Young Men's Christian Association of Portland v. Croft

• Decision Date: 19 December 1898
• Citation: 55 P. 439,34 Or. 106
• Parties: YOUNG MEN'S CHRISTIAN ASSOCIATION OF PORTLAND v. CROFT et al.
• Court: Oregon Supreme Court

55 P. 439

34 Or. 106

YOUNG MEN'S CHRISTIAN ASSOCIATION OF PORTLAND v. CROFT et al.

Supreme Court of Oregon

December 19, 1898

Appeal from circuit court, Multnomah county; L.B. Stearns, Judge.

Suit by the Young Men's Christian Association of Portland against Mary E. Croft and others. From a decree dismissing the suit as to defendant Cake, plaintiff appeals. Affirmed.

This is a suit to foreclose a real-estate mortgage and to recover a personal decree against a guarantee of the premises, who had assumed and agreed to pay the mortgage debt notwithstanding his immediate grantors were not personally liable therefor. The facts are that one M.W. Gay, on October 19, 1889, being the owner of lots 7 and 8 in block 111 in Grover's addition to Portland, executed a mortgage thereon to one W.G Register, to secure the payment of his promissory note for $2,000, due in one year, with interest from said date at the rate of 8 per cent. per annum, which note and mortgage on December 4, 1889, were assigned to plaintiff, which since that date has been, and now is, the owner and holder thereof that on October 23, 1889, Gay conveyed said premises to Marcy C. Hill and H.E. Bristow by a deed with warranty against all incumbrances except said mortgage, but they did not assume or agree to pay the debt thereby secured; that Mary C Box,--formerly Hill,--and Thomas Box, her husband, and H.E Bristow, on April 3, 1893, for the expressed consideration of $4,800, conveyed said lots to the defendant H.M. Cake by a deed containing a covenant of warranty against all incumbrances except said mortgage, "which," the habendum et tenendum clause thereof recites, "the said H.M. Cake assumes and agrees to pay"; that Cake, on June 18, 1894, conveyed said land to the defendant Mary E. Croft by a deed containing a similar covenant and exception, but she did not assume or agree to pay said debt. Default having been made in the payment of said note, this suit was instituted for the relief hereinbefore stated, and, the trial thereof resulting in a decree foreclosing said mortgage, and dismissing the suit as to the defendant Cake, plaintiff appeals.

Wallace McCamant, for appellant.

W.M. Cake, for respondents.

MOORE J. (after stating the facts).

This appeal presents the single question whether the grantee of mortgaged premises who accepts a deed thereto containing a recital to the effect that he assumes and agrees to pay the mortgage debt is liable therefor when his immediate grantor was not personally bound. The evidence tends to show that at the time Cake purchased the lots in question he considered them worth about $3,600; that he paid on account of the purchase, the sum of $150, and executed to Mary C. Hill and H.E. Bristow a deed of unincumbered real property, which he valued at about $1,500; and from these facts it is argued by plaintiff's counsel that the mortgage debt formed a part of the consideration of Cake's purchase, and having, by his acceptance of the deed, assumed and agreed to pay the said debt, his grantors thereby created a fund for plaintiff's benefit of which Cake was trustee, and, this being so, the law supplies the want of privity of contract between him and the mortgagor by the fiction of an implied promise, which a court of equity will enforce. Defendant's counsel insist, however, that, inasmuch as Mary C. Hill and H.E. Bristow were not personally liable for the payment of the mortgage debt, they did not become Cake's sureties by his assumption and agreement to pay it; and hence, as against him, they could not be subrogated by any payment they might make, and, as the mortgagee could take no better title than they possessed, it cannot recover a personal judgment against Cake upon his covenant. It is impossible to reconcile the conflict of judicial utterance upon the question under consideration, but we believe the weight of authority supports the principle for which defendant contends. In Parker v. Jeffery, 26 Or. 186, 37 P. 712, the defendants Robinson Bros., having entered into a contract with the city of Portland for the construction of a sewer, stipulated that they "would pay all sums of money due at the completion of the work, or thereafter to become due, for material used in, and labor performed on or in connection with, said work," and to secure the faithful performance of this contract they executed a bond to the city, in which the defendants Jeffery and Bays joined as sureties. The plaintiff, having sold and delivered to Robinson Bros. material to be used in the construction of the sewer, and not having been paid therefor, commenced an action against said sureties to recover the amount so due him, and it was held that he could not recover, because it did not appear that the contract had been entered into directly and primarily for his benefit. To the same effect is the case of Washburn v. Investment Co., 26 Or. 436, 36 P. 533, and 38 P. 620, in which Bean, C.J., says: "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 personally for his benefit." In Lumber Co. v. Miller, 28 Or. 565, 43 P. 659, in construing a clause contained in a bond given to the city of Portland for the faithful performance of the stipulations of a contract for making a street improvement, it was held, in effect, that, inasmuch as the city was not liable to the persons who sought to take advantage of the condition of the bond, there was no consideration for the stipulation to pay for the material used in or the labor performed upon the improvement. The conclusion arrived at in that case seems to have been based upon the rule announced by Mr. Justice Allen in Vrooman v. Turner, 69 N.Y. 280, in which he says: "To give a third party who may derive a benefit from the performance of the promise an action, there must be--First, an intent by the promisee to secure...