promise made by the defendant within that time to pay the residue of the debt, nor an acknowledgment made by the defendant within that time of his liability and willingness to pay the residue, nor evidence from which it can be inferred that within that time the defendant made, or intended to make, or was understood to make, such promise or acknowledgment." And for an extended discussion of the view that express authority to realize on collateral security does not constitute such a voluntary payment as will toll the Statute of Limitations, see Brooklyn Bank v. Barnaby (1910) 197 N. Y. 210, 27 L.R.A. (N.S.) 843, 90 N. E. 834, as set out and quoted supra, II. Also Wanamaker & Brown v. Plank (1904) 117 Ill. App. 327, which is treated supra, II. And Security Bank v. Finkelstein (1912) 76 Misc. 461, 135 N. Y. Supp. 640, holds that application of collateral security which had been given with express authority to apply the same at the option of the creditor does not, of itself, interrupt the running of the Statute of Limitations.

In Harper v. Fairley (1873) 53 N. Y. 442, where an obligation of a third person was transferred to a creditor as collateral security for a debt, it was held that a payment subsequently made thereon by such third person could not be deemed evidence of a new promise of that date by the debtor. This case was followed in Smith v. Ryan (1876) 66 N. Y. 352, 23 Am. Rep. 60, which attempted to distinguish Whipple v. Blackington (1867) 97 Mass. 476, which, as shown infra, reached a contrary conclusion, on the theory that there was different language used in the two statutes under consideration in the cases, but the effect was to disapprove the latter

case.

In Acker v. Acker (1880) 81 N. Y. 143, where a policy of insurance on the life of a debtor which had been given as collateral security was forfeited for nonpayment of premiums, and the creditor received a sum of money from the insurer, it was held that there was not a voluntary payment which would avail to save the 25 A.L.R.-5.

right of action on the principal obligation from the bar of the statute. In Mann v. McDonald (1895) 6 App. D. C. 548, an agreement to apply life insurance in pro tanto payment of the original debt was held not to affect the bar of the Statute of Limitations.

In Marshall v. Brick (1901) 16 Pa. Super. Ct. 530, where a maker of notes gave the holder of three thereof another note as collateral security covering the entire amount, and interest was paid upon the collateral note, and it was directed that all sums paid on the principal should be applied to the third note, it was held, in an action on the first two notes, that such payment of interest did not toll the Statute of Limitations as against the indorser of such two original notes.

In Berry v. Oklahoma State Bank (1915) 50 Okla. 484, L.R.A.1916A, 731, 151 Pac. 210, in holding that the application by the holder of a note, of the proceeds of the sale of securities hypothecated at the time of the making of the note, as a creditor on the note, does not toll the Statute of Limitations, the court reasoned that such a credit does not constitute either a new promise to pay or a new acknowledgment of the indebtedness, but is only an enforcement of the original obligation and promise.

And that a promise contained in the instrument of pledge to pay any deficiency that may remain after application of the proceeds of sale of collateral does not render such an application effective to toll the Statute of Limitations, was also held in Wanamaker & Brown v. Plank (Ill.) supra.

It also has been held that the act of crediting, if it be regarded as a payment by the debtor, must be regarded as his act as of the date of the giving of the collateral security, and not afterwards. Jones v. Langhorne (1893) 19 Colo. 206, 34 Pac. 997. In this case it appeared that a bank conducted by a firm transferred all its assets to another bank to which it was indebted, and, in an action against one alleged to have been a partner in the firm which had con

ducted the defunct bank, the application of certain money realized from such assets was relied upon as interrupting the Statute of Limitations; but the court held that the authority to make such application had its inception at the time the debtor bank transferred its property to the creditor bank, so that if the crediting of such money be regarded as an act of payment by the debtor bank, or of its owners, it was their act at the date of the transfer, and not afterwards.

