Barney v. Forbes — 29 N.Y. St. Rep. 980

Majority

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Newcomb C. Barney et al., Resp’ts, v. John M. Forbes, Jr., App’lt.^[1]

(Court of Appeals, Second Division,

Filed February 25, 1890.)

Headnote

1. Statute of frauds—-Promise for benefit of another—Consideration.

J. ,M. Mur was indebted to plaintiffs in the sum of $9,941, to secure which they held eight bonds of $1,000 each, and 400 shares of stock. Defendant, a member of the firm of Russell & Co., enclosed in the same envelope two letters, one by himself stating that Mur had been employed by Russell & Co. on a salary of $4,000 per annum and that he would undertake “ that the agreement made by him to pay a certain amount to you each year shall be carried out, until the indebtedness to your firm is liquidated” and requested that they would release the bonds. The other letter signed by Mur stated that he had been employed, etc., and promised to pay plaintiffs a certain amount, $3,000, a year to liquidate his indebtedness, and refers to “ the letter enclosed.” The bonds were released by plaintiffs. Feld, that defendant’s promise was not void under the statute of frauds, as it appeared on the face of the letters that defendant’s promise was made to procure ■ the release of the bonds which it secured.

2. Same—Evidence.

It was competent to show by oral evidence that both letters were enclosed in an envelope and sent by defendant to plaintiffs, and both letters must be read together.

Appeal from a judgment of the general term of the first department, affirming a judgment entered on a verdict directed for the plaintiff.

Henry F. Bennett, for resp’ts; F. B. Ooudert, for app’lt.

August 31, 1882, J. M. Mur was indebted in the sum of $9,941.88 to the plaintiffs, who held, as collateral, eight first mortgage bonds for $1,000 each, with several coupons attached, issued by the Boston, Hartford & Brie Railroad Company, and four hundred of the shares of the stock of that corpor

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ation. The snares were of little, or no value; but the value of the bonds and coupons was about equal to the debt.. At this time the defendant was one of the partners of Bussell & Co., and on the date mentioned he enclosed the following letters in an envelope and delivered them to the plaintiffs :

‘‘New York, August 31, 1882. “ Messrs. Barney, Raymond & Co., 8J¡, Broadway: “ Dear Sirs.—Mr. J. M. Mur being under engagement to Messrs. Bussell & Co. as their head bookkeeper will have $4,000 (Mexican) per annum as salary, and I will undertake that the agreement made by him to pay a certain amount to you each year shall be carried out, until the indebtedness to your firm is liquidated. Yours truly, “John M. Forbes, Jr.” “New York, August 31, 1882.

“ Messrs. Barney, Raymond & Co., New York:

“ Dear Sirs.—As you are aware If’have accepted a position in China in the house of Messrs. Buhsell & Co. at a salary of $4,000 per annum, and in order to liquidate my indebtedness to you of $9,941.88 as per account rendered yesterday, I now pledge to you to remit you from China the sum of $3,000 (three thousand dollars) per annum, in quarterly payments until the said account is closed. There shall be no failure on my part, and I trust with this assurance and the letter enclosed that this arrangement will be satisfactory, and that you will release the bonds in question. I am, dear sirs, “ Very respectfully yours. “ j. M. Mur.”

After receiving these letters the plaintiffs surrendered the bonds, but when or to whom does not appear. On different dates, between August 31, 1882, and October 20, 1884, Mur paid on his debt $3,429.25, and afterwards this action was brought to recover the remainder from the defendant, on the ground that he bound himself, by the letters, to pay Mur’s debt.

The defense interposed is that defendant’s promise contained in Ms letter of August 31,1882, is void by the second section of the second title of the Statute of Frauds, because the consideration which moved him to undertake that Mur should perform the promise which he made in his letter of the same date does not appear upon the face of the letter signed by the defendant, or upon the face of both of the letters read together.

