5ASR3d197

Series: 5ASR3d | Year: () | 5ASR3d197
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HO PYO HONG and AOTEAROA HONG,

dba KOREANSA SHIPPING AGENCY,

Plaintiffs,

 

v.

 

CHUNG YONG #21, its gear, nets and appurtenances,

Defendant in Rem.

 

High Court of American Samoa

Trial Division

 

CA No. 22-98

 

November 29, 2001


 

 

[1] Where court had both common law general jurisdiction and admiralty

jurisdiction, action in rem against

defendant vessel to enforce personal judgment could proceed under Supplemental

Rule B or C of the Trial Court Rules of Civil Procedure.

 

[2] Where court had jurisdiction to proceed under Supplemental Rule B or

C for Admiralty and Maritime Claims, court’s discretion to proceed under Rule B

did not defeat proper seizure of vessel and did not reflect judicial

determination as to Rule C in rem

claim or existence of maritime lien.

 

[3] Full faith and credit requires this court to respect the res judicata effect of an earlier

judgment in deciding the same issues presented in an action currently

litigated.

 

[4] Res judicata applies to a “final” judgment between the “parties” or

those in privity with them.

 

[5] Where earlier, final judgment determined that vessel owners’

association was legal entity with vested ownership interest in vessels, and

where plaintiffs in instant action and association were parties in the prior

action, association was estopped from relitigating same issues in instant

action.

 

[6] A partnership is a voluntary contract between two or more competent

persons to place their money, effects, labor, and skill, or some or all of

them, in lawful commerce or business, with the understanding that there shall

be a proportional sharing of the profits and losses between them, and which is

not organized as a corporation.

 

[7] A partnership agreement may be implied from conduct of parties and

circumstances.

 

[8] One of the fundamental tests to determine the existence of a

partnership is whether there exists a community of interest among the parties

for business purposes.

 

[9] Third party doing business with partnership may hold partnership

liable as legal entity for debts created in reliance on such partnership, and

in such circumstances, each member of partnership is generally, personally, or

severally liable for the partnership’s debts.

 

[10] General partners are jointly and severally liable for any judgment

debt of the partnership.

 

[11] Where corporation was determined to be partner in association, Court

properly concluded that it was jointly liable for judgment against association,

and vessel owned by it could rightfully be seized to satisfy partnership debt.

 

[12] Although no affidavit accompanied complaint, as is required for a

Rule B attachment, vessel was properly seized pursuant to a Rule C claim in rem and, therefore, was properly

before Court for Rule B attachment purposes as well.

 

[13] Laches is an affirmative defense that requires a finding that a

plaintiff delayed inexcusably or unreasonably in filing suit and that delay was

prejudicial to the defendant.

 

[14] The decision on whether to apply laches depends upon the particular

circumstances of the case at question.

 

[15] Under laches analysis, court determined that plaintiffs’ commencing

of action to enforce judgment less than 14 months after judgment was entered

was neither unreasonable nor an inexcusable length of time.

 

[16] The general rule of merger provides that when a final and personal

judgment is rendered in favor of the plaintiff, the plaintiff cannot thereafter

maintain an action on the original claim or part of the original claim,

although he may be able to maintain an action upon the judgment.

 

[17] Defense of merger was inapplicable when court treated action as

action upon personal judgment rather than action in rem on maritime lien.

 

[18] Under A.S.C.A.

§ 43.0120(5), actions founded upon a judgment must be brought within 10 years.

 

Before RICHMOND, Associate Justice, and SAGAPOLUTELE,

Associate Judge.

 

Counsel: For Plaintiffs, Charles V. Ala`ilima

 For Defendant, Paul F.

Miller

 

OPINION

AND ORDER

 

Plaintiffs Ho Pyo Hong (“Ho

Pyo”) and Aotearoa Hong (together “the Hongs”) initiated this in rem action against defendant vessel

Chung Yong #21 (“Chung Yong”) to collect a portion of the in personam judgment rendered in Ho Pyo’s favor in Korea Deep Sea Fisheries Association

v. Hong, CA No. 78-92, slip op. (Trial Div. Jan. 9, 1997). 

