8 Third Parties 8 Third Parties

8.1 Third-Party Beneficiaries 8.1 Third-Party Beneficiaries

8.1.1 Lawrence v. Fox 8.1.1 Lawrence v. Fox

20 N.Y. 268

LAWRENCE
v.
FOX.

Court of Appeals of New York.
December Term, 1859.

H. GRAY, J.

The first objection raised on the trial amounts to this: That the evidence of the person present, who heard the declarations of Holly giving directions as to the payment of the money he was then advancing to the defendant, was mere hearsay and therefore not competent. Had the plaintiff sued Holly for this sum of money no objection to the competency of this evidence would have been thought of; and if the defendant had performed his promise by paying the sum loaned to him to the plaintiff, and Holly had afterwards sued him for its recovery, and this evidence had been offered by the defendant, it would doubtless have been received without an objection from any source. All the defendant had the right to [270] demand in this case was evidence which, as between Holly and the plaintiff, was competent to establish the relation between them of debtor and creditor. For that purpose the evidence was clearly competent; it covered the whole ground and warranted the verdict of the jury. But it is claimed that notwithstanding this promise was established by competent evidence, it was void for the want of consideration. It is now more than a quarter of a century since it was settled by the Supreme Court of this State--in an able and pains-taking opinion by the late Chief Justice SAVAGE, in which the authorities were fully examined and carefully analysed--that a promise in all material respects like the one under consideration was valid; and the judgment of that court was unanimously affirmed by the Court for the Correction of Errors. (Farley v. Cleaveland, 4Cow., 432; same case in error, 9 id., 639.) In that case one Moon owed Farley and sold to Cleaveland a quantity of hay, in consideration of which Cleaveland promised to pay Moon's debt to Farley; and the decision in favor of Farley's right to recover was placed upon the ground that the hay received by Cleaveland from Moon was a valid consideration for Cleaveland's promise to pay Farley, and that the subsisting liability of Moon to pay Farley was no objection to the recovery. The fact that the money advanced by Holly to the defendant was a loan to him for a day, and that it thereby became the property of the defendant, seemed to impress the defendant's counsel with the idea that because the defendant's promise was not a trust fund placed by the plaintiff in the defendant's hands, out of which he was to realize money as from the sale of a chattel or the collection of a debt, the promise although made for the benefit of the plaintiff could not enure to his benefit. The hay which Cleaveland delivered to Moon was not to be paid to Farley, but the debt incurred by Cleaveland for the purchase of the hay, like the debt incurred by the defendant for money borrowed, was what was to be paid. That case has been often referred to by the courts of this State, and has never been doubted as sound authority for the principle upheld by it. (Barker v. Buklin, 2 Denio, 45; Hudson Canal [271] Company v. The Westchester Bank, 4 id.,97.) It puts to rest the objection that the defendant's promise was void for want of consideration. The report of that case shows that the promise was not only made to Moon but to the plaintiff Farley. In this case the promise was made to Holly and not expressly to the plaintiff; and this difference between the two cases presents the question, raised by the defendant's objection, as to the want of privity between the plaintiff and defendant. As early as 1806 it was announced by the Supreme Court of this State, upon what was then regarded as the settled law of England, "That where one person makes a promise to another for the benefit of a third person, that third person may maintain an action upon it." Schermerhorn v. Vanderheyden (1 John. R., 140), has often been re-asserted by our courts and never departed from. The case of Seaman v. White has occasionally been referred to (but not by the courts) not only as having some bearing upon the question now under consideration, but as involving in doubt the soundness of the proposition stated in Schermerhorn v. Vanderheyden. In that case one Hill, on the 17th of August, 1835, made his note and procured it to be indorsed by Seaman and discounted by the Phœnix Bank. Before the note matured and while it was owned by the Phœnix Bank, Hill placed in the hands of the defendant, Whitney, his draft accepted by a third party, which the defendant indorsed, and on the 7th of October, 1835, got discounted and placed the avails in the hands of an agent with which to take up Hill's note; the note became due, Whitney withdrew the avails of the draft from the hands of his agent and appropriated it to a debt due him from Hill, and Seaman paid the note indorsed by him and brought his suit against Whitney. Upon this state of facts appearing, it was held that Seaman could not recover: first, for the reason that no promise had been made by Whitney to pay, and second, if a promise could be implied from the facts that Hill's accepted draft, with which to raise the means to pay; the note, had been placed by Hill in the hands of Whitney, the promise would not be to Seaman, but to the Phœnix Bank who then owned the note; although, in the course of [272] the opinion of the court, it was stated that, in all cases the principle of which was sought to be applied to that case, the fund had been appropriated by an express undertaking of the defendant with the creditor. But before concluding the opinion of the court in this case, the learned judge who delivered it conceded that an undertaking to pay the creditor may be implied from an arrangement to that effect between the defendant and the debtor. This question was subsequently, and in a case quite recent, again the subject of consideration by the Supreme Court, when it was held, that in declaring upon a promise, made to the debtor by a third party to pay the creditor of the debtor, founded upon a consideration advanced by the debtor, it was unnecessary to aver a promise to the creditor; for the reason that upon proof of a promise made to the debtor to pay the creditor, a promise to the creditor would be implied. And in support of this proposition, in no respect distinguishable from the one now under consideration, the case ofSchermerhorn v. Vanderheyden, with many intermediate cases in our courts, were cited, in which the doctrine of that case was not only approved but affirmed. (The Delaware and Hudson Canal Company v. The Westchester County Bank, 4 Denio, 97.) The same principle is adjudged in several cases in Massachusetts. I will refer to but few of them. (Arnold v. Lyman, 17 Mass., 400; Hall v. Marston, Id., 575; Brewer v. Dyer, 7 Cush., 337, 340.) In Hall v. Marston the court say: "It seems to have been well settled that if A promises B for a valuable consideration to pay C, the latter may maintain assumpsit for the money;" and in Brewer v. Dyer, the recovery was upheld, as the court said, "upon the principle of law long recognized and clearly established, that when one person, for a valuable consideration, engages with another, by a simple contract, to do some act for the benefit of a third, the latter, who would enjoy the benefit of the act, may maintain an action for the breach of such engagement; that it does not rest upon the ground of any actual or supposed relationship between the parties as some of the earlier cases would seem to indicate, but upon the broader and more satisfactory basis, that the law operating on the act [273] of the parties creates the duty, establishes a privity, and implies the promise and obligation on which the action is founded." There is a more recent case decided by the same court, to which the defendant has referred and claims that it at least impairs the force of the former cases as authority. It is the case of Mellen v. Whipple (1 Gray, 317). In that case one Rollins made his note for $500, payable to Ellis and Mayo, or order, and to secure its payment mortgaged to the payees a certain lot of ground, and then sold and conveyed the mortgaged premises to the defendant, by deed in which it was stated that the "granted premises were subject to a mortgage for $500, which mortgage, with the note for which it was given, the said Whipple is to assume and cancel." The deed thus made was accepted by Whipple, the mortgage was afterwards duly assigned, and the note indorsed by Ellis and Mayo to the plaintiff's intestate. After Whipple received the deed he paid to the mortgagees and their assigns the interest upon the mortgage and note for a time, and upon refusing to continue his payments was sued by the plaintiff as administratrix of the assignee of the mortgage and note. The court held that the stipulation in the deed that Whipple should pay the mortgage and note was a matter exclusively between the two parties to the deed; that the sale by Rollins of the equity of redemption did not lessen the plaintiff's security, and that as nothing had been put into the defendant's hands for the purpose of meeting the plaintiff's claim on Rollins, there was no consideration to support an express promise, much less an implied one, that Whipple should pay Mellen the amount of the note. This is all that was decided in that case, and the substance of the reasons assigned for the decision; and whether the case was rightly disposed of or not, it has not in its facts any analogy to the case before us, nor do the reasons assigned for the decision bear in any degree upon the question we are now considering. But it is urged that because the defendant was not in any sense a trustee of the property of Holly for the benefit of the plaintiff, the law will not imply a promise. I agree that many of the cases where a promise was implied were cases of trusts, [274] created for the benefit of the promiser. The case of Felton v. Dickinson (10 Mass., 189, 190), and others that might be cited, are of that class; but concede them all to have been cases of trusts, and it proves nothing against the application of the rule to this case. The duty of the trustee to pay the cestuis que trust, according to the terms of the trust, implies his promise to the latter to do so. In this case the defendant, upon ample consideration received from Holly, promised Holly to pay his debt to the plaintiff; the consideration received and the promise to Holly made it as plainly his duty to pay the plaintiff as if the money had been remitted to him for that purpose, and as well implied a promise to do so as if he had been made a trustee of property to be converted into cash with which to pay. The fact that a breach of the duty imposed in the one case may be visited, and justly, with more serious consequences than in the other, by no means disproves the payment to be a duty in both. The principle illustrated by the example so frequently quoted (which concisely states the case in hand) "that a promise made to one for the benefit of another, he for whose benefit it is made may bring an action for its breach," has been applied to trust cases, not because it was exclusively applicable to those cases, but because it was a principle of law, and as such applicable to those cases. It was also insisted that Holly could have discharged the defendant from his promise, though it was intended by both parties for the benefit of the plaintiff, and therefore the plaintiff was not entitled to maintain this suit for the recovery of a demand over which he had no control. It is enough that the plaintiff did not release the defendant from his promise, and whether he could or not is a question not now necessarily involved; but if it was, I think it would be found difficult to maintain the right of Holly to discharge a judgment recovered by the plaintiff upon confession or otherwise, for the breach of the defendant's promise; and if he could not, how could he discharge the suit before judgment, or the promise before suit, made as it was for the plaintiff's benefit and in accordance with legal presumption accepted by him (Berley v. Taylor, 5 Hill, 577-584, et seq.), until his dissent was [275] shown. The cases cited, and especially that of Farley v. Cleaveland, establish the validity of a parol promise; it stands then upon the footing of a written one. Suppose the defendant had given his note in which, for value received of Holly, he had promised to pay the plaintiff and the plaintiff had accepted the promise, retaining Holly's liability. Very clearly Holly could not have discharged that promise, be the right to release the defendant as it may. No one can doubt that he owes the sum of money demanded of him, or that in accordance with his promise it was his duty to have paid it to the plaintiff; nor can it be doubted that whatever may be the diversity of opinion elsewhere, the adjudications in this State, from a very early period, approved by experience, have established the defendant's liability; if, therefore, it could be shown that a more strict and technically accurate application of the rules applied, would lead to a different result (which I by no means concede), the effort should not be made in the face of manifest justice.

The judgment should be affirmed.

JOHNSON, Ch. J., DENIO, SELDEN, ALLEN and STRONG, Js., concurred. JOHNSON, Ch. J., and DENIO, J., were of opinion that the promise was to be regarded as made to the plaintiff through the medium of his agent, whose action he could ratify when it came to his knowledge, though taken without his being privy thereto.

COMSTOCK, J. (Dissenting.)

The plaintiff had nothing to do with the promise on which he brought this action. It was not made to him, nor did the consideration proceed from him. If he can maintain the suit, it is because an anomaly has found its way into the law on this subject. In general, there must be privity of contract. The party who sues upon a promise must be the promisee, or he must have some legal interest in the undertaking. In this case, it is plain that Holly, who loaned the money to the defendant, and to whom the promise in question was made, could at any time have claimed that it should be performed to himself personally. He had lent the [276] money to the defendant, and at the same time directed the latter to pay the sum to the plaintiff. This direction he could countermand, and if he had done so, manifestly the defendant's promise to pay according to the direction would have ceased to exist. The plaintiff would receive a benefit by a complete execution of the arrangement, but the arrangement itself was between other parties, and was under their exclusive control. If the defendant had paid the money to Holly, his debt would have been discharged thereby. So Holly might have released the demand or assigned it to another person, or the parties might have annulled the promise now in question, and designated some other creditor of Holly as the party to whom the money should be paid. It has never been claimed, that in a case thus situated, the right of a third person to sue upon the promise rested on any sound principle of law. We are to inquire whether the rule has been so established by positive authority.

The cases which have sometimes been supposed to have a bearing on this question, are quite numerous. In some of them, the dicta of judges, delivered upon very slight consideration, have been referred to as the decisions of the courts. Thus, in Schermerhorn v. Vanderheyden (1 John., 140), the court is reported as saying, "We are of opinion, that where one person makes a promise to another, for the benefit of a third person, that third person may maintain an action on such promise." This remark was made on the authority of Dalton v. Poole (Vent., 318, 332), decided in England nearly two hundred years ago. It was, however, but a mere remark, as the case was determined against the plaintiff on another ground. Yet this decision has often been referred to as authority for similar observations in later cases.

