U.S. Supreme Court
Newell v. Nixon, 71 U.S. 4 Wall. 572 572 (1866)
Newell v. Nixon
71 U.S. (4 Wall.) 572
ERROR TO THE CIRCUIT COURT FOR THE
EASTERN DISTRICT OF LOUISIANA
1. Although no partnership may exist between them, yet where two persons are joint owners of a vessel against which a claim exists for nondelivery of cargo, and one gives a note in the joint name for a balance agreed on as due for such nondelivery -- the other party being aware of the making of the note and of the consideration for which it was given and making no dissent from the act of his co-owner -- such note cannot be repudiated by such other party, he having bought out the share of his co-owner in the vessel and agreed to pay her debts and liabilities.
2. Where a suit is brought against a shipowner for a sum acknowledged by the owners to be due the shipper for a breach of contract in delivering merchandise, the production of the bill of lading is not essential.
3. The plea of prescription of one year, under the Civil Code of Louisiana, cannot be set up in a case where the suit is brought in April on an acknowledgment made in September previous of a sum due on settlement.
4. A party suing not on a note but on the consideration for which the note was given -- and using the note as evidence rather than as the foundation of the claim -- may have lawful interest on the sum due him, although by note given on a settlement the party sued may have promised to pay unlawful interest and such as the law of the state where the note was given visits with a forfeiture of all interest whatever. chanrobles.com-red
5. Where usury is not set up in some way as a defense below, it cannot be urged here.
By the Civil Code of Louisiana it is enacted:
1. That actions "for the delivery of merchandise or other effects shipped on board any kind of vessel . . . are prescribed by one year."
2. That conventional interest shall in no case exceed eight percent, under pain of forfeiture of the entire interest so contracted.
With these provisions in force, Nixon sued Newell, attaching as his property the steamboat Hill and setting forth by petition filed April 20, 1857:
1. That Newell was indebted to him $2,585, with interest from January 11, 1855, at the rate of eight percent, for this, to-wit, that on the said day the said Newell and one Hamilton, since deceased, being co-owners of the steamboat Hill and in such capacity, viz., as owners, made their note in his favor for the above-named sum, which would appear by reference to the note annexed and made part of the petition.
2. That independently of this, Newell was indebted in the same sum for this -- that he, Nixon, had shipped, at New Orleans, on the said steamboat, of which Newell and one Hamilton were owners, a large quantity of salt which was never delivered at its destination.
The note, which was annexed to the petition, was for the amount above stated, and was signed "Newell & Hamilton, owners," but was made payable with interest at the rate of ten percent per annum.
Newell set up as defense that he never was a member of any firm known as Newell & Hamilton and that no person had authority to bind him under any such signature, and moreover that the cause was barred by the "prescription" (or "limitation," as it is called in many states), of one year.
The court found as fact that the note was not signed by chanrobles.com-red
the defendant, Newell, but by Hamilton, now dead; that these two persons had no commercial partnership; that they did not transact the business of the boat under a social name, and were not accustomed to sign notes in this form; but that they were simply part owners in the Hill -- Newell owning three-fourths and Hamilton one.
The court found further (no bill of lading being produced and the evidence being of witnesses who received the salt) that the salt was shipped as alleged, but arrived at an intermediate port in bad condition, where it was taken by the agent of the owners of the Hill, who disposed of the same with their consent and for their account, the plaintiff having refused to receive it on account of its bad condition; that the consideration of the note was the sum due by the steamboat and owners for the salt not delivered; that the defendant was aware of the making of the note and of its consideration; that there was no evidence of his dissent from the act. It was shown also that after the death of Hamilton, his administrator made a settlement with Nixon and transferred to him Hamilton's interest in the steamboat, for which Nixon had agreed to pay "the debts and liabilities of the boat." This settlement took place September 22, 1856.
The objections made below to the claim were:
1. That the defendant Newell not having been in any sense a partner of Hamilton, the note signed by Hamilton did not bind Newell.
