Dimick v. Register

• Decision Date: 12 February 1891
• Citation: 92 Ala. 458,9 So. 79
• Parties: DIMICK ET AL. v. REGISTER ET AL.
• Court: Alabama Supreme Court

9 So. 79

92 Ala. 458

DIMICK ET AL. v. REGISTER ET AL.

Supreme Court of Alabama

February 12, 1891

Appeal from chancery court, Montgomery county; JOHN A. FOSTER Chancellor.

The bill in this case was filed by the appellees, as creditors of the Montgomery Iron-Works Company, against the appellants Dimick, Chambers & Baldwin, as transferees of said company and prayed that a reference be had to the register in order to ascertain the amount of the indebtedness of the said company, and that they be paid by the register their proportinate share of the amount agreed to be paid by respondents. Defendants demurred to the bill, and moved to dismiss it for want of equity; but the chancellor overruled both the demurrer and the motion, and on final hearing held complainants entitled to the relief prayed, and ordered a reference to the register. Defendants appeal.

Tompkins & Troy, for appellants.

Arrington & Graham, for appellees.

STONE C. J

This case hinges on the written agreement of the parties, of which we give below all that we deem material to a proper understanding of its terms. Dimick, Chambers & Baldwin purchased the property and effects of the Montgomery Iron-Works Company, and in consideration thereof entered into the following stipulations: "The said D., C. & B. binding and obligating themselves to assume all valid debts and liabilities of the Montgomery Iron-Works Co. of every kind and description, and the said D., C. & B. hereby agree to bind themselves to organize a new company upon the basis of fifty thousand ($50,000) dollars capital stock, and to issue to said Wilkins and associates [the persons making the sale] stock to the amount of thirty-six hundred ($3,600) dollars. *** Two thousand ($2,000) dollars, however, is hereby agreed shall be retained by said D., C. & B. to protect and secure them against any loss, in the event the debts of the said Montgomery Iron-Works Co. shall exceed the sum of twenty-three thousand five hundred ($23,500) dollars, the said D., C. & B. in no event to be liable for an amount in excess of twenty-three thousand five hundred ($23,500) dollars, unless they are willing to take the said two thousand ($2,000) dollars of stock for such indebtedness as they may be called upon to pay in excess of twenty-three thousand five hundred ($23,500) dollars, said Wilkins and associates to have the option and privilege of paying off said excess of indebtedness by transferring and selling the certificates of two thousand dollars of stock. It is hereby further expressly agreed and understood that said D., C. & B. are to pay all the debts of the said Montgomery Iron-Works Company, as shown by the books of the said Montgomery Iron-Works Co., or which it may owe, not exceeding twenty-three thousand five hundred dollars, and to make no defense against any of said debts; that said Montgomery Iron-Works Co. had no power to contract them, or defense not going to their merits, except as to the amount which may be due on them, without the consent of the said Wilkins, except the debt of the Westinghouse Machine Company, upon which suit has been brought," etc.

It would seem there ought to be no difficulty in interpreting this contract. The promise of Dimick, Chambers & Baldwin was contemporaneous with, and was part and parcel of, the contract of purchase, by which they acquired the property and effects of the Montgomery Iron-Works Company. It was part of the consideration-the main part, it would seem-on which they became the owners of the property purchased. It was not a promise to pay Wilkins and associates a sum equal to $23,500 of the debts. It was not a promise to pay them anything. The promise was to pay the debts of the company, not exceeding $23,500. True, the consideration moved from Wilkins and associates, but the promise was not to pay them. It was a promise the creditors could claim the benefit of, and on which they could maintain an action in their own names. The debt became prima facie a debt to them and Wilkins and associates could maintain no action upon it, unless the creditors repudiated the substitution, or, the promise not being kept, coerced, or took steps to coerce, payment from the original debtor. We discussed these questions so fully both on reason and authority, in Young v. Hawkins, 74 Ala. 370, and Coleman v. Hatcher, 77 Ala. 217, that we deem it unnecessary to further reproduce the argument. The promise inured to the benefit of the creditors, and, prima facie, they alone can claim payment, or sue for the breach of the agreement. See, also, Huckabee v. May, 14 Ala. 263; Lockwood v. Nelson, 16 Ala. 294; Mason v. Hall, 30 Ala. 599. The contract, as we have shown, vesting in the creditors the right to demand, sue for, and...