In another class of cases, which have been sometimes supposed to favor the doctrine, the promise was made to the person who brought the suit, while the consideration proceeded from another; the question considered being, whether the promise was void by the statute of frauds. Thus, in Gold v. Phillips (10 Johns., 412), one Wood was indebted to the [276] plaintiffs for services as attorneys and counsel, and he conveyed a farm to the defendants, who, as part of the consideration, were to pay that debt. Accordingly, the defendants wrote to the plaintiffs, informing them that an arrangement had been made by which they were to pay the demand. The defence was, that the promise was void within the statute, because, although in writing, it did not express the consideration. But the action was sustained, on the ground that the undertaking was original and not collateral. So in the case of Farley v. Cleaveland (4Cow., 432; 9 id., 639), the facts proved or offered to be proved were, that the plaintiff held a note against one Moon; that Moon sold hay to the defendant, who in consideration of that sale promised the plaintiff by parol to pay the note. The only question was, whether the statute of frauds applied to the case. It was held by the Supreme Court, and afterwards by the Court of Errors, that it did not. Such is also precisely the doctrine of Ellwood v. Monk (5 Wend., 235), where it was held, that a plea of the statute of frauds, to a count upon a promise of the defendant to the plaintiff, to pay the latter a debt owing to him by another person, the promise being founded on a sale of property to the defendant by the other person, was bad.

The cases mentioned, and others of a like character, were referred to by Mr. Justice JEWETT, in Barker v. Bucklin (2 Denio, 45). In that case, the learned justice considered at some length the question now before us. The authorities referred to were mainly those which I have cited, and others, upon the statute of frauds. The case decided nothing on the present subject, because it was determined against the plaintiff on a ground not involved in this discussion. The doctrine was certainly advanced which the plaintiff now contends for, but among all the decisions which were cited, I do not think there is one standing directly upon it. The case ofArnold v. Lyman (17 Mass., 400), might perhaps be regarded as an exception to this remark, if a different interpretation had not been given to that decision in the Supreme Court of the same State where it was pronounced. In the recent case of [278] Mellen, Administratrix, v. Whipple (1 Gray, 317), that decision is understood as belonging to a class where the defendant has in his hands a trust fund, which was the foundation of the duty or promise in which the suit is brought.

The cases in which some trust was involved are also frequently referred to as authority for the doctrine now in question, but they do not sustain it. If A delivers money or property to B, which the latter accepts upon a trust for the benefit of C, the latter can enforce the trust by an appropriate action for that purpose. (Berly v. Taylor, 5 Hill, 577.) If the trust be of money, I think the beneficiary may assent to it and bring the action for money had and received to his use. If it be of something else than money, the trustee must account for it according to the terms of the trust, and upon principles of equity. There is some authority even for saying that an express promise founded on the possession of a trust fund may be enforced by an action at law in the name of the beneficiary, although it was made to the creator of the trust. Thus, in Comyn's Digest (Action on the case upon Assumpsit, B. 15), it is laid down that if a man promise a pig of lead to A, and his executor give lead to make a pig to B, who assumes to deliver it to A, an assumpsit lies by A against him. The case of The Delaware and Hudson Canal Company v. The Westchester County Bank (4 Denio, 97), involved a trust because the defendants had received from a third party a bill of exchange under an agreement that they would endeavor to collect it, and would pay over the proceeds when collected to the plaintiffs. A fund received under such an agreement does not belong to the person who receives it. He must account for it specifically; and perhaps there is no gross violation of principle in permitting the equitable owner of it to sue upon an express promise to pay it over. Having a specific interest in the thing, the undertaking to account for it may be regarded as in some sense made with him through the author of the trust. But further than this we cannot go without violating plain rules of law. In the case before us there was nothing in the nature of a trust or agency. The defendant borrowed the money of Holly and [279] received it as his own. The plaintiff had no right in the fund, legal or equitable. The promise to repay the money created an obligation in favor of the lender to whom it was made and not in favor of any one else.

I have referred to the dictum in Schermerhorn v. Vanderheyden (1 Johns., 140), as favoring the doctrine contended for. It was the earliest in this State, and was founded, as already observed, on the old English case of Dutton v. Poole, in Ventris. That case has always been referred to as the ultimate authority whenever the rule in question has been mentioned, and it deserves, therefore, some further notice. The father of the plaintiff's wife being seized of certain lands, which afterwards on his death descended to the defendant, and being about to cut £1,000 worth of timber to raise a portion for his daughter, the defendant promised the father, in consideration of his forbearing to cut the timber, that he would pay the said daughter the £>1,000. After verdict for the plaintiff, upon the issue of non-assumpsit, it was urged in arrest of judgment, that the father ought to have brought the action, and not the husband and wife. It was held, after much discussion, that the action would lie. The court said, "It might be another case if the money had been to have been paid to a stranger; but there is such a manner of relation between the father and the child, and it is a kind of debt to the child to be provided for, that the plaintiff is plainly concerned." We need not criticise the reason given for this decision. It is enough for the present purpose, that the case is no authority for the general doctrine, to sustain which it has been so frequently cited. It belongs to a class of cases somewhat peculiar and anomalous, in which promises have been made to a parent or person standing in a near relationship to the person for whose benefit it was made, and in which, on account of that relationship, the beneficiary has been allowed to maintain the action. Regarded as standing on any other ground, they have long since ceased to be the law in England. Thus, in Crow v. Rogers (1 Strange, 592), one Hardy was indebted to the plaintiff in the sum of £>70, and upon a discourse between Hardy and the defendant, it was [280] agreed that the defendant should pay that debt in consideration of a house, to be conveyed by Hardy to him. The plaintiff brought the action on that promise, and Dutton v. Poole was cited in support of it. But it was held that the action would not lie, because the plaintiff was a stranger to the transaction. Again, in Price v. Easton (4 Barn. & Adolph., 433), one William Price was indebted to the plaintiff in £13. The declaration averred a promise of the defendant to pay the debt, in consideration that William Price would work for him, and leave the wages in his hands; and that Price did work accordingly, and earned a large sum of money, which he left in the defendant's hands. After verdict for the plaintiff, a motion was made in arrest of judgment, on the ground that the plaintiff was a stranger to the consideration. Dutton v. Poole, and other cases of that class, were cited in opposition to the motion, but the judgment was arrested. Lord DENMAN said, "I think the declaration cannot be supported, as it does not show any consideration for the promise moving from the plaintiff to the defendant." LITTLEDALE, J., said, "No privity is shown between the plaintiff and the defendant. The case is precisely like Crow v. Rogers, and must be governed by it." TAUNTON, J., said, "It is consistent with all the matter alleged in the declaration, that the plaintiff may have been entirely ignorant of the arrangement between William Price and the defendant." PATTERSON, J., observed, "It is clear that the allegations do not show a right of action in the plaintiff. There is no promise to the plaintiff alleged." The same doctrine is recognized in Lilly v. Hays (5 Ad. & Ellis, 548), and such is now the settled rule in England, although at an early day there was some obscurity arising out of the case ofDutton v. Poole, and others of that peculiar class.

The question was also involved in some confusion by the earlier cases in Massachusetts. Indeed, the Supreme Court of that State seem at one time to have made a nearer approach to the doctrine on which this action must rest, than the courts of this State have ever done. (10 Mass., 287; 17 id., 400.) But in the recent case of [280] Mellen, Administratrix, v. Whipple (1 Gray, 317), the subject was carefully reviewed and the doctrine utterly overthrown. One Rollin was indebted to the plaintiff's testator, and had secured the debt by a mortgage on his land. He then conveyed the equity of redemption to the defendant, by a deed which contained a clause declaring that the defendant was to assume and pay the mortgage. It was conceded that the acceptance of the deed with such a clause in it was equivalent to an express promise to pay the mortgage debt; and the question was, whether the mortgagee or his representative could sue on that undertaking. It was held that the suit could not be maintained; and in the course of a very careful and discriminating opinion by Judge METCALF, it was shown that the cases which had been supposed to favor the action belonged to exceptional classes, none of which embraced the pure and simple case of an attempt by one person to enforce a promise made to another, from whom the consideration wholly proceeded. I am of that opinion.

The judgment of the court below should therefore be reversed, and a new trial granted.

GROVER, J., also dissented.

Judgment affirmed.

8.1.2 R2-302 -- Intended and Incidental Beneficiaries 8.1.2 R2-302 -- Intended and Incidental Beneficiaries

(1) Unless otherwise agreed between promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and either

(a) the performance of the promise will satisfy an obligation of the promisee to pay money to the beneficiary; or

(b) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance.

(2) An incidental beneficiary is a beneficiary who is not an intended beneficiary.

8.2 Assignment and Delegation 8.2 Assignment and Delegation

8.2.1 Macke Co. v. Pizza of Gaithersburg, Inc. 8.2.1 Macke Co. v. Pizza of Gaithersburg, Inc.

THE MACKE COMPANY v. PIZZA OF GAITHERSBURG, INC. et al.

[No. 44,

September Term, 1970.]

Decided November 10, 1970.

*481The cause was argued before Hammond, C. J., and Barnes, Finan, Singley, Smith and Digges, JJ.

James S. McAuliffe, Jr., and William J. Rowan, III, with whom were Heeney, McAuliffe & McAuliffe on the brief, for appellant.

John C. Tracey for appellees.

Singley, J.,

delivered the opinion of the Court.

The appellees and defendants below, Pizza of Gaithersburg, Inc.; Pizzeria, Inc.; The Pizza Pie Corp., Inc. and Pizza Oven, Inc., four corporations under the common ownership of Sidney Ansell, Thomas S. Sherwood and Eugene Early and the same individuals as partners or proprietors (the Pizza Shops) operated at six locations in Montgomery and Prince George’s Counties. The appellees had arranged to have installed in each of their locations cold drink vending machines owned by Virginia Coffee Service, Inc., and on 30 December 1966, this arrangement was formalized at five of the locations, by contracts for terms of one year, automatically renewable for a like term in the absence of 30 days’ written notice. A similar contract for the sixth location, operated by Pizza of Gaithersburg, Inc., was entered into on 25 July 1967.

On 30 December 1967, Virginia’s assets were purchased by The Macke Company (Macke) and the six contracts were assigned to Macke by Virginia. In January, 1968, the Pizza Shops attempted to terminate the five contracts having the December anniversary date, and in February, the contract which had the July anniversary date.

Macke brought suit in the Circuit Court for Montgomery County against each of the Pizza Shops for damages for breach of contract. From judgments for the defendants, Macke has appealed.

The lower court based the result which it reached on two grounds: first, that the Pizza Shops, when they contracted with Virginia, relied on its skill, judgment and *482reputation, which made impossible a delegation of Virginia’s duties to Macke; and second, that the damages claimed could not be shown with reasonable certainty. These conclusions are challenged by Macke.

In the absence of a contrary provision—and there was none here—rights and duties under an executory bilat-. eral contract may be assigned and delegated, subject to the exception that duties under a contract to provide personal services may never be delegated, nor rights be assigned under a contract where delectus personae was an ingredient of the bargain.1 4 Corbin on Contracts § 865 (1951) at 434; 6 Am.Jur.2d, Assignments § 11 (1963) at 196. Crane Ice Cream Co. v. Terminal Freezing & Heating Co., 147 Md. 588, 128 A. 280 (1925) held that the right of an individual to purchase ice under a contract which by its terms reflected a knowledge of the individual’s needs and reliance on his credit and responsibility could not be assigned to the corporation which purchased his business. In Eastern Advertising Co. v. McGaw & Co., 89 Md. 72, 42 A. 923 (1899), our predecessors held that an advertising agency could not delegate its duties under a contract which had been entered into by an advertiser who had relied on the agency’s skill, judgment and taste.

The six machines were placed on the appellees’ premises under a printed “Agreement-Contract” which identified the “customer,” gave its place of business, described the vending machine, and then provided:

“TERMS
“1., The Company will install on the Customer’s premises the above listed equipment and will maintain the equipment in good operating order and stocked with merchandise..
“2. The location of this equipment will be such *483as to permit accessibility to persons desiring use of same. This equipment shall remain the property of the Company and shall not be moved from the location at which installed, except by the Company.
“3. For equipment requiring electricity and water, the Customer is responsible for electrical receptacle and water outlet within ten (10) feet, of the equipment location. The Customer is also responsible to supply the Electrical Power and Water needed.
“4. The Customer will exercise every effort to protect this equipment from abuse or damage.
“5. The Company will be responsible for all licenses and taxes on the equipment and sale of products.
“6. This Agreement-Contract is for a term of one (1) year from the date indicated herein and' will be automatically renewed for a like period,, unless thirty (30) day written notice is given by either party to terminate service.
“7. Commission on monthly sales will be paid by the Company to the Customer at the following rate:* * *.”

The rate provided in each of the agreements was “30% of Gross Receipts to $300.00 monthly [,] 35% over [$] 300.00,” except for the agreement with Pizza of Gaithersburg, Inc., which called for “40% of Gross Receipts.”

We cannot regard the agreements as contracts for personal services. They were either a license or concession granted Virginia by the appellees, or a lease of a portion of the appellees’ premises, with Virginia agreeing to pay a percentage of gross sales as a license or concession fee1 or as rent, see Charlotte Coca-Cola Bottling Co. v. Shaw,. 232 N. C. 307, 59 S.E.2d 819 (1950) and Herbert’s Laurel-Ventura, Inc. v. Laurel Ventura Holding Corp., 58 Cal.App.2d 684, 138 P. 2d 43, 46-47 (1943), and were assignable by Virginia unless they imposed on Virgina du*484ties of a personal or unique character which could not be delegated, S & L Vending Corp. v. 52 Thompkins Ave. Restaurant, Inc., 274 N.Y.S.2d 697, 26 App.Div.2d 935 (1966).

