Case ID: ad_130/html/0796-01.html
Source: Caselaw Access Project
Author: {"author": "McLaughlin, J.: Ingraham, J.(dissenting):", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

A. Schwoerer & Sons, Incorporated, Appellant, v. Samuel H. Stone, Respondent.
    First Department,
    March 5, 1909.
    Contract — Statute of Frauds — agreement to answer for default of another — when promise is original and founded upon new consideration.
    , Where a. sub-contractor refused to proceed under a contract reqmring'it to construct the roof of a building -by reason of the financial embarrassment of the principal contractor, and a person interested in the completion of the work and also interested in the principal contractor, a corporation, induced the plaintiff to enter into a new contract with the principal contractor at a reduced ¡mice in consideration of his oral agreement to pay the agreed price personally, he is liable, although the agreement was not in writing, for it was an original promise founded upon a uew consideration, and not an agreement to answer for the debt or default of another.
    Ingraham and Scott, JJ., dissented, with opinion.
    Appeal by the plaintiff, A. Schwoerer & Sons, Incorporated, from a judgment of the Supreme Court in favor of the defendant, entered in the office of the cleric of the county of Hew York on the 25th day of January, 1908, upon the dismissal of the complaint by direction of the court at the close of the plaintiff’s case upon a trial at the Hew York Trial Term.
    
      Bertram L. Kraus, for the appellant.
    
      Benjamin F. Feiner, for the respondent.
   McLaughlin, J.:

This action was brought to recover the sum of $1,650 and interest therpon for labor performed and materials furnished on a building which was being constructed by the Wolff Construction Company, • the complaint alleging that the plaintiff had a contract with it to perform work and furnish materials in and about the roof, but before any of the work was performed or any of the materials furnished, the construction company became financially embarrassed and the plaintiff refused to proceed under its contract; thereafter, at the request of the defendant, who was interested in the completion of .the building, and upon his promise to pay the plaintiff, the work and materials in question were performed and furnished. The answer denied the material allegations of the complaint and alleged as an affirmative defense that the promise, if made was oral, was to answer for the debt or default of another and void under the Statute of Frauds. The complaint was dismissed at the close of plaintiffs’ case and plaintiff- appeals.

At the trial only one witness was sworn — Schwoerer, the treas-urer and active manager of the plaintiff—from whose testimony it appears that the. plaintiff entered into a contract with the Wolff Construction Company, the main contractor, to do certain work and furnish certain materials on the building ; that before the plaintiff entered upon the performance of the contract the construction company became financially embarrassed and plaintiff refused to perform its contract; that thereupon the defendant sent for Schwoerer and asked him what plaintiff proposed to do about carrying out the contract and he informed defendant that plaintiff was not going to cany it out because the construction company was financially embarrassed ; that the plaintiff had a judgment against it for $600 or $700 which it had been unable to collect; that there were hens against the building and that the Mannados Realty. Company, in which the defendant was interested and of- which he was treasurer, had commenced an action to foreclose a mortgage which it held. Thereupon the defendant asked Schwoerer how much the plaintiff would reduce the contract and go on and finish it under the supervision of a Mr. Boach, whom the defendant said he had made president-of the Wolff Construction Company in place of its former president; that Schwoerer replied he already had a contract with the Wolff Com struction Company, and there was no need of reducing the price to make a new one with them; that defendant then suggested that the contract be made with the Mannados Realty Company, and this proposition was rejected by Schwoerer, and the defendant then said: “Supposing I agree to pay you for the work, how much will you take off ? ” And Schxvoerer replied : “ If you agree to pay for the work, I will make the price $2,760 ” (the original price was $3,000); that defendant then took the contract and made an indorsement upon it to the effect that the price was reduced to $2,750, and then said to Schwoerer: “Bow * * * you go up and see Mr. Roach and let Mr. Roach prepare contracts to-morrow or the next day for $2,750;” that Schxvoerer called upon Boach, and certain revisions were made which still further reduced the price to $2,250, and a new contract was then prepared between plaintiff and the Wolff Construction Company, but no provision was made for the terms of payment, except that “payments to be arranged within the next 48 hours, satisfactory to both parties,” Boach saying the arrangement would have to be made with the defendant; that Schwoerer then took the contract to the defendant, xvho said he would pay “ as soon as I wanted any money, to try * * * to get $1,000 worth of work done ” before asking for a payment; that Schwoerer then stated that the plaintiff would not do the woik under the contract, and asked if defendant would not give him a letter, which he refused to do because he stated he was interested in the loan made by the Mannados Eealty Company, and if he did, then the other mechanics on the building would come and want their payments on the building- guaranteed in that way, and he did not propose to pay them; but he said : “ Go ahead and I will see that you get your money. * * * I will pay you for everything you do on that job. * * * I will tell you, I will give you payments as yon progress, but don’t make them any less than $1,000; ” that the plaintiff thereupon furnished the materials and performed the labor called for by the contract; that during the progress of the work Schwoerer asked Stone for a payment on the contract of $600, and the defendant said he would send over a check for that amount, which he did; that the check was made by the Mannados Eealty Company, by S. H. Stone, treasurer, payable to the order of Wolff Construction Company, “ for Schwoerer & Sons,” indorsed by the construction company, and then delivered ; that shortly after this the work was completed, and plaintiff asked Stone for final ,payment, that he made ' some complaint about the work, and said if that were remedied then he would pay; that the changes were made as suggested, and another request made for payment, and defendant i’eqolied: “You come in here in a week or ten days,” and “ I will pay you; ” that lie thereafter refused to make any further payments, and this action was brought.

