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Vanamati Sattiraju Vs. Ballapragada and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported in(1918)35MLJ87
AppellantVanamati Sattiraju
RespondentBallapragada and ors.
Cases ReferredHolderness v. Schakel
Excerpt:
.....did not approve..........a ship in common in no circumstances are partners. the law of england is no doubt that a mere part-ownership of a ship does not constitute the relation of a partner. that is clearly stated in all the books and in all the cases and there is no doubt that section 239 of the indian contract act has tended to import into the law of this country some of the very fine distinctions derived from the law of england where special reasons of public policy led to the making of these close distinctions between mere co-ownership and co-partnership in regard to vessels. although it is quite true that co-ownership in a vessel does not constitute the relation of partners but merely that of tenants-in-common, yet when the ship begins to be put to use, to earn freight, a very different state of things.....
Judgment:

1. In this case the plaintiff sued for a decree for the dissolution of his partnership with the defendants, and the learned subordinate judge dismissed plaintiff's suit on a point taken for the first time in his court namely, that the suit was not maintainable as assuming the facts alleged in the plaint to be true, there was in law, no partnership.

2. These facts are contained in the 3rd, 4th and 5th paragraphs. Paragraph 3 says that the plaintiff and the 1st defendant entered into an agreement in or about December 1907 to construct at their joint expense a boat and another smaller boat attached to it, the plaintiff making certain advances towards it. Among certain other stipulations which need not be gone into in detail, and agreeing that the licences, when the boat was completed, should be taken in the name of the 1st defendant, that the boats should be plied for hire, that the 1st defendant should keep the accounts and that the net profits and losses derived from the use of the boats should be shared equally between the plaintiff and the defendant. Paragraph 4 sets out the amounts advanced by plaintiff towards the capital and paragraph 5 states that the 1st defendant had been letting the boat for hire and managing the whole business and had earned large sums of money by way of profit from her use for which he had not accounted to the plaintiff.

3. Now, the learned Subordinate Judge having perused a section in Lord Lindley on Partnership, on this extremely difficult subject, apparently has come to the conclusion that people who own a ship in common in no circumstances are partners. The law of England is no doubt that a mere part-ownership of a ship does not constitute the relation of a partner. That is clearly stated in all the books and in all the cases and there is no doubt that Section 239 of the Indian Contract Act has tended to import into the law of this country some of the very fine distinctions derived from the law of England where special reasons of public policy led to the making of these close distinctions between mere co-ownership and co-partnership in regard to vessels. Although it is quite true that co-ownership in a vessel does not constitute the relation of partners but merely that of tenants-in-common, yet when the ship begins to be put to use, to earn freight, a very different state of things exists. Abbot on Merchant Shipping, Part I,. Chap. III, page 132 of the 14th Edn, says this : 'Firstly: Co-owners are, as such, tenants in-common of their ship : and secondly if they employ their ship in earning freight, or otherwise as a money making machine, they become joint adventurers or partners in the employment; ' and for that proposition Green v. Briggs (1818) 17 L.J. Ch. 328 is cited. That is a very long judgment of Wigram, V.C. and he cites Holderness v. Schakel (1828) 8 B. & C. 612 : 3 Mood. & Rule 25 and says this : 'The court distinguished there between the ship itself and her earnings, and held, in that case, that although part-owners were tenants-in-common of the ship, they were jointly interested in the use and employment of the ship, and that the law as to earnings must follow the law in partnership cases.' And in exparte Hill (1815) 1 Madd. 61 : 56 E.R. 24 the Vice-Chancellor said : 'There is no lien on the ship because that was not joint property; but the earnings of the ship would have been joint property and liable to the joint creditors; not from any doctrine peculiar to the earnings of a ship, but on the general principle applicable to the joint property of every partnership.' If, in this case, the Thames had been employed on a whaling voyage, and the money now at the Bank represented the cargo, no dispute could have arisen. Then is freight, qua earnings, distinguishable from other earnings of a ship, for the purpose under consideration In the absence of authority establishing such distinction, or a clear principle requiring me to admit it, I will not adopt it.'

4. In Ex-parte Young (1813) 2 V. & B. 242 one of the cases relied on by the respondents' Vakil, in which Lord Eldon's mind was distinctly called to the distinction between the ship and her earnings, he said, ' I have no doubt that freight is liable to the joint demand. As to the ship, it stands upon the nice distinction of a tenancy-in-common.'

5. And I notice that Lord Lindley points out that there are two cases, under the English law of employment of a ship : one is where she is employed by some only of the total co-owners, which in English law can be done against the will of the rest. For reasons of public policy it has been held that the majority of the co-owners of the ship who wish to employ her may force the hands of the others. Therefore one sees that if a ship is employed under these conditions it may very well be right that the law should guard the unwilling co-owners from being made co-adventurers in an employment which they did not approve of. With regard to the second case what Lord Lindley says at page 57 is this : ' Where a ship is employed by all the part-owners or by some of them, but not against the will of the others they all share her gross earnings, and contribute to the expenses incurred in obtaining them; and in such a case there is little, if any, difference between the account which is taken between the part-owners and that which would be taken if they were actually partners.' And similarly Abbott lays it down quite plainly at page 133, that ' each part-owner, who does not before the commencement of an adventure effectually withdraw authority from his co-owners to sail the ships on his behalf, is liable, as a partner, for the whole of the expenses of that adventure, We therefore hold that, so far as the earnings of the ship go as regards the freight that she earns, on the allegations in the plaint there exists a partnership between the plaintiff and the defendants, and the plaintiff, if he can prove these allegations, will be entitled to a dissolution of partnership and taking of accounts as regards freight. But he is not a partner but only a co-owner in respect of the actual hull of the ship and he will not be entitled in any event to have his prayer granted' as regards the sale of the boat or boats used by the partnership.

6. The preliminary objection on which the learned subordinate Judge dismissed the case was due to a misapprehension and it must be remanded to him for disposal upon the merits. The appellant will have the costs in this Court. Costs in the courts below will be costs in the cause.


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