The appellees earnestly argue that they had dealt with Macke before and had chosen Virginia because they preferred the way it conducted its business. Specifically, they say that service was more personalized, since the president of Virginia kept the machines in working order, that commissions were paid in cash, and that Virginia permitted them to keep keys to the machines so that minor adjustments could be made when needed. Even if we assume all this to be true, the agreements with Virginia were silent as to the details of the working arrangements and contained only a provision requiring Virginia to “install * * * the above listed equipment and * * * maintain the equipment in good operating order and stocked with merchandise.” We think the Supreme Court of California put the problem of personal service in proper focus a century ago when it upheld the assignment of a contract to grade a San Francisco street:

“All painters do not paint portraits like Sir Joshua Reynolds, nor landscapes like Claude Lorraine, nor do all writers write dramas like Shakespeare or fiction like Dickens. Rare genius and extraordinary skill are not transferable, and contracts for their employment are therefore personal, and cannot be assigned. But rare genius and extraordinary skill are not indispensable to the workmanlike digging down of a sand hill or the filling up of a depression to a given level, or the construction of brick sewers with manholes and covers, and contracts for such work are not personal, and may be assigned.” Taylor v. Palmer, 31 Cal. 240 at 247-48 (1866).

See also Devlin v. Mayor, Aldermen and Commonalty of the City of New York, 63 N. Y. 8, at 17 (1875). Moreover, *485the difference between the service the Pizza Shops happened to be getting from Virginia and what they expected to get from Macke did not mount up to such a material change in the performance of obligations under the agreements as would justify the appellees’ refusal to recognize the assignment, Crane Ice Cream Co. v. Terminal Freezing & Heating Co,, supra, 147 Md. at 588.

In support of the proposition that the agreements were for personal services, and not assignable, the Pizza Shops rely on three Supreme Court cases, Burck v. Taylor, 152 U. S. 634, 14 S. Ct. 696, 38 L. Ed. 578 (1894); Delaware County Comm’rs v. Diebold Safe & Lock Co., 133 U. S. 473, 10 S. Ct. 399, 33 L. Ed. 674 (1890); and Arkansas Valley Smelting Co. v. Belden Mining Co., 127 U. S. 379, 8 S. Ct. 1308, 32 L. Ed. 246 (1888), all of which were cited with approval by our predecessors in Tarr v. Veasey, 125 Md. 199, 207, 93 A. 428 (1915). We find none of these cases persuasive. Burck held that the contractor for the state capítol in Texas, who was prohibited by the terms of his contract from assigning it without the state’s consent, could not make a valid assignment of his right to receive three-fourths of the proceeds. In Delaware County, Diebold Safe and Lock, which was a subcontractor in the construction of a county jail, was barred from recovering from the county commissioners for its work on the theory that there had been a partial assignment of the construction contract by the prime contractor, which had never been assented to by the commissioners. This result must be limited to the facts: i.e., to the subcontractor’s right to recover under the assignment, and not to the contractor’s right to delegate. See Taylor v. Palmer and Devlin v. Mayor, Aldermen and Commonalty of the City of New York, both supra. Arkansas Valley, which held invalid an attempt to assign a contract for the purchase of ore, is clearly distinguishable, because of a contract provision which stipulated that payment for the ore was to be made after delivery, based on an assay to be made by the individual purchaser named in the contract. The court concluded that this was a confidence im*486posed in the individual purchaser’s credit and responsibility and that his rights under the contract could not be transferred to another. Tarr v. Veasey involved a situation where duties were delegated to one person and rights assigned to another and our predecessors held the rights not to be assignable, because of the parties’ intention that duties and rights were interdependent.

We find more apposite two cases which were not cited by the parties. In The British Waggon Co. & The Parkgate Waggon Co. v. Lea & Co., 5 Q.B.D. 149 (1880), Parkgate Waggon Company, a lessor of railway cars, who had agreed to keep the cars “in good and substantial repair and working order,” made an assignment of the contract to British Waggon Company. When British Waggon Company sued for rent, the lessee contended that the assignment had terminated the lease. The court held that the lessee remained bound under the lease, because there was no provision making performance of the lessor’s duty to keep in repair a duty personal to it or its employees.

Except for the fact that the result has been roundly criticized, see Corbin, supra, at 448-49, the Pizza Shops might have found some solace in the facts found in Boston Ice Co. v. Potter, 123 Mass. 28 (1877). There, Potter, who had dealt with the Boston Ice Company, and found its service unsatisfactory, transferred his business to Citizens’ Ice Company. Later, Citizens’ sold out to Boston, unbeknown to Potter, and Potter was served by Boston for a full year. When Boston attempted to collect its ice bill, the Massachusetts court sustained Potter’s demurrer on the ground that there was no privity of contract, since Potter, had a right to choose with whom he would deal and could not have another supplier thrust upon him. Modern authorities do not support this result, and hold that, absent provision to the contrary, a duty may be delegated, as distinguished from a right which can be assigned, and that the promisee cannot rescind, if the quality of the performance remains materially the same.

*487Restatement, Contracts § 160 (3) (1932) reads, in part:

“Performance or offer of performance by a person delegated has the same legal effect as performance or offer of performance by the person named in the contract, unless,
(a) performance by the person delegated varies or would vary materially from performance by the person named in the contract as the one to perform, and there has been no * * * assent to the delegation * *

In cases involving the sale of goods, the Restatement rule respecting delegation of duties has been amplified by Uniform Commercial Code § 2-210 (5), Maryland Code (1957, 1964 Repl. Vol.) Art. 95B § 2-210 (5), which permits a promisee to demand assurances from the party to whom duties have been delegated. See also, “The Uniform Commercial Code and Contract Law: Some Selected Problems,” 105 U. of Pa. L.R. 837, at 913-16 (1957); Noblett v. General Electric Credit Corp., 400 F. 2d 442 (10th Circ., 1968), cert. denied 393 U. S. 935, 89 S. Ct. 295, 21 L.Ed.2d 271 (1968).

As we see it, the delegation of duty by Virginia to Macke was entirely permissible under the terms of the agreements. In so holding, we do not put ourselves at odds with Eastern Advertising Co. v. McGaw, supra, 89 Md. 72, for in that case, the agreement with the agency contained a provision that “the advertising cards were to be ‘subject to the approval of Eastern Advertising Company as to style and contents’ ”, at 82, which the court found to import that reliance was being placed on the agency’s skill, judgment and taste, at 88.

Having concluded that the Pizza Shops had no right to rescind the agreements, we turn to the question of damages.

The assessment of damages for loss of profits following the breach of an executory contract has been a relatively recent development, Prescon Corp. v. Savoy Constr. *488 Co., 259 Md. 52, 267 A. 2d 222 (1970); American Motor Inns, Inc. v. A.W.L. Advertising Agency, Inc., 253 Md. 654, 254 A. 2d 191 (1969); Stuart Kitchens, Inc. v. Stevens, 248 Md. 71, 234 A. 2d 749 (1967); M&R Contractors & Builders, Inc. v. Michael, 215 Md. 340, 138 A. 2d 350 (1958); Evergreen Amusement Corp. v. Milstead, 206 Md. 610, 112 A. 2d 901 (1955); J. A. Laporte Corp. v. Pennsylvania-Dixie Cement Corp., 164 Md. 642, 165 A. 195 (1933).

Under the concept of “foreseeability” enunciated by Hadley v. Baxendale, 9 Ex. 341, 156 Eng. Rep. 145 (1854), which was followed in United States Telegraph Co. v. Gildersleve, 29 Md. 232 (1868), in order to recover unrealized profits a plaintiff had to show that the breach of contract caused the loss and that the loss of profits was in the contemplation of the parties and the probable result of a breach. Some of the early American cases superimposed a test of certainty on the concept of foreseeability. See, for example, Griffin v. Colver, 16 N. Y. 489, 69 Am. Dec. 718 (1858), which was cited with approval in United States Telegrayh, suyra.

In the last hundred years, however, courts have modified the rule that anticipated profits were not an element of damages because of their inherent uncertainty, see “Speculative Profits as Damages for Breach of Contract,” 46 Harv.L.Rev. 696 (1933), and have turned from the requirement of “certainty” to a more flexible test of “reasonable certainty.” See Restatement, Contracts § 311 (1932); 11 Williston on Contracts § 1345 (3d ed. 1968) at 231; 5 Corbin on Contracts § 1020 (1964) at 124.

This Court, speaking through Judge Horney in M & R Contractors & Builders, Inc. v. Michael, supra, 215 Md. 340, said:

“Courts have modified the ‘certainty’ rule into a more flexible one of ‘reasonable certainty’. In such instances, recovery may often be based on opinion evidence, in the legal sense of that term, from which liberal inferences may be drawn. *489Generally, proof of actual or even estimated costs is all that is required with certainty.
“Some of the modifications which have been aimed at avoiding the harsh requirements of the ‘certainty’ rule include: (a) if the fact of damage is proven with certainty, the extent or the amount thereof may be left to reasonable inference; (b) where a defendant’s wrong has caused the difficulty of proving damage, he cannot complain of the resulting uncertainty; (c) mere difficulty in ascertaining the amount of damage is not fatal; (d) mathematical precision in fixing the exact amount is not required; (e) it is sufficient if the best evidence of the damage which is available is produced; and (f) the plaintiff is entitled to recover the value of his contract as measured by the value of his profits. McCormick, Damages, Sec. 27 (1935).” at 348-49.

To recover direct profits in a case such as this, the measure of damages is the difference between what it would have cost Macke to perform and what it would have received had the Pizza Shops not repudiated, M & R Contractors & Builders, Inc. v. Michael, supra, 215 Md. at 346; J. A. Laporte Corp. v. Pennsylvania-Dixie Cement Corp., supra, 164 Md. at 648.

We can understand why the court below was “not satisfied that the claim for damages [was] shown with reasonable certainty, since it [was] based upon conjecture.” Macke attempted to prove damages by the testimony of two witnesses. The first was Arnold Harlem, the general manager of Macke’s Chesapeake area, in which the Pizza Shops were located. His testimony related to gross sales figures for the cold drink vending machines at the six locations for the month of January, 1968, when the machines were still under Macke’s control. He produced a computer print-out (which was not introduced in evidence) in support of his statement that Macke’s cost of *490goods for January 1968 was 23.62 % of gross sales. From this testimony, it might have been possible to extrapolate what Macke’s profit would have been on five of the machines for the 11 months commencing 1 February 1968 and ending 31 December 1968 and on one of the machines for the period February 1968 to 24 July 1968 when the Virginia agreements respectively ended, assuming that cold drink sales in the Pizza Shops remained uniform during the year, as Mr. Harlem said they did, and that cost of goods did not vary.

No such extrapolation was introduced in evidence, but one had been supplied in answer to an interrogatory. For some unaccountable reason, it projected sales and profits for 10 months only, included the Gaithersburg location for five months, which, for reasons to be developed, should not have been included at all, and failed to reflect that five of the agreements provided for an increase in commission rates from 30% to 35% on gross receipts in- excess of $300 in any month.

Macke then called Thomas S. Sherwood, one of the individual defendants, as an adverse witness. He testified, without objection, to the commissions received by five of the Pizza Shops during the calendar year 1967, and by the sixth shop, at Gaithersburg, for the last five months of that year. Based on this testimony, Macke’s counsel prepared, and submitted to the court, a “Memorandum of Damages Claimed,” an extrapolation of 1967 figures intended to show profits lost in 1968.

The fact that the projection from Harlem’s testimony showed lost profits of $5,286.80,2 and the extrapolation from Sherwood’s testimony showed lost profits of $9,-047.00 3 was surely enough to give the lower court pause. Factually, the situation was not dissimilar from that in Prescon Corp. v. Savoy Constr. Co., supra, 259 Md. 52, at 55, where the plaintiff attempted to establish a prima facie case of lost profits by having its vice president testify from a computer print-out which was never intro*491duced in evidence. The opinion in Prescon, delivered more than six months after the trial of the case before us, was, of course, not available to the trial court. In Prescon, we affirmed the judgment as to liability, but remanded the case so that additional evidence could be taken on the question of damages.

There is ample authority for the proposition that loss of profits may be projected from past performance, Tucson Federal Savings & Loan Ass’n v. Aetna Investment Corp., 74 Ariz. 163, 245 P. 2d 423 (1952); Kay Petroleum Corp. v. Piergrossi, 137 Conn. 620, 79 A. 2d 829 (1951); Eastman Kodak Co. of New York v. Southern Photo Materials Co., 273 U. S. 359, 47 S. Ct. 400, 71 L. Ed. 684 (1927), assuming, of course, that past performance has continued long enough to be the best evidence of damage which is available, Eastman Kodak Co. of New York v. Southern Photo Materials Co., supra.

