U.S. Supreme Court Mathewson v. Clarke, 47 U.S. 6 How. 122 122 (1848)
Mathewson v. Clarke
47 U.S. (6 How.) 122
APPEAL FROM THE CIRCUIT COURT OF THE UNITED
STATES FOR THE DISTRICT OF RHODE ISLAND
Although a new member cannot be admitted into a partnership without the consent of all parties, yet a person who has obtained a share in the concern can, after the partnership has expired, maintain a suit in chancery for his share of the profits.
The language of the complainant in his bill, "that he became interested in a ship and cargo at and from Gibraltar," is decisive of the question of time when his interest commenced, and shows that he had no interest until she arrived at Gibraltar.
Where a master and supercargo was to receive a certain sum per month as wages and a commission of five percent, and also one-tenth of all the profits, and it was agreed that these were to be in full of all services and privileges, the master and supercargo had no right to traffic upon his own account, for his own benefit.
If the master and supercargo, after the loss of his first vessel, charters another and uses the capital of his partners in prosecuting his trade, informing his owners thereof and expressing his willingness to continue the business upon the same terms as before, to which they did not object, such continuance of the business must be governed by the same rules which regulated the transactions in the first ship.
The record was very voluminous, being a printed volume of more than five hundred pages, which contained numerous letters and accounts relating to trading voyages to different and distant parts of the world from October, 1820, to November, 1826. There were three reports from masters in chancery in the court below, and a supplemental report made to this Court by agreement of counsel and sanction of the court. The arguments of counsel referred to a great number of these transactions, of which it is impossible to give any other than a general outline.
In the year 1820, there were in Providence, Rhode Island, two mercantile houses, one known by the name and firm of Edward Carrington & Co. and the other by that of Cyrus Butler. The house of Edward Carrington & Co. was composed of Edward Carrington and Samuel Wetmore.
In October, 1820, these two houses made the following agreement with Henry Mathewson, the present appellant.
"This agreement witnesseth that whereas Messrs. Lynch, Hill & Co., of the Republic of Chili, have contracted and agreed with his Excellency, General San Martin, commander-in-chief of said republic, to furnish to him or said government a quantity of military stores, which contract has been assigned to Cyrus Butler and Edward Carrington & Co., who have undertaken to furnish the same. Wherefore the said Cyrus Butler and Edward Carrington & Co. on the one part, and Captain Henry Mathewson on the other part, all of Providence, in the
State of Rhode Island, on t12 October, A.D. 1820, make and enter into the following agreement and stipulations, viz.: "
"1st. The said Henry Mathewson agrees to take the command of the ship or vessel the said Butler & Carrington & Co. shall provide for said expedition, and at all times to act as captain and supercargo thereof."
"2d. The said Mathewson is to proceed to Europe, attend to the purchase of said military stores, proceed therewith in said ship to Chili and Peru, deliver the same, receive the payment therefor, and do all and everything that may be necessary and advisable for the faithful accomplishment of said contract both as regards the delivery of the military stores and the receiving the payment therefor, whether the said payments shall be in cash or in produce of the republics and with the said payments, proceed to such ports in China, Europe, or the United States as may be considered most advantageous and according to the instructions and recommendations of said Butler & Carrington & Co. Providing further that should any circumstance have occurred or should occur to prevent the contract's being complied with on the part of the Chilian or Peruvian government or by General San Martin or his successor, then the said Mathewson is to use his best abilities and exertions to dispose of said military stores in the most advantageous manner, and to [the] best profit; and the proceeds of such sale embark on board said ship, and proceed therewith to such ports in China, Europe, or the United States as may be considered most advantageous and according to the recommendations and instructions of said Carrington & Co. and C. Butler."
"3d. The said Butler & Carrington & Co., on their part, promise to allow and pay the said Mathewson fifty dollars per month as wages as navigator and master of the ship, and also the sum of seven hundred dollars as commission for attending and procuring the purchase of said military stores in Europe for delivering and making the sale of the same in Chili or Peru, receiving the payment either in cash or produce of the republics and delivering the same in China, Europe, or the United States, he conforming always to the instructions and recommendations of said Butler & Carrington & Co. The said Mathewson is to have allowed him all traveling expenses and charges that attach to business."