The Hongs’ claim that the judgment against the Korea Deep Sea Fisheries

Association (“KDSFA”) entitles them to in

rem judgment or attachment against the vessels owned by members of KDSFA,

and specifically against the Chung Yong for supplies in the amount of

$7,517.63. The court holds for the Hongs.

Facts

 

In 1992, KDSFA brought suit

against Ho Pyo, CA No. 75-92, alleging debts for failure to fulfill ship supply

contracts.  Ho Pyo filed a counterclaim

for unpaid loans to KDSFA and unpaid invoices to KDSFA vessels.  On January 9, 1997, judgment was rendered in personam for Ho Pyo in the amount of

$1,339,344.05.  The Chung Yong was one of

the KDSFA vessels with outstanding invoices. 

This claim is based on four invoices, one dated August 24, 1990, and

three dated August 31, 1990.[1] The invoices were for food

supplies and other provisions, such as liquor and tobacco, which were delivered

to the Chung Yong by the Hongs.

 

Following the judgment in CA No. 78-92, KDSFA shut

down its operations in American Samoa on November 6, 1997.  In Saeng Lee, the former manager of KDSFA in

American Samoa, has since established a new agency in the territory to

effectively continue with these operations.

In order to collect the debt included in the judgment

in CA No. 78-92, the Hongs had the Chung Yong arrested on March 3, 1998, after

it entered Pago Pago Harbor.  On March 4,

1998, the Hongs and the Chung Yong’s local agent entered into a stipulation

under which the Chung Yong was released upon the deposit of $10,000 into the

Court’s registry.

 

Discussion

 

A.  Jurisdiction

 

[1-2] This matter is properly before this

Court.  The Court has both common law

general jurisdiction and admiralty jurisdiction.  Gray,

Cary, Ames & Frye v. HGN Corp., 6 A.S.R.2d 64, 69-70 (App. Div. 1987); Sec. Pac. Nat’l Bank v. M/V Conquest, 4

A.S.R.2d 59, 61 n.1 (Trial Div. 1987). 

Because of the Court’s dual jurisdiction, the case could lie in this

Court on either of two supplemental rules for admiralty and maritime claims,

T.C.R.C.P. B (Attachment and Garnishment) or C (Action in Rem).  The difference

between the two is the difference between a common law quasi-in-rem action to

answer for the in personam judgment in CA No. 78-92, Rule B, and an admiralty

law in rem action on a maritime lien

for the provision of supplies, Rule C. 

The Chung Yong was properly seized for a Rule C in rem proceeding, which the Hongs fully argued before the

court.  We will, however, consider this

action as one that concerns the execution of a civil judgment through Rule B

attachment against the property of a judgment debtor, an action which perfects

a lien against the property.  See Diocese of Samoa Pago Pago v. K.M.S.T., Inc.,

18 A.S.R.2d 67, 69 (Land & Titles Div. 1991).  The discretion of the court to proceed under

Rule B does not destroy the proper seizure of a vessel.  The property properly attached was the Chung

Yong, its gear, nets, and appurtenances.

 

Our decision to decide this action on Rule B

attachment and partnership liability grounds does not reflect any judicial

determination as to the Rule C in rem

claim, nor the existence of a maritime lien. 

The successful Rule B attachment makes it unnecessary to reach those

other issues at this time.  However, the

Hongs presented valid alternative arguments, and we reserve opinion on

them.  We proceed from this position.

 

B.  Res Judicata

Effect of CA No. 78-92

 

[2] In CA No. 78-92, this Court found

that KDSFA, as it did business with Ho Pyo, was “a legal entity,” that it

represented itself as “an association of boat owners,” and that equity mandated

it be estopped from denying its legal status. 

Korea Deep Sea Fisheries

Ass’n, 31 A.S.R.2d at 83.[2]  This Court has therefore

already determined that KDSFA is not merely an agent for the vessels under its

control.  It is a business entity with a

vested ownership interest in these vessels. 

Hence, we will treat KDSFA as a legal entity in this action, and further

determine that KDSFA is a partnership of its members and that principles of

partnership liability thus apply to this action.

 

[3-5] Full faith and credit requires this

court to respect the res judicata

effect of an earlier judgment in deciding the same issues presented in an

action currently litigated.  U.S. Const., Art. IV, § 1; In re A

Minor Child, 28 A.S.R.2d 33, 35 (Trial Div. 1995).  Res judicata applies to a “final” judgment between

the “parties” or those in privity with them. 

