Eureka Fertilizer Co. v. Baltimore Copper ( 1893 )

McSherry, J.,

delivered the opinion of the Court.

This suit was instituted to recover the amount of several promissory notes given for the purchase price of a barge sold by the appellee to the appellant. To the declaration which contained, in addition to counts on the notes, the usual money counts, the defendant pleaded the general issue, and several defences by way of equitable pleas which need not be particularly alluded to at this time. But one exception appears in the record and that was taken to the action of the Court below upon the several prayers presented by both plaintiff and defendant for instructions to the jury. Whether the instructions granted at the instance of the plaintiff were correct and whether those oí the defendant which were asked but refused, ought to have been granted, are the only questions before us for decision.

The negotiations which ultimately culminated in the execution on May the fifteenth, 1889, of the notes sued on, were carried on partly in writing and partly by parol, and seem to have originated on February the thirteenth of the same year in a letter addressed by the appellant to the appellee, making inquiry as to whether the latter had disposed of its acid boat, and requesting the appellee to name the lowest price for which the boat could be bought. Considerable correspondence followed, throughout which the appellee asserted that the barge, which was an old one, “was in condition for service at once.” The appellant, however, sent its superintendent to make an inspection of the boat, and this he did as far as was possible without hauling her out upon the ways. After this inspection had been made he went to the appellee’s office in Baltimore, and informed the appellee’s treasurer that he, the witness, had inspected the barge and that as far as he could see, she was all right; to which the treasurer replied, “yes, we have recently had her overhauled and she is all right.” This statement was denied by the treasurer. Subsequently, the purchase was consummated, the notes sued on were signed and delivered, and the barge was turned over to the appellant, though she remained registered in the name of the vendor as security for the payment of the purchase money. After she was purchased the boat was used by the appellant to transport acid from Camden, New Jersey, to the appellant’s works on the Susquehanna River, by way of the Chesapeake and Delaware Canal. On her fourth trip from Camden, she sprung a leak and sank in the canal, seriously damaging her valuable cargo. She was after-wards raised and towed to Havre de Grace, and placed upon a marine railway in a ship yard for repairs. It was then ascertained that her spikes were corroded and worn, that some of her timbers were rotten', and others so decayed as to be incapable of holding a nail, and that the planking on her bilges below the water line was worn from its original thickness of two and a half inches down to one-half of an inch; and that to make her seaworthy it would be necessary to lay a new keel, that is, to re-build her. This condition of the boat was not apparent when she was inspected by the appellant’s superintendent, because the alleged defects were all below the water line and’could only have been discovered after she had been placed upon a dry-dock. There was evidence tending to show that the four trips made by the boat after she had been purchased by the appellant could not possibly have caused the unsound condition just described, and that, therefore, she must have been in this damaged state when sold by the appellee.

As the contract of sale was partly in writing and partly in parol, its construction was not for the Court, but for the jury. Roberts & Co. vs. Bonaparte, 73 Md., 190. It was consequently for the jury to say, under proper instructions, whether, taking all the evidence, both written and oral together, and crediting such of it as they might believe, there was a warranty by the vendor of the soundness of the boat; or whether, adopting as true others of the circumstances adduced, the purchase was made with any other or different warranty, or none at all, but purely upon the faith of the inspection of which mention has been made. The case presented, therefore, opposite and conflicting theories founded upon the opposite and conflicting evidence introduced by the contesting parties; and each of these parties, if the evidence supported his theory, was entitled, upon making such a request, to have the legal principles involved in that theory announced to the jury upon an hypothetical statement of the facts upon which it was founded. Accordingly, the plaintiff below by its first and third prayers procured an instruction to the jury to the effect that if they should find that the plaintiff sold the barge as she stood subject to an inspection by the defendant, and that the plaintiff only represented that the barge was in condition for service at once; that the defendant did inspect her and accept her, and that she was in condition for service at the time oí the sale, then the plaintiff was entitled to recover the full amount of the notes with interest. Upon the other hand, the defendant asked, but was refused, an instruction to the effect that if the jury should find that as an inducement to the purchase the plaintiff represented that the barge was all right, and was in condition for service at once, and that the defendant relying upon that representation did make the purchase, and if they should find that the barge was not all right, and in condition for service at once, but on the contrary, was unsound and unseaworthy, and in consequence of such unsoundness was with her cargo lost or damaged, then the defendant was entitled to recoup against the claim on the notes the amount of damages sustained as a direct consequence of the breach of warranty.

