Lippincott v. Ashfield — 6 N.Y. Super. Ct. 611

Majority

p. 611

Lippincott and others v. Ashfield.

Headnote

A third person, representing that he had in his hand9 sufficient property of a debtor which he intended to sell, in consideration that the creditor would extend the time of payment promised-by parol to the latter that he would sell the property, aud pay the creditor, and that it should séll for enough to pay the debt.

Held, 1. That the promise was not one to pay the debt of another, and not within the statute of frauds.

2. That it was made upon a sufficient consideration.

(Before Oakley, Oh. J., and Doer and Paine, J. J.)

April 16 -,

May 24, 1851.

Demurrer to the complaint. The complaint sets forth, in substance, that the plaintiffs, doing business in this city, under the firm of Lippincott & Raynolds, about the 13th of May, 1818, sold to E. B. Clussman & Co., merchandise amounting to $450.98, for which they took Clussman & Co.’s note payable in four months. The plaintiffs are still the holders and owners of that note; no part of it has been paid; and E. B. Clussman & Co. are still indebted to the plaintiffs thereon for the whole amount, with interest. About the 24th of January, 1849, the defendant, Ashfield, represented to the plaintiffs that he had, under his control, certain property, which was worth more than the amount of the plaintiff’s claim, and which belonged to E. B. Clussman & Co.; that he intended to sell it, and apply the proceeds to the payment of the plaintiff’s claim. At the same time, the defendant, in consideration that plaintiffs should forbear and give time of payment to Clussman & Co., on the note, for twelve months, promised and agreed with the plaintiffs, by parol, to sell the property, and pay 'the plaintiffs the proceeds within twelve months, and promised ,that the property should sell for enough to pay their claim. The plaintiffs fore-bore, and gave time for twelve months, and the defendant has not performed the agreement.

The defendant demurred, insisting that the agreement is a

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promise to answer for the debt of other persons, and is not in writing, expressing the consideration, and is void by the statute ■of frauds.

The cause was argued before Campbell, J., in February, 1851, who overruled the demurrer, with leave to the defendant to answer in ten days, on payment of costs. From this judgment the defendant appealed to the general term.

J. J. Lotting, for the appellant.

1. The promise was clearly to answer for the debt of'third persons. In determining this point, we have only to see whether the promise remains collateral to the liability of other persons to the same party to whom the promise is made.

' 1. It is collateral, because, the consideration was not such as to shift the actual indebtedness to the new promissor, so that as between him and the original debtor, he was bound to pay the debt as his own. (Kingsley v. Balcombe, 4 Barb. 138 .)

2. It is collateral so long as the liability of the original debtor remains, unless according to the dictum of Ch. J. Savage, in Farley v. Cleveland, it be founded upon a new and original consideration of benefit to the defendant or harm to the plaintiffs, moving to the party making the promise either from the plaintiffs or the original debtors. (Simpson v. Patten, 4 John. 222 ; Jackson v. Rayner, 12 Ibid. 291 ; Smith’s Merc. Law, 538, 543 ; Goodman v. Chase, 1 B. & A. 297; Edwards v. Kelley, 6 M. & S. 204.)

' In the present case, the defendant derived and could derive no benefit whatever from the property which it is said he had under his control. And the plaintiffs neither relinquished any right, non suffered any harm. Their forbearance to sue E. B. Clussman & Co., is not such a consideration as between them and the defendant, as to make the promise an,original one. (Smith v. Ives, 15 Wend. 182 ; Fish v. Wilkinson, 1 Wils. 94 ; King v. Wilson, 2 Strange, 873.)

If there was any benefit or advantage here, it was wholly to the persons or property of E. B. Clussman & Co., and that is

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not sufficient to take the case out of the statute. (Nelson v. Boynton, 3 Metc. 396 .) The defendant, at the utmost, can only be regarded as a trustee or assignee of the property of Cluss-' man & Co., and he cannot be made personally liable. ( 12 John. 291 .)

II. This case does not come within the principle on which that of Farley v. Cleveland, ( 4 Cow. 435 ,) was held not to be within the statute of frauds. In that case, as well as in a number of others in this and other' states, the promise was made at the same time with, and in consideration of, the sale or transfer of the property or funds; the promissor thereby becoming himself the debtor of the original debtor, and undertaking to pay his own debt to the creditor instead of to the original debtor. (Barker v. Bucklin, 2 Denio, 45 ; Gold & Sill v. Phillips, 10 John. 412 .) It is essential to the validity of a parol agreement of this kind, and to save it from the operation of the statute, that it should be made by and between the debtor himself and a third person, whereby the latter promises, upon a sufficient consideration, to pay the debt owing by the former to his creditor. (Per Jewett, J., in Barker v. Bucklin, 2 Denio, 58 ; Eastwood v. Kenyon, 11 Ad. & E. 438; Smith’s Merc. Law, 541.) This is not a case of funds or property placed by a debtor in the hands of a third person with a direction to pay it to his creditor, where the creditor might have a good cause of action against such third person for moneys received to his use; as in the cases of Wyman v. Smith, 2 Sand. S. C. R. 331, and Hilton v. Dinsmore, 8 Shepley’s R. 410. To sustain this action on this ground, the present complaint requires an allegation that Clussman & Co. placed certain property in the defendant’s hands with directions to sell it, and apply it to the payment of the plaintiff’s claim; which is not pretended. Finally, this case is in no respect distinguishable from those of Simpson v. Potter, 4 John. 422 ; Jackson v. Rayner, 12 Ibid. 291; and Watson v. Randall, 20 Wend.; all of which have .been repeatedly approved in later cases.

