Washburn v. Interstate Inv. Co.

• Decision Date: 31 December 1894
• Citation: 26 Or. 436,38 P. 620
• Parties: WASHBURN v. INTERSTATE INVESTMENT CO.
• Court: Oregon Supreme Court

38 P. 620

26 Or. 436

WASHBURN v. INTERSTATE INVESTMENT CO.

Supreme Court of Oregon

December 31, 1894

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

Action by A.K. Washburn against the Interstate Investment Company upon contract. Judgment for plaintiff, and defendant appeals. Reversed.

C.M. Idleman, for appellant.

Robert T. Platt, for respondent.

BEAN, C.J.

This is an action by a creditor of the Boston Shoe &amp Leather Company to recover on a promise of the defendant to the leather company to pay and discharge its debts and liabilities. The action was tried by the court without the intervention of a jury, and from the pleadings and findings of fact it appears that on November 10, 1891, the Boston Shoe & Leather Company, being indebted to sundry persons including this plaintiff, entered into a written contract with the defendant, by which it was stipulated and agreed that the defendant should, within 30 days, pay and discharge such indebtedness, and should also make advances necessary to enable the leather company to carry on its business for a period of four months, the entire amount to be so paid out and advanced not to exceed a balance of $13,309.79, due the leather company from one O.D. Taylor on a subsidy contract. As a consideration for this stipulation on the part of the defendant, the leather company agreed that when the indebtedness should be paid as provided in the contract it would issue and deliver to the defendant one share of its paid-up capital stock, of the par value of $50, for each $50 of indebtedness so paid, and in like manner one share for each $50 advanced by the defendant to enable it to carry on its business, and that a compliance with the terms of the agreement by the defendant should operate as a satisfaction of the subsidy contract with Taylor. Upon these facts, the only question for decision is as to plaintiff's right to recover in assumpsit upon defendant's promise to the leather company to assume and pay its debt to him. The plaintiff not being a party or privy to the contract, and its consideration not moving from him, the case presents another phase of the perplexing question as to the right of a third person to maintain assumpsit upon a contract the performance of which will inure to his benefit, but to which he is not party. As we intimated in Parker v. Jeffery, 37 P 712, the cases upon this subject are discordant and irreconcilable. As a general rule, only parties or privies to a contract can maintain an action to enforce its stipulations; and allowing a stranger to do so is an exception to, and inconsistent with, this rule. It will not be profitable at this time to collate the authorities upon the general question of the right of a stranger to a contract to enforce its stipulations, or to undertake to deduce from them any general rule upon the subject. The prevailing doctrine in this country undoubtedly is that, where one person, as a consideration or part consideration for an executed contract, promises another, for a consideration moving from him, to pay or discharge some legal obligation or debt due from such other to a third person, the latter although a stranger to the consideration, and not an immediate party to the contract, may maintain an action thereon, if it was made directly and primarily for his benefit. And this, we think, is all that has in fact been held by the former decisions of this court in which such actions have been sustained, although the language of some of the decisions states the rule without qualification that, where one person makes a promise to another for the benefit of a third, the latter may maintain an action thereon. 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; Chrisman v. Insurance Co., 16 Or. 283, 18 P. 466. But, after a somewhat exhaustive examination of the question we have found no case which has gone so far as to hold that such action can be maintained on an executory contract by which one person promises to advance his own money to pay the debts of another, but, on the contrary, the authorities deny the application of the rule to such a contract. Garnsey v. Rogers, 47 N.Y. 233; Second Nat. Bank of St. Louis v. Grand Lodge, 98 U.S. 123; Pardee v. Treat, 82 N.Y. 385; Berry v....