28 N.J. Eq. 200 | New York Court of Chancery | 1877
The object of this suit is to compel the defendant to perform a promise alleged to have been made by him, to one Samuel Barber, for the benefit of the complainant. The parties became the sureties of Barber for the fulfillment of a contract made by him with the city of Newark, July 9, 1872, for paving part of Broad street. On the 24th of the same month, Barber applied to the defendant to raise $25,000 for him, on three notes, all drawn by himself, two of $8,000 each, and one of $9,000, and endorsed by both the complainant and the defendant. As between themselves, the defendant was first liable on the two of $8,000 each, and the complainant on that of $9,000. Two other persons had endorsed all three prior to either complainant or defendant. All were accommodation endorsers. The defendant raised the money on the three notes. Before it was passed over, Barber executed two orders, one on the treasurer and the other on the auditor of the city, directing the payment to the defendant of all the moneys earned under the contract. Over $85,000 have been paid to the defendant upon these orders, by the city, at different times. Barber- failing to pay the $9,000 note, after several renewals, the complainant ’was compelled to take it up. ■ The bill avers that Barber’s purpose in making the orders, and the defendant’s in accepting them, was to secure the application of the money received upon them to the payment of all three of the notes. This averment is fully supported by Barber’s testimony. He swears it was distinctly agreed between the defendant and himself, when the orders were given, that the money received under them should be applied by the defendant to the payment of the three notes. The orders simply author
There can be no doubt, if upon the evidence it is found as a fact that the defendant received the orders upon his promise to apply the moneys received upon them to the payment of the $9,000 note, and that such promise remained in force when this suit was brought, the complainant has a right to relief. The doctrine is settled in this state, that if, by a contract not under seal, one person makes a promise to another for the benefit of a third, the third may maintain an action on it though the consideration did not move from him. Joslin v. N. J. Car Spring Co. 7 Vr. 141. And where the consideration of such promise springs out of a new transaction, or moves to the party promising, upon some fresh and substantive concern to himself, the promise is not
Legal rules clearly entitle the complainant to relief, if he is right in his facts. The test question is one of fact: "Were the orders made and accepted upon the promise stated in the bill and sworn to by Barber, and did it remain in force at the commencement of this suit ? The evidence on the first branch of this question is not as conflicting as counsel seemed to regard it on the argument. Barber swears the orders were given upon an express promise by the defendant that all three of the notes should be paid out of the money received upon them, while the defendant, on his direct examination, says he agreed to raise the money on the two $8,000 notes on condition that Barber assigned the contract to secure the debt he then owed him, and on his cross-examination he says he consented to take the three notes provided Barber would assign the contract to secure what he then owed him, and also all future liabilities. The only possible distinction which can be drawn between the two statements is this: According to Barber’s statement, the defendant made an absolute promise to pay the notes out. of the money received upon the orders; while according to the defendant’s, it may be said he understood the money was assigned to him to pay the debt then due to him, and also to indemnify him against the contingent liability he had incurred as endorser of the three notes. At the time the order’s were delivered, the defendant had already endorsed the three notes, or did so immediately afterward, and passed
But, it may very properly be said, the complainant, so far as his title to relief has yet been considered, stands in Barber’s right and upon his contract, and that the defendant and Barber having, by a subsequent agreement, appropriated the money to the security of a debt subsequently contracted by Barber to the defendant, the complainant is seeking to enforce a contract which has been abrogated by the parties to it, and he is, therefore, without a “ legal existing stipulation ” to support his action. This view has the support of authority. Crowell v. Hospital of St. Barnabas, 12 C. E. Gr. 650; 1 Lead. Cas. Eq. (4th Am. ed.) 175. But, it is also true, a new and independent equity could have been created by the promise of the defendant, or arisen out of his conduct, upon which the.complainant may stand in his own right. Mr. Spence, in speaking on this subject, says : “ If, by reason of the expectations held out to a stranger to the contract, under the contract, his condition in life has been changed, to the knowledge and by the instrumentality of the parties, then the stipulation for his benefit may be enforced by such stranger,” not in virtue, however, of its original efficacy, but upon a new equity arising in favor of the stranger. 2 Spence’s Eq. Jur. 281. If, while the original arrangement was in force, or perhaps even subsequently, the defendant promised the complainant, if he would wait until a subsequent or the final' payment was made, he would pay the $9,000, the promise created a new and substantial equity in favor of the complainant which no subsequent contract between the defendant and Barber could extinguish. The law will not permit the defendant to lure the complainant