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Opinion of the Court.
in the form of stating the qualifications and limitations of the general rule, yet indicate with reasonable certainty the substantial grounds upon which the doctrine of implied warranty has been made to rest. According to the principles of decided cases, and upon clear grounds of justice, the fundamental inquiry must always be whether, under the circumstances of the particular case, the buyer had the right to rely and necessarily relied on the judgment of the seller and not upon his own. In ordinary sales the buyer has an opportunity of inspecting the article sold; and the seller not being the maker, and therefore having no special or technical knowledge of the mode in which it was made, the parties stand upon grounds of substantial equality. If there be, in fact, in the particular case, any inequality, it is such that the law cannot or ought not to attempt to provide against; consequently, the buyer in such cases—the seller giving no express warranty and making no representations tending to mislead—is holden to have purchased entirely on his own judgment. But when the seller is the maker or manufacturer of the thing sold, the fair presumption is that he understood the process of its manufacture, and was cognizant of any latent defect caused by such process and against which reasonable diligence might have guarded. This presumption is justified, in part, by the fact that the manufacturer or maker by his occupation holds himself out as competent to make articles reasonably adapted to the purposes for which such or similar articles are designed. When, therefore, the buyer has no opportunity to inspect the article, or when, from the situation, inspection is impracticable or useless, it is unreasonable to suppose that he bought on his own judgment, or that he did not rely on the judgment of the seller as to latent defects of which the latter, if he used due care, must have been informed during the process of manufacture. If the buyer relied, and under the circumstances had reason to rely, on the judgment of the seller, who was the manufacturer or maker of the article, the law implies a warranty that it is reasonably fit for the use for which it was designed, the seller at the time being informed of the purpose to devote it to that use.
Opinion of the Court.
Whether these principles control, or to what extent they are applicable, in the present case, we proceed to inquire.
Although the plaintiff in error is not a manufacturer in the common acceptation of that word, it made or constructed the false work which it sold to Hamilton. The transaction, if not technically a sale, created between the parties the relation of vendor and vendee. The business of the company was the construction of bridges. By its occupation, apart from its contract with the railroad company, it held itself out as reasonably competent to do work of that character. Having partially executed its contract with the railroad company, it made an arrangement with Hamilton, whereby the latter undertook, among other things, to prepare all necessary false work, and, by a day named, and in the best manner, to erect the bridge then being constructed by the Bridge Company–Hamilton to assume and pay for such work and materials as that company had up to that time done and furnished. Manifestly, it was contemplated by the parties that Hamilton should commence where the company left off. It certainly was not expected that he should incur the expense of removing the false work put up by the company and commence anew. On the contrary, he agreed to assume and pay for, and therefore it was expected by the company that he should use, such false work as it had previously prepared. It is unreasonable to suppose that he would buy that which he did not intend to use, or that the company would require him to assume and pay for that which it did not expect him to use, or which was unfit for use. It is suggested that, as Hamilton undertook to erect the bridge in a thorough and workmanlike manner, he was not bound to use the false work put up by the company, and that if he used it in execution of his contract, he did so at his own risk. This is only one mode of saying that, in the absence of an express warranty or fraud upon the part of the company, the law will not, under any circumstances, imply a warranty as to the quality or sufficiency of this false work. But the answer to this argument is that no question was raised as to its sufficiency; that, while Hamilton must be charged with knowledge of all defects apparent or discernible upon inspection, he could not Opinion of the Court.
justly be charged with knowledge of latent defects which no inspection or examination, at or before the sale, could possibly have disclosed. The jury have, in effect, found the false work to have been insufficient, in that the piles were not driven deep enough; that had they been properly driven, the work would have answered the purposes for which Hamilton purchased it; and that he could not have ascertained such defects in advance of an actual test made during the erection of the bridge. It must be assumed that the company knew, at the time of sale, that Hamilton could not, by inspection, have discovered the latent defects which were subsequently disclosed. And if it be also assumed, as it fairly may be, that Hamilton, being himself a bridge builder, knew that there might be latent defects in this false work, caused by the mode of its construction, and beyond his power by mere inspection to ascertain, it must not be overlooked that he also knew that the company, by its agents or servants, were or should have been informed as to the mode in which the work had been done. That he did not exact an express warranty against latent defects not discoverable by inspection, constitutes, under the circumstances, no reason why a warranty may not be implied against such defects as were caused by the mode in which this false work was constructed. In the cases of sales by manufacturers of their own articles for particular purposes, communicated to them at the time, the argument was uniformly pressed that, as the buyer could have required an express warranty, none should be implied. But, plainly, such an argument impeaches the whole doctrine of implied warranty, for there can be no case of a sale of personal property in which the buyer may not, if he chooses, insist on an express warranty against latent defects.
