Clay v. Woodrum

[122] The opinion of the court was delivered by JOHNSTON, J.: The action of Woodrum is based on the contract made between Elwood and Clay, Robinson & Co., which has been set out at length in the statement of the case. It appears that in the spring of 1887, Elwood drove a herd of southern cattle into Washington county, which had been brought from the prohibited district south of Kansas, and were liable to, and did, impart to native cattle a disease known as Texas, splenic, or Spanish fever. At that time, Woodrum was the owner of a herd of native steers, and was keeping them in Washington county. About July 4, 1887, they became diseased, and it is stated that 167 of them sickened and died from the Texas fever. Clay, Robinson & Co. are livestock dealers, with headquarters in Chicago and Omaha, who furnished money to stock-growers and feeders in the west, taking security on their cattle, it being a part of the arrangement that when the cattle were ready for the market they should be shipped to and sold by Clay, Robinson & Co., whose compensation was the interest on the money furnished, and the commission obtained for selling the cattle. Prior to that time, they had furnished Woodrum quite a sum of money,' and in 1887 he was owing them about $8,000. They also had similar relations with Elwood, who was indebted to them in a large sum of money at the same time. The herd of cattle driven into the State by Elwood in 1887 seems to have communicated the Texas fever to several herds of cattle in that section of the State, and heavy claims for damages were made against Elwood for loss and damages resulting from that cause. It is alleged that he was financially embarrassed, and Clay, Robinson & Co., to protect themselves, as they aver, entered into the contract above mentioned. This contract, as will be seen, provides that land and personal property belonging to Elwood should be conveyed and sold to Clay, Robinson & Co., in consideration of which certain acts were to be done by them, certain payments made and notes surrendered, and certain obligations assumed. Among [123] other things, and as a part of the consideration for the sale and conveyance of the property, they were to assume the payment of the claim and lien for damages to the Woodrum cattle by reason of the fever having been communicated to them by the Elwood cattle. Woodrum claimed that he sustained damages on account of the Texas fever to the extent of $4,958, and he brought this action on that provision of the contract wherein Clay, Robinson & Co. assumed the payment of such damages, and asked a personal judgment against them for that sum. He also asked that it might be declared a lien against the Elwood herd of> cattle, but this claim appears to have been abandoned on the trial, and only a personal judgment was sought for or obtained. In the course of the trial, Clay, Robinson & Co. offered testimony tending to establish the defense which they set forth, namely: That Elwood had failed to comply with the terms of the contract, in that he was required to deliver 1,320 head of cattle, but that he fell short of what was required of him, and delivered only 1,105 head. The court excluded this and all testimony tending to show a failure of consideration or a non-compliance by Elwood with the provisions of the contract on his part; and this is one of the principal objections urged by plaintiffs in error. [124] i. contract-ac-pa“tyb-.eqírt-of consideration; good defense. [123] This ruling was prejudicially erroneous. The defense was proper, and properly pleaded. Woodrum relied on the contract alone, and whatever right he had to a personal judgment against Clay, Robinson & Co. was derived through this contract, to which he was not a party. Unless he has released Elwood, he has a right of action against him for the damages sustained, and it was competent for him to bring this action against Clay, Robinson & Co. It is well settled in this state, that where one person agrees with another to do some act for the benefit of a third person, such third person, though not a party to the promise, may maintain an action against the first party for a breach of the agreement. (Manufacturing Co. v. Burrows, 40 Kas. 361; Mumper v. Kelley, 43 id. 256.) The [124] third party, however, who 'avails himself of such a contract, and claims under its provisions, is subject to the defenses arising: out of the conJ ° tract between the original parties. The contract in this case, as we construe it, is executory, and is entire and indivisible. Its provisions appear to have been dependent on each other, and mutually binding on each of the parties. Elwood agreed to convey numerous tracts of land, and to sell and turn over horses, cattle and sheep, and in consideration of which Clay, Robinson & Co. agreed to assume and pay certain liens and obligations against Elwood, furnish a certain sum of money for payment of other claims, deliver certain promissory notes of Elwood and others, release a lien which they had on a bunch of hogs, and were to allow Elwood to retain certain posts and wood on the land which he agreed to convey. There were incumbrances and liens on a great deal of the real and personal property mentioned, some of which were assumed by Clay, Robinson & Co., and others1 which they did not assume, but expressly stipulated that they should be satisfied and discharged by Elwood. It is true that certain acts were to be performed at certain times, when the other party was required to do certain things on his part, but no one of these provisions appears to be distinct and independent of the others. It appears to us to have been intended as a complete settlement between the parties, and we cannot say that Clay, Robinson & Co. would have