Opinion
Argued April 22, 1878
Decided May 28, 1878
Edward Fitch, for appellant. Geo. A. Black, for respondents.
The plaintiffs' demand is founded upon two contracts in writing, commonly called bought and sold notes, entered into between them and the firm of J.L. Pierce Co., on the 28th of February, 1867, by which said J.L. Pierce Co. bought from the plaintiffs 1,000 barrels of oil, which were deliverable at the plaintiffs' option during the remainder of the year 1867, for which the vendors agreed to pay thirty-six cents per gallon. In the month of October, 1867, said J.L. Pierce Co., for value, sold and assigned said contracts to the defendant, and, for the purpose of transferring them, indorsed the firm name across each of said contracts and delivered them to the defendant. There is testimony showing that the plaintiffs received a written notice of the transfer of these contracts to the defendant before the expiration of the period within which they were to be performed.
On the twelfth of December following, the market price of oil having fallen, and Pierce Co. being desirous of being relieved from the contracts in question, as well as another one for the same number of barrels, entered into an agreement in writing by which, in consideration of the plaintiffs agreeing to release them of all liability on said contracts, they agreed to pay the plaintiffs "the sum of $2,500 in cash, and also to give them all over this sum that shall be realized from W.S. Dickinson on our contracts with him," etc. This sum, at the request of Pierce, was paid by the check of Mixer, Whitman Co., which firm had not seen the defendant in regard to the matter, prior to that time. It appears, however, that the money was furnished by the defendant. Upon the last day for the fulfillment of the contract by the plaintiffs they tendered the oil to the defendant's agents and demanded payment therefor. It was refused, and this action was brought to recover the difference between the contract price and the market price of the oil at the time when the tender was made, deducting the $2,500 paid by Pierce Co. as hereinbefore stated.
Upon the foregoing statement of the leading facts which were presented upon the trial, the question arises whether the defendant was liable to respond to the plaintiffs in damages for a failure to accept the oil which was tendered under the contracts referred to? Whatever may have been the intention of the parties in the transfer of the contracts from Pierce Co. to the defendant, it is by no means clear that the effect of such transfer was to place the defendant in the same relation to the plaintiffs that Pierce Co. had occupied prior to that time. Although the defendant was entitled to demand and claim the oil which was agreed to be delivered, yet there was no such privity between the plaintiffs and the defendant which rendered the latter directly liable to the plaintiffs for a breach of the contract. The defendant did not occupy the same position as the assignee of a lease, who, by accepting an assignment of the same, subjects himself to the performance of all the covenants contained therein; nor are we able to discover that there is any analogy between the case at bar and that of Holmes v. Weed (19 Barb., 128), which was a contract to indemnify and save harmless the plaintiff against fines and penalties, and to pay to other parties certain liabilities which the plaintiff had incurred. We think the case considered stands upon a different footing. The principles applied in the cases referred to have no application here, and the action cannot be maintained upon any such ground. The rights of the parties must be determined upon the construction to be placed upon, and the effect to be given to, the agreement made between Pierce Co. and the plaintiffs on the 12th day of December, 1867.
The effect of the transfer of the contracts to Dickinson was to create an implied contract arising therefrom to indemnify Pierce Co., the assignees or vendees of the contract of sale; and the defendant was clearly liable to them for any damage sustained, or amount which should be paid by Pierce Co. to the plaintiffs, by reason of their failure to perform said contract. The authorities fully sustain this doctrine. (See Walker v. Bartlett, 18 C.B., 845; Kellock v. Enthoven, 21 Weekly R., 944.) And it is conceded in the points of the appellants that this is the rule. Assuming then that such is the law applicable to the case, it follows that the defendant was liable for all losses which might be sustained by J.L. Pierce Co. by reason of any failure to perform the contract. The contract of December, 1867, was an adjustment, by which Pierce Co. were relieved from liability, upon payment of a sum named therein, and it was agreed in substance that Pierce Co. should pay the plaintiffs all over the sum paid, which might be realized over and above that named in the contracts, from the defendant. By this arrangement Pierce Co. undertook to settle for all the damages which they might be liable to pay in consequence of the failure to fulfill the terms of the contract. They paid the sum of $2,500, and agreed to pay such sum as might afterwards be obtained by them of the defendant. The intention of the parties evidently was, that if Pierce Co. should receive anything more of the defendant, that they should pay over the same to the plaintiffs. As Pierce Co. settled with the plaintiffs we think it was a final adjustment of the contracts, and no claim existed in favor of the plaintiffs against Pierce Co., or against the defendant. They could not sue Pierce Co., because they had settled with them and parted with their claim against them; nor could they maintain an action against the defendant as the entire claim had been arranged and discharged. Pierce Co., by the settlement with the plaintiffs, had canceled all their liability for damages, and of course had no claim against the defendant, and could not, therefore, succeed in an action against him. The position that the contract of settlement operated as an assignment by Pierce Co. of their claim against the defendant is not well founded, as there was no interest remaining which was assignable after the settlement had been made. The plaintiffs, therefore, acquired no claim against the defendant by the instrument executed by Pierce Co., and had no right of action whatever against the defendant. Without considering other questions raised upon the trial, we think that the action was not properly brought, and the judge upon the trial erred in denying the motion to dismiss the complaint.
The judgment must be reversed, and a new trial granted, with costs to abide the event.
All concur, except MILLER, J., dissenting, and FOLGER, J., not voting.
Judgment reversed.