129 N.Y.S. 676 | N.Y. App. Div. | 1911
The amended complaint alleges the execution and delivery of three promissory notes by one Egan to the plaintiff in' part payment of two locomotives, that said notes were discounted with certain banks and that two of said notes were not paid at maturity and were protested for non-payment, whereby plaintiff was compelled to take up said two notes, and now sues to recover the amounts due thereon, including protest fees. The complaint further alleges a certain written contract between defendant and said Egan and others whereby defendant assumed and agreed to pay said notes, which contract is annexed to and made a part of the amended complaint. This contract, in the form of a sealed instrument and acknowledged ■ by all of the parties thereto, provides among other things for the payment of a-certain sum by the party of the first part, this defendant, to the party of the. second part for and on account of himself and. the parties of the third and fourth parts, and also for the payment of certain notes, including th,e notes in question, by said party of the first part: The parties Of the second and fourth parts and Egan, party of the third
The complaint is evidently drawn'on the theory of Lawrence v. Fox (20 N. Y. 268), which holds that an action lies at the instance of a third party upon promise made for a valid consideration for the benefit of such third party, although he is not privy, to the consideration passing between the .parties to the contract: This case has long been regarded as the foundation of the so-called “American doctrine,” now generally-adopted in this country, and especially of the law in this State. Later cases, however, have somewhat limited .the apparent scope of this decision with the result that now, to enable a third party to a contract to sue, “the contract must have been entered into for his benefit, or at least such benefit must be the direct result of performance and within the contemplation of the parties. There must also be a legal obligation [or] duty on the part of the promisee to such third party, the theory of the cases being that such an obligation so connects him with the contract as to be a substitute for any privity with the promisor.” (7 Am. & Eng. Ency. of Law [2d ed.], 107, citing Durnherr v. Rau, 135 N. Y. 219, 222. See, also, Barlow v. Myers, 64 N. Y. 41; Vrooman v. Turner, 69 id. 280, 283-285; Haefelin v. McDonald, 96 App. Div. 213, 221-224; Pond v. New Rochelle Water Co., 183 N. Y. 330, 333-338; Rochester Dry Goods Co. v. Fahy, 111 App. Div. 748, 751-753; affd., without opinion, 188 E. Y. 629.)
The contract in question being under seal a good consideration is presumed for all the promises therein contained. The Lawrence v. Fox doctrine applies as well to contracts under seal as to simple contracts. (Pond v. New Rochelle Water Co., supra, 334.) There was clearly in this contract a legal obligation or duty on the part of the promisee, Egan, to the third party, this plaintiff, inasmuch as he was indebted to the plain - ¡tiff on his promissory notes. The question then remains, in
The question then arises as to the sufficiency of the defenses demurred to. The first, a partial defense only, alleges an overpayment by defendant, on account of a mistake in fact, to
The second defense demurred to alleges that .plaintiff with knowledge of the overpayment obtained judgment against said Egan in the State of Pennsylvania upon said notes, and that' by reason thereof he merged said notes into the judgment and thereby waived his recourse, if any, against this defendant. The promise of defendant, however, to pay these notes would in effect amount, under the doctrine hereinbefore mentioned, to making defendant primarily liable on these notes while not' in any way releasing Egan from his own liability thereon. This being the case we think there was no such merger of the notes by judgment as to bar the present action, and consequently that the holder of the notes was entitled to proceed against either or both of the parties liable on the notes. The fact that the maker of the notes was first sued and a judgment obtained, which is still unpaid, cannot operate to release the defendant from its contractual obligation to pay the notes. The present action is brought to compel the doing of the very thing that defendant promised to do, and so long as the notes remain unpaid plaintiff has such a right of action.
The third defense similarly alleges a waiver by plaintiff of his right of action on account of having discounted said notes. But defendant’s obligation to pay these notes was not conditioned upon their remaining until maturity in the hands of the payees. As commercial paper, and possessing the usual attributes of negotiability, the defendant by undertaking the payment of the notes must be held to have assumed their payment at maturity to whomsoever the then holders in due course
The interlocutory judgment should be affirmed, with costs.
All concurred.
Interlocutory judgment affirmed, with costs, with usual leave to defendant to amend upon payment of costs of demurrer and of this appeal. •'