Opinion
Argued March 31, 1876
Decided April 11, 1876
James Clark for the appellant. Thomas H. Rodman for the respondents.
It is agreed upon both sides that the instrument of July 13, 1867, drawn by defendants upon the president of the railroad company, is not a bill of exchange, but that it operates as an assignment of the fund upon which it is drawn to the extent of $5,000. And the only question for our consideration is the obligation assumed by the defendants by this instrument under the circumstances surrounding its execution.
The railroad company owed the plaintiff something for services in procuring the defendants to enter into a contract to build its road; the amount to be paid him had not been liquidated. At the time the negotiations between the defendants and the president of the railroad company were substantially closed, the question of plaintiff's compensation came up. As all the assets of the company were to go to the defendants under this contract to build the road, it was a matter of consideration how the plaintiff should be paid. It was first suggested by the president of the company that the defendants should pay him out of the $250,000 which they were to receive under their contract. This they declined to do, and it was then arranged that the company should increase its available assets $5,000, and agree to pay defendants for building the road (besides giving them the road and all its franchises when built) the sum of $255,000; and then they would give the plaintiff the draft of July thirteenth. This arrangement was carried out; the contract was executed and the draft was given and accepted at the same time. The substance of the arrangement was, that the contract-price to be paid the defendants for building the road was increased $5,000, in consideration that they would assume and pay the plaintiff the sum of $5,000 out of the moneys to be paid to them on their contract. The mode of payment was specified in and arranged by the draft.
There was abundant consideration for the draft and every obligation which it imposes upon the defendants. The plaintiff agreed to take his pay in this way, and for the time being, at least, he was confined to his remedy upon the draft. This furnished a consideration. But further, the defendants received a contract from the company to pay them $5,000 more for their undertaking in consideration that they would pay out of it this sum to the plaintiff. If the defendants had absolutely agreed to pay the plaintiff this would have been an ample consideration to uphold the agreement. If they had gone on and performed their contract with the railroad company, and the money under their contract had thus become due and payable, they could not have repudiated this draft and defeated its payment on the ground that there was a want of consideration. The obligation of the defendants to pay was not, however, absolute, but conditional. If, without their fault, no money became due under the contract, the $5,000 could not be paid. If the railroad company had prevented them from performing, then they would have been absolved from any liability, and the company would have been liable upon its acceptance. But can they give this draft and then set up their own default to defeat its payment? We think not. For a sufficient consideration they gave this draft, payable out of a particular fund, and they cannot, by their own default, prevent the creation or realization of that fund, and then set up the absence or failure of the fund as a defence to this action. Having, by their own fault, prevented the condition from arising which would make the payment to the plaintiff due, they are estopped from setting up the failure of the condition to defeat the plaintiff's claim. ( Gallagher v. Nichols, 60 N.Y., 438, 448.)
But there is another view: the fund may be treated as in existence, in the possession of the acceptor, to be transferred to the plaintiff upon the happening of a condition. The acceptor could not by its act defeat the condition and then set it up as a defence to plaintiff's claim when sued upon its acceptance. So, the fund was to be transferred to the plaintiff upon the performance of a certain condition by the defendants, and they cannot defend by setting up their own voluntary non-performance. Defendants' obligation, as thus defined, grows out of the whole transaction. The two parties to the draft, the drawer and acceptor, certainly incurred some obligation by what was done; they were parties to the scheme to pay the plaintiff, and that scheme was embodied in the draft and the contract. It must have been understood by the plaintiff that he was to get his pay through the scheme; and the other parties must have intended that he should thus get his pay. It cannot be supposed that either of the other parties intended to reserve the right to nullify the scheme at will at any time. It was a part of the scheme that the other parties should perform all their obligations then entered into to create or transfer the fund drawn upon. They each assumed an obligation to the plaintiff to act in good faith toward him in carrying out the scheme, and not to defeat it by any mere default.
These views dispose of the merits of this case, and it is only necessary to say further, that the fact that the plaintiff was to pay a share of the $5,000, when realized by him, to other parties, does not affect his right of action for the whole sum.
The order of the General Term must be reversed and judgment ordered for plaintiff upon the verdict, with costs.
All concur.
Order reversed and judgment accordingly