Case Name: Gimbel Brothers, Appellant, vs. McConnell, Respondent
Court: Wisconsin Supreme Court
Jurisdiction: Wisconsin
Decision Date: 1915-01-12
Citations: 159 Wis. 325
Docket Number: 
Parties: Gimbel Brothers, Appellant, vs. McConnell, Respondent.
Judges: 
Reporter: Wisconsin Reports
Volume: 159
Pages: 325–329

Head Matter:
Gimbel Brothers, Appellant, vs. McConnell, Respondent.
December 9, 1914 —
January 12, 1915.
Contract for benefit of third person: Escrow: Failure to comply with conditions: Release.
A contract providing that the owner oí certain property should convey it to defendant free of all liens or claims except two mortgages, and that as part of the consideration defendant should assume and pay plaintiff’s claim against said owner, was, together with the proper deeds, placed in escrow, not to he delivered until the owner was able to comply with the conditions of the contract. Being unable to comply therewith, the owner afterwards in terms released defendant from paying plaintiff’s claim. Held, that as the contract never became operative defendant never became liable to pay plaintiff’s claim. Tweeddale v. Tweeddale, 116 Wis. 517, and 'Wetutzhe v. 'Wetutzke, 158 Wis. 305, distinguished.
Appeal from a judgment of tbe circuit court for Dane county: E. Rat SteveNS, Circuit Judge.
Affirmed.
Action to recover $1,760.63 claimed to be due from defendant under an agreement alleged to have been entered into between him and one Bridge, who was indebted to plaintiff in tbat amount. Bridge owned a hotel at Portage which on July 17, 1911, be agreed to deed to tbe defendant free of all liens or claims except two mortgages amounting to $10,000. As a part of tbe consideration defendant agreed to pay plaintiffs claim against Bridge to tbe amount stated. Defendant denied that Bridge ever performed bis part of tbe contract; alleged that be was unable to do so and on that account tbe agreement between tbcm was rescinded. He further alleged that after tbe rescission of his contract with Bridge plaintiff settled bis account with him by accepting notes from him in full payment of the account; that Bridge has been adjudged a bankrupt, and that plaintiff has filed tbe notes referred to in tbe bankruptcy proceeding and is there seeking to collect them. Tbe written contract for tbe sale of tbe hotel, signed by tbe defendant and Bridge, contained this provision: “This agreement is to be fully consummated and tbe papers exchanged on or before tbe 20th day of August, A. D. 1911; said McConnell, however, is to have possession of tbe Portage hotel property from this date.” Tbe contract and papers were placed in escrow with one Morgan and were not to be delivered till Bridge was able to comply with tbe terms of tbe agreement. He never complied therewith, but on the contrary liens amounting to about $6,000, in addition to tbe two mortgages, were filed against tbe hotel after tbe agreement was executed and while tbe papers were in escrow. They were held by Morgan at tbe time defendant discovered tbe additional liens on tbe property, and there is nothing to show they bad been delivered when defendant and Bridge made the new arrangement whereby defendant was released from paying plaintiff’s claim, or that they have since been delivered.
Tbe trial court found that on July 17, 1911, tbe defendant entered into a contract with Bridge which provided that the latter should transfer to tbe defendant certain real estate free and clear of all liens or claims except two mortgages, and that tbe defendant should assume and pay Bridge’s account ■ with plaintiff; that Bridge never carried out bis part of tbe contract by transferring tbe real estate bargained for free of all liens and claims except two mortgages; tliat subsequent to July 17, 1911, it was mutually agreed between Bridge and tbe defendant tbat Bridge should pay bis claim to plaintiff and the defendant should be relieved from the payment thereof, and that defendant took and still retains possession of the hotel. It further found that on or' about September '20, 1912, the plaintiff and Bridge agreed that the latter should give his notes to the former for the amount of the account in suit, which was done; that the notes were accepted by the plaintiff as payment of the account and it then released defendant from further liability thereon. Judgment was entered dismissing the complaint and the plaintiff appealed.
For the appellant there was a brief by Freeman & Qeilfuss and Byron II. Stebbins, and oral argument by Mr. Stebbins.
