Gambar halaman

on account of Hovland's acts connected with The credit allowed Smith as the value of 15,700 shares of Inspiration, and that in certain options and equities in certain proplieu of the debit in said sum Hovland should erties rests upon evidence that Smith inbe debited with $378,605.50.

dividually owned the options and equities be[3] It appeared that in 1904 the company fore the partnership was formed, that the which owned the Arizona King group of rights were very valuable, that he relinclaims failed to do the necessary assessment quished them in favor of the partnership and work and in January, 1905, two men, strang- for its financial benefit. One of the priners to this litigation, located the claims. cipal matters concerning this credit was the Thereupon Smith and the two locators agreed partnership promotion and development of that Smith was to assure payment for do- the Warren Realty & Development Company ing necessary work and was to have a half in which in 1905 the firm spent approximateinterest in the claims. After the firm of ly $600,000 in buying certain properties, Hovland & Smith was formed, the partner- which in 1917 were sold for over $2,000,000. ship bought some interests in the group, and But back in 1903 many of the properties eventually the claims were patented to the which went into the Warren Company were two strangers and Smith, and Smith con- held by Smith under options to purchase. veyed all of his interest in the Arizona King By such options, if availed of, Smith would group to the Union Mines Company, the en- have received about $130,000 in cash, and tire capital stock of which was owned by the partnership, by promotion of the WarHovland & Smith. In 1912 the Union Mines ren Company, was enabled to buy the properCompany sold its interest in the group for ties less the commissions Smith was entitled $100,000 which sum was applied to the to. The master thought it just to give Smith payment of partnership debts. It appeared, credits against the partnership as of March however, that payment to the men who did 1, 1905. Whether the value of Smith's rights the assessment work for 1904 was made by in the options was worth the sum for which a partnership credit entered on the part- he was given credit was vigorously quesnership books (which were kept in Smith's tioned, but there was ample evidence to name) in March, 1906. The master did not support the finding, and it will not be disoverlook the bearing that the book entry turbed. might have as tending to support Hovland's With respect to certain shares and purtestimony to the effect that before the part- chases of stock other than Live Oak innership of Hovland & Smith was created cluded in an account submitted by Hovland Hovland told Smith he would join him in the to Smith in February, 1912, Hovland took purchase of the Arizona King group, but the position that the stocks were bought as considering the fact that when the strangers partnership property, whereas Smith conmade their location there was no partner- tended that the purchases were Hovland's inship of Hovland & Smith, and that prior dividual matters and therefore should be to March, 1905, the locators dealt with Smith kept out of the partnership accounts. Much alone, it was concluded that entry for do- conflicting testimony was introduced. Smith ing the assessment work made upon the books testified that he never had possession of any was in reality a payment of Smith's individ- of the shares involved, and the master, after ual obligation incurred in 1904 and should sifting the mass of evidence, both oral and have been charged against Smith on the documentary, concluded that Hovland treatpartnership books. It was further found ed the stocks as his own and that they belongthat when the partnership was formed it ed to him. An attentive reading of the tesbecame owner of a half interest in the group, timony leads to the view that the letters and title to which, however, was then involved acts of the partners were consistent with that in litigation. The master estimated the val- conclusion, and that the finding was correct. ue of Smith's interest in the group when he

The master, however, was right in treatturned it over to the partnership at $40,000, which at Hovland's request were taken from

ing as partnership stocks Parea Oil shares, but because of the litigation over the titles his personal safety box to be sent to Hovhe reduced the value to $30,000. We think land at Duluth, for it is clear that the partthere should be a modification of this cred- nership was interested in Parea Oil and that it, and that Smith's valuation of $10,000 shares in that company were issued to each should be accepted without reduction of the partner. Hovland was therefore correct in twenty-five per cent. This seems equitable claiming credit for the value of such shares, in the light of the fact that the litigation and Smith was right in not disputing the failed to impair the titles.


