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(202 N.Y.S.)

SHEA V. UNITED STATES SHIPPING BOARD EMERGENCY FLEET

CORPORATION et al.

(Supreme Court, Appellate Term, First Department. January 6, 1924.) 1. Shipping 3/2, New, vol. 8A Key-No, Series Emergency Fleet Corporation

held liable for injury to employee of shipping company operating its vessel.

Under operating and managing agreements between United States Shipping Board Emergency Fleet Corporation and shipping company for operating a vessel, providing that the shipping company would maintain, equip, and supply the ship, and would provide and pay for all provisions, wages, and other expenses, the shipping company held an agent of the Emergency Fleet Corporation, and such corporation was therefore

liable to an injured employee hired by the shipping company. 2. Shipping 3/2, Now, vol. 8A Key-No. Series-Where no cause of action

against shipping company, there was no cause of action against its successor,

Where there was no cause of action against a shipping company for injury to an employee, but the cause of action was against the United States Shipping Board Emergency Fleet Corporation, there was no cause of action against the shipping company's successor.

Delehanty, J., dissenting.
Appeal from City Court of New York.

Action by Thomas Shea against the United States Shipping Board Emergency Fleet Corporation and another. From a judgment on a verdict for plaintiff, and from an order denying defendants' motion for a new trial, defendants appeal. Judgment affirmed, as modified.

Argued November term, 1923, before GUY, BIJUR, and DELEHANTY, JJ.

Burlingham, Veeder, Masten & Fearey, of New York City (William Paul Allen, of New York City, and Basil Pollitt, of New Brighton, of counsel), for appellant United States Shipping Board Emergency Fleet Corporation.

E C. Sherwood, of New York City (H. H. Brown, of New York City, of counsel), for appellant United American Lines, Inc.

Silas Blake Axtell, of New York City, for respondent.

GUY, J. The proof sufficiently establishes plaintiff's freedom from contributory negligence and the negligence of the employer.

[1] The defendant United States Shipping Board Emergency Fleet Corporation entered into an operating agreement and also into a managing agreement with Livermore, Dearborn & Co. In the operating agreement Livermore, Dearborn & Co. are appointed as agents of the Shipping Board for the operation of the vessel, and the Shipping Board undertakes to man, equip, victual, and supply the ship, and provide and pay for all provisions, wages, etc., and to keep the vessel in a thoroughly efficient state in hull, furniture, equipment, etc., during service. It is further provided that Livermore, Dearborn & Co. shall be subject to the orders of the Shipping Board Emergency Fleet Corporation as to voyages, cargoes, charters, and as to all matters connected with the use of the vessel. Similar provisions are contained in the managing agreement. The managing agreement contains the

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additional clause that Livermore, Dearborn & Co. "shall exercise due diligence to man, equip, victual, and supply the ship, and to provide and pay for all provisions, wages, and consular, shipping, and discharging fees of the master, officers, and crew." The latter clause must be construed as meaning that in so doing they are acting as the agents of the Shipping Board. Plaintiff having been employed by Livermore, Dearborn & Co., as agents for their principal, United States Shipping Board Emergency Fleet Corporation, and having established a good cause of action for negligence on the part of said corporation through its agents, the judgment against United States Shipping Board Emergency Fleet Corporation must be affirmed.

[2] Subsequent to the accident the defendant United American Lines, Inc., succeeded the said Livermore, Dearborn & Co.; but, no cause of action being established as against Livermore, Dearborn & Co., there is none against United American Lines, Inc., and the complaint is dismissed as to that corporation, with costs.

Judgment modified, by providing that the plaintiff recover of the defendant United States Shipping Board Emergency Fleet Corporation the amount of the judgment, and that the complaint against the defendant United American Lines, Inc., be dismissed, with costs, and judgment, as so modified, 'affirmed, with costs to plaintiff against the United States Shipping Board Emergency Fleet Corporation, and with costs to the United American Lines, Inc., against plaintiff.

BIJUR, J., concurs.

DELEHANTY, J. I dissent. The answer of the defendant United American Lines, Inc., admits that at the time of the accident to the plaintiff Livermore, Dearborn & Co. was operating the vessel in question, and had in its employ the plaintiff, and that subsequent to that date said defendant succeeded the said Livermore, Dearborn & Co., and further admits, by not denying the allegations of the complaint, that said defendant is a "successor to and a reorganization of Livermore, Dearborn & Co.," and that it wassumed all liabilities of Livermore, Dearborn & Co.”