The testimony of the witness Schwoerer to the effect that the defendant personally promised to pay the plaintiff was corroborated by the affidavit of Eoach, which was put in evidence without objection.

Upon this state of facts I think the plaintiff made a ¡prima facie case which entitled it to recover. It is fairly to be inferred from Schwoerer’s testimony that the defendant not only was interested in the Mannados Eealty Company, which was foreclosing the mortgage upon the building, but that he in fact constituted substantially the Wolff Construction Company. He stated that he had removed Wolff from the construction company and put Eoach, his superintendent, in his place. The promise sought to be enforced related to the indebtedness thereafter to be created. It was an original promise, founded upon a new consideration, which was work thereafter to be performed and materials thereafter to be furnished. (Raabe v.Squier, 148 N. Y. 81; Reisler v. Silbermintz, 99 App. Div. 131.) It was beneficial to the promisor by reason of his interest in the Wolff Construction Company or the Mannados Realty Company, or both. Thus the case is brought within the rule laid down in White v. Rintoul (108 N. Y. 222), in which the court said :• “ Where the primary debt subsists and was antecedently contracted, the pi’omise to pay it is original when it is founded on a new consideration moving to the promisor and beneficial to him, and such that the promisor thereby comes under an independent duty of payment irrespectivé of. the liability of the principal debtor.”

The judgment appealed from should be reversed and a new trial ordered, With costs to appellant to abide event.

Clarke and Houghton, JJ., concurred; Ingraham and Scott, JJ., dissented.

Ingraham, J.(dissenting):

So far as appears from this record, the defendant had no personal interest in the performance of this contract. He appears to have been an officer of a corporation who had a mortgage upon the prop erty that was being improved; but the record certainly shows no personal-interest which would be benefited by the performance of the plaintiff’s contract. The' .plaintiff having a contract with, a contractor to-erect a building upon the premises described, who was in financial difficulties, had refused to carry out his contract. He saw the defendant, stated his position, and the defendant asked him what lie would do the work for if the defendant promised to pay the amount due. According to the plaintiff’s testimony, an agreement was then arrived at by which the defendant would pay the anfount of a new contract to be made with the original contractor. Subsequently a new contract was made, not between the plaintiff and the defendant, but between the plaintiff and the original contractor, which contained no reference to the defendant, and under which the plaintiff furnished the materials and performed the work that lie had undertaken to do.

