Opinion
No. 27132.
May 28, 1928.
1. FRAUDS, STATUTE OF. Promise of vendor's agent to purchaser to pay taxes out of purchase money received from purchaser held not promise to answer for debt or default or miscarriage of another ( Hemingway's Code 1927, sections 3325, 8189).
Promise by agent employed for sale of land to pay taxes constituting a debt of owner, under Code 1906, section 4256 (Hemingway's Code 1927, section 8189), which payment was to be made from money paid to agent as purchase price of land, held not a promise to answer for debt or default or miscarriage of another person, within meaning of Code 1906, section 4775 (Hemingway's Code 1927, section 3325).
2. FRAUDS, STATUTE OF. Performance of duty of third person involving only application of funds or discharge of duty owing by promisor is not within statute ( Hemingway's Code 1927, section 3325).
A promise to perform or otherwise to satisfy all or part of the duty of a third person to the promisee is not within Code 1906, section 4775 (Hemingway's Code 1927, section 3325) if, by the terms of the promise when it is made, performance thereof can involve no more than the application of funds then or thereafter put in hands of promisor for such purpose, or performance of any other duty owing by promisor to promisee, irrespective of promise.
APPEAL from circuit court of Hinds county, First district; HON.W.H. POTTER, Judge.
Franklin, Easterling Fox, for appellant.
It is the contention of the appellant that the amended declaration states a valid cause of action which can be supported by any one of three well-established and familiar principles of Mississippi Law. 1. That appellee in consideration of the commissions to be paid him promised Sheridan that he would pay the taxes. This being a valid contract between Sheridan and Bridges, not within the Statute of Frauds, for the breach of which Sheridan could recover damages and being for the benefit of a third party (Palmer) made known to such third party and on which such third party relied, to his damage, a suit may be brought by the third party for such damages. 2. The direct promise to pay the taxes made by Bridges to Palmer, supported by a valuable consideration, constitutes a valid contract between Palmer and Bridges which is not within the Statute of Frauds; and, 3. That even though there might not in fact have been any consideration for Bridges' promise, Bridges would still be liable for negligence in failing to completely fulfill his undertaking, he holding himself out as a professional and skilled real estate manager and having partly entered upon his gratuitous undertaking. 6 R.C.L. 654; Moore v. Kirkland, 112 Miss. 55, 72 So. 855; Ware v. Allen, 64 Miss. 545, 1 So. 738.
Bridges did not even in fact promise to answer for Sheridan's debt. Bridges' undertaking was not to answer for the debt himself, but it was to take Sheridan's money when it came into his possession and attend to the payment of the taxes to the city, county and state and thus discharge the lien upon appellant's property. It was that undertaking that he contracted with Sheridan to do and for which he received his commissions. The performance of this undertaking was for the benefit of Palmer by discharging the lien on his property and when he received the money with which to pay the taxes he took it charged with the duty of performing his contract by paying the taxes with a part of it. 25 R.C.L. 504, sec. 87; Prout v. Webb (Ala.), 6 So. 190; Dillaby v. Wilcox, 60 Conn. 71; 27 C.J. 137, sec. 23; Edwards v. Van Cleave, 47 Ind. A. 347; 2 C.J. 722, sec. 384.
Powell, Harper Jiggitts, for appellee.
There was no consideration for the alleged promises of W.P. Bridges. So far as the declaration shows, Palmer, by virtue of the warranty deed, was under legal obligation to pay the purchase price as provided for in said deed and that the existence of a lien for taxes on the property would not justify Palmer in withholding the purchase money or any part thereof when it became due by the terms of the deed, for under Sheridan's warranty, Palmer had carved out his own security against the tax lien.
In support of the proposition that Palmer did not have the right to withhold payment of the purchase money we cite Stokeley v. Cooper et al., decided by this court on April 9, 1928, being No. 26,920, and not yet reported. This court held that Mrs. Stokeley could not withhold the payment of the purchase money because by the taking of the warranty deed she had carved out her own security against the outstanding lien and must pay the purchase money as it fell due. This case is the latest pronouncement of this court on this subject, but we also cite Brown v. Smith, 5 How. 387; Johnson v. Jones, 13 Sm. M. 580; Wailes v. Cooper, 24 Miss. 52; Wofford v. Ashcraft, 47 Miss. 641; Winstead v. Davis, 40 Miss. 785; Guice v. Sellers, 43 Miss. 52.
Alleged promise of W.P. Bridges was a promise to answer for the debt or default of another and was not in writing. We call the court's attention to Sweatman v. Parker, 49 Miss. 19, particularly syllabus 5, which is in the following words: "The sort of promise which the statute means, and which must be reduced to writing is a promise to answer for the debt, default or miscarriage of another person, for which that other person himself continues liable, and this is the test by which we are to determine whether it should be in writing." We do not believe that there can be any question about the fact, that even though appellee made the alleged promise, that Clark Sheridan continued liable for this debt and that, therefore, the alleged promise of said bridges comes squarely within the rule mentioned above and within the Statute of Frauds.
