49 Conn. 191 | Conn. | 1881
The plaintiffs held a mortgage on real. estate. The defendant purchased the equity of redemption, agreeing with the mortgagor to pay the mortgage debt. Subsequently the mortgage was foreclosed—the property then being worth less than the mortgage debt—leaving a balance unpaid. This action is brought to recover the balance. The promise was not assigned to the plaintiffs but was- discharged by the mortgagor before suit brought. The question of the defendant’s liability is reserved for the advice of this court.
The case differs from the other cases on this subject that
As a rule actions on contracts can be brought only by Mm with whom the contract was made and from whom the consideration moved. The legal title is deemed to be in Mm alone and strangers to the contract cannot sue. The rule is a salutary one and should not be departed from except for good reasons. There are however some exceptions to it. Actions of assumpsit may be maintained in some instances where there is no express contract with the plaintiff and where the consideration does not move from Mm. If A receives money from B to be paid to O, 0 may maintain an action against A. These cases however are exceptions only in appearance. They in fact recognize the general rule and are really within it; for the action is not brought on the express promise by A to B, but on an implied promise by A to pay the money to O.
Another class of exceptions is where the contract 'has for its object a benefit to a third party and is made with that intent. Some early English cases in wMch promises were made to a father or uncle for the benefit of a cMld or nephew are instances of tMs class. There may also be cases in which a third party may have some peculiar eqrnty in the subject matter of a contract wMch will enable Mm. to maintain a bill in equity to enforce it.
Does tins case fall within any exception recognized by-authority and supported by principle ?
Before alluding to decided cases let us examine the case with some care in the light of the circumstances, for the purpose of discovering just what the intention of the parties was and precisely what the defendant promised to do; for courts always in enforcing contracts Mtend to give effect to the intention of the parties; and when that intention is discovered in respect to a legal and valid contract it
What was the transaction ? It was not a sale of a piece of land for a fixed price, equal to the value of the land, so as to create a debt for that sum; but was simply a sale of the equity of redemption. The distinction between the land, unincumbered, and the equity of redemption, is obvious enough, and is an important one, as on it depend in a great degree the rights and obligations of the parties. The defendant purchased the equity of redemption. The finding is that the mortgagor “ conveyed to the defendant said real estate subject to said mortgage.” So that the only debt brought into existence by the transaction was the price agreed to be paid for the equity of redemption. The mere purchase raised no debt to the mortgagor which the defendant was to discharge by paying the incumbrance. By the contract of assumption he obliged himself to the mortgagor to pay the mortgage debt. Whether that raised any personal obligation to the mortgagee is the question in the case. If the probable intention of the parties is to govern it is difficult to find any such liability in the transaction. The mortgagee was not a party to it, no part of the consideration moved from him, and he was in no worse condition because of it. He still had the security of the land and the personal responsibility of the mortgagor, and that is all he contracted for or required. The parties contracted with reference to their own interests, not his; to benefit themselves, not him. He had no legal or equitable interest in the contract and there is no room for the presumption that it was intended for his benefit.
There was no agency express or implied. The mortgagor would doubtless be surprised at the suggestion, should it be made, that he was acting as the agent of the mortgagee. There was no substitution or novation, for that requires three parties, and here were only two; besides the original debtor was not discharged.
We are aware that there are decisions from courts of the highest authority, and whose opinions are entitled to the highest respect, which hold that the creditor may sue on such contracts; perhaps it is not too much to say that the prevailing current of authority in this country is in that direction; but believing as we do that they are not founded in good reason or sound policy we cannot accept them as law. The question is an open one in this state, and principle, rather than precedents not founded in principle, should determine it.
We cannot undertake to examine in detail the cases alluded to; we can only refer in a general way to the reasoning by which they are supported. It is interesting to note the various grounds on which they stand, some of which are not only weak in themselves, but fail to strengthen the others. It is an argument of no little weight against the correctness of decisions that they seem to require disconnected and inharmonious reasons to sustain them.
In cases of this class the reasoning is not uniform. In some it is suggested that from the express promise to the promisee the law implies a promise to the third person. In others the principle of agency is invoked and the mortgagor in making the contract is treated as the agent of-the mortgagee. The difficulty with this last position is that it is contrary to the facts.
In Urquhart v. Brayton, 12 R. Isl., 169, Durfee, C. J., holds the defendant liable to a third person on the ground of a novation, while Potteb, J., in the same case places the liability on the ground, of money had and received. There seem to be several difficulties in treating it as a novation; first, it changes the nature of the contract; second, it requires a third party, and here aré but two; and third, an essential element of a novation is wanting—the discharge of the original debtor.
In other cases the transaction is treated as a sale of the land irrespective of the mortgage and a retention by the purchaser of a portion of the purchase money, to be paid to the mortgagee. Hoff's Appeal, 24 Penn. St., 200; Urquhart v. Brayton, 12 R. Isl., supra; Blyer v. Monholland, 2 Sandf. Ch. R., 478. When the circumstances will warrant that view of the facts there is no difficulty. In such cases the debtor actually places or leaves the money in the hands of the promisor to be paid to the creditor, and the action for money had and received may be maintained—not on a promise to the debtor but on an implied promise to the creditor.