We cannot agree with the lower court’s conclusion that the claim for damages could not be shown with reasonable certainty because it was based on conjecture. For this reason, we propose to remand the case in order that damages may properly be assessed. On remand, the court may wish to take several factors into consideration. First, it seems clear to us that no damages should be allowed with respect to the repudiation of the agreement covering the vending machine at 16523 North Frederick Road, Gaithersburg. The uncontroverted testimony of the Pizza Shop’s manager established that the agreement covering this machine was breached in January, 1968 by Macke’s failure to stock and service the machine.

Then, too, the record is deficient as regards Macke’s duty to mitigate damages. Harlem’s testimony as to what disposition was made of the vending machines removed from the Pizza Shops was vague and inconclusive. It may well be that the machines were placed at other locations prior to the time when the agreements would have expired by their terms, and this, of course, may have to be taken into account in assessing damages, subject, however, to the limitation that gains made by Macke could *492not have been made, save for the breach. M & R Contractors & Builders, Inc. v. Michael, supra, 215 Md. at 355; 5 Corbin, supra §§ 1039, 1041 at 241, 256; McCormick, Handbook on the Law of Damages, § 41 (1935) at 151.

Finally, it is not an implausible inference that Macke’s machines were replaced in the Pizza Shops by comparable machines provided by another concern. If this is the case, a more appropriate measure of damages might be that grounded on the five Pizza Shops’ actual experience for the period February through December 1968, rather than one based on extrapolating profits from the results experienced in the year 1967 or in January 1968, particularly in the light of testimony that the seating capacity of one or more of the shops may have been altered in 1967 and the conflicting testimony as to whether cold drink sales remain constant in pizza shops. Authority for the use of a defendant’s future earnings as an appropriate method of determining lost profits may be found in Pace Corp. v. Jackson, 155 Tex. 179, 284 S.W.2d 340 (1955); Sinclair Refining Co. v. Jenkins Petroleum Process Co., 289 U. S. 689, 53 S. Ct. 736, 77 L. Ed. 1449 (1933).

The appellees make two other points which can be summarily disposed of. The first is that the agreements were terminable at any time on 30 days’ notice. A careful examination of the agreements shows that this was simply not the case, despite the fact that the president of Virginia and the Pizza Shops may have thought so. The second point is that the assignments were invalidated by Virginia’s failure to comply with the provisions of the U.C.C. relating to bulk transfers, Code Art. 95B, Subtitle 6. The short answer to this is that the Pizza Shops were not creditors in the context of their relationships with Virginia, since they had control of the machines and were accountable to Virginia for their contents. Additionally, see U.C.C. § 6-102 (3) and Official Comment to this subsection, indicating that the primary thrust of the bulk transfer provisions of the U.C.C. is directed at en*493terprises whose principal business is the sale of merchandise from stock.

Judgment reversed as to liability; judgment entered for appellant for costs, on appeal and below; case remanded for a new trial on the question of damages.

8.2.2 Crane Ice Cream Co. v. Terminal Freezing & Heating Co. 8.2.2 Crane Ice Cream Co. v. Terminal Freezing & Heating Co.

CRANE ICE CREAM COMPANY vs. TERMINAL FREEZING & HEATING COMPANY.

Assignment of Contract — Bights and Liabilities — Sales of Uncertain Amounts.

As a general rule, a contract cannot he enforced by or against a person who is not a party to it, though there are circumstances under which either of the contracting parties may substitute another for himself in the rights and duties of the contract without obtaining the consent of the other party to the contract. p. 59&

Eyery bilateral contract includes both .rights and duties on each side while both sides remain executory. p. 593'

*589Whether the attempted assignment of the rights under a contract, or the attempted delegation of the duties thereunder, must .fail because the rights or duties are of too personal a character, is a question of construction to be resolved from the nature of the contract and the express or presumed intention of the parties. p. 594

A contract to supply an individual, during a period of three years, with all the ice needed in his ice-cream business, up to a named amount per week, at a stipulated price per ton, with a provision that he would, to the extent of such named amount, not buy ice elsewhere, was of such a personal nature as not to be assignable by him, as regards either the rights or the liabilities thereunder, to a company, already carrying on the ice-cream business in another city, to which he sold out his business and plant. pp. 594-597

'The inducement for the seller to enter into the contract was obviously its knowledge of the average of ice consumed, and probably to be needed, by such individual buyer, and its confidence in the stability of his enterprise, his competency in commercial affairs, his probity, personal judgment, and continuing financial responsibility. p. 597

The possibility that the individual buyer might have expanded his business so as to require the named weekly amount of ice, and that consequently the burden of the contract might have been as onerous to the seller as it could be under the proposed assignment, was immaterial, since the law accords to every man freedom of choice in the party with whom he deals and the terms of his dealing. p. 597

One who, by going out of business and selling his plant to' another, renders impossible his performance of a contract by which he agreed to buy from the other party thereto all of a certain material needed in his business, thereby repudiated the contract. p.-597

While a party to a contract may as a general rule assign all his beneficial rights, except where a personal relation is involved, his liability under the contract is not assignable inter vivos,, since one cannot substitute another’s liability for his own. ‘ p. 598

*590One who is bound so as to bear an unescapable liability may delegate the performance of his .obligation to another, if the liability be of such a nature that its performance by another will be substantially the same thing as performance by the promisor himself, the performance of the third party in such case being the act of the promisor, who remains liable under the contract and answerable in damages if the performance be not in. strict fulfillment of the contract. p. 598

Where an attempt is made, by an assignment of an executory bilateral contract, to transfer the rights and to delegate the duties of- the assignor, and the terms and circumstances of the contract make plain that the personal qualification and action of the assignor, with respect to both his benefits and burdens thereunder, were essential inducements in the formation of the contract, the contract cannot be enforced by the assignee, p. 599

An attempted delegation of the duties under a personal contract, by the making of an assignment, involves a repudiation of any future liability on the part of the assignor. p. 599

Where one contracting party repudiates his obligations, the other party has the right of declining to be bound to a stranger by its terms. p. 602

Decided February 26th, 1925.

Appeal from tbe Superior Court of Baltimore City (SrAw'TOW, L).

Action by the Crane Ice Cfceiam Company against the Terminal Freezing & Heating Company. From a judgment in favor of defendant, plaintiff appeal®.

Affirmed.

The cause was argued before Bonn, O. I., Ubheb, Ad-kthe, Dtgges., Pabke, -and Walsh, JJ.

Isaac Lobe Straus and J. Paul Schmidt, with whom was W. W. Parker on the brief, for the -appellant.

Clarence K. Bowie, with Whom were Bowie & Clark on th-e brief, for the appellee.

*591Parke, J.,

delivered the opinion of the Court.

The appellee and one W. 0. Frederick entered into a contract for the ‘delivery of ice by .the appellee to Frederick, and, before the expiration of the contract, Frederick executed an assignment of the contract to the appellant; ¡and on the refusal of the appellee to deliver ice to the assignee, it brought an action on the contract against the appellee to recover damages for the alleged breach. The common counts of-the declaration were abandoned, leaving -an amended special count on the contract ¡and assignment, to which.! a demurrer was filed and ¡sustained. It is from ¡the judgment against the appellant on this demurrer that the appeal was taken.

The demurrer admitted the following material allegar tions: At the execution of the contract, the 'Terminal Freezing and Heating Company, appellee, wias a corporation engaged in the manufacture and -sale of ice at wholesale within the State of Maryland, and William -0. Frederick made and sold ice cream in Baltimore, where has plant wasi located. The original contract between these two parties was made on April 2nd, 1911, and ran until April 2nd, 1920. -The contract was modified on June 3rd, 1918, by the increa.se of the original contract price of ice from $2.15 a ton to $3.25, and, before its expiration, the contract was renewed by the parties for another three years, so that the contract was continued until April 2nd, 1923, without change, save as to the higher-agreed cost of the ice delivered.

The contract imposed upon the appellee the liability to sell and deliver to Frederick such quantiti-ess of ice as he might use iu his business as an ice .cream manufacturer to the extent of two hundred and fifty tons per week, at and for the price of $3.25 a ton of two thousand pounds on the loading platform of Frederick. The contractual rights of the appellee were (a) to' be piaidl on every Tuesday, dtaiug the continuation of the contract, for all ice purchased by. Frederick during the week ending at midnight upon the next preceding Saturday; (ib) to require Frederick not to¡ buy or accept any ice from -any other source than the appellee, *592except in excess of the weekly maximum of -two- hundred and fifty tons; (c) to -annul the contract upon any violation of the agreement by Frederick; and (d) to sustain no liability for any breach of contract growing out of causes beyond its control. The converse of these rights and liabilities of the appellee were the correlative liabilities and rights of Frederick under the contract.

There w-as -a further provision .that the contract in its entirety should continue iu force from term to term, unless either party thereto gave to- the other party at leiast sixty days’ notice in writing; before the expiration of the term of the intention to- end the contract. The contract did not expressly permit or inhibit an assignment, but neither did it contain any word, such as assigns-, to indicate- that the parties contemplated an assignment by either.

Before the firs-t year -o-f the second term of the contract . had expired, Frederick, without the -consent or knowledge of the ap-pellee, executed and delivered to- the -appellant, for a valuable consideration, a written assignment, dated February 15th, 1921,; of the modified agreement 'between him and the appe-lle-e. The attempted transfer of the contract was .a part -of the transaction between Frederick .and the appellant, whereby the appellant acquired by purchase the plant equip* ment, rights and credits-, cho-seis in -action, “go-o-d will, trade, ■custom, patronage-, rights-, contracts” and other as-sets -of Frederick’s ice cream business, which had been established and conducted -by him in Baltimore. 'The purchaser- took full pois-ses-si-on and continued th-a former business carried -on by Frederick. It was then -and is now -a corporation “engaged in the ice cream business upon -a large -and extensive scale in the City -of Philadelphia, -as well as in the City of B-altimiore, -and State of Maryland,” -and had -a large capitalization, amp-le resource-si and credit, to meet -any of its -obligations, “and all -and .singular the- terms -and provisions” of the contract; .and it wais prepared to p-ay cash for -all ice deliverable under the contract.

As soon as¡ the .appellee learned of this purporting -assign-

*593meat and the absorption of the business of Frederick by the appellant, it notified Frederick that the contract Was at an end, and declined -to deliver -any ice to the appellant. Until the day of the assignment the obligations of both original parties had been fully performed and discharged.

It may be stated as .a general rule that a: contract cannot be enforced by or against a person who is not a party to it, but there are circumstaneeisi under which either -of the contracting- parties may substitute another for himself in the rights and duties -of the contract without obtaining the consent of the other party to the contract. The inquiry here is whether the facta bring the ease within the scope of the g’enieral rule, and -the answer must be found from‘a -eonsid•eration iu detail of -the relation of the parties concerned, the subject matter of the contract., its terms, and the- circumstances of its formation. , .

, The basic facts upon which the question for solution depends must be sought in the effect -of the attempted assignment of this executory bilateral contract on both the rights and the liabilities of -the contracting parties, -as every bilat•eral contract 'includes both rights and duties on each side while both sides remain -executory. 1 Williston on Gonirttcis, sec. 407. If the -assignment of rights and the assignment of duties by Frederick 'are -separa,ted, they fall into these t-wo divisions: (1) The rights of the'assignor were (a) to-take no ice, if the assignor used none in his business; but, if he did (b) to require the appellee to, -deliver, on the loading platform of the assignor, all the ice he might need in his business to the extent of twio hundred anid fifty tons a week; and (c) to buy any -ice he might need in excess of th-ei weekly two hundred -and fifty tons from any other persons; and (2) the liabilities of the -assignor were (.a) to. pay to the -appellee on every Tues-day -during the continuance .of -the contract the -stipulated price for all ice purchased and weighed by the assignor during the week ending -at midnight upon the next preceding 'Saturday, and (b) not, directly or indirectly, during the existence .of this agreement, to buy or accept any ice *594from, any- otter person, firm, or corporation than the- said Terminal Freezing and Hmting Company, except such amounts as might he in excess of the weakly limit of two hundred and fifty tons.

_■ Whether the attempted assignment of these rights, or the attempted delegation of these duties, must fail because the rights or duties are of too- personal a character is .a question of construction to be resolved from the nature of the contract and the express or presumed intention of the parties. Williston on Contracts, sec. 431.

Tire contract was made by a corporation with .an individual, William 0. Frederick, an ice cream manufacturer, with whom the corporation had dealt for three years; before it executed a renewal contract for a second like period. The character, credit, and resources of Frederick had been tried and tested by the appellee before it renewed the contract. Not only had his ability to pay as agreed been established, but his fidelity to Ms obligation not to buy or accept .any ice from any other source up to tvro hundred and fifty tons a week had been ascertained. In addition, the appellee had not asked in the beginning, nor on entering into, the second period of the contract, for Frederick to undertake to buy a specific quantity of ice; or even to- take any. Ehederick simply engaged himself, during a definite term, to accept •.and pay for such quantities of ice as he might use in his business! to the extent of two hundred and fifty tons a week. If he used no ice in Ms business, he Was under no obligation to pay for a pound. In -any week, the quantity coulid vary from zero to two hundred and fifty tons, -and its weekly fluctuation, throughout the life of the contract, could irregularly range between these limito. The weeldy payment might be nothing or as much] a'a $812.50-; tod' for every wegk a credit was extended to the eigjhth -day from the beginning of every week’s delivery.' From the -time of the beginning of every weeldy delivery of the ice to the date of the payment • therefor, the title to» the ice was in the purchaser, and the •seller had no security for its payment except in the integrity *595■and solvency of Frederick. The performances, therefore, were not concurrent, but the performance of .the non-assigning party to the contract was to precede .the payments by the ■assignor.