11 F.(20) 15 A large part of the conflicting evidence payment of the partnership debts, plaintiff was addressed to what was the true date of would not now be in a position to complain the dissolution of the partnership, whether of such sale. The legal injury to the partas of March 1, 1912, as Smith contended, or nership does not lie in the sale of the stock, January 17, 1911, as Hovland stated. It is which as a partner defendant had the right sufficient to say that the finding of the mas- to make, but in the withholding of the proter and the court is amply sustained; hence ceeds for which he was bound to account. the accounting was properly made with re- The rule is stated in a line by Rowley (secspect to March 1, 1912.

tion 601) as follows: 'If a partner after [4] Smith's contention that the master dissolution retains the proceeds from the erred in charging interest against him on the sale of firm property for more than a reasonunexpended balance of $100,000 he received able time he may be chargeable with inon account of the sale of the Rough Rider terest.'' group does not appeal to us. The sale was It is argued by Smith that the value of made for partnership purposes, and Smit” the Inspiration stock as found by the court received the money on April 7, 1917, five was too little, but there is ample evidence years after dissolution. The fact that Smith that the sum realized was the fair market brought the action soon after he paid out value at the time of the sale, March, 1914. certain sums in settlement of partnership We are of the opinion that an accounting, debts, and that he expressed a willingness made in accordance with the decree of the to account, ought not to relieve him of the lower court when modified in respect to the duty to pay interest for moneys retained credit for Smith's interest in the Arizona by him, which money belonged to the part- King group, will equitably adjust the acnership. His testimony that he applied the counts between the parties. money to debts due to him personally from The decree will therefore be modified to the partnership, though true, does not put conform to this opinion, and as so modified the case outside of the rule that where a will stand affirmed without costs to either partner after dissolution has retained the party. proceeds of a sale of firm property for more

Modified and affirmed. than a reasonable time he may be equitably charged with interest in an account between himself and his copartner. Rowley on Partnership, § 601.

DEMPSEY et al. v. DOWNING et al. [5] The last of the important items pertains to the Live Oak or Inspiration stock, which (Circuit Court of Appeals, Fourth Circuit.

January 12, 1926.) was partnership property, but which was sold by Hovland's creditor-pledgee to pay

No. 2364. his personal debts-all as referred to in the

1. Shipping Om42-Implied warranty of sea. statement of the findings of the master. We worthiness held to attach to barges hired agree with the view expressed in the clear for storage of cargo pending repairs to ship, and comprehensive memorandum opinion notwithstanding inspection of holds. filed by Judge Dooling, that upon dissolu

Hiring of barges for storage of cargo pendtion either partner had the right to sell any ranty that barges were reasonably safe and

ing repairs to ship held to carry implied warof the partnership assets either to pay part- seaworthy, notwithstanding ship's representanership debts or for closing the partner- tives examined holds of barges to ascertain ship, but that if either retained the proceeds whether they were in clean condition. of sale he should be charged interest thereon. 2. Shipping Ow58 (2). Therefore Hovland, having a right to sell In absence of contrary showing, ship is the Inspiration stock at the time he did sell presumed seaworthy for services undertaken. it, should have used the proceeds to pay firm 3. Shipping 42—Shipowners, wishing to debts. The fact that he did not do so did avoid implied warranty of seaworthiness, not injure the partnership or his copart

should do so in plain and unequivocal terms. ner, provided the sale was for the fair and Shipowners, wishing to release their vesreasonable value. The test is: Was the lia

sels from liability on implied warranty of sea

worthiness for service undertaken, should do so bility that he incurred greater than that in plain and unequivocal terms. fixed by the law of partnership? Upon this point Judge Dooling well said: "If, there- Appeal from the District Court of the fore, defendant, upon the sale of the Live United States for the Eastern District of Oak stock, or its later equivalent the Inspira- Virginia, at Norfolk; D. Lawrence Groner, tion stock, had applied the proceeds to the Judge.

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Libel by W. E. Downing, master, bailee, hold and from No. 4 between-decks, aggreand the Standard Oil Company of Brazil, gating 8,605 cases, was transferred to the owner of a certain cargo, against John J. Experiment. Having loaded the gasoline, Dempsey and others. Decree for libelants, the barges were towed to Hampton Roads and libelees appeal. Affirmed.

and anchored, awaiting completion of repairs John W. Oast, Jr., of Norfolk, Va. (Oast, the reloading began. When the hatches of

to the steamship, and on the 26th day of May Kelsey & Jett, of Norfolk, Va., on the brief), the first barge were broken open for the purfor appellants.

