2. At the time of sale of a barge which remained registered in the name of the seller as security for the purchase money, insurance thereon was taken out in the seller's name as an additional security, the premiums being paid by the buyer. Held that, this having been turned over to the buyer to enable collection from the insurance company, he could not, in an action for the purchase money, recoup for the damages for breach of a warranty of soundness without regard to the money which he had received from the policy.

Appeal from circuit court, Harford county. Action by the Baltimore Copper, Smelting & Rolling Company against the Eureka Fertilizer Company of Cecil county. Judgmen for plaintiff. Defendant appeals. Reversed. Argued before ROBINSON, C. J., and BRISCOE, FOWLER, and McSHERRY, JJ.

Albert Constable and J. J. Archer, for appellant. John S. Wirt and R. F. Brent, for appellee.

MCSHERRY, J. 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 defenses 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 of 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 18, 1889, of the notes sued on, were carried on partly in writing, and partly by parol, and seem to have originated on February 13th 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 a 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, N. J., to the appellant's works, on the Susquehanna river, by way of the Chesapeake & Delaware canal. On her fourth trip from Camden, she sprung a leak, and sank in the canal, seriously damaging her valuable cargo. She was afterwards raised, and towed to Havre de Grace, and placed upon a marine railway in a shipyard 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 bidgers below the water line was worn from its original thickness of 2% inches down to 1⁄2 of an inch; and that, to make her seaworthy, it would be necessary to lay a new keel,-that is, to rebuild 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 drydock. 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 v. Bonaparte, 73 Md. 191, 20 Atl. 918. 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 be lieve, 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 a 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 of 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 hereinbefore 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 defense 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. Sales, (4th Amer. Ed.) § 985.

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 $2,200 were taken out in the vendor's name upon the boat and her cargo, the vendee paying the 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 subsequently effected between the appellant and the insurance companies, whereby the latter paid to the former, the defendant below, the sum of $1,000, 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 equaled 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 re

coup 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. The defendant's second and third prayers were granted. For 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 below, and new trial awarded.

(78 Md. 270)

MCRAE et al. v. McRAE. (Court of Appeals of Maryland. Nov. 23, 1893.)

RESULTING TRUST SUFFICIENCY OF EVIDENCE CONTRACT TO SELL EQUITABLE PROPERTY RIGHT OF WIFE TO DOWER.

1. In a suit by a widow to recover property, which she contended her husband had bought, but that the title was taken by his brother to secure the price, there was evidence of a verbal agreement that the payment of the purchase money was a loan, but the witnesses testified that the agreement was incorporated in a lease. The lease gave complainant's husband an option to buy the property within a certain time. There was evidence of repeated declarations by complainant's husband that his brother, and not himself, had bought the property. Held, that the evidence failed to establish a resulting trust.

2. Where a husband buys property, and, before the title is conveyed to him, executes for a valuable consideration a lease with an option on the part of the lessee to buy, the contract to sell may be enforced free of the wife's claim of dower, since a contract by a husband to sell his equitable estate will in equity bar the claim of the wife.

Appeal from the circuit court of Baltimore city.

Bill by Henrietta McRae, as executrix and devisee of Charles McRae, deceased, against George P. McRae and Margaret J. McRae, to enforce the specific performance of a contract to sell land. Subsequently an amended bill was filed. Decree for complainant, and defendants appeal. Reversed.

Argued before ROBINSON, C. J., and BRYAN, MCSHERRY, FOWLER, and BRISCOE, JJ.

Theo. B. Horwitz, for appellants. Thos. M. Lanahan and Frank Gosnell, for appellee.

ROBINSON, C. J. The property out of which this controversy bas arisen, being a storehouse and dwelling, was sold at public auction on the 13th March, 1888, by John M. Littig and Jane McRae, trustees, under a decree of the circuit court of Baltimore city, and George P. McRae was returned as purchaser, and on the 18th April following the

sale was finally ratified. On the 20th April, two days after the ratification of the sale, the purchaser leased the property to his brother, Charles McRae, for a term of five years, at a yearly rent of $960, payable in monthly installments, the lessor agreeing to pay all taxes, including water rent and expenses of repair; and, upon default in the payment of the rent, the lessor was to reenter, and the lease thereby to be null and void. The lessor further agreed to sell and convey the property to Charles, the lessee, in fee, upon the payment by him, his heirs or personal representatives, of the sum of $10,000 and all arrearages of rent at any time during the continuance of the lease. Under this Charles entered into possession of the premises, and remained in possession until his death, in January, 1892. After his death, and within the time designated in the lease, his widow, the complainant, as executrix and devisee under his will, through Mr. Lanahan, her attorney, tendered to George F. McRae, the lessor, $10,000 and all arrearages of rent, and also a deed conveying the property in fee to the complainant. This tenuer George, the vendor, refused to accept, and refused also to execute the deed. Thereupon a bill was filed by the complainant, executrix and devisee, against the vendor to enforce the specic performance of the contract of sale. In bis answer, George, the vendor, says his wife, not being a party to the contract of sale, refuses to join in a deed conveying the property in fee to the complainant, and that all the complainant has a right to demand of him under the contract of sale is a conveyance of the property by him, upon the payment of the sum of $10,000 and all arrears of rent, subject to the dower therein of his wife. Subsequently an amended bill was filed by the complainant against George P. McRae and Margaret, his wife, alleging that since the filing of the original bill she had discovered that George was not in fact the owner of the property, but that it was purchased by Charles, her husband, at the trustee's sale, and was paid for by him with the money loaned to him by his brother, George, and that the title was conveyed by the trustees merely as a security for the payment of the loan. Now, if these averments be true, if the property was purchased by Charles, and George loaned to him the $10,000 to enable him to pay the purchase, and took the legal title in himself as a security for the payment of the load. then, upon such a state of facts, a trust would arise by operation of law in favor of Charles, and the case would fall directly within the decision of Dryden v. Hanway, 31 Md. 254. In other words, George would hold the property in trust for Charles, and the deed conveying the legal title to George would be treated in equity merely as a se curity for the payment of the loan. The burden, however, is upon the complainant to establish the facts upon which the trust rests