On the other hand, in Myers v. Muskegon Improv. Co. (1912) 169 Mich. 689, 135 N. W. 949, where mortgages were assigned as collateral security, but the mortgagees retained possession and treated them as their own, and, upon collecting money thereon, transmitted a part thereof to be applied as partial payment on the secured obligation, it was held that such payments tolled the Statute of Limitations.

And, as hereinbefore indicated, indicated, some cases have adopted the view that in case of collateral securities other than mortgages or deeds of trust given by the debtor, the creditor may be considered as the debtor's agent so as to render the application of funds derived from such collateral securities effective as a payment which will toll the running of the statute. As stated supra, II., this rule evidently had its origin in Porter v. Blood (1827) 5 Pick. (Mass.) 54. See this case as set out and quoted supra, II.

And Sornberger v. Lee (1883) 14 Neb. 193, 45 Am. Rep. 106, 15 N. W. 345, is one of the leading authorities holding that the receipt of, and indorsement on, a promissory note by the holder, of money received from collateral left with him by the maker for that purpose, will stop the running of the statute. The court said that the application of the money realized on the collateral was a payment by the debtor just as truly as if he himself had, at the time of the indorsement, handed the money over to his creditor, with the express direction to him to make the indorsement.

And again, in Bosler v. McShane (1907) 78 Neb. 86, 12 L.R.A. (N.S.)

1032, 110 N. W. 726, on rehearing in (1907) 78 Neb. 91, 12 L.R.A. (N.S.) 1035, 113 N. W. 998, applying the principle that the debtor, by delivering collateral to his creditor and authorizing him to collect thereon, thereby constitutes the creditor his agent, so that everything he does in the premises is in effect the act of the debtor, in consequence of which the transaction amounts to a voluntary payment which will toll the Statute of Limitations, it was held that an action brought upon a promissory note is not barred where payment of dividends upon the stock of a corporation assigned to the payee by the maker of the note as collateral security has been made within the statutory period, and applied upon the note.

In Scott v. De Graw (1911) 90 Neb. 274, 133 N. W. 179, where collaterals were transferred by the maker of a note as security therefor, without any agreement as to application of proceeds, it was held that payments on such collaterals must be considered as payments on the principal note by the maker thereof, in the absence of any agreement to the contrary, as of the time that such payments were made, so as to start the Statute of Limitations running anew from that time.

In Taylor v. Foster (1882) 132 Mass. 30, in which the question seems to have been not so much as to whether the proceeds of collateral might be considered as a payment, as whether such proceeds might be appropriated toward the payment of notes already outlawed, as well as to notes against which the statute had not then run, the view seems to have been tacitly adopted that the application of the proceeds of collateral interrupted the running of the statute. It should be stated, however, that the collateral was given after the maturity of the notes, and with the express intention of providing for their payment, the debtor having failed in business.

So, in Buffinton v. Chase (1890) 152 Mass. 534, 10 L.R.A. 123, 25 N. E. 977, the court said: "Collections made upon collateral security are to be regarded as payments by the principal

In Slater v. Mosgrove (1881) 29 Grant, Ch. (U. C.) 392, where a promissory note made by the purchaser, and indorsed by his son, was given as security for the payment of land sold to the defendant, on which note a payment had been made by the indorser, the court held that such payment was properly applicable to reduce the amount remaining due upon the purchase money, and was sufficient to prevent the running of the statute.

In Re Conlan (1892) Ir. L. R. 29 Eq. 199, where a mortgage on certain land was assigned as collateral security for a loan, and a policy on the life of the borrower was assigned as security for the mortgage debt, the proceeds of such policy being received and applied in reduction of the mortgage debt, the court held that it was a part payment in itself sufficient to keep alive the principal obligation. And see Scott v. Synge (1891) Ir. L. R. 27 Eq. 560.

