U.S. Supreme Court
Sun Ins. Co. V. Kountz Line, 122 U.S. 583 (1887)
Sun Insurance Co. V. Kountz Line
Argued January 17-18, 1887
Decided May 23, 1887
122 U.S. 583
A person who conducts himself with reference to the general public is such a way as to induce others, acting with reasonable caution, to believe that he is a partner in a partnership is liable as such to a creditor of the partnership who contracted with it under such belief, although he is not in fact a partner.
The defendants in error so conducted themselves toward the general public, in their business relations with each other, as to induce a shipper, chanroblesvirtualawlibrary
acting with reasonable caution, to believe that they had formed a combination in the nature of a partnership, or were engaged as joint traders, under the name of the Kountz Line.
This is a libel in admiralty and in personam. The libellants are insurance companies, which issued policies covering certain produce and merchandise delivered May 21, 1880, on board the steamboat Henry C. Yeager at St. Louis, Missouri, for transportation to the City of New Orleans and other ports on the Mississippi River, which cargo was lost by the sinking of the boat the day succeeding its departure from St. Louis. The Yeager was unseaworthy both at the commencement of her voyage and at the time of the loss. The sinking and the loss were the direct consequence of such unseaworthiness. The libellants having paid to the owners of the cargo the damages sustained by them ($31,720.10), and having been subrogated to all the rights and claims of the latter on account of such loss, brought this suit against the appellees jointly to recover the amount so paid. In the district court, the attachments sued out by the libellants were discharged and the libel dismissed. In the circuit court, it was adjudged that there was no joint liability on the part of the respondents or any of them, and that liability for the loss of the cargo was alone upon the Yeager and her owner, the H. C. Yeager Transportation Company. As to all the other respondents, the libel was dismissed. Of that decree the libellants complain, the principal assignment of error being that the court erred in not holding the respondents, or some of them, jointly liable for the loss of the cargo. The general ground upon which this contention is placed is that the shipment of May 21, 1880 on the Henry C. Yeager was a part of the general business of transportation in which the H. C. Yeager Transportation Company, the C. V. Kountz Transportation Company, the K. P. Kountz Transportation Company, and the M. Moore Transportation Company were jointly engaged under the name of the "Kountz Line," and consequently that said companies were jointly liable for the loss and damages in question. The decree chanroblesvirtualawlibrary
below proceeded upon the ground that said companies were not jointly engaged in business, and that the loss must be borne entirely by the company owning the Henry C. Yeager. Citizens' Ins. Co. v. The Kountz Line, 10 F.7d 8.
The determination of the question of joint liability depends upon the facts set out in the finding by the circuit court. Those facts, preserving in our statement of them substantially the language of the court below, are as follows:
In June, 1872, William J. Kountz, John W. King, W. W. Atex, and Charles Scudder organized, under the laws of Missouri, a corporation by the name of the "Kountz Line," of which they were to be, and did become, directors for the first year, and of which Kountz was President, and King general agent. Its capital stock was fixed at $15,000, divided into shares of $100 each. The declared object of the corporation was to build or purchase, use, or employ one or more wharf boats for the use of steamboats and other vessels belonging to the stockholders of the company; to build, purchase, or charter steamboats, towboats, etc., for transporting freight and passengers on the Mississippi River and its tributaries, and to do a general river business. It does not appear that the Kountz Line corporation owned at the time of the shipment on the Yeager, or at any time during the year 1880, any steamboat or other watercraft, except a wharf boat at St. Louis.
In a few months after the organization of that corporation, to-wit on the 13th of November, 1872, Kountz, King, and one Sheble organized, under the laws of Missouri, the four transportation companies above named, of each of which Kountz and King were chosen directors, and King treasurer and secretary. Kountz, King, and Sheble, Charles H. Seaman, H. K. Haslitt, and W. P. Braithwaite, having interests, as owners, respectively, in the steamboats Henry C. Yeager, Carrie V. Kountz, Katie P. Kountz, and Mollie Moore, transferred the same by bills of sale as follows: The Henry C. Yeager to the H. C. Yeager Transportation Company, the Carrie V. Kountz to the Carrie V. Kountz Transportation chanroblesvirtualawlibrary
Company, the Katie P. Kountz to the K. P. Kountz Transportation Company, and the Mollie Moore to the M. Moore Transportation Company, the vendors receiving, in consideration of said transfers, stock in the respective transportation companies.
Of the stock of the Kountz Line corporation, on the 6th of July, 1874, William J. Kountz owned two shares; King, D. C. Brady, Van Hook, and C. H. Seaman, one share each; the steamboats John F. Tolle, Henry C. Yeager, Mollie Moore, and Carrie V. Kountz thirty-six shares each. There was no change in the ownership of such stock by those steamboats up to the commencement of this suit except that the shares held by the John F. Tolle belonged to the steamboat J. B. M. Kehlor when, on September 14, 1878, the latter was transferred to the M. Moore Transportation Company. W. J. Kountz never at any time, owned more than two shares in the Kountz Line corporation, and was a stockholder in all of the transportation companies.