2. That no bill of lading had been produced, and that one was necessary.
3. That the suit was barred by prescription or limitation of one year.
The court (Campbell, J), as to the first point, admitted that as Newell was not a partner in any sense of Hamilton, the note could not bind Newell, unless he was connected with it by testimony other than itself. But it thought that the special facts of the case did so connect and make him liable. The term "boat," in the contract by which Newell assumed to pay "the debts and liabilities of the boat," the learned judge considered as meaning those binding the chanrobles.com-red
owners on account of their interest in the boat. The assumption had been made on an adequate consideration. The note on its face expressed an obligation affecting the boat, and it was given in recognition of such a liability.
In regard to the second point, the learned judge did not consider the production of the bill of lading essential to the support of the action. The suit had not been brought on the contract of shipment, but to collect the sum acknowledged to be due in consequence of the breach of contract.
3. To the argument of prescription the court said nothing.
Judgment having been given accordingly for the plaintiff, the same points were again presented here on exception, an additional point being made, to-wit, that the court erred in allowing eight percent interest. chanrobles.com-red
MR. JUSTICE CLIFFORD delivered the opinion of the Court.
Judgment was rendered for the plaintiff in the court below, and the defendant in that court excepted and sued out this writ of error. Cause of action, as stated by the plaintiff in his original petition, was that the defendant, Thomas H. Newell, was justly indebted to him in the full sum of two thousand five hundred and eighty-seven dollars and eighty-five cents, with interest thereon from the eleventh day of January, 1855, until paid, at the rate of eight percent per annum. He also alleged that the defendant, together with one Thomas Hamilton, deceased, as the owners of a certain steamboat engaged in carrying freight and passengers for chanrobles.com-red
hire on the same eleventh day of January, made and executed to him their note for that sum, payable one day after date, with interest thereon at the rate of ten percent per annum from the date of the note, which was annexed to and made part of the petition. In his supplemental petition the plaintiff alleged that during the month of June, 1854, he shipped on board the steamer aforesaid, of which the defendant and the said Thomas Hamilton were the owners, four thousand seven hundred and sixteen sacks of salt, to be transported to Nashville, and there to be delivered to certain consignees, and that a large part of the shipment, to-wit, two thousand four hundred and six sacks of the salt, were never so transported and delivered, and he averred that he was entitled to recover for the value of the deficit and that the note annexed to the original petition and signed "Newell and Hamilton, owners," was given by them for that consideration.
Service was made by attachment, as the defendant resided permanently out of the state, and the writ of attachment was duly served on the aforesaid steamboat, then lying in the port of New Orleans. Due return having been made by the sheriff, the defendant appeared in the case, and on his motion the property attached was discharged, he having given bond to satisfy such judgment as might be rendered against him in the suit. All these proceedings took place in the Fifth District Court of New Orleans, but the cause was shortly afterwards, on motion of the defendant, removed into the circuit court of the United States for that district under the twelfth section of the Judiciary Act.
Principal defenses, as pleaded in the original and supplemental answers of the defendant, were:
1. A general denial of all the allegations of the petition.
2. That the defendant never was a member of a firm or partnership called Newell & Hamilton, and that no person ever had power or authority to bind him by note or otherwise under that name or style.
3. That the supposed cause of action accrued more than one year prior to the institution of the suit, and that the same was barred by the prescription of one year. chanrobles.com-red
1. Testimony was taken and the cause was submitted to the court without the intervention of a jury. Although there was no jury trial, still the rulings of the court, under the peculiar practice in the Louisiana district, may be examined in this Court upon writ of error and the judgment reversed or affirmed by a bill of exceptions in the same manner as if there had been a jury trial. They may also be revised here upon a state of facts found by the court, but the question presented in the court below and decided by the court must be clearly stated. *
Applying that rule to the present case, it is clear that no questions are properly before the Court in this case except such as are distinctly presented in the bill of exceptions. Recurring to that source, it appears that the court found from the evidence that the steamer which carried the freight was commanded by the and that he owned three-fourths part of her, and that Thomas Hamilton (since deceased), owned the remaining one-fourth; that they were not partners, and never had any partnership name for transacting the business of their steamboat, and were not accustomed to sign bills or notes for each other, but that each signed for himself whenever it was necessary to give securities concerning the business of the boat, and that the note annexed to the original petition was not in the handwriting of the defendant. Full proof, however, was introduced that the consideration of the note was the balance due by the steamboat and owners for the salt not delivered to the plaintiff, and that the defendant was aware of the making of the note and of the consideration for which it was given.
