Mathewson v. Clarke

47 U.S. 122 (____) 6 How. 122

HENRY MATHEWSON, RESPONDENT AND APPELLANT,
v.
JOHN H. CLARKE, ADMINISTRATOR OF WILLARD W. WETMORE, APPELLEE.

Supreme Court of United States.

The cause was argued by Mr. Albert C. Greene and Mr. Webster, on the part of Mathewson, the appellant, and Mr. R.W. Greene and Mr. Whipple, for the appellee.

Mr. Justice McLEAN delivered the opinion of the court.

This is an appeal from the Circuit Court of Rhode Island.

Wetmore, the complainant, states in his bill, that on the 12th of October, 1820, Cyrus Butler, Edward Carrington, and Samuel Wetmore, merchants, doing business under the name of Edward Carrington & Co., of one part, and Henry Mathewson, of the other, all of Rhode Island, entered into an agreement in relation to a certain commercial adventure; that, in pursuance of the agreement, the ship Mercury was procured, and in December, 1820, Mathewson, as master and supercargo, received her at the Texel, in Europe, with instructions under the contract; and having purchased the cargo, as directed, he sailed the 30th of March, 1821, to Valparaiso, in Chili, and to other ports and places in Chili and Peru, as required in the agreement; sold the cargo, and with the proceeds sailed to Gibraltar, at which place he arrived in November, 1822, and there sold the cargo, having completed his first voyage.

The complainant further states, that at Gibraltar, in November, 1822, Mathewson commenced a new voyage or adventure in said ship, and, according to the terms of said agreement, became and was an owner in the ship and cargo of one tenth part thereof. And Butler, Carrington & Co., in pursuance of the agreement, furnished the ship with a cargo of the value of fifty thousand dollars; and Mathewson sailed on the new voyage from Gibraltar, as master and supercargo, on the 28th of December, 1822. He proceeded to the ports of Rio Janeiro, Valparaiso, and other places, backwards and forwards, for trade, freight, and the employment of the ship, until the 10th of June, 1825, when, at the port of Guayaquil, in South America, the ship Mercury was condemned as unseaworthy, and ordered to be sold.

The complainant further states, that, about the 1st of June, 1821, he entered into copartnership with Carrington & Co., and thereupon became and was interested in the ship Mercury and cargo, and in all the concerns of said adventure, according to the terms of said agreement, at and from Gibraltar, as aforesaid, in the proportion of one fourth of nine twentieth parts thereof, and then and there became a partner therein with Mathewson and the other defendants, and so continued to be until the said adventure ended, and until the dissolution of the partnership. In this part the bill was so amended as to enable the complainant to claim as an assignee, &c.

Mathewson is further represented, in December, 1825, as having chartered at the port of Chorillas, or some other place in South America, three fourth parts of the ship Superior, Captain Andrews, on account and for the concern of the ship Mercury, and shipped on board of her a part or the whole of the proceeds of the sales of the ship Mercury and cargo, &c., on the terms and conditions of the agreement, and proceeded therewith to the port of Payta, and to other places backwards and forwards, until the 8th of November, 1826, at the port of Lima, where the charter-party expired, the voyages were ended, and the partnership dissolved.

And the complainant alleges that Mathewson had not rendered a full and fair account of his transactions and of the profits; and the bill prays that he and the other defendants may come to a full and fair account, &c.

None of the defendants, except Mathewson, answered the bill. The accounts were referred to masters at different times, and various reports were made. And the case comes before this court on exceptions to the masters' reports.

Instead of taking up the exceptions, the general principles on which they are founded will be considered.

It is first objected, that the complainant cannot sustain this suit, as he was not a member of the copartnership, and could not be without the consent of Mathewson. The general principle is admitted, that the individuals who compose the partnership cannot be changed without the consent of the whole. And it does appear that Mathewson had no knowledge that the complainant was a partner, or had any interest, in the concern, until some time after his return to the United States. The complainant, therefore, could not be considered or treated as a partner in prosecuting a partnership claim, or in any other procedure involving the rights of the original partnership.

But the complainant does not represent himself to be a partner in any other light than to show the extent of his interest. He seeks to enforce no right of the firm; but, alleging that the partnership was long since dissolved, he asks that the share of the profits to which he may be entitled shall be decreed to him. And in the amended bill he represents himself to be the assignee of a certain interest in the capital, and consequently entitled to a proportionate share of the profits.

If the firm were still in operation, the complainant, not being a member of it, could have no right or power to dissolve the partnership or to maintain this suit. His remedy would be against Carrington & Co., with whom he made the contract. But the partnership, or whatever it may be styled, having been dissolved, the complainant must be considered as having a certain interest in the fund to be distributed. On this ground he may maintain the suit, although Mathewson may never have had notice of his interest until the bill was filed. The allegation in the bill is, that the defendant has in his hands funds which belong to the complainant. And as it is stated and proved that the business was transacted by Mathewson, without the particular knowledge of the other parties in interest, he may be called on in the form of this bill to account for and pay over to the complainant any moneys in his hands which belong to him. The object seems to be merely to ascertain the distributive share to which the complainant may be entitled, as the answers of the defendants, except Mathewson, have not been required.

