McLaughlin v. Gillings

—According to the facts as found by the justice, the plaintiff was employed by Gen. Earle to do certain work on the Washington House, between 159th and 160th streets, this city. The defendant did certain of the work for the plaintiff, and his bill amounted to $290. He wanted his money, and the plaintiff promised to give him an order on Gen. Earle for it, but added: “Mr. Robinson, my foreman, has $75 coming to him, and I would like to make the order $365, so that when you collect the order you may turn $75 over to Mr. Robinson, which will settle my account with him.” The defendant agreed to this. The order was accordingly made out for $365, and the defendant obtained the money on it from the drawee, but refused to pay Robinson his $75. The plaintiff, upon demand therefor, paid Robinson the $75 he owed him, and brought the present action to recover the amount from the defendant. The plaintiff declared for “money paid by mistake,” but on the trial, without objection amended his complaint by claiming for “money had and received.” Robinson was present when the arrangement was made, and assented to it, and from this the defendant argues that there was a complete substitution of parties; that the plaintiff was discharged, and the defendant instead became the debtor of Robinson. The legal results flowing from the acts of the parties will be separately considered.

2. The transaction did not amount to a novation. The plaintiff owed Eobinson $75. The defendant was not indebted to either, and did not agree to become Robinson’s debtor in the place of the plaintiff. “The promise by a third person to apply the debtor’s own property to pay his debt is not a promise by a third person to pay it himself.” Lippineott v. Ashfield, 4 Sandf. 615 ; De Col. Guar. & Prin. & Sur. (Am. Notes by Morgan) 84, 85. No new debt was substituted for the old one. The defendant simply agreed' to collect $75 for the plaintiff, and pay it over to Eobinson, who agreed to accept the money from the defendant as the plaintiff’s agent; but until the actual payment of the money the plaintiff continued to be Eobinson’s debtor. Such is the construction of the transaction as the parties understood it, and effect should be given to their intention. Novation is never presumed, and must be clearly established by a full discharge of the original debt, the express terms of the agreement, or the acts of the parties whose intention must be clear. 16 Am. & Eng. Enc. Law, 868; 5 Lawson, Rights, Rem. & Prac. sec. 2572. To constitute a novation, there must be a mutual agreement among three parties, the creditor, his immediate debtor, and the intended new debtor, by which the liability of the last-named is accepted in the place of the originial debtor in debtor of the original debt; if the liability of the original debtor continues, there is no consideration for the new contract, and no valid substitution takes place. Add. Cont. (2d Am. Ed.) 1004; Poth. Obl. (3d Am. Ed.) marg. p. 546; Clark, Cont. (Hornbook Series) 612; 1 Pars. Cont. (6th Ed.) 218; Jaudon v. Randall, 47 N. Y. Super. Ct. 374 . In Coxon v. Chadley, 3 Barn. & C. 591, the court said: “Sweet is not proved ever to have said, ‘I will take you, Robert, as my debtor, and discharge James.’ He is not proved ever to have said or done that which would have the effect of discharging James.” Hence there was no novation. Whether there has been a consent of all the parties sufficient to constitute a novation is a question for the jury. Dean v. Board, 73 Mich. 165 , 41 N. W. 218 ; Lynch v. Austin, 51 Wis. 287 , 8 N. W. 129 . The court below found that there

3. The fact that the transaction gave Robinson the right to sue Gillings on his promise to pay him the $75 owing by McLaughlin (Lawrence v. Fox, 20 N. Y. 268 , and kindred cases), if he had elected that remedy did not in the absence of such election (Mills v. Parkhurst, 126 N. Y. 89 , 36 St. Rep. 512 ), prevent Robinson from enforcing his demand against McLaughlin, his original debtor, whom he had not released. A. cannot discharge his debt to B. by arranging with C., even upon a good consideration, that the latter will pay the debt to B.; nor can he compel B. to sue C. on Ms promise to pay. Even if B. should at first assent to the suggestion, he could not be held bound, in the absence of proof of novation by his actual acceptance, or some new consideration to Mm whereby he had concluded Mmself upon the subject. The direction to C. until payment by him, or or such conclusive acceptance, would be revocable by A. as a mere naked authority. Judge Comstock, in his dissenting opimon in Lawrence v. Fox, supra, made tMs pertinent statement (which is not at variance with the decision there rendered) %

“It is plain that Holly, who loaned the money to the defendant, and to whom the promise in question was made, could at any time have claimed that it should be performed to Mmself personally. He had lent the money to the defendant, and at the same time directed the latter to pay the sum to the plaintiff. This direction he could countermand, and, if he had done so, mamfestly the defendant’s promise to pay according to the direction would have ceased to exist.”

In Kelly v. Roberts, 40 N. Y. 439 , the court, in reiterating the same principle, illustrates it by holding that if A. hand money to his own servant or agent, with instructions to carry and deliver it to B., which the servant or agent agrees to do, such instructions are revocable; for—

“Until such instructions have been acted upon in some manner, the servant continues the servant of A., and only his servant. So, where one hands money to his servant, agent, or friend, with a request that he visit the city and therewith pay a note due or about to become due, can it be seriously questioned that if, before anytMng further is done, such one concludes to use the money for some other purpose, or to pay some other debt, he may do so? I think not. And in cases cited [Lawrence v. Fox, 20 N. Y. 268 ; Berly v.

See, also, Aetna Nat. Bank v. Fourth Nat. Bank, 46 N. Y. 92 .

Instead of availing himself of the promise made by the defendant for his benefit, Robinson elected to pursue McLaughlin, his original debtor from whom he obtained satisfaction of his demand, thereby effectually releasing Gillings, the defendant herein, from all obligation to him resulting from his promise to pay, leaving McLaughlin, the plaintiff, to the remedy suggested by the court in Kelly v. Roberts, supra, against Gillings, the defendant, viz.: recover back the $75 on the unperformed contract; for, until appropriation according to the directions given, that sum remained the money of McLaughlin.

4. The promise to pay Robinson was conditioned upon the collection of the money, for until then there would be nothing in the defendant’s hands to pay with. When he received the money, and failed upon demand to pay the plaintiff’s debt to Robinson, he was guilty of a breach of his contract with the plaintiff, who was still interested in having his debt extinguished, and this interest was sufficient to enable the plaintiff to maintain the action for the breach. Robinson testified that he owed nothing to the defendant, a circumstance which, if true, proves that the defendant’s refusal to to pay over the $75 was capricious, and in bad faith, the risk of which Robinson never agreed to assume. Robinson did not regard the order as affecting a novation, for he demanded payment of the $75 from the. plaintiff; and the latter, apparently of the same mind, handed over that amount to Robinson, and then resorted t"o this action for the breach in the form of money had and received to and for his use. Such an action is maintainable where a party receives money belonging to another which in equity and upon principles of natural justice he should pay over to him. Cow. Treat. § 305; Roberts v. Ely, 113 N. Y. 128 , 22 St. Rep. 185 ; Roberts v. Ellwood, 116 N. Y. 652 ; 26 St. Rep. 727 ; 4 Wait, Act. & Def.

The judgment must be affirmed with costs.