63 F. 536 | U.S. Circuit Court for the District of Washington | 1894
(orally). This action is founded upon a promissory note and contract in favor of J. M. Arthur & Oo., a corporation, signed by Blackman Bros., in which the defendants promise to pay a certain sum of money with interest, and following that there is this contract, over their signature:
“The above note is givou upon and for 1he sole consideration that the said J. M. Arthur & Co. have agreed and promised that upon the payment of said note, principal and interest, at maturity, they will sell and transfer to the undersigned * * [certain machinery which is described], which the said J. M. Arthur & Co. have intrusted to the care of the undersigned. It is admitted and agreed that the said property so intrusted is tho property of said J. M. Arthur & Co., and tho legal title thereof is in said J. M. Arthur & Co., and shall remain in thorn until they shall make tho aforesaid salo and transfer, after tho interest and principal aforesaid shall bo paid. And tho undersigned agree to return tho said machinery 1o said J. M. Arthur & Co., if requested, at any time before said salo and transfer, in good order, and such return shall not extinguish or alter the liability of the undersigned to pay the interest and principal aforesaid. Above property to be kept insured by'J. M. Arthur & Co., in their favor, at the expenso of makers.”
There is a number of these notes and contracts, a,nd they are all sued on, each one being a separate cause of action. The defendants have answered, pleading two separate affirmative defenses. The first defense is that (here has been a failure of consideration, and they show that this machinery, while it. was in the defendants’ possession as bailee for the owner, was destroyed by fire without the fault of the defendants, so that the plaintiff is not in a position to be able to comply with the contract to sell and transfer live title of this property upon payment being made. The second defense is that the plaintiff neglected to avail itself of the provision in the contract for keeping the property insured for its own benefit. The ease has been argued and submitted upon a demurrer to these two defenses.
In support of the demurrer to the first defense, that there has been a failure of consideration, it is urged that the defendants obtained what they contracted for. They had possession, and although, under the contract, the lawful possession remained in Die plaintiff, the defendants had the use and beneficial possession of the machinery until it was destroyed; and that beneficial use, they
The second affirmative defense is based upon the supposition that the plaintiff was obligated to protect the defendants by having the property insured. I do not so understand the contract. There is a provision put in, to keep the property insured at the expense of the defendants, and it was entirely optional with the plaintiff to claim that privilege, and no fault or blame can be imputed for neglecting that precaution. Certainly the defendants are not prejudiced. If the property had been insured the insurance money would go to the plaintiff and not to the defendants. The plaintiff had the legal title to the property, and an insurable interest, whether the defendants had or not. It is a mooted question whether the defendants could insure for their benefit. Probably they could. Whether that is so or not, they are not prejudiced in any way by the plaintiff’s failure to insure, and I think, if they were otherwise liable upon this note, they are still liable, notwithstanding the property was allowed to burn up uninsured. The demurrer to the second defense is sustained.