When it is also considered that the ice was to be supplied .and paid for, according to its weight, on the loading platform of Frederick, ,at an unvarying price, without any reference either to the quantity used, or to the fluctuations in the cost ■of production, or to m(arket changes in the selling price, throughout three years, the conclusion is inevitable that the inducement, for the appellee to enter into the original contract and' into, the renewal lay outside ’the hare terms of the .contract, hut was implicit in them, and was the appel]ees reliance upon its. knowledge -of an average quantity of ice consumed, and probably to be needed, in the usual course' of Frederick’s business, .at all times throughout the year', and its confidence in the stability of his enterprise, in his competency in commercial .affairs, in his proibity, personal judgment, and in his continuing financial responsibility. The contract itself emphasized the personal equation by specifying that the ice was to be bought, for “use in his business as ;an ice cream maufacturer” and was to be paid for according to its weight “on the loading platform of the said W. 0. Frederick.”

When Frederick went out of business as .an ice cream manufacturer, and turned over his plant and everything constituting his business to the .appellant, it Was no longer his business, or his loading, platform, or subject to his care, control or maintenance, but it was the business of .a stranger, whose skill, competency 'and requirements of ice were .-alto^ •gefher different from those of Frederick. The assignor had his single plant in Baltimore. The assignee, in its purchase, simply added .another unit to its ice cream business, which it. had been, .and is now, carrying on “upon a large and extensive scale in the Oity of Philadelphia .and State of Pennsylvania., as well as in the Oity of Baltimore .and State of Maryland.” The .appellee knew that Frederick could not carry *596on his business -without ice wherewith - to manufacture ice creain at his plant for Ms trade. It also Was fiaimiliar with the quantities of ice hie would require, from time to time, in his business at his plant in Baltimore; and it consequently eo-nld make its other commitments for ice with this knowledge as a basis.

The, .appellant, on the other hand, might wholly supply its increased trade, acquired in the purchase -of Frederick’s business, with its ice cream produced upon a large and extensive scale by its manufactory in PhiladelpMa, which would result in no- ice being bought- by the assignee of the appellee, and s-O' the appellee would be deprived of the -benefit of its contract by the introduction of a different personal relation or element, wMch was never' contemplated by the original contracting parties. Again, -should the price of -ice be relatively high in PhiladelpMa in comparison with the stipulated price, tlie assignee -could run -its business in Baltimore -and furnish its patrons, or a portion of them, in Philadelphia, with its product from the wieddy maximum consumption of two hundred and fifty tons- o-f ic-e throughout the year. There can be no denial that the uniform delivery o-f the maximum quantity of two hundred and fifty tons a week would be a eonsaquence not witMn the normal scope -of the -contract, and would impose a greater liability on the -appellee than was anticipated.. 7 Halsbury’s Laws of England, sec. 1015, p. 501.

Moreover, the contract here to supply ice was undefined except as indicated from time to tome by -the personal requirements of Frederick in Ms specified -business. The quantities of ice to be supplied to Frederick to answer his weekly requirements must be very different from, ¡and would not be the measure of, the quantities- needed by Ms assignee, and, manifestly, to impose on thei seller the -obligation to -obey the demands of the substituted assignee is to -set up a n-ew measure of ice to be supplied and .so- a new term in the 'agreement that the appellee never hound itself to perform. Up to two hundred -and fifty tons o-f ice a week, Frederick *597engaged not to buy or accept any ice from any other party than the appellee. After Frederick had sold ¡away his business, -this covenant could not bind the assignee of his business, and even if it 'Continued to¡ bind Frederick, his refraining from not buying ice elsewhere was not a contemplated consideration for selling ice to my one except Frederick himself. Kemp v. Baerselman (1906), 2 K. B. 604, 608. 609. It was argued that Frederick was entitled to the weekly maximum of two 'hundred and fifty tons, and .that he-might have expanded his, business so as to require this weekly limit of ieei, and that, therefore, the burdens of the contract might have been as onerous to the appellee, if Frederick had continued in business, as they could become under the purporting assignment by reason of the increased requirements of the larger business of the asisdgpee. The unsoundness of this -.argument is that the la,w accords to every man freedom of choice in the party with whom hei deals, -and the terms of his dealing. He cannot be forced to do¡ a -thing which he did not agree to do because it is like and mo more burdensome than something which he did contract to do.

Under all the circumstances of the case, it is clear that the rights and duties of the contract under consideration were of so personal a character that the rights of Frederick cannot be -assigned nor hi© duties be -delegated .without defeating the intention of the parties to the original contract. "When-Frederick went out of the business of making dee -cream herniada it impossible for him to¡ -complete his performance of the contract, and hi© personal action and qualifications!, upon which the appellee relied, were eliminated from a contract which presupposed their continuance. Ftederi-efc not only attempted an assignment, but hisi course isi a repudiation of the obligations of the contract. He is not -even -alleged to-be ready to pay for any -ice which might be delivered after the date of the purporting assignment, but the allegations of the declara,tion simply aver that the assignee ¡alone had undertaken to- perform 'the further contractual -obligations -of the a-s-sigpor. Frederick, however, cannot be heiard to say that *598he has not repudiated a contract, whose contemplated! performance his own .act has made it impossible for him to fulfill. Eastern Advertising Co. v. McGaw, 89 Md. 86, 88.

While a party to a contract m|ay .as a general rule assign all his beneficial rights, except where a personal 'relation is involved, his liability nmder the contract is not assignable inter vivos, because any one who is bonnd to any performance whatever or who owes money cannot, by any act of his own, or by any act in .agreement with any -other person than his creditor or the one to. whom his performance is -due, cast off Ms own liability -and substitute .another’s liability. If this Were not. true, obligor® could free themselves of their obligations by the isdmple expedient of assigning them. A further ground for the rule is that not only is a party entitled to know to whom he must look for the satisfaction of M» rights under the contract but, in 'the familiar word® of Lord Denman in Humble v. Hunter, 12 Q. B. 317, “you have a right to the benefit yon contemplate from the character, credit .and substance of the person with whom yon contract.” Eor these reasons it has; been uniformly held that a man cannot assign his liabilities under a contraet, but one who is bonnd so as to bear .an ime-scapable liability may delegiate the performance of his obligation to; ..another, if the liability be of .such a nature that its perf ormance -by another will be substantially the same thing as performance by the promisor himself. In such circumstances the performance of the third party is the act of the promisor, who remains liable under the contract and answerable in damage» if the performance be not in strict fulfillment of the contract. British Waggon Co. v. Lea, 5 Q. B. D. 149; Robson & Sharpe v. Drummond, 2 B. & Ad. 303; Anson on Contracts, 218, 219 (4th Am. Ed.), pp. 377-380; 7 Halsbury’s Laws of England, p. 495; Eastern Advertising Co. v. McGaw, 89 Md. 86-88; Tarr v. Veazey, 125 Md. 199; 1 Williston on Contracts, secs. 411, 412, 418, 421, 420, note 48, at pp. 784, 785; Arkansas Valley Smelting Co. v. Belden Mining Co., 127 U. S. 379; Edison v. Babka, 111 Mich. 235; Schultz v. Johnson, 5 B. *599Mon. 497; Lansden v. McCarthy, 45 Mo. 106; Hardy etc. Co. v. South Bend Co., 129 Mo. 222; Paige v. Faure, 229. N. Y. 114.

However, tha analysis of the facts on this appeal leaves no room for doubt that the ease at bar falls info the category of those .assignments where an .attempt is made both to transfer the rights .and to delegate the duties of the assignor under an executory bilateral contract, whose terms and the circumstances make plain that' the' personal qualification and action of the assignor, with respect to. both his benefits and burdens: under the contract, were essential inducemients in the formation of the contract; .and further that. the. assignment was a repudiation of any future liability of the assignor. ■ The attempted assignment before us. altered the conditions and obligations of the undertaking. The appellee would here be obliged moti only to. perform the subsequent stipulations of the contract for the benefit of a stranger and in conformity with his will, but also, to accept the performance of the stranger in place of that of the assignor with whom it contracted, and upon whose personal integrity, capacity and management in the course of .a particular business he must be assumed to have relied by reason of the very nature of the provisions of the contract and1 of the circumstances of the conti-aoting parties.. The nature and stipulations of the contract prevent it being implied that the non-assigning party had .assented to such an 'assignment of rights and ■ delegation of liabilities. The .authorities are clear, on the facts at bar, that -the appellant could noit enforce the contra,at against 'the appellee.

The principle applicable here has been enforced by this Court in Eastern Advertising Company v. McCaw, 89 Md. 72, and in Tarr v. Veazey, 125 Md. 199. In the latter of these two cases the Court said: “The rule was thus, stated in Delaware County v. Diebold Safe Co., 133 U. S. 488, and in Burck v. Taylor, 152 U. S. 651: ‘A contract to. pay money may doubtless be assigned by the person to whom the money is payable, if there is nothing in the terms of the contract *600■which manifesto the intention of the parties to it that it shall .not he assignable. But when rights arising out of contract are coupled with obligations to be performed by the contractor, and! involve ,such a relation of personal confidence that it must have been intended that tbei rights should he exercised, and the obligations performed by him alone, the contract, including, both his rights and 'his obligation®, cannot be assigned without the consent of the other party to the original contract.’ ” Kemp v. Baerselman (1906), 2 K. B. 604; Demarest v. Dunton Lumber Co., 161 Fed. 264; Paige v. Faure, 229 N. Y. 114, 127 N. E. 898, 899; Burck v. Taylor, 152 U. S. 651.

The authorities cited on appellant’s brief have been examined, and they are not in 'conflict with the principles of law controlling this case, but rather serve to' illustrate their application to other .and' different combinations of facts, which do not afford any ground for this Oount to change its conclusion on the non-asisiginable character’ of the burdens and benefits arising from the stipulations and the nature of the contract- in this .appeal. The appellant stressed the case •of Tolhurst v. Associated Portland Cement Manufacturers (1903), A. C. 414, as supporting it® contention that the attempted assignment of the instant case involved no element of personal qualification or action. It may he.said of this case, that it raised a great difference -of opinion. It was decided one way by the King’s Bench; ■ and another way by the Oourt of Appeal, -and there wasi .a marked divergence of views in the Lions© of Lords, which affirmed the Oourt of Appeal, with the Earl of HaMntry doubting,' and Lord Robertson vigorously dissenting. (1901) 2 K.’ B. 811; (1902) 2 K. B. 660; (1903) A. 0. 414.

The decision has never been accepted -as wholly siatisr factory and' was not regarded as controlling in Kemp v. Baerselman (1906), 2 K. B. 604, where it was distinguished, and Lord Alverstione -stated that the House of Lords! had decided “in that particular case the contract for the supply of challe for fifty years was to' -be treated as a contract for *601the supply to a given cement-making place, and. not a personal contract.” p. 608.

TollrurS't wasi the owner of chalk quarries and made a contract with ‘the Imperial Portland Oemient Company, Limited, by which it was agreed that he would for fifty years supply to the company, and that the company should take and buy fr om him, at least seven hundred and fifty tons of challe per-week at a certain price, and -so much more as ‘the company should require for the whole of their manufacture of Portland cement upon their-land near the quarries. The Imperial Company was formed for the purpose of establishing cement works on land obtained from Tolhurst, near the chalk quarries, which were to supply the chalk to be used in making the cement. Tolhurst had built a tramway to the boundary of the land of the Imperial Company, which was to continue the tramw&y on its .own land1 to. a convenient place in -ordter to enable him to deliver chalk 'at the company’s plant.

The Imperial Company sold out to. a new and' larger company, and went into) voluntary liquidation, and its affairs had been fully Wound up and all its -assets had been distributed, when the assignee of its business land this contract brought 'an -action against Tolhurst, claiming a declaration that the contract wffl binding upon Tolhurst, -and that be must supply the -chalk to the -assignee in accordance with the -contract.

