Slaughter's Administrator v. Gerson

APPEAL from the Circuit Court for the District of Maryland.

This was a suit in equity to enforce the lien of two mortgages upon two steamers. The case was thus:

On the 12th of July, 1864, one Slaughter, since deceased, purchased of the complainant, Gerson, a steamboat named the George Law, for the consideration of $40,000. Of this sum he paid $15,000 in cash, and for the balance gave to Gerson his bond, conditioned to pay the same in two instalments of $12,500 each in three and six months thereafter. To secure the payment of these sums he at the same time executed to Gerson two mortgages, one upon the steamboat which he purchased, and the other upon a steamboat named the Chester, which he formerly owned. The first instalment on the boat not being paid at its maturity, the present bill was filed to enforce the mortgages by a sale of the steamboats, and the application of the proceeds to the demand of the complainant.

The answer of the defendant admitted the execution of the bond and mortgages, but set up, as a defence to their enforcement, that they were obtained from him by misrepresentation and fraud, and set forth the particulars in which such alleged misrepresentation and fraud consisted.

The substantial averments in this respect were those: That the defendant had established a line of steamboats from Baltimore to various landings on Chester River, on the Eastern Shore of Maryland, and landings on tributaries to that river; that the most important of these landings was at Queenstown; that no boat drawing more than 3 1/2 feet of water could reach the wharf at this place except in case of an extraordinary high tide; that he purchased the George Law of the complainant for this route, upon a representation that it drew only this number of feet when fully laden; that this representation was false and fraudulent, and that the steamer, when placed on the route, grounded upon her first trip in 5 feet of water; and that, so soon as precise information was obtained of this fact, the defendant called upon the complainant to cancel the contract, offering at the same time to return the steamboat purchased, but that the complainant refused to comply with this proposition.

A great deal of evidence was taken in the case bearing upon these allegations of misrepresentation and fraud. This was in many particulars conflicting. Some of it tended to show that when the negotiation was first entered upon, Slaughter did particularly state that it was indispensable to his purpose that the boat should not draw more than 3 1/2 feet water; that upon Gerson's saying that the boat was cheap at the price proposed for her, Slaughter said that he did not want her at any price if she drew more than 3 1/2 feet; that Gerson repeatedly said that she did not draw more; and that if she did, Slaughter should have her for nothing. On the other hand there was evidence which-if any conversation with Gerson, himself, had taken place at all-went to show that he never stated more than that according to the representation of the captain of the boat, she drew no more than the desired depth of water; and that it was plain that Gerson spoke only on the strength of what thus came to him.

But whatever did or did not thus take place in the origin of matters, it appeared that before the contract for the sale was executed, and with the intention of examining the vessel, in view of a purchase, Slaughter himself went to New York from Baltimore, where he resided, taking with him two shipcarpenters and a square to measure the steamer; his son, who afterwards was captain of the boat, accompanying the party. Whilst these persons were in New York, every opportunity which they desired was given to them to examine the vessel from one end to the other; and they made an extended and careful examination accordingly. They made a trip on her to one of the ports where she was running, and measured her draft on two occasions; once amidships, and once at the stern and bow. Gerson accompanied them on board, on their arrival in New York, and told them to look for themselves, and to go anywhere they pleased about the boat; that he was not 'a steamboat man,' and that he got all his information from the captain of the boat, to whose statements he referred them. One of the carpenters who accompanied Slaughter made a measurement of the boat while she was lying at the dock without any load, and reported that she drew 4 feet 6 inches at midships. The other of the carpenters made a measurement forward and aft, and reported that the boat drew at both places 3 feet 6 inches. Both of these measurements were communicated to Slaughter, and the latter was accompanied with the declaration that the boat drew too much water for his purposes. The captain of the boat also took the defendant on to the dock where she was lying, and showed him that she was coppered three feet and nine inches from the keel, and that she showed her copper three inches out of water.

The bill of sale given to Slaughter contained a detailed description of the steamer, but did not state her draught.

The Circuit Court gave a decree for the complainant, and from it the defendant appealed to this court.

Mr. William Schley, for the appellant:

All knew that Mr. Slaughter wanted a boat to ply on a specified route, drawing, when laden, not more than 3 1/2 feet water. The captain, of course, knew well that the draught much exceeded this, and that the boat would not suit at all. The doctrine of caveat emptor ought not to be applied. Unless the sea was calm-which does not appear-it was impossible to make an accurate measurement of the draught of water. Besides this, the rule of caveat emptor, however potent in actions ex contractu, is, comparatively, of small force in an action based on fraudulent misrepresentations.

But if there was no fraud on the part of Gerson or his agent, still it is clear, from the testimony, that Slaughter would not have purchased the boat at any price, if he had known that she would not answer the purpose for which he wished to procure a boat. Upon the hypothesis that Gerson was acting honestly, the case presented is one of mutual mistake. Coming, as he has done into a court of conscience, Gerson submits himself to its power to make him do what is right, or to be left to his remedy at law. Foreclosure of a mortgage is in the nature of a specific performance of a contract, which will be refused, where the defendant has, by mistake, not originating in mere carelessness, entered into a contract framed differently from his own intention.

Mr. B. W. Huntington, contra.

Mr. Justice FIELD delivered the opinion of the court.