Other cases, and this class includes a large number, resort
We come now to a class of cases which constitute an important exception to the rule we are considering—that suits must-be brought by the party making the contract and from whom the consideration moved. We refer to those cases in which the parties confessedly contracted for the
The principle itself is best illustrated by a brief reference to a few of the leading cases. In Dutton v. Pool, 1 Ventris, 318, the defendant promised the father to pay the daughter a sum of money as a marriag0 portion. It was, held that the daughter might sue on the promise. The relation of the father to the daughter and his obligation to give her a marriage portion seem to be adopted as a substitute for privity of contract. Some of the decisions in the state of New York have taken a similar view and treat the obligation of the mortgagor to the mortgagee as a “ substitute for privity,” or “ privity by substitution,” to connect the mortgagee with the contract. Vroom v. Turner, 69 N. York, 280, and cases cited. Dutton v. Pool in modern times in this country would be upheld on the ground that the promise was intended for the benefit of the daughter as its object.
In Felton v. Dickinson, 10 Mass., 287, the defendant promised the father of a minor son to pay the son a sum of money for his services. After performing the service it was held that the son might maintain an action in his own name. In Farley v. Cleveland, 4 Cow., 432, (same case in error, 9 Cow., 639,) the defendant bought hay of the debtor, in consideration of which he promised to pay the debt due the plaintiff. The plaintiff maintained a suit in his own name. In Hendrick v. Lindsey, 93 U. States R., 143, the defendant promised A that if he would sign a bail bond he would give him a bond of indemnity. A and B signed the bail bond .and it was held that they could jointly maintain an action on the promise. In these cases there is no difficulty in discovering an intention to benefit the third person.
And yet this exception seems not now to be recognized in England. Tweddle v. Atkinson, 1 Best & Smith, 393.
The question then recurs—is the case at bar within the exception? We have already expressed our views as to the nature of the contract and the real intent of the parties. If we are right it is clear that the question must be answered in the negative.
That the incidental advantage to the creditor, (if it is an advantage to'have his debt paid by one man rather than another,) is not such a benefit as the exception contemplates, is apparent from a consideration of the possible and even probable consequences of holding it to be so. The case before us affords a good illustration. The debtor is insolvent, and the property mortgaged has largely depreciated, so that it fails to pay the debt. Now if the plaintiffs may recover the balance of the defendant, they have a security for their debt which they did not originally have, which they neTrcr contracted for, and which the contracting parties did not intend that they should have. It in effect makes him the absolute guarantor of the debt.
Whatever doubt may have existed as to the state of the law in New York on this subject, it seems to be set at rest, for the present at least, by recent decisions. In Garnsey v. Rogers, 47 N. York, 233, which was an action like this, the court says, by Rapallo, J.,—“ I do not understand that the case of Lawrence v. Fox [20 N. York, 268,] has gone so far as to hold that every promise made by one person to another, from the performance of which a third would derive a benefit, gives a right of action to such third party, he being neither privy to the contract nor to the consideration. To entitle him to an action the contract must have been made for his benefit. He must be the person intended to be benefited. * * If such a contract could be enforced by the creditor who would be incidentally benefited by its performance, every agreement by which one party should agree with another, for a consideration moving from him, to
The case of Merrill v. Green, 55 N. York, 270, was this:— Roberts and Green were partners. They dissolved, and Green and one Nichols executed a bond to Roberts conditioned that Green should pay all the parthership debts. In a suit on the bond by a creditor it was held that creditors could not sue. Grover, J., says:—“ Green was liable with Roberts for the payment of the firm debts. ■ He agreed with Roberts upon a valid consideration to assume the payment of the whole of the debts, and Nichols undertook that he should perform this contract. This was no agreement made by Green and Nichols with the creditors or for their benefit, but one with Roberts to exonerate Mm from his liability for the debts of the firm, payment of wlfich Green was to make, and, in case of his default, such payment to be made by Nichols. All the liability incurred by either was upon the bond, and this was to the obligees only.”
The case of Vrooman v. Turner, 69 N. York, 283, was also the case of a mortgage. Allen, J., says:—“ To give a tMrd party who may derive a benefit from the performance of the promise an action, there must be, first, an intent of the promisor to secure some benefit to the third party, and second, some privity between the two, the promisee and the party to be benefited.” In Simson v. Brown, 68 N. York, 361, the court says:—“But it is not every promise made by one to another from the performance of which a benefit may accrue to a tMrd person, which gives a right of action to such third person, he being neither privy to the contract nor to the consideration; The contract must have been made for his benefit as its object, and he must be the party intended to be benefited.”
We advise the Superior Court to render judgment for the defendant.
In this opinion the other judges concurred.