Washer v. Independent Mining & Development Co.

COOPER, C. This action was brought to recover of defendant the sum of four thousand five hundred dollars. The case was tried before the court, findings filed, and judgment thereupon entered for plaintiff as prayed. This appeal is from the judgment on the judgment-roll. It is claimed that the court erred in overruling defendant’s demurrer to the complaint, and that the judgment is not supported by the findings. Both questions may be considered together. The facts as alleged and found are substantially as follows: On the eleventh day of July, 1895, F. A. Stephens and C. L. Banta were the joint owners of two mines, known as the “Mammoth” and “Edith,” situate in Riverside County. On said day they, as parties of the first part, entered into a written agreement with the plaintiff, as party of .the second part, in which it was recited that the parties of the first part had expended the sum of one thousand dollars, and the party of the second part had expended the sum of $874.75, in the development of the said mines. Said agreement provided that, for the more rapid development of said mines, the parties of the first part, in consideration of the further sum of four thousand dollars, agreed to sell and convey to the party of the second part an undivided one-fourth interest in and to said mines. The party of the second part agreed to pay the said four thousand dollars in certain installments covering a period of fifteen months. In case of a satisfactory sale of the said mines before the completion of the payments by the party of the second part, he was to be repaid the said $874.75 and all sums which he had paid and furnished under said contract, and the parties of the first part were to be repaid the said one thousand dollars, and then, after these payments, the proceeds of such sale to be divided, three fourths to the parties of the first part, and one *705 fourth to the party of the second part. The agreement, after other provisions not material here, contained the clause: “And it is further understood that the stipulations aforesaid are to apply to and bind the heirs, executors, administrators, and assigns of the respective parties hereto.” The said agreement was duly acknowledged and placed of record. On October 27, 1896, the said Banta sold and conveyed all her interest in said mines to one Van Winkle. On February 17, 1897, said Van Winkle, by a deed of conveyance, in which said Banta joined, sold and conveyed the same interest to one Patterson. On February 18, 1897, the said Stephens, by a deed of conveyance, in which said Banta and said Van Winkle joined, sold and conveyed his interest in and to said mines to ine Ensign, as trustee. On June 30, 1897, at a meeting of more than two thirds of the stockholders of defendant, called for that purpose, the following resolution was passed, to wit: “On motion of E. E. Banta, seconded by A. E. Carpenter, it was resolved that the board of directors be, and is hereby requested to purchase interests in the Mammoth and Edith mines on a basis of $100,000 in full paid-up stock of this company, for the entire interest in said mines, subject to the contract with W. A. Washer, F. A. Stephens, and E. E. Banta, for the return to them of advances amounting to about $5,900 as set out in said contract, and that this company assume the repayment of said advances. Carried.” On the same day, at a regular meeting of directors of defendant, the following resolution was passed, to wit: “On motion of E. E. Banta, seconded by A. E. Carpenter, it was resolved that the board purchase the interests in the Mammoth and Edith mines in Minifee Mining District, Riverside County, California, on a basis of $100,000 in full paid-up stock of this company, for the entire interest in said mines, subject to the contract with W. A. Washer, F. A. Stephens, and E. E. Banta, for the return to them of advances amounting to about $5,900, as set out in said contract, and that the company assume the payment of said advances. Motion carried.” In pursuance of the said resolutions, the defendant, on the' first day of July, 1897, procured two deeds to the said mines, the first one being made by said Stephens and said Ensign (trustee) as grantors, and the second being made by said *706 Patterson, Van Winkle, Banta, and others as grantors. Both of said last-named deeds, made July 1, 1897, were made to defendant as grantee, and were duly acknowledged and recorded and contained the following clause, to wit: “This conveyance is made subject to the terms of that certain agreement between F. A. Stephens and E. E. Banta on the one part and W. A. Washer of the second part, of date July 11, 1895, recorded in book 39 of deeds, page 68, recorder’s office of Riverside County.” The plaintiff was not a party to, nor did he consent to the execution or delivery of, any of said deeds. At the time of the passage of the said resolution, and at the time of the purchase of said property, the plaintiff had advanced under the said agreement for the development of the said mines the sum of forty-five hundred dollars, no part of which had been repaid, and which has never been repaid, and defendant had full notice of said agreement with plaintiff and of the expenditure of said forty-five hundred dollars under the terms thereof. Prior to the purchase of the said mines by defendant, plaintiff had paid all sums agreed to be paid by him under the terms of said agreement, and had demanded of said Stephens and Banta a deed to an undivided one fourth of the said mines as per the terms of said agreement. The court further found as follows: “That by virtue of said resolutions passed respectively by stockholders and directors of said defendant corporation, and by virtue of the obligation assumed by the defendant in the deed dated July 1, 1897, above set forth, said defendant purchased the said mining property subject to the contract set forth in paragraph 2 of said complaint, for the return to plaintiff and said Stephens and Banta of advances then made amounting to about fifty-nine hundred dollars ($5,900); and said defendant intended to and did thereby assume the repayment of said advances. That the said amount of money advanced by plaintiff towards the development of said mining properties