Pratt v. Bates

• Decision Date: 08 January 1879
• Citation: 40 Mich. 37
• Court: Michigan Supreme Court
• Parties: Lemuel C. Pratt v. John H. Bates and William L. Hunter, survivors of themselves and Charles H. Bates, deceased

40 Mich. 37

Lemuel C. Pratt v. John H. Bates and William L. Hunter, survivors of themselves and Charles H. Bates, deceased

Supreme Court of Michigan

January 8, 1879

Submitted November 21, 1878

Error to Kalamazoo. Submitted November 21, 1878. Decided January 8 1879.

Judgment reversed with costs and a new trial granted.

Edwards & Sherwood for plaintiff in error. An unwritten promise to pay the debt of another is void, Maule v Bucknell, 50 Pa. 39. While a debt stands against the original debtor, the promise of a third person to pay it is collateral and must be in writing (Watson v. Randall, 20 Wend. 201; Nelson v. Boynton, 3 Met. 396) unless there is a consideration directly to the promissor from the promissee, Calkins v. Chandler, 36 Mich. 320; Farley v. Cleveland, 4 Cow. 432; Leonard v Vredenburgh, 8 Johns. 29; Mallory v. Gillett, 21 N.Y. 412.

Severens, Boudeman & Turner for defendants in error. A parol promise to pay another's debt is not within the statute of frauds if made upon a consideration beneficial to the promissor, Jepherson v. Hunt, 2 Allen 417; Alger v. Scoville, 1 Gray 391; Emerson v. Slater, 22 How. 28; Allen v. Thompson, 10 N.H. 32; Luark v. Malone, 34 Ind. 444. An action lies upon the breach of a promise to pay a debt in the payment of which the promissor is interested and the measure of damages is the amount of the debt, even though the promissee has not paid it (Furnas v. Durgin, 119 Mass. 500; Wheelock v Rice, 1 Doug. [Mich.], 267; Hall v. Mash, 10 Mich. 303 Dye v. Mann, 10 Mich. 291; Richards v. Whittle, 16 N.H. 259; Stewart v. Clark, 11 Metc. 384; Gilbert v. Wiman, 1 Comst. 550; Wright v. Whiting, 40 Barb. 235; Loosemore v. Radford, 9 M. & W., 657; Rector v. Higgins, 48 N.Y. 532; Farnsworth v. Clark, 44 Barb. 603), and ownership of stock or of a beneficial interest in the property of a debtor corporation is a sufficient interest to make an oral promise to pay its debts binding, Lethbridge v. Mytton, 2 B. & Ad., 772.

Campbell, C.J. The other Justices concurred.

OPINION

Campbell, C.J.

Defendants in error sued Pratt to recover a debt due from the Michigan Chair Company, which it was claimed he had become liable to pay them. The transaction set out in the declaration was that on the 1st of September, 1875, Lucius B. Kendall, Henry E. Hoyt and Albert Arms were stockholders of the company, which was then indebted to Bates & Co., and Pratt, in consideration that these gentlemen would transfer to him 360 shares of stock, agreed he would pay that debt, and they made the transfer. That afterwards, in consideration that Bates & Co. would take no legal steps against the chair company for three months, Pratt promised that firm to pay the debt.

This claim was set up in certain counts of the declaration with some variations. There was also a count relying on the promise to Kendall, Hoyt and Arms alone, and a further count relying on that promise and its assignment to Bates & Co.

It is not seriously contended that Bates & Co. could sue on the promise to Kendall, Hoyt and Arms without some further facts to bring them into privity with Pratt.

The liability supposed to arise from the extension of time is in our opinion very plainly within the statute of frauds. It was a promise to Bates & Co., creditors of the chair company, to pay the chair company's debt if they would not sue the chair company within three months. There is nothing in either allegation or proof to indicate any agreement to substitute Pratt's liability for that of the company. It was an additional and collateral liability to that of the principal debtor. The extension of time might be a very good and sufficient consideration for Pratt's promise, but the promise itself being to pay the debt of another is void unless in writing. And the possible interest of Pratt in seeing the debt paid, or the advantage he might possibly gain by the delay did not make the debt any less the debt of the chair company, nor his promise any other than a promise to pay it as their debt. The statute is clear on this subject. Brown v. Hazen, 11 Mich. 219; Corkins v. Collins, 16 Mich. 478; Welch v. Marvin, 36 Mich. 59; Green v. Brookins, 23 Mich. 48.

The promise to Kendall Hoyt and Arms, if proved as alleged, being directly to them and not to the creditors of the chair company, for a consideration moving from the promisee to the promisor, was not within the statute. Green v. Brookins, 23 Mich. 48.

The questions arising on this are therefore quite different, and require different treatment. The court below allowed damages to the full amount of the debt, without any reference to the interest of the original promisees in the matter, and without being measured by their individual or collective loss by the non-payment of the company debts.

It is evident that Bates & Co. if claiming as assignees of the promisees (and this is the only ground on which they can make any claim) can only recover the same amount and on the same conditions with them.

There is a misrecital of the consideration. The number of shares to be transferred, instead of 360, was 1440.

To understand the position of the parties, it is necessary to refer briefly to what appeared on the trial. Pratt and Kendall, Hoyt and Arms were holders individually of a large part of the stock of the chair company. Its affairs were not prosperous, and it had become indebted largely to Pratt and others to the amount of more than $ 60,000. Pratt's claim was nearly half of that sum. Negotiations were had to induce him to assume charge of the affairs of the company and endeavor to work out;...