And in some instances, where the creditor has been expressly clothed by the debtor with power to apply the proceeds of collateral as a payment, it has been held that the realization and application thereof constitute such a payment as will interrupt the running of the statute. Thus, in National State Bank v. Rowland (1892) 1 Colo, App. 468, 29 Pac. 465, where, at the time of the making of a note and the delivery of the security, the debtor, by a power of attorney, appointed an agent with power to sell and transfer the collaterals at public or private sale, and apply the proceeds, if any, as a payment on the note, it was held that the debtor having expressly clothed his agent with authority to apply the proceeds to the payment of the note, it must be held to be such a voluntary payment as would take the case out of the statute; and that it is immaterial whether the selling and application be done by an agent specially authorized to act in the matter,

holder of the promise, so long as, by the terms of the convention, he is entitled to sell and to apply as a payment the sums received. And in Haven v. Hathaway (1841) 20 Me. 345, an action on a note payable more than six years before the commencement of the suit, it was held that, where the defendant had delivered another note to the plaintiff, "to collect the same and apply the proceeds to the payment" of the note in suit, and the plaintiff had accepted it, he was bound to comply with these directions; and that, as soon as he collected the money upon it, he was obliged to consider it a payment of so much on the note in suit; and that proof of a payment on the collateral would operate as proof of payment of the same sum on the note in suit. So, in Whipple v. Blackington (1867) 97 Mass. 476, when the holder of a note delivered it to his creditor as collateral security on an account, with the understanding that any sum collected thereon should be applied on the account, and afterwards, as agent of the creditor, collected and paid to him a dividend on the note from the estate of the maker in insolvency, which payment, on the day thereof, the creditor applied to the account, the court held that the Statute of Limitations did not begin to run until after that day. And in New York F. Ins. Co. v. Tooker (1881) 4 N. J. L. J. 334, a nisi prius case, it was held that where a pledgee of stock who held the same as collateral security for the payment of a debt, and had a power of attorney authorizing the sale thereof or the collection of dividends and application thereof in partial payment of the debt, surrendered the stock and took a new certificate in his own name, there was a payment made at the time of such surrender equivalent to the value of the stock, which would take the debt out of the Statute of Limitations.

In Divine v. Miller (1904) 70 S. C. 225, 106 Am. St. Rep. 743, 49 S. E. 479, it appeared that a debtor, having assigned a bond and mortgage as collateral, and believing that the mort

gagor might set up defenses against him which would not avail against his assignee, requested such assignee to foreclose in his name, and apply the proceeds on his own note as a payment. Such foreclosure litigation was accordingly conducted under the direction of the debtor until his death. Upon this state of fact it was held that, if the suit on the mortgage had continued under the debtor's direction to its termination, and the proceeds of the sale had been applied to his note under his express instructions, then the payment would have been his payment and would have arrested the currency of the statute, since, under the existing arrangement, the creditor was not merely the holder of a collateral, but was the agent of the debtor acting under his express direction in the conduct of the suit and the collection of the money; but that the debtor having died before a sale of the mortgaged property from which the payment was realized, his death ended the special agency, although not the creditor's interest in the collateral, or his right to collect it, so that the application of the proceeds. was not effective to arrest the statute. Of course, payments on collateral may be made with the knowledge and consent of the debtor so as to make

them voluntary and take the case out of the rule that the mere realization on collateral security does not interrupt the running of the Statute of Limitations. For a case which apparently is of this kind, see Fletcher v. Brainerd (1903) 75 Vt. 300, 55 Atl. 608, where certain stock was deposited as collateral for the payment of a note, and, upon failure to pay the note, the orator said he must have the dividends, and they were paid to him. and indorsed quarterly for a period of fifteen years, and in which the court, in answering the question whether the payments were voluntary payments so as to toll the statute, said that the dividends, under the facts, were voluntary payments, made with the defendant's assent and prevented the, orator's demand from becoming stale. And see Carlson v. Dixon (1913) 155 Wis. 63, 143 N. W. 1064, where bonds were deposited as collateral to secure a loan, and as the interest coupons became due they were regularly sent to the debtor at his request, and he collected the same, and sent his personal check for the amount to the creditor, and in which it was held that such payments were voluntary and were such as interrupted the running of the Statute of Limitations. G. J. C.