"It is further mutually agreed between the aforesaid parties that after delivering or depositing the proceeds of the aforesaid military stores and completing and finishing the aforesaid agreement according to the tenor thereof, a new voyage and adventure is to be begun in the following manner: "
"1st. The said Henry Mathewson is then to be admitted an owner in said ship of one-tenth part, at the rate of her first cost in the United States, including repairs on hull, sails, and rigging, that may be put on her after her purchase, either in [the] United States, Europe, or elsewhere, and also owner of one-tenth part of her cargo or such new voyage and adventure."
"2d. Said Butler & Carrington & Co. agrees to sell said Mathewson, and he agrees to purchase, one-tenth of the ship on the terms heretofore described in article first."
"3d. Said Cyrus Butler and E. Carrington & Co. agrees to furnish the sum of fifty thousand dollars (as a cargo for said ship) at the port where the said ship shall deliver and deposit the proceeds of said military stores."
"4th. The said Mathewson is to allow said Butler and E. Carrington & Co. interest at the rate of six percent per annum for his one-tenth of ship and cargo, from the time the proceeds of the military stores (heretofore mentioned) are delivered or deposited in manner as heretofore stipulated."
"5th. The said Mathewson is in this new voyage to have liberty to proceed to such ports, countries, and places, backward and forward, for trade, freight, or other employment of the ship and cargo as he may think most for the interest and advantage of the concern in said ship and cargo."
"6th. In this new voyage as before described it is mutually agreed the said Mathewson shall 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 percent 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."
"7th. It is agreed that the wages and commissions specified and agreed for in the sixth article are to be in full of all services and privileges to Captain Mathewson, as master and supercargo during the voyage or voyages heretofore specified or otherwise."
"It is understood the said Mathewson is to have no privilege in the first voyage heretofore specified, and that the wages and commissions of seven hundred dollars allowed on that voyage are to be paid in the United States at the end of voyage."
"EDWARD CARRINGTON & CO."
In pursuance of this agreement, Mathewson repaired to
Europe, and in December, 1820, at the Texel, received the ship Mercury and her cargo from the other parties. He also received two sets of instructions, one genuine and the other fictitious, to be used in case of capture. The true instructions commenced in this way:
" Providence, November 13, 1820 "
"CAPT. HENRY MATHEWSON: "
"Sir -- We herewith hand you the letter of Messrs. Lynch, Hill & Co., of Valparaiso, to Edward Carrington & Co., under date of June 15, 1820, accompanied with a contract made by their Mr. Lynch with General San Martin commander-in-chief of the Chilian and Peruvian armies and in behalf of said government. You will observe, on perusal of the letter and contract, that the muskets, carbines, and sabers expressed in the first article in the contract are to be furnished by Lynch, Hill & Co. themselves, and that the same articles mentioned in the second article are the ones intended to be supplied by ourselves, and are the same as we directed to be purchased by yourself in Europe, viz., "
"20,000 muskets, of good proof"
"7,000 cavalry sabers"
"The prices, you will observe, are stipulated at eight and a half dollars for the muskets, six dollars for the carbines and cavalry sabers, to be imported into Peru free of duties, and the proceeds or payment for the same is also allowed to be exported free of duties. The delivery of the said arms to be at any one port in Peru in possession of the patriots under General San Martin or where, on your arrival at any one of said ports, General San Martin may determine on the coast of Peru. You will observe the contract provides that any articles, the produce of Peru, may be received in payment (at the current market price) for the arms, always by the agreement and consent of both contracting parties, and that the same may be exported free of duties. You will also observe that the duties on the import of any other articles of merchandise by said Lynch into the port of Peru are to be admitted towards the payment of the said arms. You will also observe it is understood that if the payment is made in specie for said arms, it is permitted to be exported free of duties."
