Baltimore Sugar Refining Co. v. Campbell & Zell Co.

Roberts, J., delivered the opinion of the Court. The facts and circumstances out of which the controversy on this appeal has arisen are unusual, peculiar and interesting. The demurrer to the appellant’s bill makes it necessary that the facts properly pleaded should be stated with such particularity as to give a clear understanding of the principles of law to be considered and announced. The bill alleges that the appellant was in the month of February, 1890, about to engage in the business of sugar refining in the city of Baltimore, and for the purpose of properly conducting its business, it became necessary to purchase certain steam boilers ; that in carrying on its business,fit employed two of the appellees, Engal and Kraft, as engineers, believing them to be men of integrity and honesty, skilled in the ⁴⁹ business of sugar refining, and well acquainted with the machinery required for the refining business ; that it was well known to the appellee company that the appellant did so depend upon its said agents, and that they were charged by it with the duty of selecting proper boilers for its use; (3), that acting upon what it believed to be the honest advice and judgment of its said agents, it purchased from the appellee company, on or about the 12th of February, 1890, six boilers for the price of twenty-five thousand one hundred dollars, one-fourth payable in cash on delivery, and one-fourth payable when the boilers should be ready for testing, and the balance when the boilers were found to be such as they were guaranteed to be by the appellee company; that each of said boilers was represented to be 250-horse-power, rating horse-power equal to 30 pounds of water evaporated per hour from feed-water 100 degrees Fahrenheit at 70 pounds pressure, and were guaranteed by said appellee company to be full power as rated to give dry steam, to be perfect in all parts, and with proper draft to be as economical as any other boiler, and to evaporate not less than 10 pounds of water per pound of good Cumberland coal as rated, and to evaporate twenty-five hundred pounds of water per hour for 10 consecutive hours; (4), that six boilers were placed in the appellant’s refinery by said appellee company, and were accepted by the appellant under the advice and approval of its said agents, and without any knowledge or suspicion on the part of the appellant that its said agents were not faithful to their duty, and that their advice and directions with reference to said boilers, and as to the acceptance of them by the appellant, were other than truthful and worthy of its confidence ; (5), that it was soon discovered that said boilers were defective ; .that they were not such as they were represented and guaranteed to be, and that they failed to perform the service which the said appellee company had represented and guaranteed that they would perform, and that they were not for that reason suitable for the purpose of appellant’s business ; but it avers ⁵⁰ that it was induced to believe, by the advice and suggestion of its said agents, that said boilers could be made to perform the work required of them, according to said guarantee, and to answer the purpose for which they had been purchased, and for which they had been sold, by making certain changes in the arrangements for using them, suggested by said appellee and by said agents of the appellant.

