Smith v. Exchange Bank

| Pa. | Oct 26, 1885

Mr. Justice Trtxnkey

delivered the opinion of the court, October 26th, 1885.

Hiram Smith conveyed .to his brother John, by deed dated June 25th, 1874, a tract of land for the expressed consideration of $2,626. Although a formal receipt was signed for this sum, none of it was actually paid. On the date of the deed John Smith gave to Hiram a writing setting forth that he had received the deed, had paid no money, was to hold the land as security for what he was bound as bail, and was to sell the land, retain out of the proceeds the amount he was bail for, and return the balance to said Hiram.

E. M. Sayers, who held a small judgment against Hiram Smith, that was a lien on said land before the conveyance to John, issued execution, on which the land was sold at sheriff’s gale to said Sayers for $100, and the sheriff’s deed was acknowledged on January 14th, 1876. At the time of this sale Sayers was attorney for John Smith, and bought the land for him. Smith paid Sayers $100 for his services respecting the sale, and Sayers transferred the sheriff’s deed to Smith — this was done to perfect the title. Instead of selling the land, in pursuance of his agreement, Smith so proceeded that the ostensible title in fee was vested in himself. And on May 2d, 1877, he conveyed the land to Webster for the consideration of $2,286.

On June 8th, 1875, the Exchange Bank obtained judgment for $2,249.27 against Hiram Smith, Webb and Flenniken, said Smith being the principal, and the other defendants his sureties, and on same date execution was issued. This judgment became a lien on the land mortgaged by Hiram Smith to John. Flenniken had control of the execution, was interested as surety, but the debt was then owing to the bank. Prima facie Flenniken was acting for the bank, and if an agreement was made for release of the levy and stay of execution, in consideration whereof John Smith would pay the debt, in absence of evidence to the contrary, -the presumption is that the parties to the agreement were John Smith and the plaintiff in the execution. The verdict establishes that sucli agreement was made. There was ample testimony to warrant a finding by the jury that said execution was the first lien on Hiram Smith’s personal property, which was worth about $2,000, that John Smith was indorser for Hiram for another debt, that Hiram and John and Flenniken came together, that it was mutually agreed that the bank would release the levy and stay the writ, and that John would pay the judgment to the hank out of the proceeds of the sale of the land, and that Hiram assented to the arrangement. For some cause, although John held the mortgage for his security, he desired that Hiram’s personal property should be freed from that levy so that it could be taken'on the debt for which he was surety or indorser, hence the arrangement. The contract, if in one sense •to pay his brother’s debt, was for a consideration moving directly from the bank to himself, and he was to pay the debt out of proceeds of sale of his brother’s property. When the bank released the levy and stayed the writ it performed its part of the contract, it was not bound to see that John Smith’s claim against Hiram was paid out of Hiram’s personal property. Although the bank afterwards issued another writ, none of the personal property which had been released was levied on, nor was anything done to interfere with the rights of John under his contract with the bank. The first, fifth, seventh, eighth, and ninth assignments cannot be sustained.

As the case stood before the sheriff’s sale of the land, John Smith was a mortgagee in possession, with power to sell, and the judgment of the bank was a lien. Hiram Smith was adjudicated a bankrupt; but the sheriff’s sale was on a lien that had attached before the proceeding in bankruptcy was begun, and was suffered to be made without hindrance by the assignee, or the U. S. .District Court. If the sheriff’s sale was valid under the laws of this commonwealth, nothing in the bankruptcy of Iliram Smith invalidates it. John Smith isnot; in position to deny the validity of the sale he procured. As an abstract proposition, the defendant’s second point, if answered at all, should have been affirmed, but when considered in connection with his third and fourth points the three were rightly refused.