A clear case of liability to the plaintiff has been established against Livermore, Dearborn & Co., Inc., his employer. The defendant United American Lines, Inc., concededly a "reorganization” of and successor of Livermore Dearborn & Co., did not claim upon the trial, nor upon this appeal, that such liability, if any, was not one of those "assumed” by it, but merely contended that error had been committed upon certain other grounds. Obviously a corporation, by “reorganization” and a change of name, does not escape liabilities already incurred, especially where, as here, "all liabilities” of the old company have been “assumed.” The judgment, therefore, should be affirmed as against said defendant.

On the other hand, no evidence of negligence was given against the codefendant, called for convenience the Shipping Board, except that it was sought to connect it by the two agreements, put in evidence, made between said Shipping Board and the said Livermore, Dearborn & Co., Inc., of which the other defendant was the successor.

Both agree

(202 N.Y.S.)

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ments were dated December 31, 1919, and by the first or "operating" agreement the Shipping Board appointed Livermore, Dearborn & Co., Inc., as its agent, called “the operator,” for the operation of the vessel in question, and such other vessels as had been, or might from time to time be, assigned by it to the operator for such purpose.

Although by the said first agreement the Shipping Board is to man, equip, and supply the vessel, and provide and pay for all provisions, wages, etc., and keep the vessel in a thoroughly efficient state in hull, machinery, tackle, etc., during service, yet by the said second agreement, made the same day, all these duties were turned over by the Shipping Board to the said Livermore, Dearborn & Co., Inc., which was thereby appointed its agent "for the husbanding and managing" of the vessel in question, and such other vessels as had been, or might from time to time be, assigned to "the manager” for such purpose. By the said “managing agreement" Livermore, Dearborn & Co., Inc., called "the manager" therein, undertook to take proper delivery of the vessel from the Operation or Construction Division of the Shipping Board, “or from the owner, builder, or any one else having control,” and to "exercise due diligence to man, equip, victual, and supply the vessel, and to provide and pay for all provisions, wages, and consular, shipping, and discharging fees of the masters, officers, and crew, and all other costs and expenses

* properly incident to the management of the vessel, including war risk insurance, if any, required by law, on the master, officers, and crew.”

The agreement further provided that the manager "shall exercise due diligence to maintain the vessel in a thoroughly efficient state in hull, and machinery, tackle, furniture, and equipment, procuring for and on behalf” of the Shipping Board the “necessary labor and material to effect ordinary running repairs and replacements," and "shall exercise due diligence to do or cause to be done all things which would be done by the owner, or the owner's agent, under the usual government form of time charter, attending to all matters in connection with the management of the vessel.” Both under the operating agreement and the managing agreement the vessels were to be operated and managed "in such trade or service” as the Shipping Board should direct, being “subject to the orders” thereof "as to voyages, cargoes, priorities of cargoes, charters, rates of freight, and other charges, and as to all matters connected with the use of the vessel.”

The Shipping Board was also to have the advantage and benefit of any existing or future contracts of “the manager” for the purchase of material, fuel, supplies, or equipment, provided such contracts might be made available to it, without "unreasonably interfering with the requirements of other vessels owned or operated by the manager." The Shipping Board was to pay the manager, as "compensation for management,” a lump sum of $400 per month for each vessel up to five, and $350 per month for each vessel over five, in number, and payable from the day of delivery of each vessel to the manager until redelivery or loss." Commissions also were to be paid for funds advanced for the Shipping Board by the manager in foreign ports. The Shipping Board could terminate either of the agreements as to any or all

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vessels "and to assume forthwith control of any or all of the vessels," except that it could require current business to be liquidated by the operator and manager.

The legal effect of both agreements, when construed together, contemplated the delivery by the Shipping Board of the vessel in question, among others, to the corporation of Livermore, Dearborn & Co., Inc., as an independent contractor, with full control, operation, and management, both as to navigation and as to all details of selecting and hiring the crew, and paying their wages, including the plaintiff, and as to all details of furnishing and equipping the ship, and as to all details of loading and unloading the vessel, and subject only to the direction and orders of the Shipping Board as to what “trade or service” the vessel should be operated in, and "as to voyages, cargoes, priorities of cargoes, charters," etc., "and as to all matters connected with the use of the vessel," as a whole, but not as to the management of the vessel, for the managing agreement itself expressly provides that "the manager" shall attend “to all matters in connection with the management of the vessel.”

