Court Opinion

ID: 8187514
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:10:12.869981+00
Date Added: 2024-06-11T16:40:28.618109
License: Public Domain

Maeshall, J.
Tbe agreement by Daniel Tweeddale to pay plaintiff $100 and bis sister $50, as part of tbe consideration for tbe property which came to him from bis mother, stands upon tbe same footing as any promise made by one person to another, for a consideration, for tbe benefit of a third person. As soon as tbe title to tbe land was vested in Daniel Tweeddale and tbe bond and mortgage were delivered to his mother, be became obligated to pay to them that part of the consideration for tbe land represented by tbe sums secured to bis brother and sister, if the principle controls that a grantor of land becomes obligated to pay tbe whole or a part of tbe consideration for tbe property conveyed to him to a stranger to tbe transaction if it is left in bis bands for *521that purpose, and upon bis promise to make snob payment. We apprehend tbe trial court so viewed tbe matter. Notwithstanding the finding that tbe sum secured to appellant and that secured to bis sister were mere gifts, tbe turning point in tbe case, in tbe mind of tbe circuit judge, we apprehend, was that tbe beneficiaries did not know of tbe agreement and did not accept tbe same or in any way become parties thereto till their mother, with tbe consent of Daniel Tweeddale, rescinded tbe transaction. An agreement by one person, upon a good consideration, to pay bis debt to another by paying tbe same to a third person, is just as binding where there is no consideration for tbe promise between the immediate prom-isee and tbe third person as where tbere'is such consideration. Whether tbe benefit secured to tbe tbijd person is a gift, strictly so called, or one intended, when realized, to discharge some liability of such promisee to the third person does not change tbe situation. It is the exchange of promises between the immediate parties, and the operation of law thereon, that binds the promisor to the third person. The idea which ruled this case, — that where a person for a consideration paid to him by another agrees to pay a sum of money to a third person, a stranger to the transaction, the latter does not thereby become possessed of the absolute right to the benefit of the promise, nor until he accepts the same in some way; and that while he is ignorant of the promise, or thereafter, at any time before he assents to the transaction, it may be rescinded, — -we must admit is well supported in the books. The authorities so holding, in the main, go upon the ground that privity between parties is absolutely essential to a liability of one to another of a contractual nature, and that until the third person brings himself into privity with the one who has promised to be his debtor by at least assenting thereto, he has at least no legal right to the benefit.of the promise; and that, till then, the parties to the transaction may rescind it or change it *522as they see fit. There is also much authority to the effect that, while the element of privity between the promisor and the third person is essential to render the promise absolutely binding upon the former, no act of the latter is necessary thereto;. that the law, operating upon the acts of the parties to the transaction, creates the privity immediately upon its being consummated between them, and that neither one nor both of them can thereafter, without the third person’s consent, enforce the promise. The first class of authorities is well represented by the following: Trimble v. Strother, 25 Ohio St. 378; Brewer v. Maurer, 38 Ohio St. 543; Crowell v. Hospital, 27 N. J. Eq. 650; Durham v. Bischof, 47 Ind. 211; Davis v. Calloway, 30 Ind. 112; White v. Hunt, 64 N. C. 496. The second class of authorities is fairly well represented by the following: Ray v. Williams, 112 Ill. 91; Dean v. Walker, 107 Ill. 540; Hare v. Murphy, 45 Neb. 809, 64 N. W. 211, 29 L. R. A. 851; Graves v. Macfarland, 58 Neb. 802, 79 N. W. 707; Brewer v. Dyer, 7 Cush. 337; Mallett v. Page, 8 Ind. 364; Henderson v. McDonald, 84 Ind. 149; Pruitt v. Pruitt, 91 Ind. 595; Rodenbarger v. Bramblett, 78 Ind. 213; Frank v. New York, L. E. & W. R. Co. 7 N. Y. St. Rep. 814; Esling v. Zantzinger, 13 Pa. St. 50.