This contract is not within the Act of April 26th, 1855, which declares that no action shall be brought to charge the defendant upon any special promise to answer for the debt or default of another, unless the agreement be in writing and signed by the party to be charged. Where M. owed a debt to B. and D., saying he had money of M.’s in his hands, promised to B. that if he would give time to M. he would see that the debt was paid to B., and B. agreed not to push his claim against M., but did not surrender his claim and afterwards prosecuted it to judgment against M., it was held that the promise of D. was not within the Statute of Frauds. Where the promise is to apply the funds or property of the debtor in the hands of the party, the debtor consenting, it is unnecessary that the creditor should give up recourse against the debtor upon the original claim: Dock v. Boyd & Co., 93 Pa. St., 92. This case is clearly within the exception to the Statute. The creditor’s release was a good consideration for John Smith’s promise to pay the debt, and he had possession of the debtor’s land out of which he was to raise money for the payment. It was an original, not collateral, contract, and it is no matter that Hiram continued liable for the debt. Nor does the Statute of Limitations bar the action, for it was begun June 18th, 1881, less than six years after the sheriff’s deed was aeknowledged. Prior to January 14tb, 1876, the defendant had neither sold the land nor changed the title. The plaintiff’s l ight of action did not accrue until the lapse of a reasonable time for the defendant to make the sale, and if the right accrued before the sale to Webster it did not before the sheriff’s sale which was less than eight months after the defendant’s promise to pay the judgment. This contract was with the bank, not with Flenniken who acted for the bank. Whether Flenniken was adjudged a bankrupt, and what was done with his estate, are questions foreign to this investigation, and the limitations of actions provided in the Bankrupt Laws do not apply. Equally foreign to the present inquiry is the 62d section of the Act of April 22d, 1856, P. L. 532. The plaintiff is not seeking to enforce specific performance of a contract for sale of real estate, nor to enforce an equity of redemption, nor to enforce an implied or resulting trust as to realty, but merely to compel the defendant to perform his contract to pay a debt. His liability to pay that debt is not dependent on his conduct relative to the land. If he gave the land away, or wrongfully suffered or procured a sheriff’s sale of it to himself, or kept it an unreasonable time without sale, is he thereby, relieved from his contract? His obligation is not absolved by his bad faith or legerdemain. There is no error in matters complained of in the tenth, eleventh, twelfth, thirteenth and fourteenth assignments, at least none against the defendant. And if the time stated in the plaintiff’s sixth and seventh-points when the Statute of Limitations would begin to run, is incorrect, the error was harmless, for the period of six years prior to the beginning of the suit began at an earlier date than is named in these points.

The learned counsel for the defendant rightly says that the’ defeasance given by John Smith to Hiram on June 25th, 1874, was no declaration of trust in favor of Flenniken and Webb, or the Exchange Bank. But as the case stood it did no harm, to call the defeasance a declaration of trust, and to rule that the contract between the bank and the defendant “was not a declaration of the creation of a trust within the Act of April-26th, 1856.” Some of the plaintiff’s points and some of the instructions of the Court were drawn out by the ingenuity of the defendant in presenting the law of trusts as to really, and the Bankrupt Laws, and the Statute of Frauds, but not so as to heavily cloud the simple contract of the defendant to pay the debt owing bjr Hiram Smith to the plaintiff. The defendant has no reason to complain of the affirmance of the plaintiff’s second point. It is true beyond question that the alleged agreement upon which the plaintiff claimed to recover was not a trust within the statute.

We are not convinced that the court erred in affirming the plaintiff’s first point. In the point and in the general charge it was submitted to the jury to find whether the agreement was that “ Flenniken should procure the withdrawal of the said execution, and in consideration thereof the defendant should pay the judgment of the Exchange Bank aforesaid, out of the proceeds of certain real property placed in his hands by the said Smith,” and also whether Flenniken did procure the withdrawal of the execution. As the testimony was submitted the jury found such agreement was made, that the execution was withdrawn, that afterwards the representatives of Webb and Flenniken were compelled to pay the judgment, and that they assigned their interests to the present use plaintiff. When the bank withdrew the execution it ratified the agreement made by Flenniken, even if Flenniken was not previously authorized to make it. When the administrator of Webb, and the assignee in bankruptcy of Flenniken, paid the bank, they became the equitable owners of the judgment — the bank is still the legal plaintiff. The plaintiffs third point was rightly affirmed.

The fifteenth, sixteenth, seventeenth, twenty-first, and twenty-second assignments cannot be sustained. We think the testimony on disputed facts was fairly submitted, that the charge was fair and properly presented the claims of the respective parties, and that if any party has cause to complain of the instructions relativo to allowance of deductions from the amount paid by Webster for the land, it is not the defendant.

The defendant did not make the promise to pay the judgment at the same time that the mortgage-deed was delivered, as alleged in the third paragraph of the bill of particulars, but it did not follow that the verdict should be for the defendant. He afterwards made the promise, as alleged in the fifth paragraph of the bill. His sixth point was rightly refused.

Judgment affirmed.