Koons v. Franklin Trust Co. , 276 Pa. 377 ( 1923 )

Opinion by

Mr. Justice Sadler,

The Wyoming Construction Company planned thei erection of forty-one houses on Florence Avenue, Philadelphia. In order that money could be raised by the sale of mortgages on the proposed buildings, it arranged with the Franklin Trust Company, defendant, to issue policies to purchasers indemnifying them against possible loss which might be sustained from a failure to complete the work of construction. All funds were to be deposited for its protection, and withdrawn only on order of the builder, subject to the approval of defendant. Later, the plaintiff was employed by the contractor to make sale of the houses, his compensation being fixed at $2,000, in case a purchaser was found. This was-done, and, on June 6, 1919, one Hall entered into an agreement to buy, paying at the time $4,100, as a deposit. The check for this sum was endorsed to the defendant, but on condition that the proceeds should not be used until actual conveyance, so that the amount could be returned in full if, for any reason, the vendor was unable to complete its contract.

After the execution of the agreement, Stonehill, the real estate officer of defendant, told plaintiff his commissions would be taken care of when the final settlement was made, and he should not then insist upon payment, since the vendee required the amount presently paid to be kept int'act, as noted above. Later, an order to pay, issued by the construction company to Koons, was assigned to Best, the use-plaintiff, and notice of this fact was given the trust company. Upon the paper filed, there was endorsed the following: “The letter of which the above is a copy was received by the undersigned company on July 3,1919, for its files, without any obligation to itself.” Testimony was further offered to show a promise in December following that the commissions would be paid when the mortgages given in part payment of the purchase price were satisfied.

These facts were proven at the trial. It appeared the first conversation between Koons and the trust company officer occurred when the agreement of sale was entered into, and the promise to take care of the commissions followed the consummation of the transaction. It was also shown that the money paid at the time was. accepted upon condition that it should not be used for any pur. pose until final conveyance was made, when, in fact, the whole of the proceeds of the deposited check was consumed in the payment of bills for construction. No evidence was introduced indicating the defendant had other funds in its hands applicable to the payment of the claim. The learned court below entered a compulsory nonsuit, which it subsequently refused t'o set aside, and judgment was entered for the defendant; hence this appeal.

The first question raised is the effect of the promise made on June 6th, by the real estate agent of defendant, and later in December, to see that the commissions were paid. It is insisted that the declarations testified to created a contract, and that ample consideration appears in the undertaking of Koons to withhold demand for payment of his claim. Forbearance in the collection of an outstanding account may be sufficient to make valid the promise to pay a debt of a third person, provided the grant of such delay is of benefit to the promisor, or the one for whom he intervenes. But, in the present case, the alleged agreement was made after the sale was concluded, and nothing remained to be done to make it a binding agreement. The check had already been transferred, subject to the condition that the fund should not be used until a final settlement was made. The only relation which the defendant bore to the construction company was that of indemnitor of it's mortgages in so far as completion of the actual building of the houses was concerned. The record shows it had no other interest, and we can, therefore, find no consideration for the promise. Neither Koons nor his principal did anything in reliance upon Stonehill’s statement. Of course, the employer was liable for the commissions which it agreed to pay to its agent, now collectible by his assignee, but the voluntary assumption of that responsibility by a third person, having no interest other than here appeared, cannot be enforced.

Another obstacle to a recovery in this case is found in the fact that the alleged agreement to pay the debt of another was in parol. It cannot be said to be a new contract by the defendant. “Where a liability is to be incurred on the strength of an oral promise, and it does not appear from all the facts entering into the transaction that it was the intention of the promisor to create an original undertaking by him, he cannot be made liable by reason of the statute on such promise......While it has been held that a promise to pay the debt of another is not within the statute of frauds, where the promisor has money or property of the debtor placed in his hands for the purpose of such payment, or where in any other way an agency or trust arises whieh involves a duty to pay” (Riley v. Kahn, 68 Pa. Superior Ct. 415, 418), yet, here, it was not made to appear that any such fund existed, the check for $4,100 having been deposited under the express condition that it should not be used for the payment of commissions, or for any other purpose, prior to settlement, — the outstanding' construction accounts were first' to be satisfied, — and the existence of any other sums which could be applied in- payment was not made evident. The case of Buckwalter Stove Co. v. Central Trust & Savings Co., 53 Pa. Superior Ct. 558, relied on by appellant, is to be distinguished in that goods were there furnished upon the agreement of the defendant, trustee of the building funds, to pay, if further materials were furnished. On the strength of this promise, heaters were supplied; but no such circumstances appear here.

The order of the construction company to Koons for the sum due, assigned to Best, and received by the defendant, cannot alter the situation, in view of the endorsement thereon. Nothing is set forth therein indicating a promise in writing to pay; on the contrary, it was considered merely as a notice of claim, received without effect upon the right's of the respective parties.

From what has been said, it follows that a correct conclusion was reached by the court below, and the assignment of error should be dismissed.

The judgment is affirmed.