Restatement

(Second) of Judgments § 17 (1988); Puailoa v. Estate of

Lagafuaina, 19 A.S.R.2d 40, 46 (App. Div. 1991).  The judgment in CA No. 78-92 is a full and

final judgment of this Court.  KDSFA and

Ho Pyo were both parties to CA No. 78-92, and KDSFA is estopped from denying

the appropriate application of res

judicata on the issues in this action.

 

C.  KDSFA as

a Partnership

 

[6-8] A partnership is a “business owned by

two or more persons that is not organized as a corporation.  A voluntary contract between two or more

competent persons to place their money, effects, labor, and skill, or some or

all of them, in lawful commerce or business, with the understanding that there

shall be a proportional sharing of the profits and losses between them.”  Black’s Law

Dictionary 1120

(6th ed. 1990); see also Meehan v. Valentine, 145 U.S. 611, 618-19 (1892).  While a contract is needed for a partnership to

exist, this contract may be implied from the conduct and circumstances

alone.  Temple v. Temple, 365 N.W.2d 561, 566 (S.D. 1985); Yoder v. Hooper,

695 P.2d 1182, 1187 (Colo. Ct. App. 1984). 

One of the fundamental tests to determine the existence of a partnership

is whether there existed a community of interest among the parties for business

purposes.  59A Am. Jur. 2d

Partnerships § 157 (1987).

 

The evidence in this action established that between

1990 and 1997 the vessel was owned by Daerim Corporation (“Daerim’), a Korean

corporation, and that Daerim was a member of KDSFA.  Further, Daerim placed their property in

lawful commerce in combination with the other members of KDSFA.  The members expected to and did receive a

proportional share of the profits from the venture.  The KDSFA office in American Samoa was not

operating solely as an agent for the individual vessels it served, but in fact

it controlled the activity of KDSFA members’ vessels, the catch, sales, and

financial affairs of those vessels, and the remittance of profits back to the

KDSFA members in Korea.  A “community of

interest” existed amongst the KDSFA members for their operations in American

Samoa.  KDSFA did not produce any

credible evidence to refute the existence of a partnership.  There was not any sort of fee-paying

arrangement between the KDSFA members and KDSFA’s local agent in American Samoa

that would allow a conclusion other than finding that there was an agreement to

receive a share of the profits of the partnership.  Based on the records introduced into

evidence, it appears that KDSFA remitted profits to the partnership

members.  There is no credible evidence

that Daerim did not receive a proportional share of these profits.  This collection of actions shows, and we

hold, that at the very least an implied partnership contract existed between

the members of the KDSFA based on their conduct and the circumstances of their

affairs in American Samoa.

 

D.  Liability

for Partnership Debts

 

[9-11] A third party doing business with a partnership

may hold the partnership liable as a legal entity for any debts created in

reliance on such partnership; each member of the partnership is personally or

severally liable for the partnership debts. 

Texaco, Inc. v. Wolfe, 601 S.W.2d 737, 740-41 (Tex. Ct.

App. 1980); O.L. Holt v. Owen Elec. Supply, Inc., 722 S.W.2d 22,

24 (Tex. Ct. App. 1986).  General

partners are jointly and severally liable for any judgment debt of the

partnership.  Kaneco Oil & Gas, Ltd. v. Univ. Nat’l Bank, 732 P.2d 247, 250 (Colo.

Ct. App. 1986).  The Hongs clearly did

business with KDSFA vessels in reliance on KDSFA being a partnership.  There is no contrary evidence, and it is

likely the Hongs would not have extended credit for supplies in such large

amounts to various Korean fishing boats, including but not limited to the Chung

Yong, if not for the security that KDSFA would be liable for these debts and

that action would lie against KDSFA’s and its partner’s assets if

necessary.  As such, Daerim, as a partner

in KDSFA, is jointly liable for the judgment debt and the vessel can be rightly

seized to satisfy the partnership debt.