The instructions then proceeded to tell him how to arrange his cargo, what to do when he got to Valparaiso, and continued thus:
"In the execution of this business, it will require your best
attention and circumspection to weigh well all points and circumstances, and, in conjunction with Lynch, Hill & Co., pursue that course best calculated to have the contract complied with, taking care at the same time, as much as possible, to have the payment therefor placed under favorable circumstances, or if circumstances should have occurred to defeat the expedition, and with it destroy the hope of having the contract complied with, you are then to adopt the next best plan to make the sales of our property to the best advantage. If the contract is complied with by General San Martin, we should recommend your fully loading the ship with copper -- taking the same as payment towards the arms, particularly as it is to be allowed export free of duties -- and taking copper may facilitate and help the government, and be the means of getting payment before the expiration of the eighty days limited in the contract, and taking the balance in specie, and proceed immediately to Canton, or if the contract is not complied with and you should make the sale in Chili or other place where copper can be procured at not exceeding fifteen or sixteen dollars the quintal on board, we should then also recommend your loading with copper, particularly if it should aid you in making sales of the arms, and then taking the balance in specie and proceed direct for China. After having disposed of the arms and obtained the payment for the same, it will be of much importance that you reach China as direct, and with as little delay as possible. In order that a second deposit may be had for the property and that a new voyage may be begun anew without any regard to the present one, after reaching Canton you will deliver all our property to Messrs. S. Russell & Co., except the fifty thousand dollars, which you are to retain as a capital for the ship in any future operations you may think it advisable to undertake, either by trading or freighting, according as you think most profitable for all concerned -- perhaps a cargo from China for Chili or Peru may be a good investment. However, after you get to Canton, and take the fifty thousand dollars as a capital, you must be your own master, and do that which is best."
The instructions then proceeded to provide for many contingencies, and concluded with a general reference to conversations between the parties before Mathewson left the United States.
The fictitious instructions provided entirely for a trading voyage to Columbia River, thence to Canton &c.;
In April, 1821, having purchased a cargo of arms, Mathewson sailed from Bremen in the ship Mercury for Valparaiso, and arrived there in August of the same year.
From Valparaiso he went to Lima, where he arrived in September.
On 1 June, 1821, a transaction occurred at Providence which was the basis of this litigation. Willard W. Wetmore (and his administrator, the present defendant in error) claimed to have been admitted on that day as a partner in the firm of Edward Carrington & Co., and the following entry upon their books was produced upon the call of the defendant Mathewson.
" Providence, June 1, 1821"
" Edward Carrington & Co. -- New concern."
"Edward Carrington 3/8"
"Samuel Wetmore 3/8"
"W. W. Wetmore 2/8"
And commencing on the first page, under date of 1st June, 1821, and continuing through several pages, Edward Carrington & Co., old concern, are credited with the sum of $118,987.32 for their interest in various adventures and shipments then outstanding.
The corresponding leger is headed, "New concern, leger A," and commences with the same date.
Let us return to the voyages of Mathewson.
At Lima, he sold his cargo of arms, and was detained there nearly ten months waiting for payment from the Peruvian government.
In June, 1822, having chartered the Mercury at Lima to a person by the name of Rodolpho, he sailed with the proceeds of the arms for Gibraltar by way of Rio de Janeiro, and arrived at Gibraltar in November, 1822.
In December, 1822, he sailed from Gibraltar on a trading and freighting voyage with freight and merchandise for the joint account of the owners.
Arrived at Rio, February, 1823
Sailed from Rio, February, 1823
Arrived at Valparaiso, April, 1823
Arrived at Callao, July 1, 1823
Left Callao, September, 1823
Arrived at Arica, October, 1823
Left Arica for Callao, October 25, 1823
Arrived at Callao, December, 1823
Sailed from Callao for Canton, January 1, 1824
Arrived at Canton, April 10, 1824
Left Canton for South America, July 11, 1824
Arrived at Monterey, October 25, 1824
Left Monterey for Mazatlan, January 1, 1825
Arrived at Mazatlan, January 21, 1825
Left Mazatlan for Lima March 20, 1825 Arrived at Guayaquil, June 3, 1825, where the ship, being injured in a gale and decayed by age, was condemned and sold.
On 12 September, 1825, Mathewson embarked at Guayaquil with goods and money for Lima, in the steamboat Tilica, which was blown up and destroyed on the passage.
In November, 1825, being at Lima, Mathewson chartered three-fourths of the ship Superior. He claimed to do this upon his sole responsibility and risk, and therefore to be entitled to all the profits, allowing to Butler, Carrington & Co. only the interest upon such portion of the partnership funds as were invested in the adventure.