It will be observed that the cement works .and fhe¡ chalk quarries were -on parts of a tract of land that, was originally owned by Tolhurst, and that the cement company was formed for the commercial exploitation of the chalk deposit. The location of the enterprise wias obviously induced by the -advantages of a continuous supply from the quarries, -and so the contract was -drawn that, on completion of the extension of the tramway on its land by the Imperial Company, “the said Alfred Tolhurst will, for -a term -of fifty years, to be computed from the 25th day of December, 1891, or for such shorter period (not being less than thirty-five years) as he shall be possessed of chalk -available and -suitable for the *602manufacture of Portland cement, ¡and, capable of being quarried and got in the usual manner above water level, supply to the company, and! the eonxpany will take .and buy of the said Alfred Tiolburst at least seven ¡hundred and fifty tons per weak, .and so much more, if 'any, as the company shall require for the whole of their manufacture of Portland cement upon their said land.” The contract was, in substance, a -sale of 'all the chalk in the quarries by weekly deliveries, less what might be sold by Tolhurat to others'. As was said by WiUiston in his able work on contracts: “The case must be rested 'On a construction of the contract making the test of the amount of chalk to¡ be furnished not the personal needs of the -original promisee, but the capacity of that promisee’s land) and the machinery thereon.” Williston on Contracts, see. 421, p. 786; Kemp v. Baerselman (1906), 2 K. B. 604, 608.

It is manifest that this case is to¡ be distinguished from' the one at bar, but, if not, this Court would not be prepared to follow the reasoning of the final decision^ because the Imperial Company had renounced its obligations under' the contract; had gone out of business, and had disposed of .all its assets so as to be no longer able toi pay the .agreed price, ■and thereby the ¡seUer had -lost the credit of the original contracting party, ¡and the decision compelled' Tolhurst to give 'Credit to the asisigp.ee only. We take it to be sound doctrine that where one contracting party repudiates his obligations, the other party has the right of declining to be bound to a stranger by its term®. See Anson on Contracts (4th Am. Ed. by Corbin), note 2 pp. 378, 379; 1 Williston on Contracts, see. 420; Hand v. Evans Marble Co., 88 Md. 226, 229, 230.

As it is the opinion of the Court that the judgment below wias in accordance with the principles of law applicable to the facts ¡admitted by the demurrer, the judgment wiU be. affirmed without comment on the ability of an assignee of an executory contract for the sale of goods to bring an action in *603bis own name. See Code, art. 8, sec. 1; Banks v. McClellan, 24 Md. 62, 80; Hand v. Evans Marble Co., 88 Md. 226, 229, 230.

Judgment affirmed, with costs to the appellee.

8.2.3 Langel v. Betz 8.2.3 Langel v. Betz

250 N. Y. 159
JOHN A. LANGEL, Respondent,
v.
ISIDOR BETZ, Appellant.
(Argued December 7, 1928; decided December 31, 1928.) 

[159] JOHN A. LANGEL, Respondent, v. ISIDOR BETZ, Appellant.

Langel v. Betz, 224 App. Div. 266, reversed.

(Argued December 7, 1928; decided December 31, 1928.)

APPEAL, by permission, from a judgment of the Appellate Division of the Supreme Court in the second judicial department, entered July 24, 1928, unanimously affirming a judgment in favor of plaintiff entered upon a decision of the court on trial at Special Term.

Abraham L. Pomerantz for appellant. A vendor cannot enforce specific performance against the assignee of a vendee, irrespective of what acts are done by the assignee under the contract, short of a novation or an express assumption of the obligations of the contract by the assignee. (Lisenby v. Newton, 120 Cal. 571; Mound Valley Vitrified Brick Co. v. Mound Valley National Gas & Oil Co., 258 Fed. Rep. 936; Williams v. McWhorter, 218 Pac. Rep. 791; Comstock v. Hitt, 37 Ill. 542; Wilson v. Beazley, 186 Cal. 437; Corbus v. Teed, 69 Ill. 205; Gross v. Thomson's Estate, 286 Ill. 185; Cameron Steam Pump Works v. Lubbock Light & Ice Co., 167 S. W. Rep. 256; Smith v. Kellog, 46 Vt. 560; Hugel v. Habel, 132 App. Div. 327.) Neither in logic nor in principle can the holding of the court below be sustained. (Epstein v. Gluckin, 179 N. Y. Supp. 221.)

Harry Gittelson for respondent. Defendant's requests to adjourn closing of title are tantamount to a demand for performance, and consequently he assumed the obligations [161] of the vendee. (Epstein v. Gluckin, 233 N. Y. 490; Merchants' Bank v. Thomson, 55 N. Y. 7; Page v. McDonald, 55 N. Y. 299; Bay v. Hunt, 112 N. Y. 191; H. & H. Corp. v. Broad Holding Corp., 204 App. Div. 669.)

POUND, J. Plaintiff, on August 1st, 1925, made a contract with Irving W. Hurwitz and Samuel Hollander for the sale of certain real property. This contract the vendees assigned to Benedict, who in turn assigned it to Isidor Betz, the defendant herein. The assignment contains no delegation to the assignee of the performance of the assignor's duties. The date for performance of the contract was originally set for October 2d, 1925. This was extended to October 15th, 1925, at the request of the defendant, the last assignee of the vendees. The ground upon which the adjournment was asked for by defendant was that the title company had not completed its search and report on the title to the property. Upon the adjourned date the defendant refused to perform. The vendor plaintiff was ready, able and willing to do so, and was present at the place specified with a deed, ready to tender it to the defendant who did not appear.

The plaintiff as vendor brought this action against the defendant assignee for specific performance of the contract. Upon the foregoing undisputed facts he has had judgment therefor.

The question is: " Can the vendor obtain specific performance of a contract for the sale of real estate against the assignee of the vendee, where the assignee merely requests and obtains an extension of time within which to close title? "

Here we have no novation, no express assumption of the obligations of the assignor in the assignment and no demand for performance by the assignee.

The mere assignment of a bilateral executory contract [162] may not be interpreted as a promise by the assignee to the assignor to assume the performance of the assignor's duties, so as to have the effect of creating a new liability on the part of the assignee to the other party to the contract assigned. The assignee of the vendee is under no personal engagement to the vendor where there is no privity between them. (Champion v. Brown, 6 Johns. Ch. 398; Anderson v. N. Y. & H. R. R. Co., 132 App. Div. 183, 187, 188; Hugel v. Habel, 132 App. Div. 327, 328.) The assignee may, however, expressly or impliedly, bind himself to perform the assignor's duties. This he may do by contract with the assignor or with the other party to the contract. It has been held (Epstein v. Gluckin, 233 N. Y. 490) that where the assignee of the vendee invokes the aid of a court of equity in an action for specific performance, he impliedly binds himself to perform on his part and subjects himself to the conditions of the judgment appropriate thereto. " He who seeks equity must do equity." The converse of the proposition, that the assignee of the vendee would be bound when the vendor began the action, did not follow from the decision in that case. On the contrary, the question was wholly one of remedy rather than right and it was held that mutuality of remedy is important only so far as its presence is essential to the attainment of the ends of justice. This holding was necessary to sustain the decision. No change was made in the law of contracts nor in the rule for the interpretation of an assignment of a contract.

A judgment requiring the assignee of the vendee to perform at the suit of the vendor would operate as the imposition of a new liability on the assignee which would be an act of oppression and injustice, unless the assignee had, expressly or by implication, entered into a personal and binding contract with the assignor or with the vendor to assume the obligations of the assignor.

It has been urged that the probable intention of the [163] assignee is ordinarily to assume duties as Well as rights and that the contract should be so interpreted in the absence of circumstances showing a contrary intention. (The American Law Institute's Restatement of the Law of Contracts (§ 164) proposes a change in the rule of interpretation of assigned contracts to give as full effect to the assumed probable intention of the parties as the law permits. The following statement is proposed:

"Section 164. Interpretation of Words Purporting to Assign a Bilateral Contract and Effect of Acceptance of the Assignment by the Assignee.

"(1) Where a party to a bilateral contract which is at the time wholly or partially executory on both sides, purports to assign the whole contract, his action is interpreted, in the absence of circumstances showing a contrary intention, as an assignment of the assignor's rights under the contract and a delegation of the performance of the assignor's duties.

"(2) Acceptance by the assignee of such an assignment is interpreted, in the absence of circumstances showing a contrary intention, as both an assent to become an assignee of the assignor's rights and as a promise to the assignor to assume the performance of the assignor's duties."

This promise to the assignor would then be available to the other party to the contract. (Lawrence v. Fox, 20 N. Y. 268; 1 Williston on Contracts, § 412.) The proposed change is a complete reversal of our present rule of interpretation as to the probable intention of the parties. It is, perhaps, more in harmony with modern ideas of contractual relations than is " the archaic view of a contract as creating a strictly personal obligation between the creditor and debtor " (Pollock on Contracts [9th ed.], 232), which prohibited the assignee from suing at law in his own name and which denied a remedy to third party beneficiaries. " The fountains out of which these resolutions issue" have been broken up if not [164] destroyed (Seaver v. Ransom, 224 N. Y. 233, 237), but the law remains that no promise of the assignee to assume the assignor's duties is to be inferred from the acceptance of an assignment of a bilateral contract, in the absence of circumstances surrounding the assignment itself which indicate a contrary intention.

With this requirement of the interpretation of the intention of the parties controlling, we must turn from the assignment to the dealings between the plaintiff and the defendant to discover whether the defendant entered into relations with the plaintiff whereby he assumed the duty of performance. The assignment did not bring the parties together and the request for a postponement differs materially from the commencement of an action in a court of equity, whereby the plaintiff submits himself to the jurisdiction of the court or from a contractual assumption of the obligations of the assignor. If the substance of the transaction between the vendor and the assignee of the vendee could be regarded as a request on the part of the latter for a postponement of the closing day and a promise on his part to assume the obligations of the vendee if the request were granted, a contractual relation arising from an expression of mutual assent, based on the exchange of a promise for an act, might be spelled out of it; but the transaction is at least as consistent with a request for time for deliberation as to the course of conduct to be pursued as with an implied promise to assume the assignor's duties if the request were granted. The relation of promisor and promisee was not thereby expressly established and such relation is not a necessary inference from the nature of the transaction. When we depart from the field of intention and enter the field of contract, we find no contractual liability; no assumption of duties based on a consideration.

Plaintiff contends that the request for an adjournment should be construed (time not being the essence of the contract) as an assertion of a right to such adjournment, [165] and, therefore, as a binding act of enforcement, whereby defendant accepted the obligations of the assignee. Here again we have an equivocal act. There was no demand for an adjournment as a matter of right. The request may have been made without any intent to assert a right. It cannot be said that by that act alone the assignee assumed the duty of performance.

Furthermore, no controlling authority may be found which holds that a mere demand for performance by the vendee's assignee creates a right in the complaining vendor to enforce the contract against him. (H. & H. Corp. v. Broad Holding Corp., 204 App. Div. 569. See 8 Cornell Law Quarterly, 374; 37 Harvard Law Review, 162.) That question may be reserved until an answer is necessary.

The judgment of the Appellate Division and that of the Special Term should be reversed and the complaint dismissed, with costs in all courts.

CARDOZO, Ch. J., CRANE, ANDREWS, LEHMAN, KELLOGG and O'BRIEN, JJ., concur.

Judgments reversed, etc.

8.2.4 Herzog v. Irace 8.2.4 Herzog v. Irace

John P. HERZOG v. Anthony IRACE and Donald Grey Lowry.

Supreme Judicial Court of Maine.

Submitted on Briefs June 6, 1991.

Decided Aug. 6, 1991.

*1107John W. Philbrick, Lowry & Associates, Portland, for appellants.

Christopher J. Ryer, Brunette, Shumway & Ryer, Portland, for appellee.

Before McKUSICK, C.J., and ROBERTS, WATHEN, GLASSMAN, CLIFFORD, COLLINS and BRODY, JJ.

BRODY, Justice.

Anthony Irace and Donald Lowry appeal from an order entered by the Superior Court (Cumberland County, Cole, J.) affirming a District Court (Portland, Goran-ites, J.) judgment in favor of Dr. John P. Herzog in an action for breach of an assignment to Dr. Herzog of personal injury settlement proceeds1 collected by Irace and Lowry, both attorneys, on behalf of their client, Gary G. Jones. On appeal, Irace and Lowry contend that the District Court erred in finding that the assignment was valid and enforceable against them. They also argue that enforcement of the assignment interferes with their ethical obligations toward their client. Finding no error, we affirm.

The facts of this case are not disputed. Gary Jones was injured in a motorcycle accident and retained Irace and Lowry to represent him in a personal injury action. Soon thereafter, Jones dislocated his shoulder, twice, in incidents unrelated to the motorcycle accident. Dr. Herzog examined Jones’s shoulder and concluded that he needed surgery. At the time, however, Jones was unable to pay for the surgery and in consideration for the performance of the surgery by the doctor, he signed a letter dated June 14, 1988, written on Dr. Herzog’s letterhead stating:

I, Gary Jones, request that payment be made directly from settlement of a claim currently pending for an unrelated incident, to John Herzog, D.O., for treat*1108ment of a shoulder injury which occurred at a different time.

Dr. Herzog notified Irace and Lowry that Jones had signed an “assignment of benefits” from the motorcycle personal injury action to cover the cost of surgery on his shoulder and was informed by an employee of Irace and Lowry that the assignment was sufficient to allow the firm to pay Dr. Herzog’s bills at the conclusion of the case. Dr. Herzog performed the surgery and continued to treat Jones for approximately one year.