J. W Gilbert, for the plaintiffs.

I.' An agreement to forbear, for a specified period, constitutes

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a sufficient consideration. (Chitty on Cont. 35; Pitm. on Prin. & Sur. 58.) Smith v. Ives, 15 Wend. 182 , and Watson v. Randall, 20 Ibid. 201 , are put on tbe ground that the agreement to forbear was without limitation as to time.

II. The agreement to forbear necessarily worked a postpone* ment of the right of the plaintiffs to reach the property of E. B. Clussman & Co. in the defendant’s hands, and this was a good consideration for the defendant’s promise.

III. The agreement is not within the statute of frauds: (2 B. S. 135, § 2.) It is not an agreement to answer for the debt, &c., of Clussman & Co., but an independent contract to convert property received from them, and pay over the proceeds to the plaintiffs. (Barker v. Bucklin, 2 Denio, 45 ; Wyman v. Smith, 2 Sand. S. C. R. 331.)

The" subsisting liability of Clussman & Co. is no objection to a recovery, as the agreement of the defendant was máde upon a new and original consideration. (Farley v. Cleveland, 4 Cow. 439 ; S. C. in Err. 9 Cow. 639 ; Ellwood v. Monk, 5 Wend. 235 ; Mercein v. Mack, 10 Ibid. 461; Bogert v. Kneeland, 10 Ibid. 229; S. C. in Err. 13 Ibid. 115; Russell v. Babcock, 14 Maine, 140; Andrews v. Smith, 2 Cr. M. & Ros. 627; Dixon v. Hatfield, 2 Bing. 439 ; Parkins v. Moravia, 1 C. & P. 376; Walker v. Rostron, 9 M. & W. 411.)

The true test to apply, is to inquire whether the agreement of the defendant is merely that of suretyship for Clussman & Co. (Johnson v. Gilbert, 4 Hill, 178 .) It clearly is not; because, 1. The defendant-did not promise to pay the debt. 2. He could not be sued jointly with Clussman & Co. 3. His agreement was merely that he would perform a legal duty imposed on him by executing a trust voluntarily assumed. ■ 4. E. B. Clussman & Co. are not liable to the plaintiffs for the performance of .the defendant’s agreement.

By the Court.

-The question presented in this case arises under the statute of frauds. E. B. Clussman & Co. were indebted to the plaintiffs oh a promissory note, and the defendant, haying property of Clussman & Co. in his hands,

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agreed, that if the plaintiffs would give them a year’s time to pay, he would apply the property to pay the debt, and agreed further that the property should sell for enough to pay it. The complaint is upon this promise, and the defendant demurs to- it as being without consideration and within the statute of frauds.

The promise is not, however, as defendant’s counsel insists, to pay the debt of another. There are two promises: one toapply property in defendant’s hands to pay the debt; and the other, that the property shall sell for enough to pay it.

Neither of these promises is a promise to pay the debt of another. The promise by a third person to apply the debtor’s own property to pay his debt, is not a promise by the third person to pay it himself.. The guarantee added to this promise, that the property shall sell for enough to pay it, is not a prom-.-, ise to pay it. Neither are both promises taken together a promise to pay the debt, although their effect may be to render the promissor liable for so much of it as the property should be insufficient to pay. We do not think the statute is to be extended, by a forced construction, to embrace a case which is clearly not within its letter or meaning. The statute, no doubt, means the ordinary promise to pay another’s debt; that is, a promise which simply binds the promissor himself to pay the debt with his own means.

The demurrer does not appear to raise the objection of a want of consideration for the promise, except as subordinate to the general defence, that the case is within the statute of frauds. If it did, however, it would be a sufficient reply to it, that the forbearance was, a sufficient consideration, .even if it was not beneficial to the defendant. It was harmful to the plaintiff, and that is sufficient.

But the consideration was beneficial or valuable to the defendant. He had the debtor’s property in his hands, and we must presume, from the character of the promise, that the disposition and application which he agreed to make of it, were with the debtor’s assent. Clearly, then, the property - in his hands was a consideration of value. Suppose the promise had been directly to the debtor, could there be a question that the.con

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sideration. was not sufficient, or the promise not binding. And if the promise is made,- with the debtor’s assent, directly to the plaintiff; who is to be alone benefited by its performance, is it less valid? If it had been made to the debtor, the plaintiff could have sued upon it, as a promise made for his benefit. And can there be any reason, then, why he should not sue upon it, when made directly to himself ?

The j udgment of the special term, overruling the demurrer, is affirmed with costs.

Cases cited

Smith v. Ives 15 Wend. 182 N.Y. Sup. Ct. p. 612, p. 614
Ellwood v. Monk 5 Wend. 235 N.Y. Sup. Ct. p. 614