
    Charles Frederick Parraga, Respondent, v. Tomas G. Ribon and Rafael Ribon, as Surviving Members of the Firm of Ribon, Castro & Co., Appellants, Impleaded with Diego de Castro, as Surviving Member of the Firm of Ribon, Castro & Co.
    
      Contract ■— agreement, in consideration of property rights conveyed, to pay a debt owing by one party thereto to a third person — irrevocable after its acceptance by the third person.
    
    The firm of Ribon, Castro & Co. on August 30, 1888, entered into an agreement with one Cisneros to guarantee to the extent of'£44,000 credits which Cisneros might obtain in London, upon the latter’s agreement to secure Ribon, Castro & Co. by executing,, upon their request, a mortgage covering the railroad which he was engaged in building. On October 3, 1884, the parties entered ■ into a further agreement "which, after reciting that under the former agreement Ribon, Castro & Co. had guaranteed certain credits obtained by Cisneros in London and New York, amounting to £67,135, contained an agreement by Ribon, Castro & Co. to advance a further sum of $389,000 upon the same terms as thesum previously mentioned, and ”, to pay up wholly the credits of £67,135 sterling, paid to Cisneros in Loudon and New York,” in consideration of which agreement Cisneros, by. the same instrument, mortgaged the entire railroad enterprise to Ribon, Castro & Co. as security for their advances, and agreed that they should have half the net profits of the enterprise, and that, irrespective of the claim of Ribon, Castro & Co. against the railroad, it belonged to them and Cisneros in equal parts.
    
      Held, that the agreement of Ribon, Castro & Co. to pay in full the credits amounting to £67,125, was founded upon a valuable consideration, and was valid; That, although the creditors of Cisneros, whose claims were included in the £67,125, were not parties to the agreement, it could not, after its acceptance by them, be abrogated without their consent, by a subsequent agreement between Ribon, Castro & Co. and Cisneros to cancel the mortgage, but would support an action by such creditors against Ribon, Castro & Co. to recover the amount of’ the debt.
    What operated as an adoption of the agreement by a creditor of Cisneros, considered. ‘
    
    Appeal by the defendants, Tomas G. Ribon and another, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of thb clerk of the county of New York on the 10th day of December, 1898, upon the report of a referee.
    Judgment affirmed, with costs, on opinion of referee.
    
      Charles C. Beaman, for the appellants.
    
      Edward B. Hill, for the respondent.
    Present — Van Brunt, P. J., Barrett, Patterson, Ingraham and McLaughlin, JJ.
   The following is the opinion of the referee :

Hamilton Odell,

Referee:

In this action the plaintiff seeks to recover of the defendants the sum of $15,000 loaned by him to Francisco J. Cisneros, in February, 1884, and which he alleges the firm of Ribon, Castro & Co., of which the defendants are the surviving members, “ for a valuable consideration undertook, promised and agreed to pay.”

Cisneros was engaged in the construction of the La Dorada railroad under a concession granted to him by the United States of Colombia. Being in need of funds he obtained loans from various parties, including Munoz, Espriella & Co., D. de Castro & Co. and the plaintiff. On the 20th of August, 1883, he entered into a contract with the firm of Ribon, Castro & Co. of Paris, by which said firm agreed to guarantee for the term of two years credits which Cisneros might obtain in London to the amount of £44,000. In the said contract it was declared by Cisneros that the railroad enterprise “ is incumbered, or will be so at the time of perfecting the present contract,” to the extent of £20,000, including £3,000 in favor of the plaintiff, and that “ with this exception ” the entire undertaking, with its annexes and dependencies, and all rights acquired or that might be acquired by 'Cisneros under contracts with the United States of Colombia and the sovereign State of Tolima for the construction of said railroad and the bridge over the Magdalena river, etc., “ remain affected to the payment to Ribon, Castro & Có. of the advances which they make in moneys and of the guarantees which they may give for credits * * * Cisneros remaining under obligation to make out a legal mortgage with all the formalities required by law as soon as Ribon, Castro & Co. demand it; ” and it was agreed that such mortgage should be kept in force until Ribon, Castro & Co. should be covered “in full of their advances, guaranties, interests, expenses and commissions which may be owed to them or for which they may.be responsible for account of said railroad and bridge.” By other provisions of the contract Ribon, Castro & Co. were to act as the agents of Cisneros in Europe and the United States in all matters relating to said railroad and bridge, with unrestricted powers; an agency was to be established in Honda in the State of Tolima, which should obey Ribon, Castro. & Co.’s instructions in the management of the road, and Cisneros agreed to obtain from the national government permission to transfer to Ribon, Castro & Co. the contract for the construction of the road and bridge.