H. H. Little, of Norfolk, Va. (Hughes, pose of reloading the steamship, it was dis

H. H. Little, of Norfolk, Va. (Hughes, covered that a large number of the cases, ag. Little & Seawell, of Norfolk, Va., on the

gregating 7,400 in all in both barges, which brief), for appellees.

had been loaded in the barges, were in a wet Before WADDILL, ROSE, and PAR- and damaged condition, and all of these cases KER, Circuit Judges.

were rejected by the representative of the

owner of the oil then present. Subsequently, WADDILL, Circuit Judge. The libel in upon the appearance of the representative of this case was filed by the appellees to recov

the underwriters, 5,200 of the 7,400 damaged er damages to certain portions of cargo plac- cases were reconditioned and forwarded, leave ed by appellees upon the barges Katherine ing the remaining 2,200 cases unfit for shipDempsey and Experiment, owned and oper- ment. These last cases were left in the barges ated by appellants, because of the alleged un- and sold for approximately 50 per cent. of seaworthiness of the barges. The case arose

their value, occasioning a loss of $4,701.46. in this manner:

For the recovery of this amount the libel hereIn the month of April, 1922, the British in was filed against the barges and their steamship Justin, loaded with a general cargo from New York to South America, via The case was tried before a judge who Hampton Roads for coaling, was in colli- had the advantage of an oral examination of sion with the Coast Guard cutter Manning the witnesses, upon issues joined, upon the in the lower Chesapeake Bay, resulting in a pleadings, as to the barges' liability for the large hole being torn in the Justin's starboard damages sued for. The court rendered its side in No. 4 bold. In No. 5 hold, and in written opinion, holding that such liability between-decks of No. 4 hold, was stored existed, and that the loss was brought about a large quantity of gasoline in cases, and be because of the unseaworthiness of the barges fore repairs could be made to the ship it be- and the failure of their owners and operacame necessary to remove this inflammable tors to perform the services undertaken by portion of the cargo. Acting through a them within the spirit and meaning of the stevedoring company, arrangements were

contract of hire. The court referred to a spemade, on the ship's account, with Dempsey cial master the question of the ascertainment & Sons for the hire of their two barges Kath- of the amount of the damages. The special erine Dempsey and Experiment for the trans- master, upon testimony submitted to him, fer and removal of the portion of the cargo concluded that the sum of $3,931.96 was the mentioned, and the barges were thus used up- proper award, and his report as to the on which to store the gasoline cases, and in amount due was, after full consideration, aplightering and holding the cased gasoline, proved by the court. It is from this decree and barreled oil, out of the steamship at Nor- that the present appeal is taken. folk, Va.

The merits of the appeal depend almost The damage to the Justin permitted wa- entirely upon the facts, as there are no legal ter to flow into No. 4 lower hold, and at questions of importance to be decided, havone time it rose to a foot or a foot and a half ing the facts definitely settled. The assignin No. 4 between-decks, but above that ments of error mainly relate to whether the point in No. 4 and No. 5 holds no water came seaworthy condition of the barges was warinto contact with the cases. The two barges ranted. It is insisted by appellants that no were at the time of their engagement lying warranty, express or implied, was made, that idle in the harbor at Norfolk. They were the evidence fails to sustain the commissionbrought alongside and their holds examined er's findings, respecting the amount assessed, by the ship's representative, for the purpose and that the testimony relied upon was wholof ascertaining whether they were in a clean ly insufficient to support his conclusion. It condition to take the gasoline. 16,666 cases is likewise urged that the damages were so were taken from No. 5 hold and transferred uncertain as not to be susceptible of judito the Dempsey, and the remainder from that cial determination, and that the commission

11 F.(20) 15 er improperly considered testimony that "The ground of liability, in the absence of should not have been submitted to him. We any evidence of negligence,

is solecan only say that there does not appear to ly the implied warranty of seaworthiness, have been any error in the action of the com- which exists whenever and wherever there is missioner in considering the testimony sub- an undertaking to carry goods for hire, in a mitted. The chief subject for consideration vessel and on navigable waters. The kind of was whether there was an express or im- carriage here contemplated was very humble; plied warranty of the barges' seaworthiness. it consisted in lying still and acting as a From the testimony adduced, it seems to us warehouse; but still it was carriage, in the that both the commissioner and the trial court sense of sustaining on the water, and that is were correct in the conclusions reached that enough.” The Jungshoved (C. C. A.) 290 F. there was such implied warranty. Certain it 733, 1923 A. M. C. 630-632. is that no case is made that would warrant See, also, The New York (D. C.) 93 F. at this court in substituting its judgment for page 496; The Presque Isle (D. C.) 140 F. that of the commissioner and of the trial 202, 203, 204; The Transit, 250 F. 71, 162 judge, who gave full and intelligent consid- C. C. A. 243; The Folmina, 29 S. Ct. 363, 212 eration to both subjects, reaching a result U. S. 354, 53 L. Ed. 546, 15 Ann. Cas. 748. that in our judgment is correct. Indeed, it Counsel insist that, under the circumwould be difficult to come to any other con- stances in this case, appellants should not be clusion upon the testimony.

