Appeal from the District Court of the United States for the Eastern District of South Carolina, at Charleston; Henry A. Middleton Smith, Judge.

Suit in equity by E. L. Chapman, trustee in bankruptcy of E. F. Prosser, against Lillie C. Prosser. Decree for complainant, and defendant appeals. Affirmed.

Ashton H. Williams, of Florence, S. C., for appellant.

A. L. Hardee, of Florence, S. C. (F. L. Willcox and Willcox & Hardee, all of Florence, S. C., on the brief), for appellee.

Before WOODS, WADDILL, and ROSE, Circuit Judges.

WADDILL, Circuit Judge. On the 2d of December, 1922, E. F. Prosser, husband of the appellant Lillie C. Prosser, was upon his petition adjudged a bankrupt by the United States District Court for the Eastern Distriet of South Carolina. Subsequently, E. L. Chapman, having been duly elected as trustee of the bankrupt's estate, and qualified as such, filed the bill in this cause against the appellant, seeking to set aside a certain conveyance fully described in the bill, by which the bankrupt conveyed to his wife, the appellant, on the 1st of March, 1922, the real estate therein mentioned the subject of this litigation, because the deed was made when the grantor was heavily indebted to various persons, and the same was without present or fair and valuable consideration, and made and intended solely to delay, hinder, and defraud the creditors of the grantor. The defendant answered, denied the allegations of the bill, and averred that she made the purchase from her husband, paying therefor adequate and full consideration.

The cause was referred to a special master to take testimony and report his conclusions as to the facts, which he did, in substance as follows: That during the year 1921 the bankrupt incurred considerable indebtedness, for which proof of claims have been filed in the bankruptcy proceedings. That in the fall of that year, his creditors were pressing him to pay his debts, and on the 21st of December, 1921, he was sued by a bank in Charleston for a large amount, for which judgment was entered on April 6, 1922. That upon the institution of this suit, the bankrupt apparently realizing his inability to meet his obligations, began to prepare for bankruptcy by disposing of all

his real estate of value, by either direct conveyances or mortgages, entering into five such transactions, including that to his wife assailed here. As to the deed to his wife, the master reported especially: That prior to 1919 E. F. Prosser, then entirely solvent, owned 332 acres of land in Williamsburg county, upon which there was a lien for $5,000. That he had negotiated the sale of this property to one L. A. Taylor for $13,000. That Mrs. Prosser, his wife, objected to relinquishing her dower, and to get her to do so, her husband promised that he would convey to her the property the subhe intended doing this does not conclusiveject of this litigation. That whether or not ly appear from the evidence, though the inference is that he did; that he neglected to fulfill this promise until some three years had elapsed, pending which time he had become insolvent. During this period, considerable credit was extended to him by persons whose claims have been allowed in the bankruptcy proceeding. That on March 1, 1922, being then insolvent, and in default, in an action by one of his creditors for an indebtedness in excess of $2,000, with the intent and design of forestalling the establishment of a lien on the property in suit by having judgment entered against him, and with intent to hinder, delay, and defraud his creditors, he made the conveyance to his wife herein assailed, for $100 and other valuable considerations. The master found the actual consideration of this deed to have been the fulfillment of the grantor's promise made some three years before to his wife to convey the property to her, and the sum of $10. He found the value of the property conveyed to be $2,500.

On the return of the special master's report, and upon full hearing thereon, the court approved the master's findings of fact and his conclusions; and by the decree of the 17th of October, 1923, appealed from herein, adjudged the deed of the 1st of March 1922, null and void as having been made without sufficient consideration, and with intent to hinder, delay, and defraud the creditors of the bankrupt, and set the same aside.

The assignments of error relate solely, first, to whether the court erred in holding that the deed was without sufficient consideration; and, second, that the same was made with intent to hinder, delay, and defraud the creditors of the bankrupt.

