Court Opinion

ID: 3608582
Source: CourtListenerOpinion
Date Created: 2016-07-05 23:53:22.251494+00
Date Added: 2024-06-11T14:07:30.327699
License: Public Domain

[EDITORS' NOTE:  THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *Page 496 
The learned counsel for the appellant insists that this case is within the principle of Lawrence v. Fox (20 N.Y., 268), and kindred cases, where it is held that an action lies on a promise made by the defendant upon a valid consideration, to a third person, for the benefit of the *Page 497 
plaintiff, although the plaintiff was not privy to the consideration. Giving the contract the construction claimed for it by the appellant there is considerable force in the position, although there is a distinction between this case and all the others bearing upon this point in two respects: First, there was no debt or duty owing by the third party to the plaintiff; and, second, there was no express promise by the defendant to purchase of the plaintiff, and others standing in the same position, any bonds, or to pay the holders the agreed price for the same. Without stopping to consider whether these differences should take the case out of the rule adopted in the cases referred to, I do not think that the construction of the agreement claimed by the appellant can be sustained. The language of the contract is not as clear and explicit as is desirable, but we must give it a construction, if practicable, to effectuate the real intention of the parties; and to arrive at this result we may look primarily at the language, and we may also consider the surrounding circumstances as well as the subject-matter of the contract and objects and purposes of the parties. The agreement was made between the defendant of the first part and Charles Moran and others of the second part, by which "the said parties of the second part agree to sell to the said party of the first partthe bonds of the Texas and New Orleans Railroad Co.," upon the terms therein specified. The closing paragraph of the agreement under which the plaintiff claims is as follows: "And it is further agreed and understood that all the holders of the said first mortgage land grant bonds who have, under the terms of said decree of foreclosure, registered their first mortgage land grant bonds, shall have the option of accepting the same price and terms upon which the sale and purchase of the lands hereby sold to said party of the first part is made." The first part of the contract, in terms, obligated the defendant to purchase of Moran, Kennedy  Co., and Congreve  Son, all the bonds of the railroad company; but, as they then possessed only about 4,000 of the bonds, belonging, mostly, as I infer, to other persons, the last clause, above quoted, was inserted, giving *Page 498 
all the holders a right to accept the terms, and include their bonds in the sale to the defendant. The clause was intended for the benefit of the holders of specified bonds, but the question is, in what manner the option named was to be consummated. As before stated the defendant did not agree to purchase of each bondholder his bonds, nor to pay to each the purchase-price, but to purchase of and pay Moran and others for the bonds, and the paragraph in question permitted other bondholders to put their bonds in on the same terms, but they must do it through Moran and others.
I do not think that the defendant intended to bind himself to purchase of each separate bondholder, and to have a separate transaction with such holder. His contract was with Moran and others, and included all the bonds provided for. The terms of payment agreed upon was half cash and half in satisfactory paper due in three and six months, and the construction claimed would require a negotiation with every separate bondholder in respect to the security. The agreement in substance was to purchase of Moran and others all the bonds that they then held as agents or otherwise, and all that they might thereafter obtain by the acceptance on the part of the holders of the option named. The contract was entire, including outside bonds, and a separate agreement with each bondholder is inconsistent with its terms as a single transaction. The language used is not the most apt to express this construction, but the express words in the first clause, and the absence of affirmative words in the last clause creating an obligation to the plaintiff, and considering the nature of the business transacted, renders it quite manifest that no other construction was intended. Moran and others, it seems, had been a committee for the bondholders for another purpose, to effect a reorganization of the company. When that project fell through, acting for themselves and the owners of the bonds in their hands, and, as we must presume, with authority, made this contract in such form as to put all the bondholders on the same footing, if they chose to ratify their sale, and this could *Page 499 
only be done by including their bonds in the sale to the defendant, not as a sale by such bondholder, but by Moran and others. It is of some moment that the parties themselves so understood it. Kennedy  Co. notified the bondholders that "we have reserved the right to put in the bonds of those who have registered at the same price and on the same terms," etc., and the defendant refused to take any bonds except through Moran and others, and the plaintiff objected to this mode only on account of the commissions exacted.
It was conceded on the argument that if this construction was adopted, this action could not be sustained, although the plaintiff would not be without remedy. The right to exact commissions is not before us. That question might arise in a different action.
The judgment must be affirmed.
All concur except EARL, J., not voting.
Judgment affirmed.