We cite the following authorities to sustain our proposition that Palmer is not a third party beneficiary under the alleged promise of Bridges to Sheridan so as to entitle him to sustain his declaration: The Second National Bank of St. Louis v. The Grand Lodge of Free and Accepted Masons of the State of Missouri, 98 U.S. 123, 25 L.Ed. 75; Constable v. National Steamship Co., 154 U.S. 51, 38 L.Ed. 903; 15 Encyc. of Pl. and Pr. 515; 9 Cyc. 380; 13 C.J. 709; 4 Page on Contracts (2 Ed.), sec. 2399; Robins Dry Dock, etc., Co. v. Flint, et al., 72 L.Ed. (Advance Sheet No. 4 of December 14, 1927) 142; German Alliance Ins. Co. v. Home Water Supply Co., 226 U.S. 220, 230, 57 L.Ed. 195, 199, 42 L.R.A. (N.S.) 1000, 33 Sup. Ct. Rep. 32.
Argued orally by J.H. Fox, for appellant, and A.Y. Harper, for appellee.
This is an appeal from a judgment sustaining a demurrer to a declaration, and on the plaintiff's declining to plead further, dismissing the cause.
The declaration is in two counts, the first of which alleges, in substance, that Sheridan was the owner of certain land in the city of Jackson and employed Bridges to sell it for him. Bridges sold the land to Palmer on December 10, 1923, under an agreement that Sheridan would make and execute to Palmer a warranty deed thereto. This Sheridan did, thereby obligating himself to pay the state, county, and municipal taxes due on the land for the year 1923.
Palmer paid the purchase money to Bridges under an agreement with Sheridan, assented to by Bridges, that Bridges would pay the taxes due on the land for the year 1923 to the state, county, and city out of the money paid him by Palmer for Sheridan as the purchase price of the land.
Bridges paid the state and county taxes, but failed to pay the taxes due the city, resulting in the sale of the land by the city therefor, and damage to Palmer, the elements of which need not here be set forth, for the recovery of which suit was brought.
The count does not specifically allege that the money paid by Palmer to Bridges was sufficient to pay the taxes due on the land, but does so allege by necessary implication.
The second count of the declaration is, in substance, the same as the first, except that while it alleges the agreement of Sheridan, assented to by Bridges, that the taxes due on the land should be paid by Bridges out of the money paid Bridges for the land by Palmer, it does not allege the payment of this money by Palmer to Bridges, but alleges that "thereafter defendant (Bridges) got into his possession the funds with which to pay said taxes." Under section 4256, Code of 1906 (Hemingway's 1927 Code, section 8189), the taxes due on the land for the year 1923 were debts due by Sheridan to the state, county, and city.
The grounds of the demurrer are (1) Bridges' agreement to pay the taxes due on the land was a promise to answer for the debt, default, or miscarriage of another, to-wit, of Sheridan, the owner of the land when the taxes became due thereon, and which he was under obligation to Palmer to pay because of the warranty in his deed to him; and (2) this promise of Bridges was without consideration.
Had Bridges promised to pay the taxes out of his own funds, the case would be within paragraph (a), section 4775, Code of 1906 (Hemingway's 1927 Code, section 3325), which provides that:
"An action shall not be brought whereby to charge a defendant or other party (a) upon a special promise to answer for the debt or default or miscarriage of another person."
But no such promise was made by Bridges.
The money paid by Palmer to Bridges to cover the purchase price of the land was for the purpose of being applied by Bridges, under Palmer's agreement with Sheridan and Bridges, first to the taxes due on the land, the remainder to be paid to Sheridan. When Bridges received the money under this agreement he became a trustee thereof, though he himself may have received no benefit therefrom, charged with the duty of applying so much of it as may have been necessary to the payment of the taxes due on the land, to which his promise to Palmer so to apply the money added nothing. Such a promise is not within paragraph (a) section 4775, Code of 1906 (Hemingway's 1927 Code, section 3325), for the rule is that:
"A promise to perform or otherwise to satisfy all or part of a duty of a third person to the promisee is not within class 2 of section 175 (paragraph [a], section 4775, Code of 1906, Hemingway's 1927 Code, section 3325) if, by the terms of the promise when it is made, performance thereof can involve no more than (a) the application of funds or property then or thereafter put in the hands of the promisor for the purpose; or (b) performance of any other duty owing, irrespective of his promise, by the promisor to the promisee." Am. L. Inst. Restatement, Contracts (Tent. No. 4), section 179; 1 Williston on Contracts, section 459; 27 C.J., p. 137, sec-23; 25 R.C.L., p. 504, section 87; Moore v. Kirkland, 112 Miss. 55, 72 So. 855.
The demurrer to the declaration, leaving its second count out of view, should have been overruled.
Reversed and remanded.