American Security & Trust Co. v. Ferrero

45 App. D.C. 84, 1916 U.S. App. LEXIS 2657

• Court: Court of Appeals for the D.C. Circuit
• Decided: April 10, 1916
• Docket: No. 2869
• Status: Published

Opinion

Mr. Chief Justice Shepard

delivered the opinion of the Court:

We think there was no error in sustaining the demurrer. There was no privity between Eerrero and the American Security & Trust Company. Norment was under no obligation to pay the notes, and there was no consideration for Ferrero’s promise to assume the payment of tbe same. Second Nat. Bank v. Grand Lodge, F. & A. M. 98 U. S. 123, 25 L. ed. 75.

Had Norment been under contract to pay the debt due the mortgagee, a bill in equity would lie on behalf of the mortgagee, because by that contract Ferrero would become the principal debtor and Norment the surety, and the creditor would have the benefit of the securities given to the surety for the payment of the debt. This does not rest upon any liability of the principal to the creditor, or upon any peculiar relation of the surety towards the creditor; but upon the ground that the surety, being the creditor’s debtor, and in fact occupying the relation of surety to another person, has received from that person an obligation or security for the payment of the debt, which a court of equity will therefore compel to be applied to that purpose at the suit of the creditor. Keller v. Ashford, 133 U. S. 610-623, 33 L. ed. 667-673, 10 Sup. Ct. Rep. 494; Willard v. Wood, 135 U. S. 309, 34 L. ed. 210, 10 Sup. Ct. Rep. 831; Union Mut. L. Ins. Co. v. Hanford, 143 U. S. 187-190, 36 L. ed. 118-120, 12 Sup. Ct. Rep. 437.

As was stated by Mr. Justice Gray in Willard v. Wood, 135 U. S. 309-313, 34 L. ed. 210-213,10 Sup. Ct. Rep. 831: “If the agreement of the grantee is considered as in the nature of assumpsit, implied from his acceptance of the deed, still, being made with the grantor only and for his benefit, upon a consideration moving from him alone, there being no privity of contract between the grantee and the mortgagee, and the latter not having known of or assented to the agreement at the time it was made, nor having since done or omitted any act on the faith of it, it follows that, by the law as declared by this court, and prevailing in the District of Columbia, the mortgagee cannot maintain an action at law against the grantee.” This seems to be conclusive of the question.

It is contended on behalf of the appellant that the promise in this case was made for the benefit of the American Security & Trust Company, mortgagee, upon a consideration passing between Norment and Ferrero, and that the action at law would lie upon the promise made for the benefit of another.

This is not the case where one person upon a consideration has made an express promise to pay money to a third.

Norment had no contract to malee payment to the American Security & Trust Company, was under no obligation to it in any respect; he had no connection with it and no interest in it, and it was not named as the promisee, and knew nothing about the transaction whatever. Other questions arising on the record need not be considered.

The judgment is affirmed, with costs. Affirmed.