Trust

V.

Damages measure of allowance for injury to property pending confirmation of trustee's sale.

3. In case of injury by fire to property sold at a trustees' sale, pending confirmation of the sale, the purchas

er is entitled to the cost of restoration, if restoration can be effected without cost disproportionate to the real injury; otherwise to the difference in value of the property before and after the injury.

[See note in 17 A.L.R. 970.]

The facts are stated in the opinion Messrs. Henry C. Weaver, McKee & Bullock, and Forrest Bramble, for appellant:

Petitioner is entitled to an abatement of the purchase money when property is damaged by fire after the sale made to him and reported to court by the trustees, but before said sale is ratified.

Miller, Eq. p. 605; Bowdoin v. Hammond, 79 Md. 173, 28 Atl. 769; Hanover F. Ins. Co. v. Brown, 77 Md. 64, 39 Am. St. Rep. 386, 25 Atl. 989, 27 Atl. 314; Towle v. Quante, 246 Ill. 568, 92 N. E. 967; Coryell v. Cain, 16 Cal. 568, 5 Mor. Min. Rep. 226; Morrison v. Kelly, 22 Ill. 610, 74 Am. Dec. 169; Southern R. Co. v. Hall, 145 Ala. 225, 41 So. 135; Griffin v. Wilmer, 136 Md. 623, 111 Atl. 114.

If the purchaser is entitled to an abatement, the owners must bear the loss, where the fire occurs before the sale is ratified.

Miller, Eq. p. 605, ¶ 512; Bowdoin v. Hammond, 79 Md. 179, 28 Atl. 769; Dalrymple v. Taneyhill, 4 Md. Ch. 171; Werner v. Clark, 108 Md. 633, 28 L.R.A. (N.S.) 94, 71 Atl. 305.

The purchaser had a right to the property as he purchased it; and hence is entitled to an allowance of such an amount as was testified to by Mr. Frantz as necessary to restore the property to its condition prior to the fire.

William Skinner & Sons' Shipbuilding & Dry-Dock Co. v. Houghton, 92 Md. 68, 84 Am. St. Rep. 485, 48 Atl. 85. Messrs. Thomas C. Mason, Harry M. Benzinger, and Benjamin Beck, for appellees:

Where a purchaser at a trustee's sale takes possession of the property pending the ratification of the sale by the court, he assumes the risk of loss by fire or otherwise.

Miller, Eq. p. 605, note 4; Wagner v. Cohen, 6 Gill, 97, 46 Am. Dec. 660;

of the court.

Brewer v. Herbert, 30 Md. 301, 96 Am. Dec. 582.

Adkins, J., delivered the opinion of the court:

On November 18, 1920, appellant purchased from appellees at trustees' sale certain property on Pennsylvania avenue, part of which was then occupied by Jones & Lamb, for $22,100. On December 17, 1920, before the sale was ratified, two of the parties interested in the proceeds of sale filed exceptions to the sale, and while said exceptions were pending, to wit, on January 7, 1921, the property was damaged by fire. On January 12, 1921, appellant filed a petition for an abatement of the purchase money to the amount of damage caused by the fire. On April 18, 1921, the exceptions were overruled and the sale ratified, "without prejudice to the right of said Benjamin Fine to proceed with his petition filed on January 12, 1921, for an abatement or his right to such an abatement of the purchase price to the extent of the damage to said property by fire on or about January 7, 1921."

A hearing was had on this petition and testimony taken. It appears from the testimony that, at the time of the sale, the lease of Jones & Lamb was about to expire, and they were desirous of having it extended for two months, to give them time to move their movable fixtures. They took this matter up with the trustees, and one of the trustees, in turn, took it up with appellant. There is some unimportant difference between the witnesses as to just what was said by appellant and Mr. Ben