Sommers v. Dukes

Hammond, J., delivered the opinion of the Court. In 1950 the appellants sold a dwelling in Baltimore to the appellees for $3,750.00, on the installment plan, and the building was totally destroyed by fire in 1954. In a prior appeal— Sommers v. Dukes, 208 Md. 386 , 395 — we held that the appellants were required under their contract of sale to carry fire insurance in -the amount of $4,000 for the protection of the buyers and that since they had failed to do so, they must put the buyers “in the same position as if the insurance had been in effect at the time the contract was signed and had been continued to the time of the fire.” On remand, the auditor’s account, as modified by the court for minor and undisputed errors, found that the buyers had paid in a total of $2,435.00, of which $1,262.55 properly had gone for insurance premiums, taxes, ground rent and interest, leaving a balance of $1,172.45 applicable to the purchase price. Thus there was still due the sellers $2,577.55.

The chancellor found, as had the auditor, that the full insurable value of the property at the time of the fire was the same amount as the purchase price, $3,750.00, and that the buyers were entitled to be paid $2,344.90, as well as to receive a deed to the lease ³⁵³ hold according to the contract. It is to be noted that $2,344.90 is exactly twice $1,172.45 — the amount which the buyers had paid on the principal. The appeal is from the ratification of the auditor’s account, as modified, over appellants’ objections. The appellants relied below on the same points on which they rely here, namely: (1) counsel for the parties had stipulated during the argument of the first appeal that if the appellees there and here prevailed, no new audit would be necessary and the approximate sum that had been found to be due by the auditor —$1,143.72—would be the sum due by appellants to appellees; (2) that the full insurable value of the property was not the same amount as the purchase price — $3,750.00, as found by the auditor and the chancellor, but only $2,000.00, and that appellants were entitled to show this by evidence; (3) that since the buyers had paid only $1,172.45 on the principal at the time of the fire and there was due the sellers $2,577.55, the judicially created insurance proceeds would have to be divided in that ratio, and the appellees would be entitled to but $1,172.45, and not to double that sum.

We think appellants are right in their third contention. Under the holding in the first appeal, the appellees were to be put in the same position as if the promised fire insurance had been in effect at the time of the fire. This is to say that if the insurance proceeds had been $3,750.00, as the chancellor assumed, the sellers would be entitled to the unpaid principal due them of $2,577.55 and the buyers to the rest of the money, that is, $1,172.45, the amount of the buyers’ equity in the property (since the insurance proceeds were assumed to be the same as the purchase price). It would matter not to whom the insurance was presumed to be actually paid.

If the sellers had gotten $3,750.00 from the insurer, they would have held the money as trustees for the buyers and so could retain only the $2,577.55 due them and must pay the balance to the buyers. Skinner & Sons’ Co. v. Houghton, 92 Md. 68, 87-90 . If it be assumed that the buyers had in fact been paid $3,750.00 of insurance, they would have been obligated under their contract to pay the balance due on the purchase price and could retain only