purchased any part of the stock and assumed the obligations which they did unless all were delivered as promised, or that the parties understood that the delivery of certain notes or the doing of certain things was to be full compensation for any part of the cattle which w'ere the subject of contract. While certain notes were to be surrendered when certain property was to be delivered, it cannot be said that each constitutes a distinct and severable item which is independent of the other conditions of the contract. The liens or damages assumed by [125] Clay, Robinson & Co. cannot be apportioned to any particular part of the cattle agreed to be delivered. Elwood agreed to sell and turn over 1,320 head of cattle, whereas it is claimed that 215 of that number were never delivered. Would Clay, Robinson & Co. have assumed an obligation to the extent of $4,958 upon a promise to deliver a part of the 1,320 head? Would they be liable on this provision of the contract if none of the property had been conveyed or delivered? Woodrum is claiming the benefit of a promise made to Elwood which was based on conditions to be performed by Elwood, and how can he recover unless those conditions have been performed? He isiu no'better position to enforce the contract derived through the promise to Elwood than Elwood himself would be. In Benedict v. Hunt, 32 Iowa, 27, an action was brought by a mortgagee against a purchaser of mortgaged premises who had assumed the payment of the mortgage, and it was held that it was a good defense that the grantor of the defendant had no title to the property, and that the consideration wholly failed. And it is also stated that the party for whose benefit the promise is made cannot claim to occupy any better position than the party who made the contract. The New York court of appeals, in a case where a party for whose benefit a promise was made was seeking to enforce it against the promisor, held that a failure of consideration was a good defense, and stated that “there is no justice in holding that an action on such a promise is not subject to the equities between the original parties springing out of the transaction or contract between them. It may be true that the promise cannot be released or discharged by the promisee, after the rights of the party for whose benefit it is said to have been made have attached, but it would be contrary to justice and good sense to hold that one who comes in by what Judge Allen, in Vrooman v. Turner, [69 N. Y. 280,] calls ‘the privity of substitution/ should acquire a better right against the promisor than the promisee himself had.” (Dunning v. Leavitt, 85 N.Y. 30. See also, Flagg v. Munger, 9 N. Y. 483.) [126] We do not decide that the testimony which was rejected was sufficient to show a failure of consideration, but simply that such failure is a proper defense in the action, and that the testimony offered was competent and material to establish that defense, and should have been received. 2. Set-off. Another point only of those presented requires attention. Clay, Robinson & Co. alleged that Woodrum was indebted to them in the sum of $8,000, upon a promissory note executed March 4, 1887, and which has been heretofore mentioned; and they ask that the same should be set off against any claim for a personal judgment that might be made against them under their contract. The court found that there was due to them from Woodrum upon this note, on September 10,1887, which was the date of the contract between Clay, Robinson & Co. and Elwood, the sum of $7,923.26, no part of which has been paid, and, with accrued interest thereon, there was due at the time of the trial the sum of $8,535, which draws interest at the rate of 10 per cent. We think the note and claim thereon was a. proper subject of set-off in this proceeding as it was tried. Only a personal judgment was rendered in the action. Woodrum sought a recovery under the contract of Clay, Robinson & Co. When the contract was made, he was indebted to them in a greater amount than was found to be due from them under their contract. They may have contracted with reference to this indebtedness, and assumed the obligation to Woodrum in the expectation that whatever their liability under the contract might be, it would be set off against his indebtedness to them. There were cross-demands between the parties which in equity and under the statute should be set off against each other, and neither party can deprive the other of the benefits thereof by assignment, “ but the two demands shall be deemed to be compensated so far*as they equal each other.” (Civil Code, §100. See, also, §§ 27, 94, 98. Sponenbarger v. Lemert, 23 Kas. 55; Gardner v. Risher, 35 id. 93; Story, Eq., ch. 38.) We have treated the ease as the'parties thereto appear to have treated it, as an action upon contract for the recovery of [127] money, in which only a personal judgment against Clay, Robinson & Co. was given. We determine nothing as to what the rights of the parties may be under the liens mentioned in the pleadings. The plaintiffs in error insist that the Washington National Bank should have been dismissed from the case; but we think that under the pleadings it was entitled to be heard and have its rights determined. Its rights, however, depend on the course of the next trial, the relief sought, and the testimony then offered; and hence, we refrain from expressing any opinion as to its rights under the evidence given at the last trial. The errors mentioned will require a reversal of the judgment and a new trial, and it is therefore unnecessary to notice the objections with reference to the jury and the findings which they returned. . The judgment will be reversed and a new trial granted. All the Justices concurring.