Flagg v. Fisk

Hatch, J.: The plaintiff is the daughter and sole heir at law and next of kin of her intestate. The action is brought to recover damages 'for the breach of a contract under seal. The contract was made on or about July 21, 1900, under the following circumstances: On and prior to June 9, 1900, the defendants’ intestate and Thomas J. Flagg were copartners, doing business- under the firm name of Fisk, Clarke & Flagg. On June 9, 1900, Thomas J. Flagg died, leaving him surviving the plaintiff, his widow; Emily Lee Flagg, his daughter, and Mortimer Kennedy Flagg, his son, his only heirs at law and next of — 171 — kin. Upon Mr. Flagg’s death Mr. Fisk, the defendant’s intestate, became the sole surviving partner of said firm. It appeared that Mr. Fisk desired to avoid liquidation of the firm affairs and to continue the business without dissolution. At this timé there appeared upon the books of the firm an indebtedness to the plaintiff’s intestate in the sum of $24,651.82, and the plaintiff, individually, her son and daughter and the plaintiff, for her mother, the said Emily Kennedy, entered into a written contract with the defendant's’ intestate under seal, in which they sold and assigned to the said Henry G. Fisk the entire business, of whatever nature, of the said firm of Fisk, Clarke & Flagg, with the right to continue the use of the firm name upon the consideration that the said Fisk should pay to this plaintiff, individually, the sum of $3,000, and that there should be paid to the said Emily Kennedy the amount which appeared to be due to her upon the firm’s books, together with interest thereon at the rate of ten per cent from the date of said contract until the 1st day of January, 1901, after which time it should, draw interest at the rate of six per cent until fully paid; that Emily Kennedy’s claim should not become due and payable- until all other creditors of the firm were fully paid. Mr. Fisk accepted the benefits of the contract upon his part, and continued the business under the old firm name. Subsequently he repudiated the contract by refusing to pay to said Emily Kennedy, or to her personal representatives, any sum whatever, whether interest or principal. Thereupon the plaintiff brought this action in her representative capacity, Mrs., Kennedy having died prior to the commencement thereof. Upon the trial the court directed a verdict for the full amount called for under the contract. Cornelia C. Flagg had previously brought an action to recover the amount due to herself personally, upon the said contract, and procured a judgment therefor, from which judgment the defendants appealed to this court, where the same was affirmed, without opinion. The answer put in issue by several denials the execution of the contract its breach and other matters. For affirmative defenses it averred payment, usury, the Statute of Limitations and that nothing had become due by virtue of the contract, for the reason that it was not made to-appear that all of the creditors of Fisk, Clarke & Flagg had been fully paid and discharged and that three ■ months had — 172 — elapsed therefrom. The affirmative defenses were. made the basis of a motion to dismiss the complaint at the close of the trial upon the proof of the plaintiff. The defendants offered no proof in their defense. While the contract provided that the' creditors of the firm should be first paid prior to the discharge' of Mrs. Kennedy’s claim, yet it also appeared that the defendants repudiated the fulfillment of the contract, in tota and claimed not to be bound thereby. The breach of the contract, therefore, upon their part being established, a cause. of action immediately accrued in favor of the parties affected thereby without regard to conditions precedent contained in the contract. (Shaw v. Republic Life Ins. Co., 69 N. Y. 286; Howard v. Daly, 61 id. 362.) The contract made between the parties was founded upon a valuable consideration, and as such, is clearly enforcible, assuming that plaintiff’s intestate acquired an interest thereunder. This was necessarily the effect of our former decision, although no opinion was written therein expressing the views of the court (87 App. Div. 631). We also necessarily held that the contract sued upon was not tainted with usury. This is clearly so upon principle and is sustained by authority. The contract did not purport to be for the loan or forbearance of the use of money, to which alone usury would apply. The consideration for this contract was a sale of the interest of the parties in the former firm of Fisk, Clarke & Flagg, and by its terms it gave to Henry G. Fisk, as sole surviving partner of said firm, the right to continue and carry on the business without liquidation; take over and appropriate to himself the firm name, its good will, etc., and in consideration of such sale he agreed to pay certain sums, among which was the claim of plaintiff’s intestate, together with - interest thereon at ten per cent for a specified period of time and six per cent thereafter. The consideration, therefore, for this promise to pay was the sale of this business and the right to continue it in the firm name without liquidation of the partnership affairs. Usury can never be predicated of .the consideration paid for the purchase of property. This court so held under the decision above referred to and numerous