[1] These two questions, under the facts of this case, are in a sense involved each in

the other. Considering the appellant's claim, from the most favorable viewpoint, it would not seem to sustain the validity of the deed here. Assuming the verbal promise to the wife to convey the property to her in consideration of her waiver of her contingent right of dower may form the basis of a full consideration for such conveyance, still the promise must have been made with certainty, which is not clear here; and it cannot form the basis for an amount in excess of the fair value of the dower right alleged to have been waived, and not at all if there be a delay in the execution of the verbal promise to make the conveyance as a consideration for the relinquishment of dower, until the husband, who in the meantime has incurred large indebtedness, becomes insolvent. To allow this to be done, and to carry out the private verbal understanding between husband and wife, to convey property in such circumstances would operate as a fraud upon creditors, and obviously so upon those whose debts were contracted pending the period of delay in carrying out the alleged promise; the property in the meantime being held out as a source of credit. Suber v. Chandler, 18 S. C. 526, 528, 529; Bates v. Cobb, 29 S. C. 395, 7 S. E. 743, 13 Am. St. Rep. 742; Jackson v. Lewis, 34 S. C. 1, 6, 7, 12 S. E. 560; Miller v. Wroton, 82 S. C. 97, 63 S. E. 62, 449; Tucker v. Weathersbee, 98 S. C. 403, 406, 82 S. E. 638; Betts & Co. v. Richardson, 112 S. C. 279, 283, 99 S. E. 815; 27 C. J. 559.

[2] Coming to the assignment of errors as to the invalidity of the deed because executed with intent to hinder, delay, and defraud creditors of the bankrupt, the decree complained of is free from error, and is fully sustained by the record. Certainly this court would not be warranted in setting aside the action and judgment of two tribunals, the special master and the district judge, who concurred in the findings of fact by the master, and adopted the same as its own, except upon the plainest showing. The master in terms reports that the grantor in the deed, while insolvent, executed the same with the intent and design of forestalling the establishment by creditors of liens upon his property, and that the same was with intent to hinder, delay, and defraud his creditors. The District Judge, as shown upon

the face of the decree appealed from, considered the case upon the pleadings, the testimony taken before the special master, the report of the special master, and approved the master's report and the findings of fact as set forth therein, and adopted the same as the conclusion of the court. Every reasonable doubt, in such circumstances, will be resolved in favor of the correctness of the trial court's decision; and this is particularly true where the appellant has seen fit not to bring the testimony taken by the master and considered by the court up as a part of the record here. How can we adjudge the District Judge erred in giving weight to testimony that he has read and considered, and we have not seen, and is not before us? Zimmerman v. Harding, 227 U. S. 489, 33 S. Ct. 387, 57 L. Ed. 608; Elliott v. Canadian Ry. Co. (C. C. A. 2d Cir.) 161 F. 250, 88 C. C. A. 286; Meyer v. Everett Pulp & Paper Co. (C. C. A. 9th Cir.) 193 F. 857, 113 C. C. A. 643; Hickson Lbr. Co. v. Stallings, 91 S. C. 473, 74 S. E. 1072; Leland v. Morrison, 92 S. C: 501, 514, 75 S. E. 889, Ann. Cas. 1914B, 349; Whiteside v. Whisonant, 105 S. C. 60, 89 S. E. 465; Pelzer v. Raysdale et al., 105 S. C. 201, 89 S. E. 705; Turner et al. v. Moore et al., 117 S. C. 536, 109 S. E. 133.

[3] Another view of this case, that makes it easier of solution, is that it involves the validity of a contract between husband and wife, entered into at a time the husband was notoriously insolvent, and under which the wife claims ownership and possession of property as against the trustee of the husband's estate in bankruptcy. Transactions of this character, in these circumstances, are presumptively fraudulent, and at least call upon the beneficiaries claiming to own the bankrupt's property, to maintain their legal right to do so by the plainest proof which in this case has not been afforded. Braffman v. Glover, 35 S. C. 431, 437, 14 S. E. 935; Du Rant v. Du Rant, 36 S. C. 49, 58, 14 S. E. 929; Porter v. Stricker, 44 S. C. 183, 21 S. E. 635; Chemical Co. v. Hunter, 94 S. C. 65, 70, 77 S. E. 751; Tucker v. Weathersbee, supra, 98 S. C. 402, 406, 82 S. E. 638; Hursey v. Lane (C. C. A. 4th Cir.) 238 F. 913, 152 C. C. A. 47.