by clear and satisfactory proof. Now, what is the proof? In the first place, it is said that the property was struck off to George at the trustee's sale; and so the auctioneer testifies, but at the same time he says that $6,500 was the bighest bona fide bid made upon the property, and that he himself, by the direction of Mr. Merryman and of George and Charles McRae, both of whom were directly interested in the sale, the property being part of their father's estate, bid the property up to $10,000, and then struck it off to Charles. Mr. Merryman, who was counsel for all the parties interested, testifies that the property was struck off to Charles, and that George was substituted as purchaser, because of Charles' unwillingness or inability to take the purchase money out of his business, and in pursuance of a verbal agreement between George and Charles that the latter should have the property whenever he paid to George the $10,000, the same being the purchase money, and that this verbal agreement was embodied in the lease which was drawn by the witness; and, being pressed by the question, he says the lease was understood to be merely as a security for the payment of $10,000. Now, whatever may be the recollection of the witness testifying as to matters which occurred five years ago, one thing is certain: that from the beginning to the end of this lease there is not a line or word from which it can be inferred that it was executed as a security for the payment of $10,000, loaned by George to Charles, nor as security for the payment of any sum whatever. On the contrary, it is a carefully prepared instrument, by which George, as purchaser and owner, leases the property to Charles for a term of years upon the payment of a stipulated rent; and besides the covenants ordinarily contained in leases, there is an agreement on the part of George to sell and convey the property in fee to Charles upon the payment of a designated sum within a designated time. Then we have the testimony of Mr. Littig, one of the trustees, and what does he prove? Quoting his exact language, he says: "There was a conversation between George and Charles McRae and the attorney, Mr. Merryman, and myself, and there was a verbal understanding. Mr. George McRae had money, as I understood, out at a low rate of interest, and he was to be substituted for Mr. Charles McRae, with a verbal understanding that Mr. Charles McRae could buy the property back. It was a loan, as I understood it. I understood a lease and agreement was made afterwards covering that verbal understanding." This is substantially the proof relied on to show that Charles was the purchaser, and that the purchase money was loaned to him by George, and that the legal title was conveyed to the latter to secure the payment of the loan. And although these witnesses speak of "understandings," and how they understood the verbal agreement between

George and Charles, yet they all agree that this verbal understanding was reduced to writing, and embodied in the lease prepared by Merryman, one of the witnesses himself. Now, if the case rested here, it could hardly be said, in the face of the clear and explicit terms of the lease, containing, as all the witnesses say, the agreement between George and Charles, and in the face of the trustee's deed conveying the legal title to George, that the complainant has offered such proof as the law requires to establish a resulting trust. But the case does not rest here. We have the repeated and unqualified declarations and admissions by Charles himself, made directly after the sale to a number of persons, among whom were some of his intimate friends, that the property was bought by George, assigning at the same time the reasons why he did not himself buy it. Directly after the sale the witness Black went with George and Charles to the house of the latter, and as soon as they entered the dining room Mrs. Charles McRae said, "Charles, who bought the store?" and he replied, "My brother, George," and then, addressing George in an excited manner, she said, "What made you buy the store over Charley's head?" Then we have the testimony of Mr. Capron, who called at the store to inquire about the sale of the property, and he says that Charles told him that George had bought it, and assigned as a reason for not buying it himself that he could do better with the money in his business. The same thing he said to the banks, and three days before the sale he told Mr. Schamper, his bookkeeper, that George was to buy the property at $10,000, and that he (Charles) could do better with the money in his business. So, taking the whole testimony together, instead of proving that the property was bought by Charles, and that the purchase money was loaned to him by George, it shows beyond all question, it seems to us, that George was in fact the purchaser; that he paid the entire purchase money; and that, in pursuance of an understanding between them, George leased the property to Charles for a term of years, with an option on the part of the latter to buy it at a named price, and within a given time. And, this being so, there is no ground on which a resulting trust can be maintained.

We come, then, to the original bill, and here we find a contract on the part of George to sell and convey the property in fee to Charles, his heirs and personal representatives, upon the payment by him of $10,000 and all arrears of rent at any time within five years from the date of the contract. The purchase money and arrears of rent have been tendered to George, and he refuses to convey the property in fee, because his wife declines to join in the conveyance. His wife was not a party to the contract, and if she has an inchoate right of dower in the property this court has no power to com