In November, 1825, he sailed from Lima to Canton, where he arrived in March, 1826. Leaving there in June, he returned to Valparaiso, where he arrived in October, and consigned all his property, individual as well as joint, to Alsop, Wetmore & Co., who sold it at a large profit.
In June, 1827, he arrived in Providence, having been absent nearly seven years.
During all these voyages, Mathewson claimed to have received sums of money for himself upon various accounts, such as presents and gratuities from the persons with whom he dealt, from Spaniards for assisting in concealing their money, a deposit from a man named Martinez, to be invested in military clothing for him at Gibraltar, but who could never afterwards be found or heard of, from passengers for taking care of their money, presents from several persons for transporting specie from the shore without full duties, and profits upon all these sums, invested upon his own account in articles of trade sold and reinvested from time to time, paying freight for the same.
In 1830, Willard W. Wetmore, of New Haven, in Connecticut, filed a bill on the equity side of the Circuit Court of the United States for the District of Rhode Island against Mathewson, claiming to have been admitted by Edward Carrington & Co. as a member of their firm in June, 1821, and calling upon Mathewson to render an account of his agency as master and supercargo of the ship Mercury on a voyage by him prosecuted before he became part owner of said ship, and of his agency as master, supercargo, and part owner of said ship and her cargo after he became a part owner, and also of his employment of the funds of the owners of the Mercury, after her condemnation and sale, in the ship Superior, three-fourths of which he
chartered at Lima in November, 1825. The bill also called for a discovery of all his transactions during the adventures.
This bill was afterwards amended by the insertion of the following clause after the claim to have been admitted as a partner in June, 1821, viz.:
" Amendment -- and then and there became the assignee and purchaser of one-fourth of nine twentieth parts of said ship Mercury and her cargo and of one-fourth of nine twentieth parts of all the rights of all the rights of said Edward Carrington & Co. in and to said contract with the said Mathewson, and, as such, entitled to a discovery and relief against the said Mathewson."
In September, 1830, Mathewson filed his answer, to which exceptions were taken, and in February, 1831, filed a further answer. In these answers he denied that the complainant ever was a partner in the house of Edward Carrington & Co. or that he ever had any interest in the ship Mercury and cargo or in the concerns of said adventure. The answers then went into a minute detail of all the transactions which had occurred during all these voyages, and had annexed to them a hundred and seven accounts with different persons, explaining the shipments, sales, freights, purchases, remittances &c.;
At November term, 1831, the cause was referred to Samuel Eddy, as master in chancery,
"to take and state an account between the complainant and the defendant, Henry Mathewson, touching and concerning the concerns and business of the partnership subsisting between the parties in said cause, and all the other matters and things charged in said bill of complaint."
At June term, 1832, Samuel Eddy, Richard K. Randolph and John H. Ormsbee were appointed masters under the above interlocutory decree.
In 1834, whilst the cause was pending before the masters, Wetmore, the complainant, died, and letters of administration upon his estate were granted to John H. Clarke, a citizen of Rhode Island, the laws of that state not permitting a person residing out of the state to become the administrator of a citizen thereof. Clarke, the appellee in the case now before the Court, filed a bill of revivor. Mathewson appeared, and moved to dismiss the suit on the ground of want of jurisdiction, inasmuch as the administrator and respondent were citizens of the same state. The circuit court dismissed the bill; but the cause being brought up to the Supreme Court, this judgment was reversed and the cause remanded for further proceedings. The report of this case will be found in 37 U. S. 12 Pet. 164.
In January, 1839, Charles F. Tillinghast was appointed a third master in the place of Samuel Eddy, to act in conjunction with the other two.
In November, 1840, the masters made a very elaborate report to the court, accompanied by numerous depositions, in which report they found a balance due from Mathewson to the administrator of $8,098.52. To this report Mathewson filed twenty-six exceptions.
At June term, 1841, the master's report was referred back to the same masters to reexamine and review and reconsider the same, with liberty to either party to introduce further evidence, the plaintiff to have leave to amend his bill and the defendant to file his answer to the amendment within twenty days. Whether or not it was at this stage of the proceedings that the plaintiff amended his bill by inserting the part included within brackets as set forth in the preceding part of this statement the record does not show. But on 9 September, 1841, Mathewson filed a further answer denying that Wetmore was or ever had been a co-partner in the firm of Edward Carrington & Co.; denying that he, Wetmore, had ever asked an account from the defendant previously to filing the bill, and denying that Wetmore had ever been admitted by the defendant as a co-partner in said ships and adventures in any manner whatever.