The decree of the District Court will be affirmed.

Affirmed.

(Circuit Court of Appeals, Third Circuit. September 30, 1924.)

No. 3130.

1. Insurance 665(3)-Vessel held seaworthy at commencement of voyage.

A vessel held seaworthy at the commencement of the voyage for which she was insured.

2. Insurance 392 (6) Acceptance of premium after loss held to estop insurer to deny seaworthiness of vessel when insured.

An insurer of a vessel, which demanded and received a part of the premium after she had sunk, with knowledge of the fact, held estopped to set up the defense that she was unseaworthy at the commencement of the voyage.

3. Insurance 403-"Perils of the seas" insured against may vary with character of vessel.

Under a policy insuring an upper river steamboat for a voyage down the Mississippi to New Orleans, and from there in tow, down the river and across the Gulf to Tampico, for which a higher premium than usual was paid, the rule as to "perils of the seas" insured against is not the same exactly as applies to seagoing vessels, but the implied warranty of insured was that the boat was seaworthy to the extent of being able to withstand all ordinary perils of navigation on the upper river, and the perils of the seas against which she was insured were such perils as would be extraordinary to a vessel of her type.

[Ed. Note. For other definitions, see Words and Phrases, First and Second Series, Perils of the Sea.]

4. Insurance 646 (6)-That sinking of vessel, though seaworthy, was caused by sea perils, not presumed.

Even though a vessel is shown to have been seaworthy immediately prior to sinking, no presumption exists that the water entered her hold as the result of a sea peril.

5. Insurance 471 Marine policy covers losses from latent injuries.

A marine policy covers, not only those loss. es that result from injuries caused by extraordinary action of the perils insured against, which became immediately known, but such, also, as result from latent injuries.

6. Insurance 403-Sinking of insured vessel held due to "perils of the sea."

The sinking of an upper river steamer, after being towed down the Mississippi from New Orleans, held due to strains from meeting heavy swells, which were extraordinary to it, and injury from a log which was caught between it and a barge alongside, which constituted perils of the sea, within its insurance policy.

7. Insurance 468-Actual total loss of vessel.

A sunken vessel is not an actual total loss, where there is hope of its recovery in specie at any cost.

8. Insurance 469-Policy may limit right to abandon vessel as constructive total loss.

A provision in a marine policy on a vessel that there shall be no recovery for a constructive total loss, unless the expense of recovering and repairing the vessel shall exceed the insured value, is valid and enforceable.

9. Insurance 470- Abandonment condition

precedent to recovery for constructive total

Before insured can recover for a constructive total loss, he must abandon all his interest in the vessel to the insurer.

11. Insurance

470-Duty of owner to determine cause and extent of loss.

It is the duty of the owner of a sunken vessel to make a prompt and adequate investigation to determine the cause of sinking and the possibility and cost of raising and repairing it, and he cannot, by abandoning it, cast the burden of such investigation on the insurer. 12. Insurance 665 (4)-Sunken vessel held not constructive total loss.

The owner of a sunken vessel held, under the evidence, not entitled to abandon her and recover for a constructive total loss.

Appeal from the District Court of the United States for the Western District of Pennsylvania; Robert M. Gibson, Judge.

Suit in admiralty by John F. Klein against the Globe & Rutgers Fire Insurance Company of New York City. From the decree, libelant appeals. Affirmed.

The following is the opinion of Gibson, District Judge in the court below:

"The libelant seeks to recover from the respondent the sum of $85,000 upon a policy of marine insurance. The undisputed material facts of the case are substantially as follows:

"On June 25, 1921, the libelant obtained a policy of insurance upon a river boat called the Tornado, subject to the approval of respondent's surveyor, which libelant intended to take from Paducah, Ky., to Tampico, Mexico. By the terms of the application and the original policy, the boat was to go on her own bottom from Paducah to New Orleans, and there placed upon a sea-going barge to be towed by a tug to Tampico. At the instance of the respondent, which was influenced by the advice of its surveyor, a rider was added to the policy, whereby the Tornado was to be towed from New Orleans upon its own bottom, instead of upon a barge as first contemplated. At the time the original policy was modified by the rider, an additional premium of $1,275 was required by the respondent.