On the 15th of January, 1873, W. J. Kountz owned 398 shares, and King and Sheble each one share, of the stock of the M. Moore Transportation Company. But on December 19, 1879, the stock of that company was held as follows: Katie P. Kountz, a daughter of W. J. Kountz, 397 shares, and Kountz, King, and Rogers each one share. November 4, 1878, Katie P. Kountz held 241 3/4 shares, her father and King each one share, and Braithwaite 56 1/4 shares, in the K. P. Kountz Transportation Company. December 19, 1879, Katie P. Kountz held 379 shares and her father, King, and Rogers each one share in the H. C. Yeager Transportation Company. On the 21st of May, 1880, of the stock of the C. V. Kountz Transportation Company, Katie P. Kountz held 323 shares, Clement Seaman, 74 shares, and her father, King, and C. H. Seaman, each one share. No subsequent transfer of stock in any of these companies was made, and at the time of the shipment on the Yeager, "the stock in no two of said companies was held by the same person." It thus appears that at the time of the shipment on the Yeager, almost all the stock of these transportation companies stood in the name of a da appears that at the time of the shipment on the Yeager, almost all the stock of these transportation companies stood in the name of a da appears that at the time of the shipment on the Yeager, almost all the stock of these transportation companies stood in the name of a daughter of William J. Kountz. chanroblesvirtualawlibrary
It was further found by the court below that the steamboats Carrie V. Kountz, Katie P. Kountz, Henry C. Yeager, and Mollie Moore
"were employed by the respective transportation companies, to which they were conveyed, under the direction of the officers of said companies, in carrying freight and passengers on the Mississippi and its tributaries,"
the Kountz Line corporation being the "common agent" of said companies, and charging the latter "for the services rendered to them, respectively, from one hundred to one hundred and fifty dollars per trip." Its office, as well as the business offices of the transportation companies, were in the same room on its wharf boat at St. Louis. It (the Kountz Line corporation) collected the dues of the transportation companies, keeping a separate account with each and paying to each the earnings of its own steamboat. By means of advertisements in newspapers, placards, handbills, and cards, the Kountz Line corporation advertised the "Kountz Line," setting forth the advantages offered by the boats of that line, their low rates of freight, etc., and "announced that it was ready to contract for the carrying of goods and passengers by the Kountz Line boats." In those advertisements, placards, and handbills, usually one, but sometimes two or more, of the boats belonging to the transportation companies were mentioned "as belonging to said Kountz Line." The Kountz Line corporation made out bills of freight upon blanks headed "Kountz Line, St. Louis and New Orleans Packet," the bills being "in the name of the particular steamboat to which the freight was due, and the dray tickets of shippers indicating on what boat the goods were to be shipped." The bills of lading were usually signed, "John W. King, Ag't Kountz Line, St. Louis," the signature thereto being made by a stamp, but the bills were sometimes signed by the clerk of the steamboat on which the goods were shipped. Some of the bills of lading for the produce and merchandise shipped May 21, 1880, on the Yeager, recited
"that the same were received from John W. King on board the steamboat Henry C. Yeager, to be delivered to the consignee at New Orleans. In witness whereof the master, clerk, or agent of said boat
hath affirmed to three bills of lading,"
etc., and were signed, some of them, "John W. King, Ag't Kountz Line, St. Louis," and some by E. B. McPherson, clerk. Others of said bills of lading recited the shipping of produce by other shippers on board the Henry C. Yeager, and were signed by King in the manner aforesaid, and others by E. B. McPherson, clerk.
In order that the boats belonging to said transportation companies might have freight, the Kountz Line corporation sometimes purchased produce and merchandise for the purpose of its being shipped upon them, the sum paid for such produce and merchandise being charged to the particular company in whose interest the purchase was made. The goods so purchased were usually bought and paid for by the Kountz Line corporation. Against such shipments it made drafts in its own name on the consignees. All moneys, whether received for freight carried by said several steamboats or for goods shipped and sold for their account, were remitted to William J. Kountz or John W. King as the agents of said Kountz Line, the cost of the goods being charged to the individual boat on which they were shipped. After deducting cost and charges, the net proceeds, although
"deposited in bank to the credit of said Kountz Line, were placed in the books of account to the credit of the boat carrying the goods, and were her separate profits."
The circuit court found that the Kountz Line and the said transportation companies "owned no property in common," and that "there was no community of profits or property between said companies, including the Kountz Line, or any two or more of them." But it also found that "none of said steamboats was ever advertised by the name of the corporations that owned them," and that, from the date of the incorporation of said transportation companies to the date of the said shipment on the Henry C. Yeager,
"none of said transportation companies ever transacted any commercial business by their several and respective names, but the same was done by the name of the Kountz Line or in the name of the individual boats belonging to said transportation companies."
Such in substance is the case made by the finding of facts. chanroblesvirtualawlibrary