The next inquiry is, At what time did the interest of the complainant in the ship Mercury and her cargo accrue?

It is claimed for the complainant, that from the 1st of June, 1821, when his alleged contract of partnership was entered into, his interest in the ship and cargo attached. If this be so, he will be entitled to participate in the profits of the first voyage of the Mercury.

There is no written evidence of the contract between the complainant and Carrington & Co., and we must ascertain the commencement of the contract from the statements in the bill, the books of the company, and other evidence in the case.

The complainant states that Butler and Carrington & Co. furnished the "ship with specie and a cargo for the new adventure, according to the terms of said agreements, of the value of fifty thousand dollars; and the said Mathewson sailed from said port of Gibraltar on said new voyage or adventure in said ship, as master and supercargo, with said specie and cargo on board, on or about the 28th of December, 1822."

And in the succeeding paragraph the complainant alleges, that about the 1st of June, 1821, he entered into copartnership with the said Edward Carrington & Co., and thereupon became and was interested in the said ship Mercury and cargo, and in all the concerns of said adventure, according to the terms of said agreement, at and from Gibraltar as aforesaid.

This language would seem to be too explicit to be misunderstood. The new voyage or adventure is spoken of from Gibraltar; and the complainant alleges, that, by virtue of his contract, he became interested in the said ship Mercury and cargo in all the concerns of said "adventure," "at and from Gibraltar." And this view is confirmed by a reference to the books of the company, in which the old concern is credited, — "By adventure ship Mercury, voyage from Gibraltar to Chili," $50,619.18; for one half, $25,309.59.

The partnership of the complainant with Carrington & Co. seems to have embraced some ten or eleven vessels; in some, if not in all of which, except the Mercury, the interest of the complainant may have attached at the time of the contract. But, however this may be, we are satisfied that he had no interest in the Mercury, by his own showing, until the new voyage commenced from Gibraltar, in December, 1822.

It seems that Mathewson, as master and supercargo, having funds, traded on his own account, in all the voyages he made; by which means he accumulated as profits a large sum. That trade, it is insisted, was incompatible with his duties as a partner, and was prohibited by his contract.

In the first voyage, which was ended at Gibraltar in November, 1822, Mathewson was to receive "fifty dollars per month as wages as navigator and master of the ship, and also the sum of seven hundred dollars as commission," &c. And he was "to have no privilege in the first voyage."

In the new or second voyage, Mathewson was to have "fifty dollars per month as wages as commander and navigator of said ship, to commence with the new voyage, and as supercargo a commission of five per cent. on the net amount of all property safely returned to the United States, Canton, or Europe, proceeding from the original stock of fifty thousand dollars, together with one tenth of all the profits and earnings made in the voyage or voyages, freights or otherwise." And it was "agreed that the wages and commissions specified and agreed for," as above, "are to be in full of all services and privileges to Captain Mathewson, as master and supercargo, during the voyage or voyages specified."

Usage has given to the masters of vessels and others certain privileges of transportation and traffic, which are denied to Mathewson by the terms of the contract. He agreed that the wages and commissions should be in "full of all services and privileges." The privileges here referred to cannot be limited to the mere right of the master to transport on board of his vessel articles of a certain weight or bulk without charge, but to all privileges whatsoever which by usage he might claim. The compensation to be paid was in full for the relinquishment of any usage or privilege of traffic, as well as for services to be rendered. This seems to be the import of the agreement. And when we consider the nature of the trust vested in Mathewson, the propriety of such an arrangement is clear.

He was to be the acting partner in the voyages contemplated, having under his control the large capital invested, with power to trade from port to port, and to buy and sell as he should deem best for the interest of the company. He was entitled, for his part of the capital, to a ratable proportion of the profits. Now, is it reasonable to be supposed that the merchants with whom he was associated would allow him to be engaged on his own account in a commercial enterprise in which he might secure to himself the profits of the trade, and throw upon his partners the loss? This is not like the case where the master, having merely the command of the ship, exercises his privilege. The supercargo is the agent of the owners, and disposes of the cargo and makes purchases under their general instructions on his own responsibility.

But Mathewson was master and supercargo, exercising full powers over the vessel and cargo. He purchased and sold where he could do so to the best advantage; and for his entire services in this agency, and for the management of the ship, he was paid. Now, can an agent, thus acting for his principals, engage in a traffic on his own account? He buys for himself and his principals at the same market, and sells at the same. On the one side, he is interested in a small portion of the profits, and in a commission of five per cent. On the other, he realizes the entire profits, deducting therefrom the common charge of freight. In the purchases and in the sales, under such circumstances, the agent would be influenced, as may be reasonably supposed, by his own interests. From the accounts rendered, it appears that a much larger profit was realized by Mathewson on his private sales than on the sales for the company. Whether this resulted from the more judicious purchases or sales in the private enterprise, it shows that the traffic was inconsistent with the general agency. It was a rival interest, hostile to the interest of the company, exercised by their agent, and without their approbation or knowledge. This the law will not sanction. It requires not only a bonâ fide action by an agent, but that he shall be free from those selfish motives which conflict with the interests of his principals.

