Smith v. Delaney

Fekít, J. The Court of Common Pleas for Hartford County, at the request of the plaintiff and of the defendant Delaney, reserved for our advice the question as to the prop — 272 — er judgment to be rendered, as to said Delaney, upon the following facts found by said court; the other defendant, McGee, having suffered a default. “ On the 10th day of November, 1890, William McGee of Bristol, in said county, defendant, as principal, and the plaintiff as surety, signed a license bond for $300 to the treasurer of said county. “ The plaintiff executed said bond at the request of the defendant Delaney, who said to the plaintiff as an inducement to execute said bond, ‘ I will see you all right,’ and also told the plaintiff that he, Delaney, intended to go into the liquor business with said McGee, and gave, this as the reason why he did not wish to sign said bond. •“ Upon the filing of said bond with the county commissioners, and on the 10th day of November, 1890, a license was issued by them to said McGee, to sell spirituous and intoxicating liquors in said Bristol, and McGee immediately commenced and carried on said business in said town until the 15th day of June, 1891, when said license was revoked by said commissioners, the said McGee having been legally convicted of a violation of the laws relating to intoxicating liquors, and said bond having been thereby forfeited, on the demand of the county treasurer, the plaintiff, on the 16th day of October, 1891, paid the amount of said bond, the said McGee having failed to pay the same. “ About a month or six weeks after said McGee began the business of selling spirituous and intoxicating liquors as aforesaid, Delaney became a partner in said business with said McGee, and said business was carried on for their joint benefit under the license to McGee alone; but said Delaney had withdrawn from the partnership about two months before the conviction of said McGee as aforesaid. “Neither McGee nor Delaney has repaid to plaintiff any part of the amount of said bond so paid by the plaintiff to the county treasurer as aforesaid.” The defendant Delaney claims that the complaint was defective, and that one or more of the several demurrers filed should have been sustained. We judge by the language used — 273 — in the reservation that this claim was waived in the court below, and no such question reserved. If, however, we are mistaken in this, we think the court below committed no error in overruling such' demurrers; certainly none which injuriously affected the defendant, so that they should now be considered. Vail v. Hammond, 60 Conn., 378. The defendant also claims that the finding fails to support the complaint, to demonstrate which his counsel, in their brief, have made use of the “ deadly parallel columns,” without, however, satisfying us that the contention is correct. Doubtless the language of the finding was not copied from the complaint, but there are no wider differences than are justified by the rules under the Practice Act, 58 Conn., 564, Rule III., that “ acts and contracts may be stated according to their legal effect,” and that “immaterial variances shall be wholly disregarded.” The main inquiry, upon the facts found, is whether the contract therein stated is within the statute of frauds. The law upon this subject, namely, whether contracts of indemnity are special promises to answer for the default or miscarriage of another, or are original undertakings, has been correctly said (Am. & Eng. Ency of Law, Vol. 8, p. 673) to be “ in a state of hopeless confusion, arising almost wholly from the different views taken of the scope of the statute. Where Thomas v. Cook, 8 B. & C., 728, is law, and the statute is confined to contracts of suretyship, results are reached entirely different from those obtained where Green v. Cresswell, 10 Ad. & E., 453, is followed, and contracts of indemnity are included in its scope.” In favor of the view of Green v. Cresswell, that contracts of indemnity are within the statute, the case of Nugent v. Wolfe, 111 Pa. St. 471, cited by the defendant; and in favor of the opposite view, held in Thomas v. Cook, the case of Davis v. Patrick, 141 U. S., 187, cited by the plaintiff, may be regarded as among the leading authorities. Doubtless, in England, the later case of Green v. Cresswell, has been practically overruled, and the authority of Thomas v. Cook fully restored. Wildes v. Dudlaw, L. R., 19 Eq., 198; Yorkshire — 274 — Railway Wagon Co. v. Maclure, L. R., 19 Ch. Div., 478. Thomas v. Cook is also followed, in a majority of the American States. Browne Statute of Frauds, § 161c. But it is unnecessary to examine'the authorities elsewhere, more at large, because the question is not now a new one in our own jurisdiction. The cases of Stocking v. Sage, 1 Conn., 519; Marcy v. Crawford, 16 Conn., 549; Reed v. Holcomb, 31 Conn., 360, and Clement’s Appeal, 52 Conn., 464, all bear more or less directly upon the question before us; and although Reed v. Holcomb and Clement’s Appeal have been thought by various courts and text writers to be somewhat in conflict, we do not so think, but that from a fair examination of both, the true rule, to which both are consistent, may be discovered. In Reed v. Holcomb, where the plaintiff indorsed a note of a third party, at the request of the defendant, and upon his oral promise to see it paid, and to save him harmless if it was not paid by the makers, it was held that the statute of frauds did not apply to the case. In Clement’s Appeal, in which no reference was made, either by counsel on either side, or by the court, to Reed v. Holcomb, Brainerd indorsed notes for Goodwin, at the request of his father, and on the father’s oral promise to save him harmless. It was held that this promise was void under the statute of frauds, because not in writing. The distinction' between the two cases was the principle on which Reed v. Holcomb was expressly stated to rest. In Clement’s Appeal, although the promisor was the father of the maker of the notes, and, as such, actuated by parental affection, he had no legal or pecuniary interest whatever, so far as the record disclosed, in the transaction. In Reed v. Holcomb, the transaction was for the