Choate v. Hoogstraat

105 F. 713, 46 C.C.A. 174, 1901 U.S. App. LEXIS 3894

• Court: Court of Appeals for the Seventh Circuit
• Decided: January 21, 1901
• Docket: No. 662
• Status: Published

Opinion

JENKINS, Circuit Judge,

after the foregoing statement, delivered the opinion of the court.

We are of opinion that the court below properly excluded the evidence offered for the purpose of showing that the debt of the Fair Lumber Company to the defendants in error had been fully paid, and this because no plea of payment had been made. The plea was one of accord and satisfaction, — that the defendants in error in May, 1895, in final settlement of the agreement of November 20, 1894, received- from the plaintiff in error and accepted $19,232.70 worth of lumber in settlement and payment of their claim and demand against the Fair Lumber Company. The evidence failed to sustain this plea, the evidence of Mr. Choate showing no accord and satisfaction, but that the lumber remaining unsold in May, 1895, was merely turned over to the defendants in error; nothing being said about price, or of its being in satisfaction of any claim. The attempt was made by an estimate of the value of the lumber so turned over and by means of a general accounting to show that the debt of the Fair Lumber Company to the defendants in error had been paid, but, in the absence of any plea to that effect, the evidence was clearly improper. Such a plea should be specific as to the amount paid. Shipman v. State, 43 Wis. 381. Here the receiving of the lumber from Choate, the trustee, because he refused to further continue in the sale of it, with no agreement as to its value, or the application of its value to the debt of the Fair Lumber Company, did not make the value of it payment to that amount upon the debt of the Fair Lumber Company. Only when the defendants in- error should dispose of iliat lumber could they be charged therewith, and then only the sale being fair, for the amount received. So, also, we think the court correct in charging the jury that the plaintiff in error was liable for the sum of $213.59, the lumber sold to the Oshkosh Log & Lumber Company, of which he was president. This amount had not been paid to Mr. Choate under some claim of the lumber company, as he stated, that it had some offset or defense as against the defendants in error or the Fair Lumber Company. The lumber was placed in the possession of Mr. Choate as trustee for the defendants in error. He obligated himself to turn over to them the proceeds. He was a trustee, and could not sell lumber to a company of which he was president, and assert any sort of a claim on the part of that company against the defendants in error or the Fair Lumber Company.

With regard to the question of the acceptance of the agreement of November 18, 1894, we think the matter was properly and fairly submitted to the jury. The question of acceptance is one of fact to be determined in the light of the surrounding circumstances; _ and, having been properly submitted, we are concluded by the verdict of ihe jury. We cannot doubt that the agreement expresses a consideration. It is, in legal effect, that the plaintiff in error would become responsible for the $6.50 per 1,000 feet, the amount of the claim of the defendants in error on factory plank, if they would allow Mr. Fair to ship lumber to fill the orders he then had. Assuming this letter to be a collateral agreement to answer for the debt of another, we think there is a sufficient statement of consideration to meet the requirements of the statute of frauds.