After the condemnation and sale of the ship Mercury, three fourths of the Superior were chartered by Mathewson, and it is insisted, that any restrictions on his private trading, in the contract, on board of the Mercury, cannot be applied to similar transactions on the Superior, that the contract of partnership terminated on the sale of the Mercury, and that if the new adventure on board of the Superior be sanctioned, it must be taken subject to the conditions imposed by Mathewson, one of which was his private trading.

It does not appear from the contract or the correspondence of the parties, that any other ship than the Mercury was named or referred to, in which the commercial enterprise contemplated was to be carried on. And it may be said that the condemnation of that vessel ended the adventure. But Mathewson, without the authority or knowledge of his company, chartered another vessel, and used their capital in the enterprises in which he was subsequently engaged. Of necessity they sanctioned this procedure, as a disavowal of it would have limited their claim, at least in effect, to the personal responsibility of their agent.

In his letter dated at Guayaquil, 16th August, 1825, to Carrington & Co., Mathewson says: — "If I can get the ship" Superior "at a fair charter, I shall return back to Canton by the way of Manilla, with the intention of returning to this coast again," &c. And again, — "Should I take the ship Superior, I expect to have the same interest in the voyage as I had in the Mercury, and wish you to keep my property constantly insured." A similar expectation is expressed in a letter dated Lima, 10th November, 1825.

And again, in a letter dated at Lima, 16th November, 1825, after giving an account of the loss occasioned by the explosion on board the steamboat Tilica, he says: — "I have chartered three fourths of the ship Superior, Captain Andrews, for a voyage to Canton, via Manilla, and back to this coast. Copy of the charter-party inclosed, which I hope will be satisfactory to you. I expect to have the same interest in the charter of this ship as I had on the former voyage in ship Mercury, and wish you to keep my interest insured."

Butler and Carrington & Co. wrote a letter to Mathewson, dated Providence, July 10th, 1826, in answer to various letters received from him, in which they speak discouragingly of the adventure in the Superior, decline sending another ship, as requested by him, and advise him to return home in the Superior, making the best disposition he can of their property, &c. At the date of this letter, the Superior was probably on her return voyage, as she arrived at Valparaiso on the 5th of October following. There was no dissent from the terms proposed by Mathewson in his three letters, above referred to, and of course the law implies an acquiescence. Indeed, from the directions given by the company in regard to their property, a sanction, though a reluctant one, and somewhat indirect, was given to the proceedings of their agent, as connected with the Superior. The refusal to advance money to Mr. Mathewson, under the circumstances, does not seem to have any direct bearing on this point.

It is claimed for Mathewson, that the company purposely avoided sanctioning his acts in regard to the Superior, until the result of the adventure should be known, when they could act as their interests might dictate.

The use of the capital of the company, which subjected it to the hazards of trade, under the circumstances, would, on equitable principles, entitle the company to the profits of the enterprise. But looking at the declarations of Mathewson about the time the ship Superior was chartered, and the nature of the enterprise undertaken, we feel authorized to say, that the relation of the parties to each other was not changed by this adventure. The rule applied to the Mercury, in regard to the rights of the complainant and the responsibilities of the defendant, must be applied to the Superior.

After the appeal was taken to this court, errors being discovered in the report of the masters, by consent, their report was returned to them for correction. And in their report to this court, dated the 1st of January, 1846, they say that they erred in their former report, in not making to Mathewson allowance for his commissions, and for his one tenth of the profits and earnings.

This last report finds a balance due to the complainant of two thousand nine hundred fifty-eight dollars and three cents; to which they add interest from the 1st of July, 1827, to January 2d, 1846, making three thousand two hundred eighty-three dollars and forty-one cents; which sum being added to the above balance makes the sum of six thousand two hundred forty-one dollars and forty-one cents.

From this sum must be deducted any amount charged for or against the defendant, by the masters in their reports, as the profits of trade or otherwise on his private account during the first voyage of the Mercury. And under the views expressed in this opinion, the complainant being interested in the Mercury and her cargo in her voyage from Gibraltar, in December, 1822, the exceptions to any items charged against the defendant and allowed to the complainant, arising out of any private trading by the defendant on board the Mercury, and afterwards on board of the Superior, are overruled. The exceptions which apply to allowances made to the complainant against the defendant, growing out of the first voyage of the Mercury, ending at Gibraltar, are sustained.

The decree of the Circuit Court is reversed, and the cause is remanded to that court, with instructions to enter a decree in pursuance of this opinion.