cases support the doctrine. (Cutler v. Wright, 22 N. Y. 472; Meaker v. Fiero, 145 id. 165; Orvis v. Curtiss, 157 id. 657.) The execution of the contract was not disputed and its breach was established. The plaintiff, therefore, — 173 — became entitled to recover if the promise to pay this debt with interest inured to her benefit so as to permit of its enforcement by her administrator. It appears from the testimony that Mrs. Kennedy did not execute the contract. It was executed upon her behalf by. Mrs. Flagg, who was at the time attending to her matters and it was executed pursuant to the advice of their attorney, who was acting for Mrs'.' Kennedy and Mrs. Flagg, and was accepted by Fisk, the purchaser, as satisfactory to him under the advice of counsel. We are of opinion that the contract inured to the benefit of Mrs. Kennedy and may be enforced by her as one made for her benefit, and that the plaintiff, as her representative, has legal capacity to enforce such right. Mrs. Flagg was the personal representative of her husband, who was formerly a member of the firm of Fisk, Clarke & Flagg. Such firm was liable for the debts which it owed, among which was that of Mrs. Kennedy, and the estate of Flagg, deceased, might in the event of the failure of partnership assets become liable for the whole amount. Mrs. Flagg, therefore, had a direct interest in having this claim paid in order that the interest - possessed by her .husband in the firm’s assets might be relieved from this charge and also that his estate might.not become chargeable with its payment. An obligation and duty, therefore, rested upon her to provide for the payment of the claim. The relation which existed between Mrs. Kennedy and Mrs. Flagg was that of mother and daughter, and Mrs. Flagg is the sole heir at law and next of kin of .her motilen It was the contract which provided for the payment of the debt; therefore, it was for the direct pecuniary interest and advantage of Mrs. Flagg, both as related to the liabilities of her deceased husband and of her interest in the estate of her mother and the natural obligation which she was under to her. The relation which existed was, I think, sufficient to support the contract to pay the debt of Mrs. Kennedy and also her right to enforce it. (Todd v. Weber, 95 N. Y. 181; Buchanan v. Tilden, 158 id. 109.) It was to the direct pecuniary benefit of Mrs. Kennedy to secure payment of her debt. The consideration which moved from her daughter to the surviving member of the firm affected in a marked degree the security for the payment of her claim. She had a direct personal interest therein and in the property of the firm, as it was the source of security for — 174 — the discharge of her obligation. The promise to pay was, therefore, for. her benefit and she may enforce, it within the rule of Lawrence v. Fox (20 N. Y. 268). The doctrine of this case has never been distinguished or modified in its application, to a degree which at all militates against it as an authority in support of the right of the plaintiff to maintain this action. On the contrary, such right has been asserted in principle in many cases. (Van Schaick v. Third Ave. R. R. Co., 38 N. Y. 346; Coster v. Mayor, 43 id. 399; Rector, etc., v. Teed, 120 id. 583.) There was no agreement for the loan or forbearance of money by Mrs. Kennedy at any time. 'The debt which was due to her was made use of as a consideration for the purchase price of this business, and, as we have already seen, Mrs. Flagg had a direct pecuniary interest in the sale and the consideration paid therefor, and the fact that she insisted that a part of such consideration should be this debt and a given rate of interest does not make the contract usurious, nor does it possess under such circumstances a single element of that vice. ■We reach the conclusion, therefore, that the plaintiff has standing to enforce this contract for the benefit of the estate which she represents. Nor was the failure to show that there were no outstanding creditors of the firm of Fisk, Clarke & Flagg remaining unpaid at the time of the commencement of the action an answer thereto. The defendants were in no position to take advantage of such fact, if it be admitted to exist. They had repudiated the contract as void, and refused to recognize it ás a subsisting. liability which they were bound to discharge; consequently, they cannot repudiate the contract and then take advantage of a clause they might have insisted upon had they fulfilled its terms. The court is not now concerned with the rights of creditors as against the claim herd asserted. The debt and its amount was established to exist from the ledger of the firm, independent of its recognition in the contract, and the offer of all of the books of the firm in evidence by the defendants was, therefore, properly excluded. Flo item was pointed out in the offer which showed that it had any bearing upon the amount, or which would contradict the ledger account; nor was it otherwise pointed out wherein, or how, any items contained therein would tend to defeat plaintiff’s claim. — 175 — We think the court was, therefore, right in directing a verdict for the full amount of the claim. The judgment entered thereon should, therefore, be affirmed, with costs. Van Brunt, P. J., Patterson, Ingraham and Laughlin, JJ., concurred. Judgment affirmed, with costs.