At November term, 1841, the masters made their second report, finding a balance due by Mathewson to Clarke, as administrator, of $8,568.52. This report was accompanied by a great mass of additional evidence. To this report Mathewson filed twenty-four exceptions.
At the same term, viz., November, 1841, the court ordered this report of the masters, so far as respected the matters in the sixteenth exception, to be referred back to them for further inquiry.
In conformity with this order, the masters filed a third report correcting the preceding one by making an additional allowance, and reporting the entire balance due by Mathewson to be $8,685.66 2/16.
At June term, 1842, Mathewson filed six exceptions to this third report.
At November term, 1842, the following decree was made by the circuit court, viz.:
"This cause came on to be heard upon the report of the masters made in this cause at the November term, A.D. 1840, of this Court, and upon the exceptions filed thereto; and upon the report of the masters made in this cause at the November term, A.D. 1841, of this court, and the exceptions filed thereto; and upon the masters' report in this cause, filed in the clerk's office of this court on 11 April, A.D. 1842, and the exceptions filed thereto, and counsel being heard thereon: "
"In consideration whereof it is ordered, adjudged, and decreed that the exceptions to the first-mentioned report be disallowed and that the said report do stand and be confirmed except so far as the same is altered by the report aforesaid made to the November term, A.D. 1841, of this court and the report aforesaid filed in the clerk's office of this court on 11 April, A.D. 1842."
"It is further ordered, adjudged, and decreed, that the exceptions to said report, made at the November term, A.D. 1841, of this court, be disallowed and that said report do stand and be confirmed except so far as the same is altered by the said report filed in the clerk's office of this court on 11 April, A.D. 1842."
"It is further ordered, adjudged, and decreed that the exceptions to the said report filed in the clerk's office of this court on 11 April, A.D. 1842, be disallowed and that said last-mentioned report do stand and be confirmed."
"It is further ordered, adjudged, and decreed that the said John H. Clarke, administrator on the estate of the said Willard W. Wetmore, in his said capacity of administrator, have and recover of the said Henry Mathewson the sum of eight thousand six hundred and eighty-five dollars and sixty-six cents, said sum being the amount found due by said last-mentioned report, together with costs, and that execution issue therefor."
"Let this decree be filed in the clerk's office in this cause."
" Ass.Jus. of the Sup.Ct. of U. States "
" District Judge U.S. R.I. District "
From this decree an appeal brought the case up to the Supreme Court.
Whilst the cause was pending in the Supreme Court, an order was passed at December term, 1845, directing the masters to review their report. They accordingly made a supplemental and fourth report addressed directly to the Supreme Court in which they admit an error in their preceding accounts from not giving Mathewson a sufficient credit for his commissions and his interest in the co-partnership. Correcting this error, they find the amount due by Mathewson to Clarke, including interest up to January 1, 1846, to be $6,241.44. This report was made a part of the record, by agreement of counsel.
In the argument of the case in this Court, the exceptions taken to the first report of the masters were not insisted upon any further than they were included in the exceptions to the second, and the exceptions to the third were entirely waived.
None being taken to the fourth, which was made to this Court, the argument was confined exclusively to the exceptions to the second report, which have been already stated to have been twenty-four in number.
MR. JUSTICE McLEAN delivered the opinion of the Court.
Wetmore, the complainant, states in his bill, that on 12 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 30 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 28 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 10 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 1 June, 1821, he entered into co-partnership 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 8 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 co-partnership, 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 1 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 & 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 28 December, 1822."
And in the succeeding paragraph, the complainant alleges that about 1 June, 1821, he entered into co-partnership 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 percent 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 percent, 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 bona 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, 16 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 Manila, 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, 10 November, 1825.
And again, in a letter dated at Lima, 16 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 Manila, and back to this coast. Copy of the charter party enclosed, 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 & Carrington & Co. wrote a letter to Mathewson, dated Providence, July 10, 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 5 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 1 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 1 July, 1827, to January 2, 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.