All the facts are present which, upon any view of the adjudged cases, must be held essential in an implied warranty. The transaction was, in effect, a sale of this false work, constructed by a company whose business it was to do such work, to be used in the same way the maker intended to use it, and the latent defects in which, as the maker knew, the buyer could not, by any inspection or examination at the time, discover; the buyer did not, because in the nature of things he Syllabus.
could not, rely on his own judgment; and, in view of the circumstances of the case, and the relations of the parties, he must be deemed to have relied on the judgment of the company, which alone of the parties to the contract had or could have knowledge of the manner in which the work had been done. The law, therefore, implies a warranty that this false work was reasonably suitable for such use as was contemplated by both parties. It was constructed for a particular purpose, and was sold to accomplish that purpose; and it is instrinsically just that the company, which held itself out as possessing the requisite skill to do work of that kind, and therefore as having special knowledge of its own workmanship, should be held to indemnify its vendee against latent defects, arising from the mode of construction, and which the latter, as the company well knew, could not, by any inspection, discover for himself.
For the reasons stated, we are of opinion that the court did not err in the law of the case, and the judgment must be
ALLEN & Another v. WITHROW & Another.
ON APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES FOR
THE DISTRICT OF IOWA.
Argued December 11th and 12th, 1883.-Decided January 14th, 1884.
Deed-Equity-Frauds, Statute of—Iowa— Partnership-Statutes—Trust.
1. The facts in this case disclose no trust attached to the estate and property
in the defendants' hands which a court of equity should enforce ; at the best they show a promise-without consideration good or valuable-of a simple donation, to be subsequently made, with no relationship of blood
or marriage between the parties, and therefore until executed, valueless. 2. A deed of real estate in blank in which the name of the grantee is not in
serted, by the party authorized to fill it, before the deed is delivered,
passes no interest. 8. Under the Statute of Frauds of Iowa in force when the transactions in con
troversy took place, a trust could not be created in relation to real estate, except by an instrument executed in the same manner as a deed of conveyance; but a trust of personalty could be created by parol, provided
Opinion of the Court.
the evidence of the trust was clear and convincing. Mere declarations of
& purpose to create a trust were of no value, if not carried out. 4. Real estate owned by a partnership, purchased with partnership funds, is,
for the purpose of settling the debts of the partnership, and of distributing its effects, treated in equity as partnership property.
Bill in equity by heirs at law of Thusie M. Allen to enforce a trust in relation to real and personal estate claimed to have been made in her favor in her lifetime. Answer denying the trust; and cross-bill by one defendant asking that plaintiffs might be perpetually restrained from setting up their claim. Judgment below for defendants in the original suit and sustaining the cross-bill. Plaintiffs in original suit and defendants in cross-suit, appealed.
Mr. C. C. Cole and Mr. B. F. Kretzinger for appellants.
MR. JUSTICE FIELD delivered the opinion of the court.
In November, 1875, one John F. Tracy, now deceased, executed to the defendant, Thomas F. Withrow, a deed of a large amount of property, real and personal, of great value, situated in Iowa. It is alleged that this deed, though absolute in form, was made in trust for one Thusie M. Allen, also now deceased, and the present suit is brought by her heirs-at-law to charge Withrow, as trustee, and compel him to account to them for the property. Withrow denies the alleged trust, and claims that he owns in his own right an undivided half interest in the property, and that the other undivided half belongs to his codefendant, Wm. L. Scott, as assignee of Tracy. Scott has filed a cross-bill setting up his title and praying that it may be established. The court below sustained the claims of both defendants and dismissed the bill, and the case is brought here on appeal from its decree.
The facts which led to the execution of the deed in question, and upon which a trust is sought to be established, collected, so far as practicable, from a mass of conflicting testimony contained in a record of over 850 closely printed pages, are substantially as follows: