Feist v. Schiffer — 60 N.Y. St. Rep. 859

Majority

p. 859

Frederick K. Feist, App’lt, v Alfred Schiffer et al., Resp’ts.

(Supreme Court, General Term, First Department,

Filed June 15, 1894.)

Headnote

Contract—Promise for benefit of third person.

Where a person seeks to base his right to maintain his action against a third party upon a contract made between such party and another, it must not be merely one to indemnify the latter party but a promise made for his own benefit.

Appeal from a judgment dismissing the complaint.

Edward W. S. Johnston, for app’lt; M. ~ffiarley Platzelc, for resp’ts Schiffer and others; IF. IF. Bryan, for resp’t David.

This action was brought by a judgment creditor of Albert A. David against the obligors under the following agreement :

“ Agreement made this third day of December, eighteen hundred and eighty-seven, by and between David, Schiffer & Company, Denzer, Stern & Company, and Bernheim, Bauer & Company, parties of the first part, and Albert A. David, party of the second part, witnesseth: Whereas, the party of the second part, at the request of the parties of the first part, undertook to effect settlement of the claims of the parties of the first part against H. S. Simon, of Eugene City, Oregon; and whereas, in order to effect such settlement, the party of the second part deemed it necessary and desirable to purchase of one Samuel Simon a certain judgment held by him against said H. S. Simon, and for which he gave his check to said Samuel Simon on the Tradesmen’s National Bank of the city of New York for eighteen hundred and sixty dollars ; and whereas, for good and sufficient reasons, and in furtherance of the interests of the parties of the first part, and with their approval, he ordered said bank to refuse the payment of such check when

p. 860

presented; and whereas, such refusal.may involve him in litigation. Now, in consideration of the premises and of the sum of one'dlollar by each of the parties to the other or others in hand paid, the receipt whereof is hereby acknowledged, these presents witness: (1) That in the event that action is brought against the said party of the second part by said Samuel Simon, his assigns or legal representatives, said parties of the first part will defend such action at their own cost and expense, and will pay any judgment that may be rendered against the party of the second part or his legal representatives in any such action. (2) That the parties of the first part between themselves agree that they will pay the costs, expenses, and judgment resulting from any action which may be brought as aforesaid in the same proportion as they were interested in the affairs of H. S. Simon,—to wit, David, Schiffer & Co., in the sum of thirty-eight hundred and fifty-one dollars and fifty cents; Bernheim, Bauer & Co., in the sum of six hundred and' nine dollars and ninety-eight cents; Denzer, Stern & Co., in the sum of one hundred and fifteen dollars.”

The plaintiff through mesne assignments, became the owner of the check referred to in the agreement, and brought suit against David thereon, and obtained a judgment, execution upon which was returned unsatisfied, and such judgment still remains unpaid. The theory of the action is that the agreement inures to the benefit of the plaintiff, having been made between David and the respective firms therein mentioned in favor of the one who should recover judgment on the check. If this theory finds support in the evidence, then under the familiar principle laid down in the case of Lawrence v. Fox, 20 N. Y. 268 , that “ an action will lie on a promise by a defendant, upon a valid consideration, to a third person for the benefit of plaintiff, although the plaintiff was not privy to the consideration,” this action is maintainable. It has been many times said by the court of appeals that the principle of that case should not be extended, but should be confined to its original limits. Lorillard v. Clyde, 122 N. Y. 498 ; 34 St. Rep. 224 ; Durnherr v. Rau, 135 N. Y. 222 ; 48 St. Rep. 394 . And in Beveridge v. N. Y. El. R. R. Co., 112 N. Y. 26 ; 20 St. Rep. 962 , Judge Gray, writing the opinion, says: “Within the principle of adjudged cases in this court, where the plaintiff seeks to base his right to maintain his action against a third party upon a contract made between that party and another, it must be one made or intended for his benefit. Such a beneficial intent must be clearly found in the agreement. * * * But in all of the cases which I have examined where the action was sustained, the facts showed that the promise clearly was for the third person’s benefit, and made with that distinct intention.”

The question here presented, therefore, narrows down to a construction of the agreement itself, as to whether it was a contract of indemnity for David’s benefit or a contract to pay the judgment creditor. If the language of the agreement were susceptible of the view that the parties thereto promised David that they would pay the judgment creditor, then there would be much force in the argument that this was within the principle laid down in Lawrence

p. 861

v. Fox and kindred cases. But it is equally clear that, if it was a mere contract of indemnity to David, then, not being a promise or agreement with David for the benefit of a third person, it would not be within the principle of those cases, and the plaintiff, having no contractual relation with the parties to the agreement, and not being himself privy thereto, could not under such circumstances maintain this action. That this was a contract of indemnity we think is clear, not alone from the language of the agreement itself, but in the light of the circumstances surrounding its execution. The parties thereto undertook to pay any judgment which one Samuel Simon or his assigns might recover against David upon the check with David had given to Simon in the interest of the parties, but the payment of which he stopped with their approval and in their interest, agreeing between themselves, in the event of liability thereon, to contribute in certain fixed proportions. They therefore occupied towards the holder of the check an attitude of hostility and resistance, and did not undertake to pay plaintiff, or make a promise which was to inure to his benefit, but, on the contrary, entered into an agreement for the purpose of inducing David to resist the paym'ent of the check given to Simon, and which subsequently passed into the hands of the plaintiff. We think that this consideration alone, in view of the language which we have quoted from the case of Beveridge v. N. Y. El. Railroad Co., supra, is conclusive against the plaintiff’s right to maintain the action. For, as already said (quoting from the opinion in that case), in all cases where the action was sustained “the facts showed that the promise clearly was for the third person’s benefit, and made with that distinct intention.”

There are other objectionsurged with much force against the plaintiff’s right to maintain this action, but, as we have reached a conclusion upon the main ground, it is unnecessary to discuss them. We think, therefore, that the judgment below was right, and should be affirmed, with costs. All concur.

Cases cited

Lawrence v. Fox 20 N. Y. 268 N.Y. p. 860
Lorillard v. Clyde 122 N. Y. 498 N.Y. 1890-12-02 p. 860