Feldman v. McGuire

• Decision Date: 23 January 1899
• Citation: 55 P. 872,34 Or. 309
• Parties: FELDMAN v. McGUIRE.
• Court: Oregon Supreme Court

55 P. 872

34 Or. 309

FELDMAN v. McGUIRE.

Supreme Court of Oregon

January 23, 1899

Appeal from circuit court, Multnomah county; E.D. Shattuck, Judge.

Action by Maria Feldman against W.W. McGuire. The facts constituting the basis of this action, as exhibited by the complaint, are that prior to March 27, 1890, Adolph Nicolai was indebted to plaintiff, and that about said day the defendant, in consideration of the conveyance and transfer by Nicolai to him and his wife of certain real property, undertook and agreed with the said Nicolai to pay to the respective owners and holders thereof all his debts and liabilities, amounting to about $30,000, which comprised the indebtedness to plaintiff, and that defendant has failed to satisfy the same or any part thereof. The judgment was for plaintiff, and defendant appeals. Affirmed.

A.H. Tanner, for appellant.

E.B Watson, for respondent.

WOLVERTON, C.J.

The promise or agreement of defendant with Nicolai to pay and discharge his debts and liabilities, and among them the debt to plaintiff, was not in writing; and, evidence of the verbal undertaking of defendant having been admitted over his objections, the question is presented whether the agreement as stated is within the statute of frauds, and therefore not susceptible of legal proof. The law may now be regarded as well settled in this state that where a person has received from another some fund, property, or thing in consideration of which he has made a promise or entered into an undertaking with such other, but directly and primarily for the benefit of a third, such third party may maintain an action directly upon such promise or undertaking so made and entered into for his benefit, although not a party to the transaction. In such case the third party acquires an equitable interest in the property, fund, or thing; and the law, acting upon the relationship of the parties and their treatment of the fund, establishes the requisite privity creates a duty, and implies a promise which will support the action. Parker v. Jeffery, 26 Or. 186, 37 P. 712; Washburn v. Investment Co., 26 Or. 436, 36 P. 533, and 38 P. 620; Lumber Co. v Miller, 28 Or. 565, 43 P. 659; Bank v. Hovey (Or.; just decided) 55 P. 535. These cases define the scope and illustrate the application of the rule, giving the action which was established by the earlier cases of Baker v Eglin, 11 Or. 333, 8 P. 280; Hughes v. Navigation Co., 11 Or. 437, 5 P. 206; Schneider v. White, 12 Or. 503, 8 P. 652; and Chrisman v. Insurance Co., 16 Or. 283, 18 P. 466. Dependent upon this principle is the question, which is now urged, whether the action can be maintained in the absence of the special quality of proof required by the statute of frauds. There is much conflict in the authorities, but the decided weight thereof supports the contention that the contract or transaction upon which such an action is based is not within the statute. The reasons urged are that the contract is not one of suretyship, but an original undertaking between the debtor and the promisor, based upon a sufficient consideration, which operates to the benefit of the creditor. The party promising has for his object some benefit or advantage accruing to himself, and on that consideration makes the promise; and this, it is said, distinguishes the transaction as an original undertaking. Furthermore, the promise is not to the creditor, but to the debtor, and is to pay such debtor the amount due him, or the consideration agreed upon, by paying or answering for it to his creditor; and the law implies the contract between the promisor and the creditor because it is incidentally for his benefit, and therefore gives him the right of action. Dixon, C.J., in Putney v. Farnham, 27 Wis. 187, speaking of such a transaction, says: "It was a guaranty in form, but not in substance or effect, within the meaning of the statute of frauds. It was not a mere promise by the defendant to be responsible for the debts of Corlett to those parties, and to pay those debts, but a promise by him to pay his own debt in that particular way. It was a promise founded upon a new and sufficient consideration, moving to the promisor from the debtor at the time the promise was made. Such a promise or agreement is not within the statute of frauds, and no note or memorandum in writing expressing the consideration, and subscribed by the party to be charged therewith, is required." Mr. Reed, in his work on the Statute of Frauds (section 82, vol. 1), says: "The commoner instance of the creditor's right to sue being sustained is where the guarantor has bought property of the debtor, and, in payment of the price, has engaged to assume the debt. This obligation *** is not within the statute of frauds, being a promise to pay the promisor's own debt, the recipient of the payment being the promisor's creditor, instead of the promisor himself." It is pertinent to add that the question whether the promisor has received money or property in consideration of the promise has, in general, been regarded as a controlling circumstance or factor in the transaction. Blunt v. Boyd, 3 Barb. 209. In support of the general proposition that the case is not within the statute, see Mallory v. Gillett, 21 N.Y. 413; Schatz v. Pfeil, 56 Wis. 434, 14 N.W. 628; Ware v. Allen, 64 Miss. 545, 1 So. 738; Bank v. Studemann (Iowa) 37 N.W. 112; Windell v. Hudson, 102 Ind. 521, 2 N.E. 303; De Walt v. Hartzell, 7 Colo. 601, 4 P. 1201; Browne, St. Frauds, § 166b. The rule has been practically adopted in this state ( Strong v. Kamm, 13 Or. 172, 9 P. 331), and, in our opinion, ought to prevail, because it is supported by reason as well as authority. The fact that Nicolai remains liable to plaintiff does not affect the liability of defendant. Farley v. Cleveland, 4 Cow. 432; Schatz v. Pfeil, supra. So, there was no error in admitting testimony of the oral contract or undertaking. Nor was the contract within the statute of frauds because it concerned real property. As to such property it was completely executed. The deeds had passed, and the title had vested in the grantees; besides, the action was not concerning that species of property.

The plaintiff, to sustain her cause, offered in evidence several exhibits, which were all received, and marked, respectively "A," "B," "C," "D," "E," "F," and "G," over the objections of the defendant, who claims that they were entirely irrelevant, and could have had no other effect than to prejudice and mislead the jury to his injury. Exhibit A is a deed executed and delivered by Adolph Nicolai and Caroline, his wife, to defendant, April 1, 1890, to certain real property, reciting a consideration of $8,500. Exhibit B is likewise a deed from Nicolai and wife to Rosalie McGuire, wife of defendant, to certain premises, executed October 20, 1890, reciting a consideration of one dollar. Exhibit C is a mortgage upon property acquired from Nicolai, executed by defendant and wife, to Henry Winehard, January 9, 1891, to secure the payment of a promissory note given, of even date, by defendant to Winehard, for the sum of $2,250. Exhibit D is the judgment roll in a suit instituted by plaintiff against Rosalie McGuire and the defendant herein, to set aside the said deed executed to her by Nicolai, upon...