Adams v. Kuehn

[84] Opinion, Mr. Justice Williams : In 1884 and for several years prior thereto, the firm of Weaver Brothers was extensively engaged in the manufacture of cigars. Samuel Adams was an accommodation indorser for them, and in August, 1884, was upon their paper for upwards of $40,000. He became satisfied that the firm was insolvent, and asked them to secure him by giving him a judgment note in a sum sufficient to cover his indorsements, so that he could have judgment entered against them and their stock seized and sold by the sheriff. On the 12th of August, 1884, they executed and delivered to him a judgment note for $25,500, on which he caused judgment to be entered and execution to issue. The Weaver Brothers claim that this judgment note was executed by them upon the promise by Adams that he would do the following things, viz.: that he would pay all their debts without regard to their number or amount; that he would pay to them the sum of $4,000 in cash; give them a house and lot adjoining, and some vacant lots in rear of, the property then occupied by them; provide them a half interest in a grocery store and give them a “free name.” David Kuehn was a creditor of the Weaver Brothers at the time of their failure, and brings this suit against Adams to recover the debt due him from Weaver Brothers. He seeks to recover on the contract which the Weavers claim to have made with Adams when the judgment note was given him. Upon the trial two questions were raised; one of fact as to the making of the contract on which the plaintiff sued, and one of law as to his right to sue upon it, if made as alleged. The jury, under an instruction from the court that the action was well brought if they found the contract to have been made, have decided that this remarkable contract was made as testified to by the Weavers. The question now to be considered is the correctness of the instruction. The contract sued on is one to which the plaintiff is a stranger. It was made with the Weaver Brothers. The consideration moved wholly from them and they were the parties to be benefited by the performance of its terms. The common law rule is that “ no one can sue on a contract to which he is not a party:” Whart., Contracts, 784; Hare on Contracts, 198. The same rule is laid down in Chitty’s Pleading. It is [85] still adhered to in England. In this country it is recognized as the law in most of the states and by the Supreme Court of the United States: 98 U. S. Rep. 128. In this state it was stated very clearly by Justice Sergeant in Blymire v. Boistle, 6 W. 182. That case has been followed and the authority of the rule recognized in several later cases, among which are Torrens v. Campbell, 74 Pa. 472, and Kountz v. Holthouse, 85 Pa. 235. In the latter of these cases it was applied by Mercer, J., who said: “ As he (the plaintiff) was a stranger to the contract and to the consideration on which it rested, he could not recover.” In Guthrie v. Kerr, 85 Pa. 303, where it was apparent that an action could have been maintained by the personal representatives of Alexander Guthrie, it was said that “ it would be a harsh rule of law that would throw on the defendant the additional burden of a suit by each of the legatees.” • There is, however, a line of cases in which a third party has been allowed to recover on a contract to which he was not a party, and several of these are brought to our attention by the defendant in error. An examination of these cases will show that they recognize the rule as we have stated it, and are relieved from its operation because of the nature of the consideration of the contract sued on. The distinction on which they rest is pointed out in Blymire v. Boistle, supra. Where one person enters into a contract with another to pay money to a third, or to deliver some valuable thing, and such third parly is the only party interested in the payment or the delivery, he can release the promisor from performance or compel performance by suit. If, on the otlier hand, a debt already exists from one person to another, a promise by a third person to pay such debt is for the benefit of the original debtor to whom it is made, and can only be released or enforced by him. If it could also be enforced by the original creditor the promisor would be liable to two actions for the same debt at the same time and upon the same contract. Among the exceptions, are cases where the promise to pay the debt of a third person rests upon the fact that money or property is placed in the hands of the promisor for that particular purpose. Also where one buys out the stock of a tradesman and undertakes to take the place, fill the contracts, and pay the debts of his [86] vendor. These cases as well as the case of one who receives money ox property on the promise to pay or deliver to a third person, are cases in which the third person, although not a party to the contract, may be fairly said to be a party to the consideration on which it rests. In good conscience the title to the money or thing which is the consideration of the promise passes to the beneficiary, and the promisor is turned in effect into a trustee. But when the promise is made to, and in relief of one to whom the promise is made, upon a consideration moving from him, no particular fund or means of payment being placed in the hands of the promisor out of which the payment is to be made, there is no trust arising in the promisor and no title passing to the third person. The beneficiary is not the original creditor who is a stranger to the contract and the consideration, but the original debtor who is a party to both, and the right of action is in him alone. The application of this rule to the case under consideration is decisive of the plaintiff’s case. If Adams made the agreement sued on, he made it with Weaver Brothers. Its various provisions were for their benefit. No fund was provided for the payment of the plaintiff’s debt, no property was set apart for his benefit. The note, under all the evidence, was given for the purpose of covering the indorsements of Adams. This case therefore stands under the general rule and is not brought within the limit of the exceptions to its operation. The suggestion of the court below that the title might be amended by adding tjie name of the Weaver Brothers as legal plaintiffs, will not relieve against the difficulty. If the plaintiff can maintain his suit so can every creditor of the Weaver Brothers maintain his separate action for his particular debt upon the same contract, and we would then have the Weaver Brothers as legal plaintiffs in possibly one hundred or more suits for the use of so many separate creditors on the same contract; and, to close the series, an action by the Weavers to recover for the non-performance of such portions of the contract as related to payment of money or delivery of property directly to themselves. The inconvenience and injustice of such a result is too obvious to require discussion. Judgment reversed.