I think that all prior negotiations were merged in this new contract when it was executed. The only question presented is whether, subsequent to the execution of the new contract, there was any agreement with the defendant to pay the amount due to the plaintiff which was enforcible. After this second contract was made, the daté of which was the 28th of March, 1905, the plaintiff testified that he saw the defendant and showed him the contract, and stated that the plaintiff had reduced the price $500 for. the omission of a stone cornice; that defendant said he would pay plaintiffs as soon as they wanted any money, to try to make the payments not less than $1,000; that plaintiff then told the defendant that he would not work under this .contract, and asked the defendant to give a letter in writing; that defendant said that he could not do that, because he was interested in the loan, and if he did that, the other mechanics in the building would come and want their payments in that way, and he did not propose to pay them ; that defendant then said : Go ahead and I will see that you get your money.” He said : I will pay you for everything you do on that job.” Here a contract had been made with the Wolff Construction Company to do the work, by which the Wolff Construction Company agreed to pay to the plaintiff the sum of $2,250, and that such sum shall be paid in current funds by the Wolff Construction Company to the plaintiff as specified. This was an absosolute obligation of the Wolff Construction Company which was in existence when the plaintiff went to the defendant, and the defendant said he would pay the plaintiff as soon as the plaintiff wanted any money; that he would pay the plaintiff for everything the plaintiff did on that job. It seems to me that this is clearly to answer for the debt of the Wolff Construction Company, and not an original contract made by the defendant to pay for the work done by the plaintiff upon this building. The courts have often gone far to prevent injustice. where the- owner of real property, vitally interested in completing a building in course of construction, had made an independent contract to pay to a person furnishing labor and materials for the building. In this case, however, where a contract has just been made and no work performed, and the only agreement was to pay to a contractor the amount of his contract by a person who was not proved to have any beneficial interest in the property, I do not think that it can be said to be an original contract, but must be construed to be a promise to answer for the debt or obligation of the Wolff Construction Company, and thus within the Statute of Frauds.

In the casé, of Raabe v. Squier (148 N. Y. 81) it was held that the Statute of Frauds was not applicable to the contract there under consideration, and the reasons given were because “ the promise, in so far as it is here sought to be enforced, related to the indebtedness thereafter to be created. The promisors were th¿ owners of the buildings in process of construction. The woodwork furnished by the plaintiffs was for their benefit. The contrae toi’S had neglected to pay the plaintiffs for the material furnished, and they refused to deliver more, as they had the right to do. Under such circumstances the promise was made,, and ft- was in reliance upon the promise that the plaintiffs delivered the rest of the woodwork. The promise thus made was. original and founded upon a new consideration, that of the goods. It- was beneficial, as we have seen, to the promisors.” In Reisler v. Silbermintz (99 App. Div. 131) the promisor was the owner of the building, and the contract that was made was for alterations in it.

In both these cases, which have been sustained as on an original promise, the promisor was beneficially interested in the performance of the contract, and stress in both cases is laid upon that condition. To make such a promise original, it seems to me there must be a new consideration which was beneficial to the promisor, and in addition to wdiat the promisee was bound to perform by .reason of his original contract. Here the plaintiff had entered into a contract with - the Wolff Construction Company. The Wolff Construction Company had not in any way violated its contract, and the plaintiff was under legal obligation to perform that contract. He went to the defendant with that contract and the defendant agreed to pay him for the materials and what he furnished under it. In both Raabe v. Squier (supra) and Reisler v. Silbermintz (supra) the original contractors had failed to perform their contract-, and thus the promisee was absolved from carrying it out. Under those circumstances he went to the owner of the building, who was beneficially interested in having the work performed, and the owner of the building, to secure that benefit, promised that what was furnished in. future he would pay for, making a new and independent contract to furnish work and materials for his, the promisor’s, benefit. In this case, however, the plaintiff had a contract with the Wolff Construction Company, which he was bound to perform. ¡Nothing had happened to discharge him from his obligation to the Wolff Construction Company, and whatever promise the defendant made was simply to pay what the Wolff Construction Company had agreed to pay and for what the plaintiff had agreed to perforin upon the promise of the Wólff Construction Company to pay. It seems to me that a contract made under such circumstances cannot in any sense he said to be a new or original contract. It was not beneficial to the defendant, and it lacked the essential elements, namely, a beneficial interest of the promisor in the performance of the contract and furnishing the labor and materials on the new promise, which, but for that, he was under no obligation to furnish, which are necessary to establish a new and independent contract. I think, therefore, that the judgment was right and should be affirmed.

Scott, J., concurred.

Judgment reversed,, new trial ordered, costs to appellant to abide event.