"Prior to August 29, 1921, the Tornado was bulkheaded and otherwise prepared, under the supervision of agents of the respondent, for her voyage to Tampico. On

August 31, 1921, it left New Orleans under tow and arrived at Pilot Town, at the mouth of the Mississippi river, about 10:30 o'clock a. m. About 1 o'clock p. m. the boat was inspected and found to be apparently all right; but about 5 o'clock p. m. it was noticed that it was listing, and an examination disclosed considerable water in its hold. The crew of the tug was notified by the two watchmen on the boat, but despite all efforts to pump it out the water gained, and the Tornado sank at about 9 p. m. in some 33 feet of water. Its smokestacks and pilot house were not entirely submerged. The respondent was promptly notified of the accident by the libelant, and on September 13, 1921, caused the wreck to be examined by a surveyor and a diver. The result of this examination was not formally presented to libelant prior to the beginning of this action. The libelant, directly and through others, after September 13, 1921, sought to learn respondent's attitude in the matter of the insurance, but the latter made no reply until about January 7, 1922, when, in substance, it refused to pay the amount of the policy.

"On October 30, 1921, the libelant filed formal proof of loss, attaching thereto two protests, one an amplification of the other, of the captain of the towing tug, and statements of the officers of the tug and of the watchmen on the boat. By the paper filed libelant claimed a total loss of the vessel, and requested payment of the entire amount of the insurance money.

"In the latter part of December, 1921, the libelant informed the respondent that he proposed to abandon the wreck on December 28, 1921, unless some instruction to the contrary was received from the latter; and, not having received such instruction, libelant ceased to assume any responsibility in connection with the sunken boat. The 'abandonment' mentioned perhaps requires some explanation, as the libelant claims that he, so far as it is essential in this case to establish the fact, abandoned the wreck to the insurer when he filed his formal claim for a total loss on October 30, 1921. From the date of the wreck until December 28, 1921, the libelant had maintained a light upon the Tornado, in obedience, as he explained, to the requirements of an act of Congress. Act March 3, 1899, 30 Stat. 1152 (Comp. St. § 9920). By his letter of December 20, 1921, libelant notified respondent that he proposed to abandon the wreck and to cease putting a light upon it on December 28, 1921.

"On December 21, 1921, the respondent, having previously made demand therefor from the brokers who had placed the insurance with it, accepted libelant's check for a part of the premium due. On January 7, 1922, by letter to the libelant, it first broke its silence in relation to the wreck. In that letter it held the proofs of loss submitted by libelant to be insufficient to show that the Tornado had sunk as a result of any of the perils mentioned in the policy, and declared its belief that it could be raised. Within a short time after the receipt of this letter, the libel was filed in the present action.

"In the instant case the court is required to determine (1) whether the Tornado was seaworthy at the beginning of the voyage contemplated in the contract of insurance; (2) whether its sinking was caused by a peril of the sea or other peril covered by the policy; and, if the issues just mentioned are found in favor of the libelant, (3) the extent of the loss. Other issues raised by respondent's answer have been abandoned. Among them may be mentioned the contention that the voyage was not begun within the period specified by the policy, and that the vessel was not towed in accordance with the requirements of the contract. Also, it is admitted that respondent's contention that Booker & Kinnaird, insurance brokers, were not agents of the respondent, is immaterial, in view of the admission of the execution of the policy of insurance.

