Parlin v. Hall

Decision Date12 April 1892
Citation52 N.W. 405,2 N.D. 473
CourtNorth Dakota Supreme Court

APPEAL from district court, Cass county; Hon. WILLIAM B. MCCONNELL Judge.

Action by J. V. Parlin against Mabel E. Hall and George Brandenburg on an account for goods sold and delivered to defendant Hall. From a judgment for plaintiff, defendant Brandenburg appeals. Reversed.


Benton & Amidon, for appellant.

Pollock & Scott, for respondent.

Benton & Amidon, for appellant:

The contract sued upon was not made for the benefit of the plaintiff and the rule which allows third persons to sue upon contracts to which they are not parties is of very recent development and as yet obtains only in a few American States. Hare on Contracts, pp. 93 and 171; Pollock on Contracts, p 200. It has been repudiated in Massachusetts and Michigan. Mellan v. Whipple, 1 Gray 321; Bank v Rice, 107 Mass. 39; Morrill v. Lane, 136 Mass. 93; Pipp v. Reynolds, 20 Mich. 88; Turner v. McCarty, 22 Mich. 264; Halsted v. Francis, 31 Mich. 112. The rule which allows third parties to recover upon a contract made for their benefit does not go so far as to hold that every promise made by one person to another, from the performance of which a third party would derive a benefit, gives a right of action to such third party, he being privy neither to the contract or the consideration. Gurnsey v. Rogers, 47 N.Y. 233; Merrill v. Greene, 55 N.Y. 270; Vrooman v. Turner, 69 N.Y. 280; Railroad Co. v. Curtis, 80 N.Y. 219; Bank v. Grand Lodge, 98 U.S. 123; Wright v. Terry, 2 So. Rep. 6; Burton v. Larkin, 13 P. 398; Chung Kee v. Davidson, 15 P. 100; Lorrillard v. Clyde, 25 N.E. 917.

Pollock & Scott, for respondent:

If the intention of the parties to the instrument could not be determined from the instrument itself evidence to explain it and show how it was acted upon by the parties was proper. 2 Parson on Contracts, 564; Schwartz v. Hyman, 107 N.Y. 562; Bank v. Miles, 73 N.Y. 335; Rindge v. Judson, 24 N.Y. 64. Plaintiff was the real party in interest so far as the guaranty expressed in the contract was concerned, and the one in whose name the action should be prosecuted. Church v. Teed, 120 N.Y. 583. The sale and delivery of the goods by plaintiff under the provisions of the guaranty was a sufficient consideration to uphold the same. Baker v. DaCunha, 126 N.Y. 293. Plaintiff was not bound to give immediate notice to appellant of the sale of the goods. Notice within a reasonable time after such sale was sufficient. Fisk v. Stone, 50 N.W. 125; Mfg. Co. v. Welch, 10 How. 462. Commercial contracts and letters of guaranty are not to be construed upon the same principles as are bonds and mortgages, but with a more generous interpretation, for the purpose of reaching the understanding and intent of the parties. Bell v. Bruen, 1 How. 170.

CORLISS C. J. BARTHOLOMEW, J. (dissenting.)



The plaintiff and respondent sold groceries to the defendant Mrs. Hall. The defendant Brandenburg was joined with her in the suit to recover the price of these groceries, the plaintiff basing his right to recover against Brandenburg on a written instrument. The plaintiff recovered judgment against Brandenburg in the trial court. As the construction of this writing is involved, it is necessary to set it forth in full in this opinion: "This agreement, made and entered into this 29th day of October, A. D. 1887, by and between George Brandenburg, of Wheatland, party of the first part, and Mabel E. Hall, of Casselton, D. T., party of the second part, witnesseth, that whereas, the said party of the first part has agreed to guaranty the grocery bill of said second party, contracted for use on the premises hereinafter described, at any place said second party may select to trade, not exceeding the sum of two hundred ($ 200) dollars in any one season during the continuance in force of a certain agreement dated this day for the purchase of section twenty-two (22) in township one hundred and forty (140) north, and range fifty-three (53) west, the said bill not to exceed one hundred dollars ($ 100) between April 1st and August 1st, and one hundred dollars from August 1st to the completion of the harvest; and said first party has agreed that he will assist said second party to pay the labor bill in seeding and harvesting the crop on said land aforesaid, with the exception of the labor of said Mabel E. Hall and George R. Hall, her husband: Now therefore, in consideration of the premises, said Mabel E. Hall hereby agrees to pay to said first party all the sums which he pays on said guaranty and advances in pursuance of this agreement, with interest thereon at twelve per cent. from date of such payment by him. Witness my hand and seal, this 29th day of October, A. D. 1887. MABEL E. HALL. [Seal.] GEORGE R. HALL. [Seal.] GEO. BRANDENBURG. [Seal.]"