held liable for damages arising from the un[1,2] Assuming that there was no express seaworthiness of the barges, either upon the warranty given as to the seaworthiness of the theory of an express or an implied warranbarges, it cannot be doubted that an implied ty; their position being that the barges were warranty was given-that is to say, that the accepted for the desired purpose by appelbarge owners believed and held out to the lees, after full inspection on the part of comcharterers, who were procuring the barges petent persons in their behalf, which, in effor a special and urgent purpose, that they fect, waived a warranty of seaworthiness of were in such reasonably safe, sound, and sea- the barges. Doubtless there may be cases in worthy condition as would enable them to which this would be true; that is, where full perform satisfactorily the contract undertak. inspection was made by those seeking to charen. The fact of the seaworthiness of the ter the vessels, with a view of and for the ships for the service undertaken is presumed purpose of learning their condition, and the in the absence of a showing to the contrary. alleged defects or weaknesses were either pat

“Where the owner of a vessel charters ent or were especially called to such charher, or offers her for freight, he is bound to terers' attention by the vessel owners; but it. see that she is seaworthy and suitable for the does not appear to the court that the facts service in which she is to be employed. If here warrant the acceptance of that doctrine. there be defects, known or not known, he is Sanford & Brooks Co. v. Columbia Dredg. not excused. He is obliged to keep her in ing Co., 177 F. 878, 101 C. C. A. 92; Portsproper repair, unless prevented by perils of mouth Fisheries Co. v. John L. Roper Lumthe sea or unavoidable accident. Such is the ber Co., 269 F. 586, 588—both decisions of implied contract where the contrary does not this court. appear.” Work v. Leathers, 97 U. S. 379, [3] It seems entirely clear to this court that 380 (24 L. Ed. 1012); Hubert v. Recknagel neither party, by doing what was done in this (D. C.) 13 F. 912.

case, meant to depart from the usual terms "It is not shown or suggested that the of a contract of hire of the barges. When contract of hiring was other than the usual shipowners contemplate the release of their one in such cases, and in the absence of spe- vessels from liability, as affects the implied cial conditions or exceptions we deem it not warranty of seaworthiness for the service open to doubt that it implied a warranty of undertaken, they should do so in plain and the fitness of the scow for the work for which unequivocal terms. Upon failure in this reit was chartered. The rule of law is so well spect, the liability arising from unseaworthisettled as not to need the aid of argument ness exists, and it is only just and reasonable or citation.” Arundel Sand & Gravel Co. that this should be so. v. Naylor & Co., 242 F. 494, 155 C. C. A. 270, The decision of the District Court must. an opinion of this court by Judge Knapp. be affirmed,

11 F.(20)-2

certidenced 2016. 64, 70 X Ed. is 159 46 Jeep II FEDERAL REPORTER, 24 SERIES


11 ,

TINCHER et al. v. UNITED STATES.* for fraudulent use of mails, being within limit

prescribed by statute, held not "cruel and un(Circuit Court of Appeals, Fourth Circuit.

usual punishment." January 12, 1926.)

7. Criminal law On 1159(5)-Action of trial No. 2371.

judge in imposing sentences within statutory

limit is not reviewable, except for gross or 1. Post office Om 48(4)- Allegation that fraud.

palpable abuse. ulent scheme was to be effected by use of mails is unnecessary, in prosecution for vio.