The question of most difficulty in this case arises upon the oral promise of November 9, 1894, found by the jury to have been made, to the effect that, if the defendants in error would permit the Fair Lumber Company to continue shipping, he (Choate) would, until he wrote them, as he promised to do, “go good for what they are shipping.” The validity of this agreement depends upon the question whether it is a collateral agreement to answer for the debt of another, or whether it is an original agreement upon a new and sufficient consideration; the extinguishment in whole or in part of the original debt by the performance of the new agreement being merely an incident. . Much subtlety has been indulged by the courts from an early date in the construction placed upon the statute of frauds. It would be difficult, if not impossible, to reconcile the various decisions of the courts. It is, perhaps, unfortunate that we have gotten away from the strict letter of the statute. We are glad to note the present tendency of the courts to get more in harmony with the spirit and the purpose of the law. It would serve no useful purpose to enter upon a review of the many and possibly discordant decisions. It is sufficient to state the rule, as we understand it to be, now held by the supreme court of the state of Wisconsin, whose law we are considering, and of other states which are in accord with that holding, and of the supreme court of the United States. In Hoile v. Bailey, 58 Wis. 434, 17 N. W. 322, and in Weisel v. Spence, 59 Wis. 301, 18 N. W. 165, the court reviews the previous decisions in that state, and furnishes, as a test to determine whether a promise is original or collateral, the following rule: “In all these cases founded on a new and. original consideration of benefit to the defendant or harm to the plaintiff, moving to the party making the promise, either from the plaintiff or original debtor, the subsisting liability of the original debtor is no objection to a recovery;” and “where the party promising has for his object some benefit and advantage accruing to.himself, and on that consideration makes the promise, this distinguishes the case of an original undertaking from one within the statute.” The latter rule is in substance declared by the supreme court of Massachusetts in Curtis v. Brown, 5 Cush. 491. “It is not enough,” says the court, “that the plaintiff has relinquished an advantage or given up a lien in consequence' of the defendant’s promise, if that advantage has not also inured to the benefit of the defendant, so as, in effect, to make it a purchase by the defendant of. the plaintiff. * * * Where the plaintiff, in consideration of the promise, has relinquished some lien, benefit, or advantage for securing or recovering his debt, and where, by means of such relinquishment, the same interest or advantage has inured to the benefit of the defendant,” an oral promise is binding. “In such cases, although the result is that the payment of the debt of the third person is effected, it is so incidentally and indirectly; and the substance of the contract is the purchase by the defendant of the plaintiff of the lien, right, or benefit in question.” In White v. Rintoul,. 108 N. Y. 222, 15 N. E. 318, the court states that the rule in Leonard v. Vredenburgh, 8 Johns. 29, that a new and original consideration moving between parties to the new promise took it out of the statute,- was “dangerously broad, and capable of grave misapprehension,” and that the rule of the state of Yew York now was that, “when the primary debt subsists, and was antecedently. contracted, the promise to pay it is original when it is founded on a'new consideration moving to. the promisor and beneficial to him, and such that the promisor thereby comes under an independent duty of payment,, irrespective of the liability of the principal debtor.” In Emerson v. Slater, 22 How. 28, 16 L. Ed. 360, the supreme court of the Luffed States declared that, “whenever the main purpose and object of the promise is not to answer for another, but to subserve some pecuniary or business purpose of his own, involving either a benefit to Himself' or damage to the other' contracting party, his promise is not within the statute, although it may be in form a promise to pay the debt of another, and although the performance of it may incidentally have the effect of extinguishing that liability.” And in Davis v. Patrick, 141 U. S. 479, 12 Sup. Ct. 58, 35 L. Ed. 826, the court observes that “there is a marked difference between a promise which, without any interest in the subject-matter of the promise in the promisor, is purely collateral to the obligation of a third party, and that which, though operating upon the debt of third party, is also and mainly for the benefit .of the promisor.” We need not inquire whether these-cases-in .the, supreme court of the United States are fully in accord with the advanced rule declared by the supreme court of Wisconsin and Massachusetts and the court of appeals of the state of New York;’ nor need we suggest that logically and rationally damage to the promisee should be as effective as benefit to the promisor in determining whether a promise is original or collateral. It is enough to say that the question was submitted to the jury by the court below under the more advanced rule referred to, and certainly the plaintiff in error has no ground for complaint. The court distinctly told the jury that the facts that Choate had an interest in the lumber through a bill of sale, and that he was in teres ted as a creditor, would not alone make Ills promise good, “because it must be understood by these plaintiffs in taking the promise that it was so made because of an interest he had. They must understand that it is not made simply out of a desire to help the Fair Lumber Company. If so made', or if so understood by the parties, that Mr. Choate had an actual interest in obtaining the shipments to be made, and that he made the promise on the strength of that, and for the purpose of causing the shipments to be made, then it is an original undertaking, and does not come within the statute.” We are inclined to the opinion that the court went beyond the rule in declaring that the promisee must understand that the promise was not made simply out of a desire to help the debtor. We read no such requirement in the rule as stated. The fact must exist that the promise is made with a view to benefit the promisor, and because of his interest in the subject-matter, but we do not find that it is essential that, the promisee should know of the interest and object of the promisor if the interest and purpose in fact existed; but this error — if error there was — was favorable to the plaintiff in error, and he cannot be heard to complain of it.

We cannot say, asa matter of law, that this promise was collateral. The situation was this: The defendants in error were in possession of the stock of lumber on account of which the Fair Lumber Company had paid $4.50 per 1,000 feet, and owed under their contract $0.50 per 1,000 feet in addition. That debt was due. The defendants in error could not be compelled to part with possession of that property until the whole debt was discharged, and they had refused to make delivery because of nonpayment of the debt. At this time the company of which Mr. Choate was president had a bill of sale of this lumber from the Fair Lumber Company. It had not been placed on record, and 'therefore was not effective as against a third party, but it was potential as between the Fair Lumber Company and Mr. Choate and Ms lumber company. He or his company was the legal owner of this lumber, subject to the claim and possessory lien of the defendants in error, and, as against the Fair Lumber Company, had the legal title to the lumber, and the right of possession for the purpose for which it was transferred. Notwithstanding the lumber had been sold to the Williamson & Libbey Company, and the bill of sale to Mr. Choate’s company was ineffectual as against that purchase, still, as against the Fair Lumber Company, it gave Mr. Choate’s company the right to the possession of the proceeds of the sale. Mr. Choate was also a member of the firm of Bray & Choate, which firm was indorser to the amount of $7,000 on paper of the Pair Lumber Company. Under these circumstances he orally agreed with the defendants in error that, if they would permit shipments of the lumber by the Pair Lumber Company, and waive their lien upon or possessory right to that lumber, he would, until such time as he should write the defendants of his final conclusion, “go good for what they are shipping.” It will be observed that he did not promise to pay the debt of the Fair Lumber Company, amounting to $27,600; nor did he promise to pay only the amount of $6.50 per 1,000 feet for such lumber as should be shipped under the oral agreement. He did promise to “go good” for such lumber as should be shipped under that agreement, and that promise we understand to be an agreement to be responsible to and to pay the defendants in error the value of such lumber as they should permit to be shipped under that agreement, and that irrespective of the debt of the Pair Lumber Company upon that quantum of lumber, and irrespective of the total indebtedness. It is at least doubtful whether this promise, if so properly construed, is not an original promise; whether it had relation to the debt of the Pair Lumber Company to the defondants in error; and whether it was not a promise for the payment of the value of the lumber shipped, without reference to any debt from another. Chandler v. Davidson, 6 Blackf. 367; Lessel v. Zillmer, 105 Wis. 334, 81. N. W. 403. Nor are we able to say, as matter of law, under the circumstances stated, and in view of Mr. Choate’s evidence with regard to the receipt of the proceeds of the lumber by his company, that his promise was not made upon “a net* consideration moving to the promisor, and beneficial to him,” and that his “leading object” was not to benefit himself. These were questions proper to be submitted to the jury, and were so submitted under instructions most beneficial to the plaintiff in error, and we cannot disturb the verdict. The judgment is affirmed.