We fail to see how plaintiff can maintain any action on this agreement. He is not a party to it; neither does it appear to be made for his benefit. It is not a letter of credit. It comes within no definition of such a letter as such letters are defined in the cases or in our statute. See §§ 4312-4316, Comp. Laws; 13 Amer. & Eng. Enc. Law, 237, 238. There is nothing upon its face to indicate that Mrs. Hall was to take this instrument to any person for the purpose of securing credit on the strength thereof. If there was any ambiguity in the contract it would be proper to look into the surrounding circumstances to discover the purpose of the parties, but the meaning of the agreement is too manifest to warrant extrinsic explanation. It is not even an agreement with Mrs. Hall on the part of Brandenburg to guaranty her grocery bill. It merely recites that such a contract has been made with her in explanation and to limit the scope of the agreement which follows, to pay twelve per cent. interest from date of payment on all sums which Brandenburg should pay because of such recited guaranty. There is not a line, word, or syllable in the instrument expressing any present agreement on the part of Brandenburg to do anything; not even an agreement with Mrs. Hall to guaranty the grocery bill, not to mention its failure to express any contract with plaintiff or any one else to guaranty such bill. The instrument, even if it had contained an express agreement on the part of Brandenburg with Mrs Hall to guaranty her grocery bill, would not be one on which plaintiff could sue, unless it showed upon its face, or unless the surrounding circumstances demonstrated that the parties intended that Mrs. Hall should use that particular instrument as a means of securing her the necessary credit to make the purchases therein mentioned, or unless it was made for his benefit. The plaintiff, who is a stranger to this contract, can sue on it only on one of two theories. One theory is that the parties, by their conduct, have made that a letter of credit which, upon its face, does not purport to be and is not a letter of credit. Perhaps even then he could not maintain an action on it. The plaintiff was not misled by the paper or by Brandenburg, as he relied on neither in giving the credit, but solely upon Mr. Hall's statement that his wife had a guarantee from Brandenburg. Plaintiff never saw the paper until after the goods were sold. Under all the cases it is necessary that the person claiming the benefit of a letter of credit must have relied thereon in making the sale. 13 Amer. & Eng. Enc. Law 238; Pollock v. Helm, 54 Miss. 1. He can connect himself with the letter of credit only by showing that it was on the strength of the promise therein contained that he made the sale. Said the court in Pollock v. Helm: "The very pith and marrow of the plaintiff's right to recover is that he was induced to put out his money on Mrs. Willis' bill on the faith of the defendant's letter of credit; and it does not appear by direct evidence that the letter was shown to Pollock or its contents reported to him." The contents of this contract were not reported to plaintiff, Mr. Hall placing his own construction on the paper, stating to plaintiff that Brandenburg had guaranteed to pay a certain sum for groceries. When a letter of credit is given, the person to whom it is addressed, in case it is a special letter, or any one to whom it is presented, in case it is a general letter, connects himself with the letter, and becomes a party thereto by accepting the promise of the writer to be liable, because he sells on the strength of that promise. But there must be something on the face of the instrument showing that the party sought to be charged intended that some one should sell to the bearer of the paper, relying on the promise of the one who has signed it to pay. It is also significant that this paper is signed not merely by Brandenburg, as is usual in the case of a letter of credit, but by Mrs. Hall and her husband also. Can the plaintiff recover on the ground that the case is brought within the principle of those decisions which allow a stranger to an agreement to sue upon it as having been made for his benefit? The paper does not show that either the plaintiff or any other stranger to it was intended to be benefited by it. The mere fact that one not a party to an agreement may be benefited by its performance does not bring him into contractual relations with the promisor in the agreement. He must have been the party intended to be benefited by the promise, and there must have existed at the time thereof such an obligation on the part of the promisor towards the third person as gives him at least an equitable right to the benefits of the promise. This is the rule under the cases. What...

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