Jenness v. True

Shepley, C. J.

— A contract was made on June 15, 1846, between the plaintiff and W. W. Harris, by which the plaintiff sold to Harris a lot of timber to be sawed into clapboards, and delivered to the plaintiff at an agreed price.

On July 27, 1846, the plaintiff assigned his interest in that contract to Franklin Adams & Co. “ to be held by them for security for the amount” of a note for $1000, made at that time by Adams & Co., and payable to the plaintiff or his order in three months from date. The assignment also provided that Adams & Co. should “ use the contract for the purpose of making out of the proceeds sufficient to pay said note, if said Jenness shall not place them in funds sufficient to pay it; if, however, said Jenness shall place them in funds to pay said note before it shall become due, then this assignment shall become void; otherwise remain in full force.”

Adams & Co. became entitled by virtue of the assignment, to receive all the clapboards from Harris, and to retain so many of them as would be sufficient to pay their note.

On August 21, 1846, the plaintiff sold his remaining interest in that contract to the defendant, who made the following indorsements upon it.

“ I hereby guaranty the agreement or contract herein specified on the part of W. W. Harris, and that the sum of one thousand dollars shall be deducted from the proceeds, to be appropriated to the payment of Franklin Adams & Co’s note to Horace Jenness, payable October 27-30, 1846; and also the said Harris shall pay all advances, made on account of said clapboards.”

“ I hereby agree to save Horace Jenness from all and every liability mentioned in this contract with W. W. Harris.”

These contracts, signed by the defendant, must be regarded as made with the plaintiff. The latter is so made in express terms. The former is not stated to have been made with Adams & Co; and they were not parties to the original contract made with Harris. The defendant assumed that Harris should perform, and the law infers, that this engagement was made with the other party to the contract made with Harris, although his name is not mentioned. Adams & Co. could not have maintained a suit in their own names against the defendant. Whatever beneficial interest they had, could have been obtained at law, only in the name of the plaintiff.

The contract cannot be explained or varied by parol testimony. So much of the testimony of Ephraim Brown, as attempts to do this, must be excluded. The rights of the parties must be determined by the terms of their written contracts.

There is no provision, that the assignment to Adams & Co. shall cease to be operative, or that the defendant should place funds in their hands to pay their note before it became payable. The defendant stipulated, that Harris should perform. The effect of such performance after the assignment, would be to place the lumber in the hands of Adams & Co. He also aarreed. that one thousand dollars “ shall be deducted from the proceeds, to be appropriated to payment of Franklin Adams & Co’s note.” This deduction could be made only by them, or by the defendant, by leaving that amount of the proceeds of the lumber in their hands. Adams & Co. were entitled to make the deduction, to be appropriated by themselves to ‘the payment of their note. Their rights derived from the assignment, were not diminished by the agreement made between the plaintiff and defendant. The stipulation on the part of the defendant is not, that they shall appropriate the amount to be deducted to the payment of their note, but that so much shall be deducted for that purpose. The defendant does not agree to pay that note. Having purchased the plaintiff’s interest, deducting from the estimated value of it the amount of the note, he engaged to deduct the same amount from the proceeds of the lumber, which was to come into the possession of Adams & Co. and to leave it in their hands to pay their own note. This would have fully accomplished the object designed by the parties, if an event not then contemplated by either party, had not subsequently happened by the failure of Adams & Co. For that event no provision was made. A loss has occurred and the question arises, whether the plaintiff or defendant must bear it. The defendant cannot be compelled to assume the risk and bear the loss without some clause in the contract obliging him to do so. In the absence of any engagement to assume it the loss must rest, where it falls by the operation of law.

It is said in argument, that Adams & Co. were not authorized to apply any of the proceeds of the lumber for that purpose, until their note became payable, and that they failed before that time. They received the assignment for security of the amount of their note, and could detain lumber to that amount as soon as sufficient came into their possession against all other persons, unless other funds were provided for payment of their note. The defendant could not otherwise deprive them of that right, and he did not engage to provide funds from other sources.

Rufus K. Hardy testifies, that “ clapboards were afterwards delivered under said contract to Franklin Adams & Co. to an amount sufficient to pay said note and advances, except one hundred and fifty-two dollars and sixty-two cents, before September 4, 1846, which was the time of our assignment. After that time said True paid to our assignees that balance.” This is alleged to be a gross attempt to give a false coloring to the transaction ; but upon an agreed statement of facts, making the deposition of a witness a part of that statement, the Court is not authorized to regard the statement as unworthy of credit.

The defendant stipulated, that Harris should pay all advances, but there is no complaint of a failure to perform this engagement.

He also agreed to save the plaintiff harmless “ from all and every liability mentioned in this contract with W. W. Harris.” The note is not mentioned in the contract made with Harris. It is only mentioned in the assignment with which Harris had no connexion.

The defendant was obliged to deduct the amount of the note from the proceeds of the lumber, or in other words, to leave so much of the proceeds in the hands of Adams & Co., and if he failed to do so there was a failure of performance. He does not appear at any time to have left in their possession or to have deducted the full amount of that sum. There was a lack of $152,62 which was paid at some future day to their assignees. The inquiry is therefore presented, whether that amount was rightfully paid to them. At the time of their failure, Adams & Co. continued to have a valuable interest in the contract, to obtain an amount of lumber sufficient to enable them from its proceeds to pay the note signed by them, or to recover damages as a compensation for a breach of it. That interest was conveyed to their assignees. The plaintiff could not insist, that the damages payable by the defendant, as guarantor of the contract of Harris, should be paid to himself, for he had assented by the assignment, that sufficient lumber to pay their note should be delivered to Adams & Co. The fact that Adams & Co. did not pay the note, which became payable after their failure, would not destroy their right to receive the lumber or to recover damages, for the assignment was not to become inoperative or void, upon their neglect to pay their note at maturity, but only in case the plaintiff should provide funds to pay it.

The payment by the defendant of the damages recoverable for a breach of the contract by Harris, was therefore rightfully made to the assignees of Adams & Co. Plaintiff nonsuit.