The appellant was thus led to continue to use said boilers in its business, notwithstanding the defects so discovered in them, and notwithstanding their failure to do the work they were guaranteed to do, and it incurred great expense in endeavoring to remedy the defects and short-coming of said boilers. (6), That, relying upon the advice and judgment of its said agents as to said boilers, it paid for them according to the contract, believing that the defects in them could be remedied and that they were in fact capable of being made to do the work they were guaranteed to be able to do, as set forth, and thus serve the purpose for which they were purchased; (7), that, finding the quantity of steam guaranteed by said boilers less than was stated in said guarantee of the appellee company, and less than was necessary for the business of the appellant, and still believing that the failure of said boilers to render the service the appellee company had guaranteed that they would render proceeded from causes that could be removed, as the appellant was so advised that it could by its said agents, the appellant sanctioned the purchase made by said agents, Kraf and Engel, of two boilers on or about the first day of June, 1891, from said appellee company, said purchase being recommended by said agents, said two other boilers being represented by the appellee company to be each 250-horse-power, rated horse-power equal to 30 pounds of water evaporated per hour from feed water of 100 degrees Fahrenheit, at 70 pounds pressure, for the sum of eight thousand five hundred and sixty-six dollars and sixty-six cents ; the said appellee company guaranteed each of said boilers to be full power as rated, to give dry steam, to be perfect in all its parts, and ⁵¹ with proper draft, to be as economical as any other boiler; that, relying upon the advice and judgment of its said agents, it paid for said two boilers all the agreed price, except about two thousand dollars, which it has not paid for the reasons hereinafter stated; (8), that, acting under the advice and relying on the judgment of its said agents, whose fidelity and integrity it had no cause to distrust, it continued to use said eight boilers and to endeavor to make the same perform the service which said appellee company had guaranteed that they would perform, as the appellant was led to believe by its said agents could be done, thereby incurring great expense and great loss in its business by reason of what it afterwards discovered to be intrinsic defects of said boilers and their insufficiency to perform the service which said appellee company had guaranteed they could perform, until finally it became evident that said boilers were not fit for its use, because they could not do, or be made to do, the work which said appellee company had represented and guaranteed that they were capable of doing ; that it was forced to abandon the use of said boilers after it had paid for the first six in full, and had paid for the other two boilers all the purchase money except two thousand dollars, which payment it had made under the belief, as above stated, that said boilers could be made to perform the services guaranteed by said appellee company ; (9), that, acting under the advice and by the direction of its said agents in endeavoring to use said boilers as herein mentioned, it did not reject said boilers as soon as the defects thereof were first perceived, but continued to use them with the expectation that they could be made to serve the purpose of the appellant according to the guarantee of said appellee, as hereinbefore set forth, and when it finally became convinced that said boilers were altogether incapable of being made to produce the results mentioned in the guarantee of the appellee company, which results it was necessary that said boilers should be capable of producing in order to conduct successfully the business of the appellant, it noti ⁵² fied the defendant, the appellee company, to remove the boilers, and claimed that said company should return the purchase money it had received for the same and make good to the appellant the loss it had suffered by reason of the premises; but said appellee refused to do so, and instituted an action in the Superior Court of Baltimore City on the 27th of April, 1892, against the appellant .to recover the balance of the purchase money of said two boilers, and a large amount claimed to be due by appellant under its contract for said boilers, for work done in attempting to make .said boilers capable of performing the service set forth in said guarantee of the said appellee company, and for alterations and repairs of said boilers, which suit now stands for trial in said Superior Court; (io), that said suit is based upon the contracts for the purchase of said eight boilers ; that said contracts were procured and the appellant induced to purchase said boilers and to retain the same, with the expectation that the defects thereof could be remedied, as hereinbefore set forth, by the gross deceit and fraud of the said appellee company; that before any of said boilers were so purchased, and while the said agents of the appellant were considering the various boilers offered to it, the president of the appellee company, and one of the appellees, fraudulently and wickedly corrupted the said agents of the appellant, upon whom it relied in making the selection of proper boilers, and upon whose advice it relied in its subsequent dealing with the said boilers, as said president and the said appellee company well knew, and by bribing the said agents of the appellant with money secretly paid to said agents, fraudulently procured said agents to accept said boilers for the appellant, and to advise the purchase of the same, and also to advise.the action subsequently taken with reference to the said boilers, as hereinbefore set forth, and thus grossly and fraudulently deceived and defrauded the appellant; (12), that it did not suspect the honesty and fidelity of its agents until after it had become convinced of the worthlessness of. said boilers and .had been forced to ⁵³ discard them, and that it has only recently been informed of the gross deception and fraud practised upon it by said appellee company. These are facts, the truth of which the demurrer admits. The ground assigned in support of the demurrer is that a Court of Equity has not jurisdiction of the case made by the bill of complaint.

Most learned and exhaustive arguments, both oral and written, have been presented to this Court by the counsel for the respective parties. The question is a narrow one, and relates chiefly to the practice which ought to prevail in Courts of Law and Equity in this State, where both jurisdictions prevail, but it is not always easily ascertainable exactly where the line of demarcation between the two jurisdictions lies. Many nice distinctions are to be found in the decided cases upon the subject, and