On the 2d of October, 1884, a further agreement was made at .Honda, in Tolima, between Cisneros and Ribon, Castro & Co., in which it was recited that by the said contract of August 20, 1883, Ribon, Castro & Co. had bound themselves to guarantee and cover the credits given to Cisneros in London and Hew York, and that such credits, including those represented by D. de Castro & Co., Munoz, Espriella &, Co., and Parraga (the plaintiff) amounted to £67,125, and that Cisneros needed an additional amount of $289,000 to finish the railroad to the Humaderas,'which sum Ribon, Castro & Co. had offered to advance “ under the same conditions as the amount (£67,125) mentioned in the previous article, that is, upon the mortgage of'the said La Dorada railroad.” The 4th article of the agreement is as follows : “ That as a consequence of the present deed Cisneros acknowledges himself the debtor of Messrs. Ribon, Castro & Co. of Paris in the following sums: The amount of £67,125 sterling, mentioned in the first of these depositions, and the amount of $289,000 mentioned in the second of these depositions-; each of said amounts to constitute a net credit in such money or currency as herein expressed. As security of these credits Cisneros constitutes and makes first mortgage especially and expressly in favor of the aforesaid parties upon the La Dorada Railroad and bridge on the Magdalena River. * * * Said mortgage shall remain in force until the full payment of the credits referred to above, of which Cisneros is the debtor to Ribon, Castro & Co., with interest at the rate of 10 per cent, per annum.” It was further provided that as compensation for the loans 'made and services rendered and risks incurred by Ribon, Castro & Co., besides being reimbursed all moneys advanced by them and interest and commissions, they should be entitled to one-half of the net profits of the enterprise until the property should be transferred to a company to be organized. Ribon, Castro & Co. expressly agreed, among other things, “to pay up wholly the credits of £67,125 sterling, paid to Cisneros in London and Hew York.” ■ It was -also mutually agreed that after payment of the sums advanced by Ribon, Castro & Co., with interest at ten per cent per annum, all jirofits that might be obtained by reason of the proceeds of the railroad, sale of shares, mortgage bonds, obligations of the company and other similar property, should be equally divided between them and Cisneros, and further as follows :

“ In consequence, independent of Ribon, Castro & Co.’s claim against the La Dorada Railroad Company, the said railroad belongs, not only as far as the portion thus far constructed is concerned, but to that which shall be hereafter constructed, within the bounds assigned to this work on the contracts of June 7th and 14th, 1881, entered into by Francisco J. Cisneros, with the Government of the Sovereign State of Tolima first, with that of the United States of Colombia secondly, to the said Cisneros and Ribon, Castro & Co. in equal parts.”

This instrument has been referred to by counsel as the “ Honda Mortgage.” It is certainly' a mortgage, but it'is a good deal more. By it Ribon, Castro & Co. not only obtained security for their advances, guaranties, interest and commissions, but they also acquired an equal interest, with Cisneros' in the entire La Dorada enterprise. The agreement was that the parties “ will divide in equal parts the price that they may obtain for the railroad after deducting the sum which under this deed is owed to Ribon, Castro & Co.” This was the consideration, or part of the consideration, for Ribon, Castro & Co.’s agreement to “pay up wholly” the debt due from Cisneros to' Parraga — part of the £67,125. It is, therefore, “ the case of a promise, made by the defendant upon' a valid consideration to a third person for the plaintiff’s benefit,” and upon such a promise the plaintiff can maintain air action, although he' was not privy to the contract or the consideration. (Clark v. Howard, 150 N. Y. 238.) But the learned counsel for the defendants insists that even if Ribon, Castro & Co. did assume-and-promise to pay the plaintiff’s loan to Cisneros, the plaintiff has no cause of action against them upon their promise, because it was not-accepted by him -before-(as counsel claims) it was in effect abrogated by other agreements made between Ribon, Castro & Co. and Cisneros, in January and March, 1888. He says : “ Whether the law of New York, or that of France.or that of Colombia be applied, is immaterial; all require an acceptance before a revocation of the promise.” As I understand the agreement of January 3,1888, it .'was. not intended to supersede and did not operate as a revocation of the Honda- mortgage.. It recited that it was “ expedient to give immediate compliance”. to the clause in the Honda mortgage relating to the formation of a stock'company which should receive a transfer of the La Dorada property, and provided for the organization of such a company, declaring the amount of its capital and the character of its stock, and directing the manner in which the stock should be distributed. It also provided that, “ as soon as the company shall be organized and the enterprise shall be transferred to it, and the shares shall have been delivered -to the shareholders, the mortgage that there is now upon the enterprise in favor of Ribonj Castro & Co. shall be canceled.” .This January agreement was modified in some particulars by the agreement of March .10, 1888. ^ The time for organizing the company was extended; the amount of its capital was reduced; changes' were made in the allotment or. distribution of the shares ; and it was expressly declared that if the organization of the company should be prevented, or if any legal action should be taken to prevent the transfer to it of the La Dorada enterprise, then “the agreement of January 3d last does not change in any manner whatsoever the obligations and rights that the contracting parties had at the time of its celebration, and that the contract registered in the city of Honda, dated October 2, 1884, as also the agreement additional to said contract made in Bogota on the 5th of the same October, 1884, will be subsistent in all respects.” The proofs show that. the company was organized about the 16th of April, 1888, and that the railroad property was transferred to it in September following, and that some of the stock was issued, but when or to what amount does not appear. On the 12th of September, 1888, a further agreement was executed, to which Cisneros, José G. Ribon (who had succeeded to all the rights and interests of Ribon, Castro & Go.), Rafael G. Ribon, as liquidator of D. de Castro & Co. under dissolution agreement of December 27, 1887, and the La Dorada Railroad Company, Limited, were parties, and by which Cisneros and José G. Ribon “ sold, assigned and transferred the property and other rights which the said vendors possess in the enterprise of La Dorada to the company called the Dorada Railroad Company, Limited,” and in which it is declared that inasmuch as such transfer “is effected by the present instrument,” therefore the Honda mortgage of October 2, 1884, in favor of Ribon, Castro & Go. is canceled and made null and void and without effect.