It is useless to endeavor to review the authorities touching the subject before us with a view of harmonizing them upon any one single theory as to the principle upon which the liability to the third person is based, or as to what are the essential elements to effect it. There is as much confusion, probably, in the judicial holdings in respect to the matter, as on any question of law that can be mentioned. As indicated, there are authorities to the effect that there is no absolute liability to the third person till in some way he is brought into privity with the promisor. Others are to the effect that such privity is entirely unnecessary. Others, as we have indicated, hold that while the element of privity is necessary, *523the law creates it, no act of the third party being necessary thereto. There are others to the effect that there is no liability at law without the element of privity between the prom-isor and the third person, hence, if he has a right to enforce the promise the remedy is in equity’unless he can show that he adopted the promise made for his benefit so as to become a party thereto. There are many other phases of the question that find support in the books. The liability is sustained in-some cases under the doctrine of novation, and held not to exist in the absence of any of the elements necessary to satisfy the law on that subject. In other cases it is held that there is no principle- of subrogation or novation involved in the liability; that it rests solely upon and is fixed absolutely by the transaction between the person making the promise and receiving the consideration and the person to whom the promise is made and from whom the consideration moves. There is confusion not only between different courts, but confusion in the decisions in many jurisdictions in the same court. The supreme court of Illinois, in Bay v. Williams, 112 Ill. 91, speaking on the subject, correctly described the situation in the following language:
“The courts are not harmonious, — not even the courts in! the same states, — and it may be added that the cases are not capable of being reconciled. . . . On the mere authority of adjudged cases in other tribunals, we would have to vacillate to keep in line.”
The extent to which the first class of cases we have mentioned goes in one direction is indicated by the following from the syllabus of Trimble v. Brother, 25 Ohio St. 378:
“In an action to recover a debt which the defendant agreed with a third party to pay the plaintiff, it is a good defense to show that before the plaintiff assented to or acted on the promise made in his favor, the agreement had been rescinded.”
The sharp conflict between the two principal classes of cases. is well indicated by reading in connection with that *524quotation tbe following from tbe syllabus of Bay v. Williams, supra:
“A purchaser of mortgaged premises from tbe mortgagor, wbo assumes payment of tbe mortgage debt, or wbo accepts :a conveyance reciting bis assumption of tbe same with a knowledge of sucb recital, will at once become personally liable to tbe mortgagee for tbe mortgage indebtedness; and be cannot defeat tbe mortgagee’s right to bold him respon■sible, by procuring a release from tbe mortgagor.”
It is believed that this court is committed to that doctrine, •though it must be admitted that there are expressions in •several opinions that may well be taken as indicating either a contrary view or that it is uncertain just what tbe rule here is on tbe subject. To illustrate, in Putney v. Farnham, 27 Wis. 187, we find this language:
“After notice, therefore, to them (tbe third persons), and their assent, tbe liability of tbe defendant . . . was absolutely fixed. ... It was no longer in tbe power of Corlett (the immediate promisee) to forbid payment or to withdraw bis assent, or to require payment to be made to himself, without tbe consent of Fallon and Gallagher.”
There is impliedly a decision that, till tbe third person receives notice of tbe agreement made for bis benefit, and •assents to it, tbe immediate parties to tbe transaction may rescind it, or tbe immediate promisee may himself change tbe direction of tbe benefit. In Bassett v. Hughes, 43 Wis. 319, tbe expression in Putney v. Farnham was repeated. In Enos v. Sanger, 96 Wis. 150, 70 N. W. 1069, language was used, taken by itself, indicating that privity between tbe third person and bis promisor does not exist prior to bis adoption in some way of tbe promise. But after discussing authorities in this and other states bearing on the subject, tbe law as stated in Brewer v. Dyer, 7 Cush. 337, and Bay v. Williams, 112 Ill. 91, was approved as more fully stating the established doctrine here than any language used in our own decisions. For tbe purpose of clearing up any uncertainty existing here *525tbe following, substantially, as a judicial rule, was deduced from our decisions and tbe .authorities wbicb met with our approval:
‘Where a grantee in a conveyance assumes and agrees to* pay tbe debt of a third person to bis creditor, neither such person nor such creditor being connected contractually with, the grantor, as part of the consideration for his purchase,, there is no necessity, for any consideration to pass from such-third person or his creditor to such grantee to support such agreement. A portion of the consideration for the purchase being left in such grantee’s hands, appropriated by the-grantor to the payment of the debt which such grantee agrees to pay in consideration of the conveyance and of such appropriation, he cannot be heard to object to the performance* of his contract because his grantor was not liable for such debt. When the grantor makes such an appropriation, and the grantee, for a sufficient consideration, promises to pay the* amount so appropriated to the creditor of such third person, such grantee thereby becomes liable to such creditor; and such liability rests solely on such consideration and such-promise.’