In May, 1989, Jones received a $20,000 settlement in the motorcycle personal injury action. He instructed Irace and Lowry not to disburse any funds to Dr. Herzog indicating that he would make the payments himself. Irace and Lowry informed Dr. Herzog that Jones had revoked his permission to have the bill paid by them directly and indicated that they would follow Jones’s directions. Irace and Lowry issued a check to Jones for $10,027 and disbursed the remaining funds to Jones’s other creditors. Jones did send a check to Dr. Herzog but the check was returned by the bank for insufficient funds and Dr. Herzog was never paid.

Dr. Herzog filed a complaint in District Court against Irace and Lowry seeking to enforce the June 14, 1988 “assignment of benefits.” The matter was tried before the court on the basis of a joint stipulation of facts. The court entered a judgment in favor of Dr. Herzog finding that the June 14, 1988 letter constituted a valid assignment of the settlement proceeds enforceable against Irace and Lowry. Following an unsuccessful appeal to the Superior Court, Irace and Lowry appealed to this court. Because the Superior Court acted as an intermediate appellate court, we review the District Court’s decision directly. See Brown v. Corriveau, 576 A.2d 200, 201 (Me.1990).

Standard of Review

At one time, we declined to give deference to a trial court’s findings of fact when based entirely upon stipulated facts and documentary evidence in the record. See, e.g., C Co. v. City of Westbrook, 269 A.2d 307, 309 (Me.1970); In re Edwards’ Estate, 161 Me. 141, 149, 210 A.2d 17, 22 (1965). We reviewed such cases de novo, reasoning that appellate and trial courts are equally able to assess documentary evidence. Id. More recently, however, we have held that we will set aside trial court findings based solely upon documentary evidence and stipulated facts only if clearly erroneous. Estate of Tully, 545 A.2d 1275, 1277 (Me.1988). Accordingly, Lowry and Irace’s recitation of the de novo standard of review is incorrect. We review the District Court’s findings of fact based on stipulated facts and documentary evidence only for clear error.

Validity of Assignment

An assignment is an act or manifestation by the owner of a right (the assignor) indicating his intent to transfer that right to another person (the assignee). See Shiro v. Drew, 174 F.Supp. 495, 497 (D.Me.1959). For an assignment to be valid and enforceable against the assignor’s creditor (the obligor), the assignor must make clear his intent to relinquish the right to the assignee and must not retain any control over the right assigned or any power of revocation. Id. The assignment takes effect through the actions of the assignor and assignee and the obligor need not accept the assignment to render it valid. Palmer v. Palmer, 112 Me. 149, 153, 91 A. 281, 282 (1914). Once the obligor has notice of the assignment, the fund is “from that time forward impressed with a trust; it is ... impounded in the [obligor’s] hands, and must be held by him not for the original creditor, the assignor, but for the substituted creditor, the assignee.” Id. at 152, 91 A. 281. After receiving notice of the assignment, the obligor cannot lawfully pay the amount assigned either to the assignor or to his other creditors and if the obligor does make such a payment, he does so at his peril because the assignee may enforce his rights against the obligor directly. Id. at 153, 91 A. 281.

Ordinary rights, including future rights, are freely assignable unless the as*1109signment would materially change the duty of the obligor, materially increase the burden or risk imposed upon the obligor by his contract, impair the obligor’s chance of obtaining return performance, or materially reduce the value of the return performance to the obligor, and unless the law restricts the assignability of the specific right involved. See Restatement (Second) Contracts § 317(2)(a) (1982). In Maine, the transfer of a future right to proceeds from pending litigation has been recognized as a valid and enforceable equitable assignment. McLellan v. Walker, 26 Me. 114, 117-18 (1896). An equitable assignment need not transfer the entire future right but rather may be a partial assignment of that right. Palmer, 112 Me. at 152, 91 A. 281. We reaffirm these well established principles.

Relying primarily upon the Federal District Court’s decision in Shiro, 174 F.Supp. 495, a bankruptcy case involving the trustee’s power to avoid a preferential transfer by assignment, Irace and Lowry contend that Jones’s June 14, 1988 letter is invalid and unenforceable as an assignment because it fails to manifest Jones’s intent to permanently relinquish all control over the assigned funds and does nothing more than request payment from a specific fund. We disagree. The June 14, 1988 letter gives no indication that Jones attempted to retain any control over the funds he assigned to Dr. Herzog. Taken in context, the use of the word “request” did not give the court reason to question Jones’s intent to complete the assignment and, although no specific amount was stated, the parties do not dispute that the services provided by Dr. Herzog and the amounts that he charged for those services were reasonable and necessary to the treatment of the shoulder injury referred to in the June 14 letter. Irace and Lowry had adequate funds to satisfy all of Jones’s creditors, including Dr. Herzog, with funds left over for disbursement to Jones himself. Thus, this case simply does not present a situation analogous to Shiro because Dr. Her-zog was given preference over Jones’s other creditors by operation of the assignment. Given that Irace and Lowry do not dispute that they had ample notice of the assignment, the court’s finding on the validity of the assignment is fully supported by the evidence and will not be disturbed on appeal.

Ethical Obligations

Next, Irace and Lowry contend that the assignment, if enforceable against them, would interfere with their ethical obligation to honor their client’s instruction in disbursing funds.2 Again, we disagree.

Under the Maine Bar Rules, an attorney generally may not place a lien on a client’s file for a third party. M.Bar R. 3.7(c). The Bar Rules further require that an attorney “promptly pay or deliver to the client, as requested by the client, the funds, securities, or other properties in the possession of the lawyer which the client is entitled to receive.” M.Bar R. 3.6(f)(2)(iv). The rules say nothing, however, about a client’s power to assign his right to proceeds from a pending lawsuit to third parties. Because the client has the power to assign his right to funds held by his attorney, McLellan v. Walker, 26 Me. at 117-18, it follows that a valid assignment must be honored by the attorney in disbursing the funds on the client’s behalf. The assignment does not create a conflict under Rule 3.6(f)(2)(iv) because the client is not entitled to receive funds once he has assigned them to a third party. Nor does the assignment violate Rule 3.7(c), because the client, not the attorney, is responsible for placing the incumbrance upon the funds. Irace and Lowry were under no ethical obligation, and the record gives no indication that they were under a contractual obligation, to hon- *1110or their client’s instruction to disregard a valid assignment. The District Court correctly concluded that the assignment is valid and enforceable against Irace and Low-ry-

The entry is:

Judgment affirmed.

All concurring.

8.2.5 Homer v. Shaw 8.2.5 Homer v. Shaw

Horace S. Homer vs. Frederick E. Shaw.

Suffolk.

March 15, 1912.

May 24, 1912.

Present: Rugg, C. J., Braley, Sheldon, & DeCourcy, JJ.

Contract, Rescission, Performance and breach. Assignment.

In an action of contract against a building contractor the plaintiff alleged that he was the assignee of a sum of money which the defendant owed a subcontractor. At the trial of the action before a judge without a jury there was evidence tending to show that the subcontractor had made a contract to do certain construction work for the defendant and that the plaintiff lent money to use in performing the contract to the subcontractor, who assigned to the plaintiff as security all sums due and to become due to him under the contract, and that the assignment was accepted ” by the defendant in writing; that thereafter because of lack of funds the subcontractor informed the defendant that he would have to "give the job up,” and the defendant agreed with him that he should go on with the work, that the defendant should pay his debts already incurred for labor and material, should advance what money was necessary for the remainder of the work and should pay him $25 per week for his services in superintending the work and for the use of his tools. The work which originally the subcontractor had agreed to do then was completed without any ostensible change in the relations of the defendant and the subcontractor. The action was for an amount alleged to have become due to the subcontractor under the original contract after the date of the new arrangement between the defendant and the subcontractor. The judge found for the defendant. Held, that the facts warranted a finding that the original contract had been rescinded by the new arrangement between the defendant and the subcontractor, and that therefore the judge’s finding was warranted.

Contract by the assignee of the rights of one George A. Lancaster under a contract with the defendant under which he was to be paid for certain excavating and mason work and the setting up and riveting of the iron work of a section of the Tremont Street subway in Boston, the defendant being the general contractor for the construction of that section for the transit commissioners. Writ dated August 27, 1896.

The case previously was before this court and is the second case referred to in 177 Mass. 1, 5, where it was decided that the plaintiff could not maintain an action upon a quantum meruit, because Lancaster voluntarily had broken his contract with the defendant. After that decision the plaintiff was allowed to file a substituted *114declaration in which he alleged that Lancaster’s contract with the defendant was fully performed.

The case then was heard by Raymond, J., without a jury. There was evidence tending to show the following facts: Lancaster began performance of his contract with the defendant soon after June 1, 1896. On or about June 13, being in need of funds to pay his men and for other expenses of carrying out his contract, he applied to the plaintiff, showing him certain letters which had passed between him and the defendant regarding the terms of their agreement and stating that the letters contained the terms of his contract with the defendant. Relying on the terms of the contract as set forth in those letters, the plaintiff advanced to Lancaster the sum of $140.05 and agreed to make the further advances that might become necessary for the payment of labor bills for the three following weeks, in consideration of. which Lancaster agreed to divide the profits accruing to him under the contract equally with the plaintiff. Under the terms of this agreement the plaintiff advanced to Lancaster in weekly payments sums amounting in all, including the first payment, to $1,010.83, which amount was received by Lancaster and applied by him to the payment of bills for labor incurred in the performance of his contract with the defendant. On or about June 27, 1896, in order to secure the plaintiff for his advances Lancaster executed and delivered to him the assignment of the amounts due and coming due to him under his contract with the defendant. This assignment was sent to the defendant for acceptance and was accepted by him in writing. On July 18 the plaintiff gave to Lancaster a check to be used in maldng his weekly payment for labor under bis contract and afterwards stopped payment of it. Thereupon on July 20 Lancaster wrote to the defendant: “Owing to my peculiar financial circumstances it will be impossible for me to go on with the iron work on the subway and shall have to give the job up.” On the same day the defendant and Lancaster met and it was agreed between them, at the defendant’s request, that Lancaster should go on with the work and that the defendant should pay his debts for labor and material already incurred in carrying out the contract, and should advance the money necessary in the future to pay for labor and material used in completing the work, and should pay the further sum of $25 per week to *115Lancaster personally. The defendant testified that the former contract was entirely rescinded and that he employed Lancaster to complete the work at a weekly salary of $25 per week for his services in superintending the work and for the use of his tools, and that the defendant thereafter assumed the entire responsibility of the work, including the payment of the men and the cost of materials without further accountability to Lancaster, except that he promised Lancaster that if he completed the work to his satisfaction and got rid of the plaintiff’s claim and any other claims and suits, he would allow Lancaster the difference between what it might cost the defendant to complete the job, including all costs and expenses, and the contract price of $6 per ton. An auditor, Charles M. Reed, Esquire, to whom the case was referred before it was before this court the first time, and whose report was in evidence at the second trial, found “that this new arrangement was in effect a rescission of the original contract and the substitution of a new and radically different one for it, and that the rights of the plaintiff under his assignment did not extend to the sums payable to Lancaster after this date.”

The plaintiff asked for the following rulings, which were refused.

“1. The letter of July 20, 1896, is not equivalent to an abandonment of the contract, and did not justify the defendant in rescinding the contract to the injury of the plaintiff.

“2. There is no evidence to show such abandonment. of the contract by Lancaster as will deprive the plaintiff of his rights under the assignment.”

“7. The arrangement which it is claimed was. entered into on July 20, 1896, between the defendant and said Lancaster was not an abandonment or cancellation of the existing contract between the parties, but only a change in the terms of payment, and, since Lancaster had fully performed the contract up to that day, the defendant, having accepted the assignment to the plaintiff, could not, by entering into a different arrangement with Lancaster, deprive the plaintiff of his rights under said assignment, or by payments to Lancaster or his creditors reduce the amounts coming due for work done.

“8. Lancaster owed no duty to the defendant under his contract with the defendant to pay his, Lancaster’s employees, and his failure so to do, and still less his announcement of his. inability *116so to do, in the absence of an actual cessation of the work, affords no legal justification to the defendant for treating the contract as abandoned or for rescinding the same.

“9. The announcement by Lancaster on July 20, 1896, that he would 'have to give the job up ’ was not a breach of any duty which he owed to the defendant under his contract, and unless there was an actual breach of the contract, the defendant had no legal right to rescind the same without the consent of the plaintiff.”

The judge found for the defendant; and the plaintiff alleged exceptions.

C. F. Lovejoy, for the plaintiff.

J. E. Young, for the defendant, was not called upon.

Braley, J.