2. Second objection of the defendant under the general issue was that the plaintiff could not recover upon the consideration stated in the petition, because the bill of lading was not produced; but the court ruled that the suit was not brought on that instrument; that it was a suit to collect the sum acknowledged to be due to the plaintiff in consequence of the breach of the contract. Undoubtedly that ruling was chanrobles.com-red
correct, as is obvious from the allegations of both petitions. They allege the consideration of the note as the cause of action, rather than the note itself, and the judgment of the court very properly followed the declaration or petition. Reference is made in the bill of exceptions to the note and the testimony in support of it rather as evidence of the amount due to the plaintiff than as the foundation of the suit.
3. But the plaintiff in error still relies upon the plea of prescription, and insists that the action was barred by that limitation. Nothing is said upon that subject in the opinion of the court, but inasmuch as that defense was set up in the answer and is mentioned in the bill of exceptions as one of the objections taken by the defendant to the right of the plaintiff to recover, we think the point is properly open to review in this Court. Hamilton gave the note in liquidation of the demand of the plaintiff, and the bill of exceptions states that the defendant had notice of it before the death of Hamilton, who died in August, 1855. After the death of Hamilton, his administrator made a settlement with the defendant and transferred to him the one-fourth of the steamboat which belonged to his intestate, and in consideration of that transfer the defendant assumed and agreed to pay all the debts due by the boat. Express statement of the bill of exceptions is that that settlement took place on the twenty-second day of September, 1856, and that the cause of action in this case was included in that settlement. Viewing the matter in that light, the court held that the promise of the defendant to the administrator of the deceased part owner enured to the benefit of the plaintiff, and inasmuch as it was within the year next preceding the commencement of the suit, it was doubtless the conclusion of the court that the plea of prescription was not maintained. Suggestion of the defendant, however, is that there was no satisfactory proof of the acknowledgment of the specific amount stated in the petition, but the statement in the bill of exceptions is substantially otherwise, and we think the statement was fully warranted by the pleadings and evidence. chanrobles.com-red
Assuming the facts to be so, then it is clear that the plea of prescription is not maintained, as the petition was filed on the twentieth day of April, 1857, less than one year after the settlement was made.
4. Remaining objection of the present plaintiff, the defendant below, is that the court erred in allowing eight percent interest. Legal interest in Louisiana is fixed at five percent, and the legislature has provided that "conventional interest shall in no case exceed eight percent, under pain of forfeiture of the entire interest so contracted." Theory of the plaintiff in error is that the judgment was rendered upon the note, and that inasmuch as the note stipulated for the payment of ten percent, the entire interest was forfeited. Present defendant denies that theory, and we think it cannot be sustained for the reasons already given. Judgment was rendered on the cause of action stated in the petition, as before explained, and not on the note, as assumed by the present plaintiff. Conventional interest might be eight percent, and as the petition claimed no more, and no more was allowed by the court, the presumption, in the absence of proof to the contrary and of any exception to the decision of the court, is that the judgment is correct. Such a question might have been presented in the finding of the court, or it might have been presented in the bill of exceptions on objection to the ruling of the court. But usury was not set up either in the original or supplemental answers, and it does not appear that any such objection was made in the court below. Parties might lawfully agree that the rate of interest should be eight percent, and inasmuch as that rate was demanded in the petition and was allowed by the court, and no objection was taken to the ruling of the court, it must be presumed in this Court, under the state of the pleadings exhibited in the record, that the court decided correctly.
The decree of the circuit court is therefore
Affirmed with costs.
* Arthurs v. Hart, 17 How. 15.