwards, the boat becoming embarrassed with debts, and R. L. Cobb and Evans, desiring to relieve themselves from the liabilities which they had incurred, and were incurring as registered owners, sent their agent, G. L. Cobb, to New Orleans, with plenary power to change the registry and to take care of their interests. Accordingly, on the 14th of March, 1856, G. L. Cobb passed the title to tho [314] boat to R. A. Clark, a young man without moans, an out-door clerk of R. Yeatman fy Co., who paid nothing for the boat and took no control over her. The testimony establishes that this sale to Clark was a mere simulation, and that the object of the transfer, as is admitted by G. L. Cobb, “ was merely to get the title out of Cobb and Evans.’’ On the day succeeding this transfer, Conery, the plaintiff, instituted suit against Clark for $3,500, on a note or due-bill given by Northern on account of the boat. Judgment was immediately confessed by Clark, and to this judgment G. L. Cobb was subrogated. In each of the other cases of the appellees, before this court, R. A. Clark confessed judgment, and in each case G. L. Cobb was subrogated by order of court, except in the case of Cobb, Wood Co. It also appears from the testimony, that G. L. Cobb, in taking a subrogation of the several judgments in favor of the appellees, was acting for his brother, R. L. Cobb, and that in reality R. L. Cobb, and not G. L. Cobb, was the party subrogated. As R. L. Cobb was registered as an owner of this boat, his payment of these debts through his agent, G. L. Cobb, prior to the judgment of distribution, must bo considered as having been made for the benefit of the boat; and his payment thereof extinguished these debts, and as the subrogations were entered of record prior to the distribution, the judgment of the District Court was in favor of parties whose debts had already been paid, who had no further interest and was, therefore, erroneous. The claim of Cobb, Wood fy Co., who sue as assignees of Shaw & Zunts, was not privileged, for it accrued more than sixty days before the seizure. The claims of the other appellees do not appear to have been privileged as against this boat, not having accrued within sixty days before the seizure, or not being of privileged character. These debts not being a privilege, could only be legally enforced by suit against the owners of the boat; and when G. L. Cobb for R. L. Cobb paid these claims, lie became the creditor of the owners of the boat for so much money paid. Neither lie nor the appellees had a right to proceed against the boat itself, for debts not privileged. It appears, also, that the appellees must have known they were proceeding against a simulated purchaser, when they sued Clark, for Giles Cobb admits, that these suits wore instituted and the judgments confessed by Clark at his “ instigation.” The evidence thus shows, that R. L. Cobb, by his agent G, L. Cobb, made a simulated transfer of title to R. A. Clark, procured suits to be brought against Clark on debts he did not owe (for Clark, even as a bona fide purchaser would not be liable for debts not privileged, and which were created before his purchase,) caused Clark to confess judgments with privilege on property he did not own, and for debts which he did not owe, and now by virtue of such judgments demands the proceeds of a steamboat which belonged to L. Northern and Kelly Co. We are of opinion that R. L. Cobb, by paying the unprivileged debts held by the appellees against the owners of this boat, became the ordinary creditor of said owners, Northern and Kelly Co., for the. amounts so paid, and that the attachments sued out by the appellants gave them a privilege upon three-fourths of the fund in court: that being Northern’s interest. [315] We would here remark, that none of the appellees attached the boat; but that they seized it under executions issued by virtue of their said judgments, and we are of opinion that judgments against a simulated purchaser, when the judgment creditors were aware of the simulation, ought not to have a preference over attaching creditors who proceed against the real owner of the boat. We are also of opinion, as R. L. Cobb was one of the registered owners of the boat and liable in solido for its debts, that when he paid the judgments of Conery and others, then the debts of the firm that owned the boat to that amount were extinguished, and as no debts of the partnership having a superior claim to the attaching creditors, who are appellants, remain, the individual creditors of one of the real owners, Northern, are entitled to be paid. We would also observe, that Northern S Co. were the real owners of the boat, and R. L. Cobb fy Co. the registered owners, and it was by their consent and to their knowledge that they were so registered. They being registered as owners were responsible for the debts, and when one of the registered owners pays the debts of a boat, he must be considered to have paid them for the firm of which he is a member, as the owners of a steamboat are bound in solido. And so far as creditors are concerned, the real owner, and the one registered as owner, by his knowledge and consent must be considered as equally liable and as constituting one firm. It may be unfortunate for R. L. Cobb to be rendered liable, but he put himself in this position by being registered as owner, and he ought to suffer rather than innocent creditors. R. L. Cobb, being a registered owner, cannot claim to be in any better position than if he was the real owner. If he had been the real owner and had paid the debts, then the partnership debts for that amount would have been satisfied; the same result must follow on the ground that he is a registered owner and holds himself thus out to the world as a real owner. The adverse doctrine would induce collusion between the registered and the real owner, and the registered owner w ould conceal or disclose his real position, as it might enable the real owner to defraud his creditors. If the controversy as to the subrogation was between Northern, one of the real owners, and R. L. Cobb, one of the registered owners, then the subrogation might entitle R. L. Cobb to be paid, for, as we before observed, he became by the subrogation the ordinary creditor of the real owners, but he cannot claim to be paid in preference, when the controversy is between the individual creditors of Northern and R. L. Cobb, who 'has been subrogated to the rights of judgment creditors of the boat; for these judgments must be considered as extinguished the moment they are paid by R. L. Cobb, and he cannot be allowed a preference on account of the payment, for he was responsible as registered owner. It is objected that the individual creditors of Northern cannot be paid out of the assets of the partnership until the partnership debts are satisfied. But no debts of this character having priority over the appellants, who are attaching creditors, are shown to exist; and ^besides, this objection comes with a bad grace from appellees, for appellants are, it is true, suing one of the partners only, but the appellees are suing neither of them but R. A. Ciarle only. It is also objected, that the testimony of Northern ought not to have been received, but it was taken without objection, and besides, it could not legally have been excluded. With relation to the two appellants, we would observe that John Yeatman is [316] entitled to have his claim first satisfied out of the fund in court, as his attachment was prior to that of Byas § Co. It is, therefore, ordered, adjudged and decreed, that the judgment be amended as follows, to wit: That John Yeatman, one of the appellants, shall recover from Lewis Northern two thousand dollars, with five per centum interest thereon from the 15th of October, 1855, and that Byas Co., appellants, recover of Lewis Northern sixteen hundred and two dollars and thirty-seven cents, and the said Yeatman is declared to have the priority over said Byas fy Co., and shall have his said claim first satisfied out of two-thirds of the fund in court, and the said John Yeatman and Byas Sf Co. are decreed to have a privilege on two-thirds oí the proceeds of the sale of the steamboat R. L. Oobb ; and it is further ordered, adjudged and decreed, that said John Yeatman first, and said Byas If Co. second, shall be paid their said claims out of said two-thirds of said fund, proceeds of said steamboat, in preference to the judgments of the appellees, E. Conery, Cobb, Wood & Co., (assignees of Shaw & Zunts,) R. Yeatman Co., Bryan §• Robinson, and R. O. ICyle & Co. And it is ordered and decreed, that the judgment in all other respects remain undisturbed and be affirmed, and that the costs of this appeal be paid by said appellees. Mr. Justice Yookoies took no part in this decision on account of indisposition.