 

E.  Rule

B—Attachment and Garnishment

 

[12] “With respect to any admiralty or

maritime claim in personam a verified

complaint may contain a prayer for process to attach the defendant’s goods and

chattels.” T.C.R.C.P. B(1).  The valid in personam judgment in CA No. 78-92

allows attachment of the Chung Yong as property belonging to Daerim, a KDSFA

partner.  The Chung Yong points out that

there was no affidavit accompanying the complaint, as needed for Rule B

attachment.  However, as discussed above,

the Chung Yong was correctly seized under the Hongs’ Rule C in rem claim and, therefore, was

properly before the court for Rule B attachment purposes as well.

 

F.  Laches

and Merger

 

[13-14] The Chung Yong has raised laches as a

defense.  Laches is an affirmative

defense that requires a finding that a plaintiff delayed inexcusably or

unreasonably in filing suit and that delay was prejudicial to the defendant.  Nat’l Wildlife Fed’n v. Burford, 835 F.2d 305, 318 (D.C. Cir.

1987).  The decision on whether to apply

laches depends upon the particular circumstances of the case at question.  Id. 

A court must weigh all pertinent facts and equities.  A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1028 (Fed.

Cir. 1992).  However, in order to invoke

the laches defense, a defendant has the burden of proving two factors: (1) the

plaintiff delayed filling suit for an unreasonable and inexcusable length of

time from the time the plaintiff knew or reasonably should have known of its

claim against the defendant, and (2) the delay operated to the prejudice or

injury of the defendant.  Id.;

Costello v. United States, 365 U.S. 265, 282 (1961).

 

[15] The Chung Yong has not proven either

of the two requirements for laches.  An

action to enforce the judgment of CA. No. 78-92 could not have begun before the

judgment was entered on January 9, 1997. 

The Hongs commenced this action on March 3, 1998, less than 14 months

later.  This is not an unreasonable and

inexcusable length of time.  The defense

of laches is therefore inapplicable.

 

[16-17] The Chung Yong has also claimed the

defense of merger.  The general rule of

merger provides that “when a final and personal judgment is rendered in favor

of the plaintiff, the plaintiff cannot thereafter maintain an action on the

original claim or part of the original claim, although he may be able to

maintain an action upon the judgment. Restatement of Judgments § 18

(1982).  As we are treating this case as

an action upon the judgment in CA No. 78-92, the rule of merger also does not

apply.

 

G.  Statute

of Limitations

 

[18] The Chung

Yong has urged the running of the statute of limitations as a defense.  This action was timely brought and does not

violate the statute of limitations. A.S.C.A. § 43.0120(5) provides that actions

founded on a judgment must be brought within 10 years.  This is an action to recover the award of a

judgment against a member of the liable partnership, not a new action against a

defendant that was or should have been known within the time period associated

with the original claim.  See Stancris

v. Yang, CA No. 47-99, slip

op. (Trial Div. Sept, 9, 1999).  The

judgment in CA No. 78-92 was entered on January 9, 1997, and this action was

commenced on March 3, 1998, less than 14 months later. This action was

therefore commenced well within the statute of limitations.

 

Order

 

The Hongs are awarded judgment in the

amount of $7,777.73, plus interest at 6% per annum from January 9, 1997.  The Clerk of Courts shall pay this amount to

the Hongs from the $10,000.00 on deposit in the court’s registry.  Any remainder shall be delivered to the Chung

Yong’s attorney, who shall return the funds to the entity entitled to them.

 

It is so ordered.

 

**********

 



[1] The invoices total $7,777.73.  The Hongs, however, claim only

$7,517.63.  There is no clear explanation

for the discrepancy.  The documents

pertaining to the judgment in CA No. 78-92 do not provide an exact accounting

of the sums used to reach the judgment amount. However, based on the evidence

presented in this case, we find the amount of the judgment in CA No. 78-92

related to the Chung Yong for purposes of this action is $7,777.73.

[2] “Here KDSFA did business with Hong as a legal

entity.  Moreover, KDSFA instituted the present action in its own

name.  Equity mandates that KDSFA be

estopped from now denying its existence as a legal entity, rather than merely

an agent of its members.  We thus find

that KDSFA is a legal entity, with the capacity to sue and be sued on its own

behalf.”  Korea Deep Seas Fisheries Ass’n v. Hong, 31 A.S.R.2d 80, 83 n.1

(Trial Div. 1996).