First Nat. Bank of Sing Sing v. Chalmers

• Decision Date: 15 January 1895
• Citation: 144 N.Y. 432,39 N.E. 331
• Parties: FIRST NAT. BANK OF SING SING v. CHALMERS et al.
• Court: New York Court of Appeals Court of Appeals

144 N.Y. 432

39 N.E. 331

FIRST NAT. BANK OF SING SING

v.CHALMERS et al.

Court of Appeals of New York.

Jan. 15, 1895.

Appeal from supreme court, general term, Second department.

Action by the First National Bank of Sing Sing against Thomas H. Chalmers and George W. Murray on a contract by defendants to pay plaintiff certain indebtedness due it from Charles Spruce & Co. From a judgment of the general term (23 N. Y. Supp. 1143) affirming a judgment in favor of plaintiff, defendants appeal. Affirmed.

For prior report, see 24 N. E. 848.

Calvin Frost, for appellants.

Francis Larkin, for respondent.

FINCH, J.

What constitutes an original promise, upon which the statute of frauds does not operate, and which, therefore, may be valid and effectual without a writing, is fairly settled in one direction at least. Wherever the facts show that the debtor has transferred or delivered to the promisor, for his own use and benefit, money or property in consideration of the latter's agreement to assume and pay the outstanding debt, and he thereupon has promised the creditor to pay, that promise is original, upon the ground that, by the acceptance of the fund or property under an agreement to assume and pay the debt, the promisor has made that debt his own, has become primarily liable for its discharge, and has assumed an independent duty of payment, irrespective of the liability of the principal debtor. Ackley v. Parmenter, 98 N. Y. 425;White v. Rintoul, 108 N. Y. 223, 15 N. E. 318. In such a case the debt has become that of the new party promising. His promise is not to pay the debt of another, but his own. As between him and the primary debtor, the latter has become practically a surety, entitled to require the payment to be made by his transferee. The consideration of the primary debt by the transfer of the money or property into which that consideration had been in effect merged may be said to have been shifted over to the new promisor, who thereby comes under a duty of payment as obvious as if such original consideration had passed directly to him.

The question before us, therefore, is whether the promise of the defendants, made to the bank, to pay the debt due it from Leary and Spruce, was founded upon such a transfer of property as I have above described, and thus was original, or whether it was not so founded, and must for that reason be deemed collateral. We are bound to assume upon the findings that the promise to pay was absolute, and clear of condition or contingency. The question whether it was made at all was severely litigated, and depended upon the conclusion to be drawn from testimony full of violent contradictions; and we are not at liberty to review the determination of fact which affirms that the promise to pay was in truth made, and was absolute in its terms, as sworn to by the witnesses on the part of the plaintiff. As to the substance of the agreement between the defendants and the primary debtors there is also contradiction. The former assert that their assumption of the debt went no further than a consent to pay it out of the proceeds of the debtors' property after the discharge of their own debt; or, in other words, that their agreed liability was to pay plaintiff only out of proceeds when realized, and even then out of any possible excess remaining over and above their own debt. If that is true, they were under no present duty to pay the bank when the promise was made. The debt had not become theirs, might never become theirs; and so their verbal promise to the bank was purely collateral and to answer for the debt of another. That proposition was quite distinctly held in Ackley v. Parmenter, supra, and upon the authority of Belknap v. Bender, 75 N. Y. 446, which disclosed an agreement simply to pay out of proceeds when realized, and so far as sufficient. On this branch of the case the inquiry turns upon the facts, and the findings fail to disclose any such agreement, but establish the contrary. They determine that for a valuable consideration, and by an agreement with Leary and Spruce, the defendants agreed to pay the plaintiff the latter's debt to it. This finding is free of any condition, and imports and absolute agreement to pay at once and in full, and so negatives the defendants' version of the facts. It is sustained by the testimony of the plaintiff's witnesses, and is strongly corroborated by the form of the confession of judgment which the defendants' attorney drew, which they accepted, upon which they issued an execution, and which provides for an assumption of the bank debt absolutely and without condition. All the requisites of an original promise, unaffected by the statute of frauds, were thus explicitly embraced in the findings, except one. It is not in terms or expressly found that the consideration, described simply as valuable, was, beyond that, such a consideration as would avoid the statute because it consisted of a transfer to the defendants for their own use and benefit of the debtors' property. That fact is involved in the findings, since it is essential to the legal conclusion, which cannot stand without it. We may look into the evidence, therefore, to see whether it would have sustained such a finding if it had been explicitly made, and thereupon assume the fact in support of the judgment. Ogden v. Alexander, 140 N. Y. 356, 35 N. E. 638.

I can find in the proof no express agreement in words transferring the real and personal estate of the firm to the defendants, but that there was such a transfer in fact is abundantly established and beyond any reasonable...