In Uppington v. City of New York, 165 N. Y. 222, at page 233, 59 N. E. 91, at page 94 (53 L. R. A. 550), the court, per Vann, J., said:

"Independence of control in employing workmen and in selecting the means of doing the work is the test usually applied by courts to determine whether the contractor is independent or not.”

The court in that case reviewed the authorities, and held that the mere reservation of the right, as in the instant case, of directing where the work is to be done, etc., but not as to method, means, and details, does not constitute the agent or contractor the servant of the principal. Hence the managing corporation and its employee, the plaintiff, were not the servants of the Shipping Board, and it cannot be held liable in this case.

In Hexamer v. Webb, 101 N. Y. 377, at page 383, 4 N. E. 755, at page 756 (54 Am. Rep. 703), the court said:

"It is absolutely essential in order to establish a liability against a party for the negligence of others, that the relation of master and servant should exist. In King v. N. Y. C. & H. R. R. R. Co., 66 N. Y. 181, 184, the rule applicable to such a case is laid down by Andrews, J., as follows: 'It is not enough, in order to establish the liability of one person for the negligence of another, to show that the person whose negligence caused the injury was, at the time, acting under an employment by the person who is sought to be charged. It must be shown, in addition, that the employment created the relation of master and servant between them. Unless the relation of master and servant exists, the law will not impute to one person the negligent act of another.'"

In a word, although the operating and managing corporation in the instant case was acting as an agent of the Shipping Board, yet in no sense was it acting as the servant thereof. The plaintiff, therefore, was not the servant of the Shipping Board, and it did not owe him the usual duties of a master to his servant. Matter of Litts v. Risley Lumber Co., 224 N. Y. 321, at pages 325, 326, 120 N. E. 730, 19 A. L. R. 1147,

(202 N.Y.S.) I am of the opinion that the judgment and order should be affirmed, with costs as against the United American Lines, Inc., but reversed, with costs, and the complaint dismissed, with costs, as against the United States Shipping Board Emergency Fleet Corporation.

DRAKE v. HODGSON et al. (Supreme Court, Appellate Division, First Department. January 25, 1924.) 1. Partnership 242(4)-Demurrers to answer of retiring partner, allegirig

statute of limitations, novation, etc., held properly overruled.

In an action for balance of account with a bankrupt firm of stockbrokers against a retiring partner, demurrers to defendant's answer, setting up the statute of- limitations, novation, and that defendant had

urged plaintiff to withdraw his account, held properly overruled. 2. Partnership On 242(4)–Plaintiff's allegation of dissolution of partnership held

not to import notice thereof to plaintiff.

In an action for balance of account with bankrupt firm of stockbrokers against a retiring partner, plaintiff,, by showing his dealings with the firm, made out a prima facie case, and an allegation in the complaint of a dissolution of the firm by the withdrawal of one of the partners does not import notice thereof to plaintiff, and it was therefore error to

hold that the complaint did not state a cause of action. 3. Partnership on241-In absence of notice of withdrawal, retiring partner con

tinues liable.

In the absence of notice of withdrawal, a retiring partner continues lia

ble for all obligations accruing after, as well as before, the dissolution. 4. Partnership w236—Retiring partner liable as surety to creditors with notice

of dissolution.

In the absence of novation, a retiring partner is liable as surety, as respects partnership liabilities accruing before dissolution of the partner

ship, even as to customers having notice of the dissolution. 5. Pleading Om 403 (2)-Allegation of answer held not to aid complaint.

Allegation of answer held not to be used in aid of the complaint. 6. Pleading ww 214(8)-Demurrant not estopped from contesting facts alleged.

A demurrer does not admit allegations of the answer, except for the purpose of testing its legal sufficiency, and demurrant is not estopped from contesting the facts alleged and putting the defendant to proof thereof at the trial.

Martin, J., dissenting.
Appeal from Supreme Court, New York County.

Action by Frank Drake against Joseph H. Hodgson and others. From a judgment of the Supreme Court (118 Misc. Rep. 503, 194 N. Y. Supp. 874), on cross-motions for judgment on the pleadings, . overruling demurrers to separate defenses and supplemental answer, and dismissing complaint, plaintiff appeals. Judgment reversed. Order reversed, in so far as it grants motion to dismiss complaint, and motion denied, and in other respects affirmed, with leave to withdraw demurrer.

See, also, 119 Misc. Rep. 288, 196 N. Y. Supp. 363.

Argued before CLARKE, P. J., and SMITH, MERRELL, FINCH, and MARTIN, JJ.

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