The defendant insists that his letter does not refer to Mur’s, and that the two are not, by their language, so obviously connected that they may be read together for the purpose of ascertaining the terms and consideration of the defendant’s promise. His letter states that Mur had been employed by Bussell & Co., on a salary of $4,000 per annum. Mur’s letter states the same fact. The defendant states in his letter: “ I will undertake that the agreement made by him (Mur) to pay a certain amount to you (plaintiffs) each year, shall be carried out, until the indebtedness to your

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firm is liquidated.” Mur’s letter agrees to pay plaintiffs a certain amount, $3,000, each year, to liquidate his indebtedness, and refers to “ the letter enclosed.” It was undisputed that both letters were enclosed in an envelope and sent by the defendant to the plaintiffs. It was competent to show this fact by oral evidence, for the same reason that it is competent to show by like evidence how and when letters forming a part of an entire correspondence were received. The delivery and circumstances attending the delivery of writings may be shown by oral evidence. Both letters must be read together, Coe v. Tough, 116 N. Y., 273 ; 26 N. Y. State Rep., 661, and if both satisfy the requirements of the Statute of Frauds, the defendant must be held liable.

A written guaranty given by a third person to a creditor that his debtor will thereafter pay to him a pre-existing debt must, notwithstanding the amendment of the statute of frauds by chap. 464 of the Laws of 1863, expressly, or by fair implication, disclose that the promise rests on a legal consideration. Castle v. Beardsley, 10 Hun, 343 ; Drake v. Seaman, 97 N. Y., 230 ; Reed Stat. Fr., §§ 423, 426. Since that amendment the courts have held with great uniformity that all of the essential parts of contracts within the amended section must be in writing. Newbery v. Wall, 65 N. Y., 484 , 488; Stone v. Browning, 68 id., 598, 604 ; Drake v. Seaman, supra. The existence, or the acknowledgment of the existence of a legal consideration for the support of such promises is not only essential, but is absolutely indispensable. The history of this question is fully given in Church v. Brown, 21 N. Y., 331 , and in Drake v. Seaman, supra, and it is quite unnecessary to again go over the cases, or give reasons for the existence of the rule. Speyers v. Lambert, 1 Sweeney, 335; S. C., 6 Abb. Pr., N. S., 309, and 37 How., 315 , must be regarded as overruled. In Evansville Nat'l Bank v Kaufmann, 93 N. Y., 273 , the defendants were held not to be liable upon their written guaranty, because there was in fact no consideration for it, nor was any expressed in the writing. It was said in Drake v. Seaman, 97 N. Y., 234 : “ What was said in Evansville Nat’l Bank v. Kaufmann, 93 N. Y., 273 , was not at all intended to decide the question upon which the courts have thus differed. The guaranty there was special and without consideration in fact, and the question now under discussion was not before the courts.”

To ascertain the meaning of an ambiguous written contract, the circumstances under which it was executed, and the matters to which it relates, may be established by oral evidence, and considered by the court. Mur was indebted to the plaintiffs in the sum of $9,941.88, and had left with them eight bonds as collateral. The amount due is stated in Mur’s letter, which con eludes: “I trust with this assurance (Mur’s letter), and the letter (defendant’s letter) enclosed, that this arrangement will be satisfactory, and that you will release the bonds in question.” The proposition contained in the letters was accepted by the plaintiffs, and the bonds in question were released. We think it appears on the face of the letters that defendant’s promise was made

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to procure the release of the bonds which it secured, and was a valid consideration for his guaranty.

There is no evidence that the defendant was induced to promise by the representations of the plaintiffs, or that they concealed any fact from him. The evidence does not show that the plaintiffs had not a good title to the eight negotiable bonds.

The obligation created by the words: “I now pledge to you to remit you from China the sum of $3,000 (three thousand dollars) per annum, in quarterly payments, until the said account is closed,” the performance of which the defendant guaranteed, is not limited by the other parts of the letters to a contract to pay only during the time that Mur remained in the employ of Bussell & Co.

The judgment should be affirmed, with costs.

All concur except Haight, J., not.sitting.