Court Opinion

ID: 3318749
Source: CourtListenerOpinion
Date Created: 2016-07-05 17:36:20.237286+00
Date Added: 2024-06-11T12:39:48.910701
License: Public Domain

The substantial condition, as affecting the claim of the town of Milford, is this: Mr. Lamkin, as a partner, as well as by agreement, was the immediate debtor of the creditors of the firm of Baldwin 
Lamkin to an amount exceeding the sum of $61,000. He was, as a partner, as well as by agreement, the sole owner of property valued at $61,000, which in his hands was subject to attachment for the satisfaction of these partnership debts. He conveyed this property to the Baldwin  Lamkin Manufacturing Company, and the corporation in consideration of *Page 67 
that conveyance promised Lamkin to assume and pay obligations of the firm to the amount of $61,000. The corporation received and has ever since enjoyed the property or its proceeds, but has not paid the obligation of the partnership to the town of Milford. In presenting its claim to the receiver the town, in legal effect, brings an action to enforce the obligation of that corporation to it. No question of the statute of frauds is involved; if the promise must be treated as one to answer for the debt of another, it is in writing. That the town has (assuming that the taxes are an obligation of the partnership within the meaning of the agreement) a right of action against the corporation, is admitted. The material question is one of marshaling the assets. Shall the claim of the town be postponed to the claims of other creditors? The majority of the court hold that it shall; and the reason implied in the opinion of JUDGE BALDWIN is, that the town's right of action is one to enforce Lamkin's rights against the corporation under its promise to him, and therefore the town, deriving its right from Lamkin, can have in the marshaling of assets no equities superior to his; and as Lamkin could not divert to the discharge of his own liabilities, property on the faith of which the corporation with his aid had gained credit for itself and which was necessary to satisfy the indebtedness thus contracted, so the town standing in his shoes comes under the same rule.
I cannot let this implication pass unchallenged. It is not essential to the decision of the case, and involves a view of the ground of action in similar cases which seems to me untenable, and which I believe the court, if the question should be directly presented, would be obliged to hold untenable.
The rights of Lamkin against the corporation arise from the promise to him. The promise to him gives no right of action to the town against the corporation, either at law or in equity. There are authorities which hold that in every instance where a promise is made to one for the benefit of another, the latter can maintain a suit upon that promise; but such is not the law in this State. The true distinction is clearly stated in Treat v. Stanton, 14 Conn. 445, 453, 454. See *Page 68 
also Meech v. Ensign, 49 id. 191, 203; Waterman's Appeal, 26 id. 96, 107; Clapp v. Lawton, 31 id. 95, 104; Baxter v.Camp, 71 id. 245, 248, 249. The case last cited stands upon the doctrine of Treat v. Stanton, and was not intended to and does not modify or extend that doctrine.
It is inconsistent with this settled law, to hold that the town has a right of action derived from Lamkin to enforce the promise made to him. When a promise is made by one to another for the benefit of a third party, that third party has no right of action on the promise, unless the promisee is in fact, or can be considered in law, his agent; and has no right of action at all unless the benefit to him involves something more than a mere gratuity. In the latter case, that is, when the rights or interests of the third party are involved in the consideration of the contract, or are affected by the transaction, he may have a right of action, not upon the promise or contract to which he was not a party, but upon the obligation arising in his favor from the transaction of which the contract is one element. Such right of action may be at law or in equity, according to the circumstances; but in any event it is a right to enforce a direct obligation from the promisor to the third party. Sometimes cases of this kind have been treated as furnishing evidence of an agency between the third party and the promisee, and for this reason an action upon the promise has been maintained. But unless such agency is clearly shown, the true ground of action is, not upon the promise, but upon the duty arising from the facts of the transaction. Meech v. Ensign, supra, p. 203.
When the corporation accepted the property valued at $61,000, — knowing that in Lamkin's hands it was subject to attachment by his creditors who had claims exceeding that amount, and that Lamkin in conveying it intended to appropriate it for the benefit of the creditors whose rights in enforcing their claims would otherwise be seriously damaged by the transfer, — the law imposed upon the corporation a duty to the creditors, independent of its duty to Lamkin under its promise to him; and this duty the creditors, taking proper steps for that purpose, could enforce by action, independent *Page 69 
of any right of action in Lamkin against the corporation. Had the corporation assumed to pay each creditor a sum named and received property actually the equivalent of that sum, an action at law might be maintained; but the facts in this case render an action in equity the proper remedy.
As the town of Milford is not suing upon a right derived from Lamkin, but upon a direct obligation from the corporation to itself, the reason given in the opinion for postponing its claim to the claims of other creditors is insufficient. A postponement, or at least a reduction of the claim, may be justifiable for other reasons; but it is unnecessary for me to discuss the question. The liability of the opinion as written, to invite inferences as to the nature of actions of this kind which I believe the court will be unable to accept when such question shall come before us directly, is the main reason for my dissent.