They contended, inter alia, that the right of a third person to enforce a contract made for his benefit does not depend upon the performance by the immediate parties to the contract of other promises made by them. It is the making of the promise, not its performance, that is the consideration for the promise to pay the third person. The rights of the third person are not subject to the condition that the promisee shall fully perform, any more than to the condition that the contract continue in force — be not abrogated by the immediate parties thereto. They cited, among other cases, Tweeddale v. Tweeddale, 116 Wis. 517, 526, 93 N. W. 440; Wetutzhe v. Wetutzhe, 158 Wis. 305, 148 1ST. W. 1088, 1090; Johnston v. Charles Abresch Co. 123 Wis. 130, 137, 101 ÜST. W. 395; Gilbert P. Go. v. Whiting P. Go. 123 Wis. 472, 102 N. W. 20; Fanning v. Murphy, 126 Wis. 538, 544, 105 N. W. 1056; Whiting v. Eoglund, 127 Wis. 135, 137, 106 N. W. 391; Peterson v. G. & N. W. B. Go. 119 Wis. 197, 203, 204, 96 N. W. 532; B. Connor Co. v. iEtna I. Go. 136 Wis. 13, 20, 21, 115 N. W. 811; Warren Webster &■ Go. v. Beaumont H. Go. 151 Wis. 1, 10,138 N. W. 102; Zwietusch v. Becher, 153 Wis. 213, 216, 140 N. W. 1056; Davis v. Galloway, 30 Ind. 112, 95 Am. Dec. 670; Ilelms.v. Kearns, 40 Ind. 124; 25 L. R. A. 258, note; Getchell <& M. L. M. Go. v. Peterson, 124 Iowa, 599, 100 N. W. 550; Doll v. Grume, 41 Neb. 655, 59 N. W. 806; School Disi. ex rel. Koken Iron Works v. Livers, 147 Mo. 580, 49 S. W. 507; Kansas City ex rel. Diamond B. & T. Go. v. Schroeder, 196 Mo. 281, 93 S. W. 405, 409; Kauffman v. Gooper, 46 Neb. 644, 65 N. W. 796; People for use of Reynolds v. Ba-nhagel, 151 Midi. 40, 114 N. W. 669, 670.
Eor tlie respondent there was a brief by Edward J. Reynolds and Henry T. Sheldon, and oral argument by Hr. Reynolds.

Opinion:
Vinje, J.
Plaintiff's counsel says the finding of the trial court that "Defendant should assume and pay the account of said Bridge with the plaintiff" is not excepted to and is therefore a verity in the case. The language of the trial court is that the defendant entered into a contract with Bridge which provided that he should assume and pay the claim. Ordinarily this would be equivalent to a finding that he agreed to assume and pay it. But the language of the trial court, taken in connection with the undisputed facts, shows that he is merely reciting the provisions of the agreement placed in escrow, which was nothing more nor less than a reduction to writing of the terms of an understanding which both parties agreed should become binding in the event that Bridge should be able to transfer the property free from all liens except the two mortgages. It was only an agreement in fieri; an understanding reduced to writing but not to become operative until certain prescribed conditions were complied with. Such conditions in this writing were never complied with, so it never became an operative agreement. There never was an unconditional contract entered into between defendant and Bridge that the former should pay the latter's account with plaintiff. On the other hand it was discovered that additional liens were placed on tbe property wbicb tbe defendant bad to assist in paying. Bridge in terms released bim from paying plaintiff's claim. Sucb agreement was not % release of any liability of defendant to plaintiff, for there bad been none; nor was it in fact a new agreement, since tbe contemplated one of July 17, 1911, never ripened into an agreement.
Tbe facts of tbe case, therefore, do not bring defendant within tbe rule of Tweeddale v. Tweeddale, 116 Wis. 517, 93 N. W. 440, and Wetutzke v. Wetutzke, 158 Wis. 305, 148 N. W. 1088, where it was held that a valid agreement entered into between two persons for tbe benefit of a third cannot be rescinded or altered without tbe consent of sucb third person.
Plaintiff, upon being informed of tbe substance of tbe contents of the writing entered into July 17, 1911, sought for some time to collect its claim from both Bridge and the defendant. Tbe latter in substance always told plaintiff that be would pay tbe claim if Bridge fulfilled bis part of tbe contemplated agreement. Upon learning from Bridge that there was small prospect of bis being able to convey subject only to tbe two mortgages, plaintiff took bis notes for the amount of its claim and thereafter tried to collect them from bim as they fell due, and filed them in tbe bankruptcy proceedings. Tbe court found that they were taken in payment of tbe claim and that defendant was released. Were it necessary to pass upon this aspect of tbe case we should bold that tbe evidence sustains tbe findings. But as already indicated, we rest tbe decision upon tbe fact that no valid unconditional promise on tbe part of tbe defendant to pay plaintiff's claim has been shown.
By the Court. — Judgment affirmed.