No question relative to an implied warranty was or is involved, or could arise. But the existence and scope of an express warranty was a subject distinctly presented. The plaintiff practically conceded by its first and third instructions that the barge had been represented as being in condition for service at once, but the defendant claimed a broader warranty than this, and relied to support it upon the testimony of its superintendent as herein before quoted. It insisted that if the jury should find that such a warranty had in fact been given, and that there had been a breach of it, the defendant was entitled to recoup against the amount it owed for the boat, the amount of damages it had sustained as a direct consequence of that breach. There ought to be no dispute about the correctness of this legal proposition, nor do we understand that there is. But the prayer has been objected to, chiefly, if not solely upon the ground that no evidence was adduced to support it. There was undoubtedly some evidence of such a warranty, and being sufficient to go to the jury, it was exclusively for them to say whether that evidence was true. If true, it established a broader warranty than the plaintiff conceded, and it asserted not only that the barge was in condition for service at once, as she well might have been though old and much worn, but further that she was all right, that is, was sound and consequently was not in such a state of decay and disrepair as to require the laying of a new keel to make her seaworthy. The rejection of the appellant’s first prayer confined the jury to the warranty or representation referred to in the appellee’s instructions, and excluded the recoupment relied on as a defence under the broader warranty set up by the defendant. The result was that the defendant’s theory was eliminated from the case, though both that theory and the plaintiff’s were entitled to be passed on by the jury. This was not only an error, but was injurious to the appellant.

The appellee’s second instruction proceeded upon the hypothesis that there was no warranty of any kind, but that the barge was purchased solely upon the faith of the inspection made by the vendee’s superintendent. It presented an alternative proposition to that contained in the first and third, and in that view is free from objection. We do not understand it as meaning that there could be no express warranty where there had been an inspection of the chattel before the purchase. Such is not the law. 2 Benj. on Sales, Sec. 985, (4ih Am. Ed.)

The fifth prayer seems not to have been acted on by the Court below and is therefore not before us for consideration.

There was no error committed by the Court’s refusal to grant the defendant’s fourth prayer. When the barge was purchased by the appellant it remained, as we have said, registered in the name of the vendor, and as an additional security for the payment of the notes representing the purchase money, policies of marine insurance for the sum of twenty-two hundred dollars were taken out in the vendor’s name upon the boat and her cargo, the vendee paying premiums thereon. After the sinking of the boat and the consequent damage to her cargo, the insurance companies refused to pay the loss thus occasioned, and considerable negotiation ensued. Finally, the vendor delivered the policies to the vendee and agreed, upon condition of being indemnified, that its name might be used in any proceedings deemed necessary by the appellant to recover upon the policies; but a compromise was subsequenty effected between the appellant and the insurance companies, whereby the latter paid to the former, the defendant below, the sum of one thousand dollars upon a surrender of the policies. These are, in outline, the facts set forth in the equitable pleas.

Now, the defendant’s fourth prayer asked the Court to instruct the jury that the fact that the proceeds of these policies had been received by the defendant could “not be taken into consideration by the jury in estimating any loss or damage which the defendant may have sustained” by a breach of the plaintiff’s warranty, but that the jury must subtract the amount of such loss or damage from the amount of the principal and interest of the notes, “without regard to what the defendant had received as the proceeds of said policies.” In other words, the debtor having received the proceeds of policies of insurance taken out in the name and for the benefit of the creditor could retain those proceeds, and also defeat a recovery upon the promissory notes by recoupment, if the damage or loss under the warranty equalled, the amount due on the notes. It, the defendant, would thus not only pay nothing for the property which had been purchased, but would actually realize a profit from the insurance to the extent that that insurance covered the barge. The appellant would have been entitled under its first prayer, had it been granted, to recoup against the notes the actual damages it had sustained by a breach of the warranty it set up, if such warranty had been found by the jury; but its actual damages were only such as remained, if any, after giving credit for the amount of money received by it from the insurance companies. It could not retain the proceeds of the insurance, and recoup against the purchase price of the barge the very same damages for which it had received compensation under the policies.

(Decided 16th November, 1893.)

The defendant's second and third prayers were granted.

Eor the error committed in refusing to grant the appellant's first prayer, the judgment must be reversed, and a new trial will be awarded.

Judgment reversed, with costs above and beloio, and neio trial awarded.