
    Alfred Brumme, Plaintiff, v. William Herod, Defendant.
    (Supreme Court, Kings Special Term,
    January, 1899.)
    1. Action by a materialman upon a promise made to the owner for his benefit — His character not changed, by taking security from the owner.
    A materialman does not lose his rights or character as such because he accepted from an owner of real estate, who was constructing fifteen buildings thereon, bonds and mortgages upon four of them to secure payment; and, upon the insolvency of the owner, the material-man may recover a balance, still due him after the foreclosure of the bonds and mortgages, of a grantee of the premises who received his conveyance in consideration of his agreement with the owner, made subsequent u> the furnishing of the materials, by which he promised “ to pay all claims for materials and labor furnished and" delivered for the erection of fifteen buildings, in course of erection, on land conveyed in pursuance thereof, subject to all mortgages, incumbrances and liens to him by ” the owner, and all notes given by the latter, “ out of the proceeds of said houses and lots ”, the grantee further agreeing to pay all indebtedness due to himself from said owner and then to divide any surplus between himself and said owner.
    2. Statute of Frauds — Original promises — Adoption by third party.
    Although the grantee never received any such proceeds of sale, such an agreement amounts to an original promise on his part to pay all claims for materials, and the materialman, after having demanded payment of both grantor and grantee, is to be deemed to have accepted and adopted the promise and may sue the grantee thereon.
    Judgment ovurruling demurrer. Facts appear in the opinion.
    John F. Brush, for plaintiff.
    A. M. Pierce, for defendant.
   Maddox, J.

By the agreement in the complaint defendant agreed “ to pay all claims for materials and labor furnished and delivered for the erection of fifteen buildings in course of erection, on land conveyed in pursuance thereof, subject to all mortgages, incumbrances and liens to Mm by Denike/’ and all notes given to (by) said Denike “ out of the proceeds of sale ” of said houses and lots, and after paymg all indebtedness due to himself from said Denike, then to divide “ any. surplus between himself and said Dernke.”

It is also alleged that theretofore plaintiff had sold and delivered to Denike a large quantity of building materials for theierection of said fifteen buildings, and that on August 17, 1893, there was owing therefor, upon an account stated, $3,000; that thereafter and before the makmg of the aforesaid agreement, Denike executed and delivered to plaintiff four bonds and four mortgages covering four of said -buildings to secure the payment, upon demand, of said $3,000 and interest, which mortgages were thereafter foreclosed, and the mortgaged premises sold, and an aggregate deficiency of $1,308 10/100 remains unpaid; that executions have been issued thereon, returned unsatisfied, and that said Denike is and since the conveyance to defendant has been insolvent. Defendant demurs to the complaint upon the ground that it does not state facts sufficient to constitute a cause of action, contending:

First. That plaintiff having accepted the four mortgages, ceased to be'a materialman; and
Second. That defendant’s obligation by.the agreement was to pay only from the surplus, if any, realized from a sale of the fifteen houses, and that -since no surplus is alleged no liability is shown.

As to the first contention, can it be said that because plaintiff took four mortgages to secure the payment, on demand, of the $3,000 and interest, thereby the character of Ms claim was changed? I think not. Was it not still a claim for materials furnished secured only by the mortgages? It was not a claim for money loaned, and if the mortgages had been assailed for want of consideration a complete answer would have been that they had been given to secure the payment of a claim for materials furnished. Hence my view upon that branch of the case is,' that the balance due plaintiff, if any, and not including the costs and expenses of the foreclosures, is still a claim for materials furnished, and is within the contemplation of the agreement and one of the “ claims for materials * * * furnished and delivered for the erection of fifteen buildings * *

The second point urged by the defendant and presenting the •maim question here involves and depends upon the consideration to be given to the contract upon wMch plaintiff relies.

Is defendant’s agreement to pay an original or a collateral promise?

The question is not free from doubt since the contract is ambiguous, made so by the use of the words- “ out of the proceeds of sale of said houses and lots.”

In consideration of the defendant’s agreement so- to pay, said Denike agreed “ to deed said fifteen houses and lots to said William. Herod, subject to all mortgages, incumbrances and liens, and paying them to divide as above any balance.”

Defendant took from Denike a conveyance of said property, went into possession thereof, and Denike “ ever since the conveyance ” has been insolvent.

Defendant’s promise was “ to pay all claims for materials,” * * * not so much thereof as the proceeds of sale might prove sufficient, nor to pay only from such proceeds: “ but to- pay all ” such claims. The use of the expression “ out of the proceeds,” * * * in my opinion fairly implies a covenant on defendant’s part to apply the proceeds to the liquidation of the indebtedness, i. e., mortgages, claims, etc., specifically enumerated and referred to in the contract.

In consideration of his promise defendant received Denike’s property, and the fact that no proceeds of sale have been realized in nowise lessens his liability under the contract. Thus it seems: to me plain that the intention of the parties, as ascertained from the language of the instrument and the surrounding circumstances, was that the defendant’s promise was and is an original and absolute one “ to pay all claims for materials.” * * * Clark v. Howard, 150 N. Y. 238.

Plaintiff’s claim is, as we have seen, one of those contemplated by the contract, and he having demanded payment from defendant as well as from Denike, he thereby accepted and adopted the promises, and may 'maintain this action thereon. Clark v. Howard, supra.

Judgment is, therefore, directed for the plaintiff upon the demurrer, with costs, but with leave to the defendant to plead over upon the payment of costs.

Ordered accordingly.  