Schindler v. Euell , 45 How. Pr. 33 ( 1872 )

Daly, C. J.

The referee finds that the assets of the firm of Greiff & Semmler, upon the dissolution of the firm, were transferred to Semmler, subject to the payment of the debts of that firm; that a new firm was formed, consisting of the defendants Euell and Semmler; that the total assets of the old firm, making $10,541.98, was put into the new one by Semmler, subject to the payment of the debts of the old firm, and that the sum of $3,000 was put in by Euell; that Euell & Semmler, in consideration of receiving all the assets of the late firm, agreed and promised to each other, at the time of the formation of the new firm, to pay off all the debts of the old ones, and that the plaintiffs’ claim was one of these debts.

It was laid down in the early case of Leonard agt. Vredenburgh (12 John., 38) by chancellor Kent, as too clearly settled to be questioned, that if a promise to pay the debt of another be founded on a new and distinct consideration, independent of the debt, and one moving between the parties to the new promise, it is not a case within the statute, but is considered in the light of an original promise; and such is the nature of the promise in the present case. So far as respects one of the defendants, Semmler, it is a promise to pay his own debt; and it is a general principle which prevails in all the cases that wherever the party’s promise is in effect to pay his own debt, the statute cannot be resorted to to enable him to get rid of his actual obligation. (See the cases collected in Brown on the Statute of Frauds, § 163, 3d ed.) And as respects the other defendant Euell, there was, in the language of Chancellor Kent, a new and distinct consideration between him and Semmler upon which his promise to pay the debts of the old firm was founded; that is, the receipt .of the assets of the old firm as a part of the capital of the new. These assets were in Semmler’s hands, subject to the payment by him of the debts of the old firm; and when he turned them over as a part of the capital of the new firm, under an agreement with Euell that the new firm would pay off all the debts of the old one, the joint interest which Euell thereafter had in them was certainly a sufficient consideration to support the promise which he made contemporaneously with the receipt, of them. It was a mutual obligation entered into by the two members of the new firm, and, for all that is known to the contrary, the amount of these assets, which were over $10,000, may have been amply sufficient to pay off and discharge all the debts due by the former firm of Greiff & Semmler; but whether they were or not, Euell saw fit, as one of the partners of the new firm, to take them as an addition to the capital of that firm, burdened with the obligation to which they had been subject in the hands of Semmler.

I can see no difference in principle between this case and that of Lawrence agt. Fox (20 N. Y., 268), There, a sum of money was loaned, upon the promise by the borrower to pay a debt due by the lender to another person \ and it was held that the person to whom the debt was due might maintain an action npon the promise as one made for his benefit; and here Euell received a joint interest in $10,000 worth of property upon a promise to be jointly responsible for the payment of certain debts due by the person from whom he received the property.

In Skelton agt. Brewster (8 John., 376) the defendant, in consideration of receiving from a person all her household goods, promised to pay a debt for which that person had been arrested in execution; and it was held that this was not a collateral engagement, but an original undertaking, upon which an action might be maintained by the execution creditor for whose benefit the promise was regarded as being made. .

There is nothing in the recent case of Garnsey agt. Rogers (47 N. Y., 233) giving any different interpretation of the law from that laid down and acted upon in the cases above cited. That case simply declares that, to entitle a third party to maintain, an action upon a promise of this nature, the contract must have been made for his benefit; that he must be the party intended to be benefited, which, it holds, was the case in Lawrence agt. Fox, and was not the case in Garnsey agt. Rogers; for there, the promisor, in the language of judge Rafallo, £i engaged "to advance his own money for the purpose of protecting the property of the promisee; which advance, when made, would become a lien upon the property of the promisee.” Here, however, the contract made by Semmler with his partner, Euell, was for the benefit of the creditors of the old firm ; for the assets of that firm were left by Greiff with his partner, Sepimler, subject to the payment of the firm debts which Semmler agreed and assumed to pay; and when Semmler, therefore, made these assets a part of the capital of the new firm, upon the condition that that firm should assume and discharge the debts of the old one, it was an agreement on his part, as I have said, for the benefit of the creditors of the old firm, for whose benefit Semmler held the assets before that agreement was entered into. In other words, it was giving up property to that firm which would otherwise have gone to the payment of the debts of these creditors; and the new arrangement was as much an engagement for their benefit as the arrangement previously made by Greiff with Semmler.

Euell having acquired' a joint interest in these assets, there was a sufficient consideration for the promise on his part, and the mutual agreement entered into cannot be regarded in any other light than as intended for the benefit of the creditors of the old firm. This being the conclusion upon the facts, it was not an agreement within the meaning of the statute of frauds.