Hendrix Mill & Lumber Co. v. Meador

• Decision Date: 16 April 1929
• Court: United States State Supreme Court — District of Kentucky
• Parties: Hendrix Mill & Lumber Company et al. v. Meador et al.

228 Ky. 844

Hendrix Mill & Lumber Company et al. v. Meador et al.

Court of Appeals of Kentucky.

Decided April 16, 1929.

1. Contracts. — Contract, providing for payment of taxes on timber by assignee of option to purchase it, without provision that payment thereof is for benefit of owner's creditor, as alleged by assignee discharging debt, must stand as written, in absence of plea of mistake or fraud in execution thereof or effort to reform it.

2. Appeal and Error. — Judgment on a verdict, properly directed by court, should be affirmed, whether court gave one reason or another for sustaining motion for such verdict.

3. Contracts. — Whether a third person, not party to contract, may maintain suit as a beneficiary thereunder, depends on the particular facts and circumstances.

4. Contracts. — Third person, not party to contract, is donee beneficiary, if promisee's purpose in obtaining promise was to make gift or confer right against promisor to performance neither due, nor asserted to be due, from promisee, a creditor beneficiary, if no intention to make gift appears from terms of promise and performance thereof will satisfy actual or asserted duty of promisee to beneficiary and an incidental beneficiary, if benefits to him are merely incidental to performance of promise, and he is neither a donee nor a creditor beneficiary.

5. Contracts. — Owners of timber, being liable for taxes thereon, if not paid by assignee of option to purchase it, were creditor beneficiaries of assignee's promise to assignor to pay them.

6. Contracts. — A promise to discharge a duty imposed on promisee creates a duty of promisor to the creditor beneficiary to perform such promise.

7. Contracts. — A creditor beneficiary under contract between other parties can recover judgment against both promisee and promisor or either, but only one satisfaction.

8. Contracts. — Owners of timber, as creditor beneficiaries of unconditional promise by assignee to assignor of option to purchase it to pay taxes thereon, as was assignor's duty, could maintain suit on such promise and recover judgment against assignee, regardless of whether latter knew of assignor's oral agreement to pay taxes when option was assigned.

Appeal from Hickman Circuit Court.

J.D. VIA and L. JERRE COOPER for appellants.

BENNETT, ROBBINS & SMITH for appellees.

OPINION OF THE COURT BY JUDGE LOGAN.

Affirming.

The appellees owned 306.5 acres of land in Hickman county covered with merchantable timber. In January, 1927, they executed to Ben Allen an option on the timber, agreeing to convey it to him, or his assignee, if the option was exercised within 30 days from its date. The consideration to be paid was $60,000.

Four days later Ben Allen assigned the option to the appellant Hendrix Mill & Lumber Company. The assignment was by written contract, in which it was recited that Allen held an option on the timber which could be exercised by the payment of $60,000 in the manner provided in the option, and the other terms of the option agreement were recited in the contract between Allen and the appellant Hendrix Mill & Lumber Company. The third paragraph in the contract between Allen and the lumber company is in this language: "It is also expressly understood and agreed that the taxes for the calendar year, 1927, and thereafter on such timber shall be paid by the parties of the second part. It is also agreed and understood that the grantors in the options attached hereto will execute and deliver on completion of such sale warranty deed, or deeds, to the parties of the second part, their successors, legal representatives, or assigns."

The sole controversy is over the payment of taxes on the timber for the calendar year 1927. There is no disagreement over the amount. The lumber company refused to pay the taxes, and the appellees, owners of the land and sellers of the timber, paid the taxes and instituted suit against the appellants lumber company and its president, who also signed the contract, for the recovery of the amount so paid.

The Hendrix Mill & Lumber Company and B.L. Hendrix, who signed the contract with it, and who was a party defendant, defended on the ground that, notwithstanding the execution of the contract by it to Allen, wherein it agreed to pay the taxes for 1927, it was not bound to pay the taxes to the appellees, and that it never agreed to do so. The making of the contract and the terms thereof are admitted. They admit the agreement to pay the taxes, but they plead that, at the time of the consummation of the trade, the appellees were indebted to a bank in the sum of about $50,000, and that, after paying the $30,000 in cash, which was to be paid by them in accordance with the terms of the option agreement, the lumber company executed its note for the remaining $30,000, which the bank agreed to accept in payment on the note which appellees were owing to the bank. It was for the benefit of the bank, so it is alleged, that the agreement was embodied in the contract to pay the taxes for the year 1927. All indebtedness to the bank was discharged before the taxes for that year became due; therefore the lumber company claims that it was under no obligation to protect the bank by the payment of the taxes, and that its obligation was fully satisfied, and it could not be held responsible to appellees for the amount of the taxes.

The contract itself has no provision that the payment of the taxes for the year was for the benefit of the bank, and there is no plea of mistake or fraud in the execution of the contract, and it is not sought to reform it. It must stand, therefore, and be interpreted, as written.

The trial court peremptorily instructed the jury to return a verdict for the appellees, and this ruling on the part of the court is the basis of the grounds relied on for reversal.

The proof...