Assuming that this provision of the September agreement was effectual to annul and terminate the Honda mortgage as between the parties, it did not in my opinion discharge or in any manner affect the defendants’ liability to the plaintiff upon their covenant to pay the money loaned by him to Cisneros. The plaintiff’s testimony is that he was not informed of the terms of the agreement of August 20, 1883, or the Honda mortgage, until in April or May, 1888, although he had prior knowledge of the fact that some contract had been executed between Cisneros and Ribon, Castro & Co. by which in some way his loan to Cisneros was secured. When, soon after its execution, he was informed of the January, 1888, agreement, he wrrote promptly to José G. Ribon objecting to the provision made for him in shares of the contemplated La Dorada Company, and, saying that such provision was not in accordance with the terms of liis' loan — “ so that under no circumstances can I acc'ept shares of the R. R. in payment of that debt”'—and in closing said: “ I beg you, therefore, that you will not count me among the future shareholders of the R. R., and in organizing the Co. kindly make such arrangements as will allow my.-receiving with little delay the money due me.” On August 10, 1888, he again wrote Mr. Ribon, saying that he had not been able to understand his position, as Cisneros had referred ' him to Ribon for payment of the sum due, and that he (Ribon) had told him that he (the plaintiff) held the same position towards the railroad that Ribon, as successor and liquidator of Ribon, Castro & Co., did. “ But now,” he said, “ that I am in possession of all .the contracts and of the deed of mortgage which had never been communicated to me in detail, I have a clear idea of my position.” He then referred to the contract of- August twentieth, by which, he said, you agreed to pay certain sums or credits, among which was included my loan. Yon have paid all these. The only one unpaid is mine. By the deed of"mortgage of October, 1884, you again bind yourself to pay mein full. Please read this document and you will notice that my demand for payment of capital and interest is in order.” Here, it seems to me, was a plain and positive acceptance and adoption by the plaintiff of the defendants’ covenant to pay contained in the Honda mortgage, and thereupon that covenant became irrevocable without his . consent. (Gifford v. Corrigan, 117 N. Y. 257.) It was not, therefore, affected by the agreement of September twelfth.

It is further argued on behalf of the defendants that if any obligation in favor of the plaintiff was assumed by them it was not to pay the loan referred to' in the complaint, but a sum due at a different date and bearing a different rate of interest; that the Honda mortgage was for the account''of all contributors to the La Dorada enterprise, and that the only undertaking of Ribon, Castro & Co. was to hold the property and distribute the proceeds ratsibly among all parties interested, which they have done, and that the plaintiff has acquiesced in the disposition of the railroad property and accepted the shares allotted to him, and thus abandoned any rights against the defendants. personally. The facts of the case do not support either of these, contentions.

The plaintiff is entitled to judgment for the sum claimed, with interest.  