That is in harmony with the language used on the subject in Bishop v. Douglass, 25 Wis. 696; and Palmeter v. Carey, 63 Wis. 426, 21 N. W. 193, 23 N. W. 586. In Stites v. Thompson, 98 Wis. 329, 13 N. W. 114, it was said that out of the transaction of one person promising, for a consideration paid to him by another, to pay a sum of money to a third person, the promisor becomes a debtor nf such third person the same as if the promise were made directly to him, as-liability is determined by his undertaking with his immediate-promisee. In Etscheid v. Baker, 112 Wis. 129, 88 N. W. 52,. the last case here where the subject is discussed, Bassett v. Hughes is cited and some significance given to the fact that the person for whose benefit the promise was made knew of' and assented to it before any attempt was made to revoke it. However, Enos v. Sanger was cited, and there was no intention to disturb the rule there laid down and re-enforced in *526Stites v. Thompson. Without further discussion of the matter we adhere to the doctrine that where one person, for a consideration moving to him from another, promises to pay to a third person a sum of money, the law immediately operates upon the acts of the parties, establishing the essential of jirivity between the promisor and the third person requisite to binding contractual relations between them, resulting in the immediate establishment of a new relation of debtor and creditor, regardless of the relations of the third person to the immediate promisee in the transaction; that the liability is -as binding between the promisor and the third person as it would be if the consideration for the promise moved from the latter to the former and such promisor made the promise directly to such third person, regardless of whether the latter has any knowledge of the transaction at the time of its occurrence ; that the liability being once created by the acts of the immediate parties to the transaction and the operation of the law thereon, neither one nor both of such parties can thereafter change the situation as regards the third person without his consent. It is plainly illogical to hold that immediately •upon the completion of the transaction between the immediate parties thereto, the law operates upon their acts and creates -the element of privity between the promisor and the third per•son, and at the same time to hold that such third person’s status as regards the promise may be changed thereafter without his consent. The idea that privity between the promisor and the third person is necessary to render the transaction between the original parties thereto beyond the reach of «either of them to revoke it, or both acting together to rescind it, springs from the supposed necessity of contractual relations between the promisor and the third person, binding upon the promisor at law. The moment such essential is •established, it seems clear that such third person’s right accrues and becomes absolute.
*527True, tbe doctrine that the element of privity may be established without the knowledge or assent of the third person, •other than that constructive assent arising from the operation of law upon the acts of the parties, is inconsistent with the rule prevailing here as to all but married women, that a mere, beneficiary of a policy of life insurance has no vested rights therein; but so is the doctrine that mere assent by a third person to a promise made for his benefit will render it irrevocable, inconsistent therewith. Neither the assent of a mere beneficiary in a policy of life insurance, to the promise made for his benefit, nor such assent coupled with an independent promise by the insurance company to him to abide thereby, has any effect upon the power of the assured to control the policy by changing the beneficiary or disposing of the insurance fund by will. The doctrine here in that regard was established at an early day. It is contrary to the rule which prevails generally. It is adhered to under the rule of stare ■decisis, and the doctrine that rules of property established by judicial decisions long adhered to should not be disturbed •even if a different decision would be rendered if the court were permitted to treat the subject from an original standpoint. The rule as to insurance contracts has not been applied by this court to any other class of contracts. The court is not disposed to treat it as a principle of general application or extend it beyond the special class of contracts to which it has been applied.
In view of what has been said we must hold that, upon the sale of the land to Paul, Daniel Tweeddale became absolutely indebted to plaintiff upon the bond and mortgage mentioned in the complaint for the sum of $100; that the satisfaction of the mortgage by' Mary Tweeddale is void as regards such debt; that his interest in the bond and mortgage was sufficiently brought home to Daniel Tweeddale’s grantee, Paul, by the record of the mortgage, to preclude him from being an *528innocent party to the void satisfaction and successfully invoking the registry laws for protection.
By the Court. — The judgment is reversed and the cause remanded with directions to render judgment in favor of plaintiff in accordance with this opinion.