benefit of the defendant. Without consulting the plaintiff, he had taken the note of a firm indebted to him, payable to the order of the plaintiff, doing so for the purpose of getting the plaintiff’s indorsement, that he might get the note discounted at the bank. The two cases are therefore in harmony, .for the reason that Reed v. Holcomb is not, as has sometimes been supposed, an authority for the unqualified doctrine of Thomas v. Cook, that a contract of suretyship is, but a con — 275 — tract of indemnity is not, within the statute; but only for the more limited doctrine recognized elsewhere, in most jurisdictions where Thomas v. Cook is not followed, and consistent with even Green v. Cresswell, that where the inducement is a benefit to the promisor which he did not before or would not otherwise enjoy, and the act is done upon his request and credit, such promise is an original undertaking and not within the statute. The earlier Connecticut cases which we have cited are in accordance with this doctrine. The case of Dillaby v. Wilcox, 60 Conn., 71, and the earlier cases therein referred to, somewhat relied upon by the defendant, are not in point; but so far as they incidentally bear upon the question at all, they illustrate and affirm the distinction here made, since they establish the rule that even what is in form a new parol promise to pay the already existing debt of another, may be valid, as an original obligation on the part of the promisor, if based upon a transfer of value “ the measure of which is, by the agreement of the parties, the defendant’s payment of the third party’s debt.” Dillaby v. Wilcox, p. 80, quoting and approving Browne on the Statute of Frauds, § 214e. Applying this established rule of our law to the case before us, we think the defendant is not entitled to avail himself of the statute of frauds. The bond was executed by the plaintiff at the request of the defendant, and presumably entirely upon his credit. At any rate, the only inducement given in the finding was the defendant’s statement, “ I will see you all right.” He told the plaintiff that he, the defendant, intended to go into the liquor business with McGee, and when the finding adds that “ he give this as the reason why he did not wish to sign the bond,” it is of course equivalent to saying that he gave it as the reason why he did wish the plaintiff to sign it in his place, namely, as a surety upon a bond, for a license to be issued to McGee. The language used by this court in Reed v. Holcomb thus becomes as pertinent to this case as it was to that. It was there said, p. 868, referring to the plaintiff’s indorsement of the third party’s note : “ This in substance, we think, was the same as — 276 — if the plaintiff had indorsed the defendant’s own note .to enable him to raise money upon it.” If that be true, was not the transaction stated in the finding the same, in substance, as if the plaintiff had signed the defendant’s own bond, to enable him to procure a license and become a dealer ? It seems to us that there is no distinction. But the defendant insists that if this be so, “if” (we quote from the brief) “ from this is to be inferred that there was an understanding known to the plaintiff that McGee and Delaney were to form a partnership and sell liquors, under Mr. McGee’s license, and that this intention and understanding was, in any sense, a consideration and inducement for Delaney’s promise to the plaintiff, ‘ I will see you all right,’ then said consideration was illegal; the contract between the plaintiff and Delaney was founded upon a consideration which was immoral, illegal, contrary to public policy and the prohibition of the statute, and is void.” It surety needs no citation of authorities to support the position that if this contract was founded upon a consideration, illegal, immoral, or contrary to public policy, it is void, and cannot support an action. So also, if the contract contemplates acts against public policy, or forbidden by statute, it is inoperative. We also concur fully with the authorities cited by the defendant, all of which are referred to in Am. & Eng. Ency. of Law, Yol. 11, p. 846, which holds that “ a license granted to one person, who forms a partnership with an unlicensed person, does not authorize the latter to make sales of liquor.” But, conceding all this, there is no finding that Delaney contemplated making sales himself, and certainty there can be no presumption that Delaney contemplated, or was understood by the plaintiff to contemplate, any illegal connection with the proposed business, if there was a legal way in which-he might be interested in it. And we think there was, if he was only a silent partner, taking no active participation, and only concerned to the extent of capital invested. On this point, we may quote again from one of our own cases already cited, Marcy v. Crawford. When the same claim that the contract was illegal was made, this court, — 277 — by Hinman, J., said, page 558 :—“ Then as to the first error assigned, that the county court did not instruct the jury that the promise claimed to be proved by the plaintiff was an illegal promise, because, as the defendant insisted, it was a promise made in consideration of the commission of an illegal act. Now, there can be no doubt that the law will not enforce a contract to commit an illegal act. A promise to commit a battery, to pull down another’s house, or to commit any such willful trespass to another, is illegal and void. But, merely because an act proves to be a trespass, which was not originally supposed to be so, will not render a promise of indemnity for the commission of it void.” Again, p. 554:—“ A promise to indemnify against a trespass is valid, unless it be shown that the promisee knew the act to be a trespass.” We do not think the record before us justifies us in finding that the plaintiff knew, understood or believed that the defendant contemplated the performance of any act illegal, immoral, or against public policy. The Court of Common Pleas is advised to render judgment, upon the facts found, in favor of the plaintiff, for the amount paid by the plaintiff, with interest thereon and costs. In this opinion the other judges concurred.