Case Name: Samuel C. Dow vs. Joseph W. Clark & others
Court: Massachusetts Supreme Judicial Court
Jurisdiction: Massachusetts
Decision Date: 1856-10
Citations: 7 Gray 198
Docket Number: 
Parties: Samuel C. Dow vs. Joseph W. Clark & others.
Judges: 
Reporter: Massachusetts Reports
Volume: 73
Pages: 198–202

Head Matter:
Samuel C. Dow vs. Joseph W. Clark & others.
An agreement, not under seal, made in consideration of the transfer of the greater part of the stock in a corporation, and by which the purchasers of the stock promise the sellers to pay all the debts of the corporation, (without specifying the names or number of such creditors, or the amount of their demands,) provided they shall not exceed a certain amount, will not support an action by one of the creditors against such purchasers.
Action of contract to recover the amount of certain bonds of the Concord and Claremont Railroad Company, a corporation duly established by the laws of New Hampshire, bearing date and issued on the 1st of February 1850, and payable in five years from date, with interest. The parties submitted the ease to the decision of the court upon the following statement of facts:
On the 12th of August 1852 Anthony Colby and eight others severally transferred to persons by them designated their stock in said railroad corporation, being three fourths of the whole amount of said stock, and thereby gave to the defendants and their friends the complete control of the affairs of the corporation ; and the defendants afterwards caused all the stock so transferred, and consequently the control of said railroad, to be transferred to the Northern Railroad, another corporation established by the laws of New Hampshire.
The defendants, at the time of this transfer by said Colby and others, and in consideration thereof, and as a part of the contract with them, executed an agreement, not under seal, reciting said transfer, and in consideration thereof agreeing “ to and with said Colby” [and others] “and each and every one of them, that we will pay all the debts, demands and claims, of every description and kind, that said corporation now owe, whether the same are now due or become due at some future day, including fourteen thousand seven hundred dollars bonds dated February 1st 1850, one hundred thousand dollars first mortgage bonds, and one hundred and fifty thousand dollars second mortgage bonds, payable at future days; ” and further agreeing to indemnify said Colby and others against “ all loss, costs or expenses accruing to them or either of them on account of their connection with said corporation, by reason of their individual liability as stockholders of said corporation under the laws of New Hampshire, and of their liability as indorsers of the notes and other paper of said corporation ; ” and further agreeing “ to and with said Colby” [and others] “that we will pay and discharge all and several the debts and liabilities of said corporation, as they shall respectively from time to time mature and become due; provided said debts and liabilities are not to exceed in the whole the sum of four hundred and twenty thousand dollars.”
The bonds sued upon were part of the bonds first mentioned in this agreement, and were all owned by the plaintiff at the date of the writ, and some of them on the 12th of August 1852. The whole amount of the debts and liabilities referred to in this agreement did not exceed the sum of four hundred and twenty thousand dollars. And the defendants have paid, pursuant to said agreement, some part of the debts of the Concord and Claremont Railroad Company.
The defendants also delivered to each stockholder in that corporation, who transferred his shares to persons designated by them, an agreement, not under seal, to pay all sums which he might be individually holden to pay as a stockholder of said corporation, and to indemnify him against any loss, cost or expense which might arise or accrue from his individual liability as stockholder.
B. F. Butler, for the plaintiff,
cited Arnold v. Lyman, 17 Mass. 400; Hall v. Marston, 17 Mass. 575; Colt v. Root, 17 Mass. 229; Lent v. Padelford, 10 Mass. 230; Com. Dig. Action upon the Case upon Assumpsit, E.; Todd v. Tobey, 29 Maine, 219; Motley v. Manufacturers’ Ins. Co. 29 Maine, 337; Cutler v. Everett, 33 Maine, 201; Dumond v. Carpenter, 3 Johns. 183; Raymond v. Bearnard, 12 Johns. 276; Chapman v. Williams, 7 Har. & Johns. 157; Findley v. Adams, 2 Day, 369.
E. R. Hoar, for the defendants.

Opinion:
Metcalf, J.
The defendants, by their agreement (not under seal) with Anthony Colby and others, upon the consideration therein set forth, promised to pay all the debts of the Concord and Claremont Railroad Company, including certain bonds given by the corporation, which are now owned by the plaintiff, and a part of which he owned at the date of the defendants' agreement, and to save said Colby and others harmless from all loss or expenses on account of their connection with said corporation. No part of the consideration of this promise moved from the plaintiff; nor was the promise, in terms, made to him or to any other creditor of the corporation, but only to Colby and others. Can the plaintiff maintain an action on this promise ? He relies, in argument, on the position, that a party, for whose benefit an unsealed promise is made, may maintain an action thereon, though it is made to a third person. And this anomalous doctrine has been applied by this court to the classes of cases mentioned in Mellen v. Whipple, 1 Gray, 317, but to no other. In all other cases, the court have adhered to the general rule of the common law, that a plaintiff, in an action on a simple contract, must be the person from whom the consideration of the contract actually moved, and that a stranger to the consideration cannot maintain an action on it. And, as we have heretofore announced, we have no inclination to make any further exceptions to that rule. Millard v. Baldwin, 3 Gray, 486. Field v. Crawford, 6 Gray, 117.
The main reliance of the plaintiff's counsel is on the case of Arnold v. Lyman, 17 Mass. 400. But we are of opinion that there is an important difference between that case and this. In that case, Hutchins, a debtor of Arnold, transferred property to Lyman, who promised Hutchins to pay certain enumerated debts of his, of specified amounts, to certain persons named and among them the debt that Hutchins owed to Arnold. Lyman therefore knew how much, and to whom, he was to make payment; and he was held liable in an action brought in the name of one of those whom he had specifically promised to pay. Such also were the facts in Fitch v. Chandler, 4 Cush. 254, where the doctrine of Arnold v. Lyman was recognized.
But, in the present case, the defendants' promise was to pay all the debts of the railroad corporation, without any specification of the names or number of its creditors, or of the amount of their demands. If the plaintiff can maintain this action, so may every one of the other creditors of the corporation, whatever may be their number, maintain a like action; and the defendants may be held answerable to persons of whom they never heard. And they will be bound, in such actions, to litigate the question, whether the party who sues them has a legal claim on the corporation. Such has never yet been held, either in this commonwealth or in England, to be the application of the doctrine relied on by the plaintiff, that on a promise made by A to B to pay B's debt to C, C may maintain an action against A. All the cases, here and in England, in which actions have been supported under this doctrine, are those in which the party sued had promised to pay a debt due to the person suing on the promise. If any of the courts of any of the states in the Union have extended this doctrine to cases not distinguishable from the one at bar, we cannot follow them.
We do not determine the question, whether the adjudged cases, on which the plaintiff relies, are applicable to a promise to pay the debts for which a third person alone is liable, or for which the party, to whom the promise is in terms made, is contingently liable, (as in this case the stockholders of the railroad corporation are thus made liable, by the Compiled Laws of New Hampshire, c. 147, for the debts of the corporation,) but we decide this case on the ground above stated, precisely as if the defendants had made such a general promise to Colby and others to pay the debts for which they alone were liable. And no inference is to be drawn from this decision as to our opinion on the question above suggested.
Judgment for the defendants.