at the time of the sale thereof to defendant, was the sum of four thousand five hundred dollars ($4,500), no part of which has been paid. That no part of the proceeds derived from the sale of said mining properties to the defendant, either in money or stock, has been paid or delivered to this plaintiff. That prior to bring *707 ing this action, plaintiff demanded of the defendant the payment of said sum of four thousand five hundred dolíais ($4,500), no part of which has been advanced by him in the development of said mining property at the time of sale to the defendant; but the defendant refused and still refuses to pay the same, and the whole of said sum is now due, owing, and wholly unpaid to the plaintiff.” The defendant contends that neither the allegations of the complaint nor the findings show that its grantors were personally liable to plaintiff for the advances made by him, and that there is nothing in either the complaint or findings to show any privity of contract between defendant and plaintiff, and hence there was no consideration for the assumption by defendant of the indebtedness due to plaintiff. Such position is not tenable. The defendant knew of plaintiff’s claim, and the contract out of which it arose. It knew, by the contract under which plaintiff made the advances, that plaintiff was to be given a one-fourth interest in the mines. Knowing these facts, it passed resolutions in due form by which it expressly assumed the payment of the amount due plaintiff. It did this before it purchased the mines. Then in its deeds it was recited that the property was taken subject to the agreement made by Stephens and Banta with plaintiff. It has never paid plaintiff, and has refused to pay him. It has the title to the mines, procured by virtue of its resolutions, assuming the amount due plaintiff, and yet refuses to pay such amount. It will not be allowed to keep the property and refuse to pay for it as it agreed. It is said that the defendant’s grantors were not personally liable to plaintiff, and that for this reason the defendant cannot be held liable. All of defendant’s grantors were not personally liable to plaintiff, but two of them, F. A. Stephens and C. L. Banta, were so liable, and this is sufficient, even if we were to concede the rule contended for by defendant. As said Stephens and Banta were the owners of the property at the time they made the contract with plaintiff, and as they joined in the deeds made to defendant, we must presume that they did so because they had an interest in the property conveyed. It does not lie in the mouth of defendant to say there is no privity—after it took the deeds signed by Stephens and *708 Banta. The payment of the amount due plaintiff was clearly a part of the purchase money to be paid by defendant. It was nothing to defendant as to whom the purchase money should be paid. If its grantors requested the payment of four thousand five hundred dollars to plaintiff, and defendant agreed to pay said sum, it will not now be allowed to defend this action upon the ground that its grantors did not owe plaintiff. It is not the business of the defendant to go upon a tour of investigation as to the merits of plaintiff’s claim against its grantors after agreeing to pay it. If its grantors were satisfied that they owed plaintiff, defendant cannot, after agreeing to pay the said indebtedness, claim that nothing was due. It was said by the supreme court of Pennsylvania in Merriman v. Moore, 90 Pa. St. 81: “A vendor may direct how the purchase money shall be paid. He may reserve it to himself, donate it to a public charity, or may make such other disposition of it as may best meet his views, and if his vendee agrees to pay it, according to such directions, he cannot set up a defense that his vendor was under no duty to apply it in such manner.” (See Warvelle on Vendors, 2d ed., see. 649; Dean v. Walker, 107 Ill 540. 1 ) It is provided in the Civil Code (sec. 1559): “A contract, made expressly for the benefit of a third person may be enforced by him at any time before the parties thereto rescind it.” The agreement to pay plaintiff was made expressly for his benefit. It has never been rescinded. In such cases the rule is, that the party for whose benefit the contract or promise is made may maintain an action against the promisor. (Morgan v. Overman S. M. Co., 37 Cal. 537; Flint v. Cadenasso, 64 Cal. 83; Buckley v. Gray, 110 Cal. 339 ; 2 Brewer v. Dyer, 7 Cush. 337.) In the latter case the doctrine is thus clearly stated: “Upon the principle of law long recognized and clearly established, that where one person for a valuable consideration engages with another to do some act for the benefit of a third, the latter, who would enjoy the benefit of the act, may maintain an action for the breach of such engagement; . . . that it does not rest upon the ground of any actual or supposed relationship between the parties, as some of the earlier cases seem to indicate, but *709 upon the broad and more satisfactory basis that the law, operating upon the acts of-the parties, creates the duty, establishes a privity, and implies the promise and obligation on which the action is founded.” The case of Ward v. Be Oca, 120 Cal. 104, is not in conflict with the views herein expressed. The facts of that case were very different from the case at bar. The opinion recites that the lower court found upon sufficient evidence that when the deed was made “said De Oca had no notice at that time of any personal liability to pay said notes, or any of them, or any part of them; that it was not intended between the parties to said deeds that the grantee, the said Maria Montes De Oca, should assume or agree to pay the said notes described in said mortgage, or any part thereof, or the mortgage indebtedness, nor was.anything other intended by them, than that the said real estate should remain liable for said mortgages, and that to the extent of the said real estate only should said defendant be liable thereon.” It follows that the judgment should be affirmed. Haynes, C., Gray, C., concurred. For the reasons given in the foregoing opinion the judgment appealed from is affirmed. Van Dyke, J., McFarland, J., Lorigan, J., Henshaw, J. Footnotes [1] 47 Am. Eep. 467, and note. [2] 52 Am. St. Eep. 88.