Where sentences imposed are within limit lation of statute against fraudulent use of prescribed by statute, action of trial judge will mails (Penal Code, 88 37, 215 [Comp. St. 88

not be reviewed on appeal, except in case of 10201, 10385]).

gross or palpable abuse. In prosecution under Penal Code, § 215 8. Criminal law Om622(1), 911. (Comp. St. § 10385), for fraudulent use of Granting of separate trials and refusing to mails in scheme for sale of worthless oil leases, set aside verdict of jury and grant new trial are allegation that fraudulent scheme was intended matters within sound discretion of trial court. to be effected by use of mails held unnecessary; Penal Code, 8 37 (Comp. St. § 10201), being 9. Criminal law Om 1054(3). inapplicable.

Generally sufficiency of evidence to support

erdict cannot be reviewed by writ of error, 2. Post office Om 48(4)-Allegation or proof unless exception is taken before a verdict to a that matters sent through mails were calcu.

ruling thereon. lated to carry out scheme to sell worthless oil seases held unnecessary (Penal Code, g 10. Criminal law e 1036 (8). 215 [Comp. St. § 10385]).

Reviewing tribunal will only in very excepIn prosecution under Penal Code, $ 215

tional cases exercise its discretion to review (Comp. St. $ 10385), for fraudulent use of sufficiency of evidence to sustain conviction, mails in sale of worthless oil leases, allega- where point was not appropriately raised in tion or proof that matters sent through mails lower court. were calculated to be effective in carrying out scheme held unnecessary.

11. Post office om50. 3. Post office em 48(4)-Indictment charging

In prosecution under Penal Code, $ 215 defendants with scheme to defraud, describ

(Comp. St. § 10385), for fraudulent use of ing soheme in detail and using mails in fur

mails in sale of worthless oil leases, evidence

held for jury. therance thereof, held sufficient to charge of. fense of fraudulent use of mails (Penal Code,

12. Post Office 35—Mailing of letter in $ 215 [Comp. St. & 10385]).

fraudulent scheme to sell worthless oil leases In prosecution under Penal Code, $ 215

was act of all defendants, where act was in (Comp. $ 10385), for fraudulent use of mails in furtherance of fraudulent scheme existing sale of worthless oil leases, indictment charging

prior to mailing of such letter. defendants with having devised scheme to defraud, describing scheme in detail, and with note and lease inclosed was an act done in fur

Where mailing of letter by defendant with using mails in furtherance thereof, describing therance of fraudulent scheme in sale of worthspecifically how mails were used, held sufficient. less oil leases, and scheme was in existence 4. Criminal law Ow371(1)-Evidence of similar prior to mailing of such letter, mailing was in fraudulent transactions in prosecution for

law act of all defendants. fraudulent use of mails in sale of worthless

13. Post office w 35-Government is not reoil leases held admissible on question of intent (Penal Code, 8 215 [Comp. St. § 10385]).

quired to show defendants' fraudulent intent

to effect fraudulent scheme by use of mails In prosecution under Penal Code, 8 215

or that mails were to be used for communicat. (Comp. St. § 10385), for fraudulent use of

ing with person intended to be defrauded mails, with prima facie showing of fraudulent

(Penal Code, $ 215 [Comp. St. § 10385]). scheme to sell worthless oil leases, evidence as to similar fraudulent transactions at or

In prosecution under Penal Code, $ 215 about same time held admissible as bearing on

(Comp. St. § 10385), for fraudulent use of

mails in sale of worthless oil leases, government question of intent.

was not required to show defendants' intent to 5. Criminal law m371 (1)-Evidence of ven- effect their fraudulent scheme by use of mails,

tures involving fraudulent intent similar to or that mails were used for communicating with one charged in indictment is admissible on person intended to be defrauded. question of intent.


14. Post Office Om 35–Defendants Where fraudulent intent is one of material

reallegations in indictment, evidence of other

sponsible for use of mails in swindling scheme

in sale of worthless oil leases, though banks and similar ventures by accused at or about

were innocent agencies. same time is properly admissible on question of intent.

Where defendants deposited purchaser's

checks in swindling scheme in sale of worthless 0. Criminal law m1213—Individual sentences

oil leases in banks, with knowledge that mails of 10 years for fraudulent use of mails held

would necessarily be used in their collection, not "cruel and unusual punishment” (Penal and collection of checks was necessary part of Code, $ 215 [Comp. St. § 10385]).

scheme, defendants were responsible for use of Individual sentences of 10 years for viola- mails by banks, though banks were entirely intion of Penal Code, $ 215 (Comp. St. § 10385), nocent agencies.

*Certiorari denied 46 S. Ct. 475, 70 L. Ed.

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