[1] "As stated, our first inquiry relates to the seaworthiness of the Tornado at the beginning of the voyage. It is beyond question that an implied warranty and condition of seaworthiness on the part of the libelant is to be read into the contract of insurance. If the vessel was not seaworthy when it left Paducah, the libelant should not recover herein. To establish its claim in this respect, the respondent called a number of witnesses, who claimed to be, and some of whom undoubtedly were, employés on or about the Tornado, either before it left Paducah or on the voyage from that point to New Orleans. These witnesses testified that the vessel was in very poor shape. It was alleged, inter alia, that the seams in its hull were so open that daylight could be seen through them by persons standing in its hold, and that it had to be pumped very frequently in order to keep it afloat. The necessity for constant pumping was particularly urgent on the journey from Paducah to New Orleans, according to several of respondent's witnesses. Several of these witnesses, however, exhibited considerable an

The policy

"As opposed to them libelant called a considerably larger number of witnesses, some of whom were superior in appearance, at least, to those of the respondent. Some of these were employés of the libelant; others were engaged in various river activities and businesses. These testified that they had examined the hull and other parts of the Tornado at the time, or shortly before, it left Paducah, and that the vessel had been repaired extensively a few months before its departure and was entirely seaworthy. Chief among libelant's witnesses were Capts. G. H. and A. E. Wilson (not related), whose approval of the boat and the equipment of it for the voyage were required by the insurance contract. Each of them testified that he had carefully examined the Tornado, both at Paducah, before its departure, and at New Orleans, on August 31, 1921, and had found it fully equipped and entirely seaworthy. In view of all the testimony offered, we are of opinion that the respondent has failed to establish its claim that the Tornado was unseaworthy when it began its voyage. The great weight of the evidence is to the contrary.

[2] "Although we so find, it is perhaps unnecessary to do so, under all the circumstances. The respondent, by accepting the payment of a part of the insurance premium as late as December 21, 1921, is estopped from setting up the defense, as we think. If it had been the victim of fraud in respect to the condition of the boat, and the policy was void by reason of it, it was its duty to repudiate the contract promptly and to do nothing which tended to a recognition of it. Respondent had no right to deny any liability under the contract while accepting the benefits of it.

[3] "In addition to the claim that the Tornado was unseaworthy when the voyage begun, respondent has set out as a defense the proposition that the vessel was not lost as a result of any of the perils mentioned in the contract of insurance. An examination of the record will disclose that a decision difficult of attainment is required in connection with this defense. It is beyond dispute that the burden is upon the libelant, in a suit upon a marine insurance policy, to establish the fact that his vessel was lost or injured as a result of one of the perils

""Touching the adventures and perils which the said assurers are contented to bear and take upon us, they are of the seas, and of all other perils, losses, and misfortunes that have or shall come to the hurt, detriment, or damages of said ship, etc., or any part thereof.'

""This insurance also specially to cover (subject to the free of average warranty) loss of or damage to hull or machinery

through any latent defect in the machinery or hull, provided such loss or damage has not resulted from want of due diligence by the owners of the ship,' etc.

"What are the 'perils of the seas' contemplated in the policy? In their excellent and exhaustive brief, counsel for the respondent have undertaken to answer the query by the citation of a number of cases wherein the term is defined. Nearly all, if not all, of those cases had as subject-matter policies of insurance upon sea-going vessels, and while we adopt the underlying principles which led to the definitions, we cannot accept the literal definitions because of the variation between the underlying facts of the instant case and those of the cases cited. In arriving at the meaning of the terms in the present policy, we must keep in mind the kind of boat insured, the voyage contemplated, and the nature of the risk assumed. The Tornado was an upper river steamboat, which, under the terms of the policy, was to be towed over the Mississippi below New Orleans and a part of the Gulf of Mexico, waters which it was not designed to regularly traverse. By the original terms of the policy the boat was to be taken to Tampico upon a sea-going barge, but a rider was added to the contract, at the instance of the respondent, by which this provision was changed, and the vessel was towed upon its own bottom. By the change the insurer assumed a greater risk, and the insured paid a higher premium. Under the circumstances it cannot be claimed that the libelant impliedly warranted the boat as seaworthy to the extent of being able to withstand all winds and waves in the lower river and the Gulf of Mexico, except such as were extraordinary. On the other hand, the contract, in our opinion, was not one of guaranty on the part of the respondent that the boat would safely make the voyage, as claimed by libelant. The implied warranty of the libelant was that the boat was sea