The defendant’s liability upon acceptance of the assignment depended upon the assignor’s performance of his contract to transport, erect and paint the steel work required for a section of a subway which the defendant was building in accordance with the plans and specifications of the transit commissioners. If not fully performed the entire contract price although payable in monthly instalments never became due, or if before completion the assignor by reason of his inability to go on, voluntarily abandoned the work, he could not recover for work and labor already performed and furnished. Homer v. Shaw, 177 Mass. 1. Burke v. Coyne, 188 Mass. 401, 404. Buttrick Lumber Co. v. Collins, 202 Mass. 413, 420. After the assignor entered upon the performance of the contract he informed the defendant, that owing to the failure of the plaintiff to advance money, which apparently he had agreed to furnish, he would be unable to complete the work as his workmen had not been paid, and if their wages remained in arrears they would leave his employment. The evidence, if no further action had been taken by the parties, and performance of the work had ceased, would have warranted a finding, that, the assignor having repudiated or abandoned his contract before the first instalment of the contract .price became payable, the defendant would not have been indebted to the plaintiff. Homer v. Shaw, 177 Mass. 1. Bowen v. Kimbell, 203 Mass. 364, 370, 371. Barrie v. Quinby, 206 Mass. 259, 267. But without any ostensible change the assignor remained in charge of the work until completion, and the plaintiff contends under the substituted declaration, that the *117money thereafter received should be considered as earned under the original contract. The assignor needed immediate financial assistance, and if the defendant might have advanced the money which the evidence shows he furnished to enable him to pay his employees, yet if he had done so the plaintiff’s assignment would have been given priority over the loan. Buttrick Lumber Co. v. Collins, 202 Mass. 413. The parties while they could not modify to his prejudice the terms of the contract assigned without the plaintiff’s consent, or by a secret fraudulent arrangement deprive him of the benefit of the assignment, were not precluded from entering into a new agreement if performance by the assignor had become impossible from unforseen circumstances. Eaton v. Mellus, 7 Gray, 566, 572. Linnehan v. Matthews, 149 Mass. 29. It consequently was a question of fact upon all the evidence for the presiding judge before whom the case was tried without a jury, to decide, whether upon facing the exigencies of changed conditions the parties mutually agreed to a cancellation, and thereupon in good faith an independent contract was substituted, by the terms of which the defendant undertook to furnish sufficient funds to pay the workmen the wages then due, and their future wages as they accrued, while the assignor was to receive a weekly salary for his personal services of supervision. The refusal to comply with the plaintiff’s requests for findings, and the general finding for the defendant manifestly show his conclusion to have been, that the first contract was treated as having been rescinded, and the plaintiff had no enforceable claim against the defendant under the assignment. Earnshaw v. Whittemore, 194 Mass. 187, 192. Glidden v. Massachusetts Hospital Life Ins. Co. 187 Mass. 538, 541. The plaintiff’s requests for rulings in so far as they were not given were rightly refused, and the exceptions must be overruled.

So ordered.

8.2.6 UCC § 2-210. Delegation of Performance; Assignment of Rights 8.2.6 UCC § 2-210. Delegation of Performance; Assignment of Rights

2-210. Delegation of Performance; Assignment of Rights.

(1) A party may perform his duty through a delegate unless otherwise agreed or unless the other party has a substantial interest in having his original promisor perform or control the acts required by the contract. No delegation of performance relieves the party delegating of any duty to perform or any liability for breach.

(2) Unless otherwise agreed all rights of either seller or buyer can be assigned except where the assignment would materially change the duty of the other party, or increase materially the burden or risk imposed on him by his contract, or impair materially his chance of obtaining return performance. A right to damages for breach of the whole contract or a right arising out of the assignor's due performance of his entire obligation can be assigned despite agreement otherwise.

(3) Unless the circumstances indicate the contrary a prohibition of assignment of "the contract" is to be construed as barring only the delegation to the assignee of the assignor's performance.

(4) An assignment of "the contract" or of "all my rights under the contract" or an assignment in similar general terms is an assignment of rights and unless the language or the circumstances (as in an assignment for security) indicate the contrary, it is a delegation of performance of the duties of the assignor and its acceptance by the assignee constitutes a promise by him to perform those duties. This promise is enforceable by either the assignor or the other party to the original contract.

(5) The other party may treat any assignment which delegates performance as creating reasonable grounds for insecurity and may without prejudice to his rights against the assignor demand assurances from the assignee (Section 2-609).

8.3 Tortious Interference 8.3 Tortious Interference

8.3.1 J.D. Edwards & Co. v. Podany 8.3.1 J.D. Edwards & Co. v. Podany

J.D. EDWARDS & COMPANY, Plaintiff-Appellee, v. Randy PODANY and Mercer Management Consulting, Inc., Defendants-Appellants.

No. 98-2486.

United States Court of Appeals, Seventh Circuit.

Argued Jan. 13, 1999.

Decided Feb. 22, 1999.

*1021William J. McKenna, Jr., Hopkins & Sut-ter, Chicago, IL, Stephen J. Baity (argued), Godin & Baity, Denver, CO, for Plaintiff-Appellee.

Michael M. Lane (argued), McCullough, Campbell & Lane, Chicago, IL, for Defendants-Appellants.

Before POSNER, Chief Judge, and COFFEY and EASTERBROOK, Circuit Judges.

*1022POSNER, Chief Judge.

A company had a contract to sell computer services. The buyer broke the contract, but the seller’s suit, a diversity suit governed, so far as substantive issues are concerned, by the law of Illinois, is not against the buyer; it is against a consulting firm (and a former employee of the firm) that advised the buyer and was responsible for the buyer’s decision to break its contract with the seller. The defendants are accused of having committed the tort of deliberately inducing a breach of contract. HPI Health Care Services, Inc. v. Mt. Vernon Hospital, Inc., 131 Ill.2d 145, 137 Ill.Dec. 19, 545 N.E.2d 672, 676 (Ill.1989); Strosberg v. Brauvin Realty Services, Inc., 295 Ill.App.3d 17, 229 Ill.Dec. 361, 691 N.E.2d 834, 845 (Ill.App.1998); In re Estate of Albergo, 275 Ill.App.3d 439, 211 Ill.Dec. 905, 656 N.E.2d 97, 103 (Ill.App.1995); Sufrin v. Hosier, 128 F.3d 594, 597-98 (7th Cir.1997); Restatement (Second) of Torts §§ 766, 767 (1979). This is a mysterious tort. It seems to give the victim of a breach of contract two remedies, where one-a suit for breach of contract against the party who broke the contract-ought to suffice. But in some cases, of which this is not one, the contract breaker is insolvent; and in others, the third party could have avoided the breach of contract at a lower cost than the contract breaker. This may be such a case; SNE, the party that broke the contract, did so on the advice of a consultant who purported to be a specialist in the field of business and computer systems.

In any event, whether the provision of a remedy in tort for inducing a breach of contract is wise is not for us to decide. It is a settled part of the law of Illinois. Nor is there any doubt that the plaintiff made out a prima facie case. The only issue is whether the jury was justified in rejecting, en route to awarding the plaintiff $2.3 million in damages, the defense to inducing breach of contract that is called the “consultant’s privilege,” or more commonly the privilege of “honest advice.” This is the privilege of a consultant, or other advisor, to offer good-faith advice to a client without fear of liability should the client act on that advice to the harm of a third person, in this ease the plaintiff. HPI Health Care Services, Inc. v. Mt. Vernon Hospital, Inc., supra, 137 Ill. Dec. 19, 545 N.E.2d at 677-78; In re Estate of Albergo, supra, 211 Ill.Dec. 905, 656 N.E.2d at 104; Welch v. Bancorp Management Advisors, Inc., 296 Or. 208, 675 P.2d 172, 178 (Ore.1983); Restatement, supra, § 772; W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 129, p. 985 (5th ed.1984).

The privilege resembles (id. at 989; see, e.g., Genelco, Inc. v. Bowers, 181 Ill.App.3d 1, 129 Ill.Dec. 733, 536 N.E.2d 783, 787 (Ill.App.1989)) the rule in defamation law that where there is a duty to speak, a defamatory utterance, if made in good faith and not disseminated any further than necessary, is privileged. Kuwik v. Starmark Star Marketing & Administration, Inc., 156 Ill.2d 16, 188 Ill.Dec. 765, 619 N.E.2d 129, 135-36 (Ill. 1993); Sullivan v. Conway, 157 F.3d 1092, 1098-99 (7th Cir.1998) (Illinois law); Jones v. Western & Southern Life Ins. Co., 91 F.3d 1032, 1035 (7th Cir.1996) (same). A consultant is hired to give advice. Often the advice is painful, because firms frequently turn to consultants when they are in trouble or when they want to do something that hurts and want to spread the blame a bit. The consultant’s advice may lead to downsizing, layoffs, outsourcing, and countless other perturbations, including, as here, contractual terminations. It would cast quite a large, dark cloud over the consulting business if consultants could be hauled into court for having given advice that in hindsight could be characterized as having been ill-advised, ill-informed, or otherwise negligent. The consultant’s privilege cuts off this possibility. But it is not absolute. It is a qualified privilege, like qualified immunity as distinct from absolute immunity in the law of public officers’ torts. Harlow v. Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982).

It is qualified in two ways. First, it is limited to advice given within the scope of the consultant’s engagement. Mittelman v. Witous, 135 Ill.2d 220, 142 Ill.Dec. 232, 552 N.E.2d 973, 987 (Ill.1989); In re Estate of Albergo, supra, 211 Ill.Dec. 905, 656 N.E.2d at 104; Joseph P. Caulfield & Associates v. Litho Productions, Inc., 155 F.3d 883, 890 *1023(7th Cir.1998); Restatement, supra, § 772(b) and comment d. If a consultant hired to advise the client, a fast-food chain, on selecting a new telephone system suggested that the client terminate its fast-food franchisee in Oshkosh because the franchisee was serving soggy doughnuts, and the suggestion was adopted, the consultant could not set up the consultant’s privilege in defense of the franchisee’s suit for interference with contract. Not having been hired to advise on the client’s franchise system, the consultant would have no contractual duty to render frank and fearless (or indeed any) advice on the subject.

Second, if the consultant does not give honest advice — if he uses his engagement to hurt other people exclusively for his own benefit (or out of dislike of his victim) rather than for the benefit of his client — he forfeits the privilege. HPI Health Care Services, Inc. v. Mt. Vernon Hospital, Inc., supra, 137 Ill.Dec. 19, 545 N.E.2d at 678; Certified Mechanical Contractors, Inc. v. Wight & Co., 162 Ill.App.3d 391, 113 Ill.Dec. 888, 515 N.E.2d 1047, 1053-54 (Ill.App.1987). If solely to feather his own nest, and without believing that (or caring whether) he is helping his client, he causes the client to break a contract to the detriment of the other party to the contract, he is liable for inducing the breach. Mittelman v. Witous, supra, 142 Ill.Dec. 232, 552 N.E.2d at 987; Vajda v. Arthur Andersen & Co., 253 Ill.App.3d 345, 191 Ill.Dec. 965, 624 N.E.2d 1343, 1352 (Ill.App.1993); Chapman v. Crown Glass Corp., 197 Ill.App.3d 995, 145 Ill.Dec. 486, 557 N.E.2d 256, 263-65 (Ill.App.1990).

Both limitations on the consultant’s privilege, scope and good faith, are in issue here. The defendants argue that there was insufficient evidence to justify the jury’s rejecting the privilege on either ground. The argument fails, as we can show largely just by recounting the facts, viewed as favorably to the plaintiff, the winner in the district court, as the record will permit.

SNE — the client and contract breaker — manufactures windows. It hired J.D. Edwards & Company, the plaintiff, to supply software for a project that SNE called PBS (for “Primary Business System”) and that involved streamlining SNE’s business and obtaining the computer support necessary for the streamlining. SNE rejected another company’s software called BPCS because BPCS lacked a “configurator,” which is a program that facilitates custom manufacturing. While the transition to PBS was under way, there was a reorganization that made SNE one of three divisions of a corporation headed by Gary Massel. Enter the defendants, Randy Podany and Mercer Management Consulting, Inc. Massel knew Podany, an employee of Mercer, and asked him to do what is called in the consulting trade a “sniff test” — a very quick, light review — of PBS. The fee was $10,000. After “sniffing” for a day (concretely, meeting with the PBS managers and reviewing relevant documents), Podany advised Massel that the basic approach that SNE had taken to streamlining its business, that of “reengineering in parallel,” and the leading role that it had assigned to J.D. Edwards, were unsound. Reengi-neering in parallel means defining the company’s business needs and at the same time obtaining the necessary computer support or other technical support. Podany is not a software expert and neither he nor his company had been retained to select software or offer a critique of the contract with J.D. Edwards. His advice had been sought at the business level. But reengineering in parallel is an example in consultant-speak of a “systems concept” and thus fell within the scope of Podany’s (and Mercer’s) engagement.

Podany also advised Massel to stop installing J.D. Edwards’ software. The plaintiff argues that this advice was outside the terms of the engagement and so outside the protection of the consultant’s privilege, but we disagree. If reengineering in parallel was a mistake and (as Podany urged) the definition of SNE’s business needs should precede the installation of any software, it followed that the installation should be halted; and making this explicit did not carry the consultant’s advice outside the boundaries of the privilege. To hold that it did would simply lead consultants to insist on very broad terms of engagement. That, or make them too timid. If a surgeon discovered a cancerous polyp on the patient’s colon while performing an ap*1024pendectomy, we wouldn’t want him to refuse to remove the polyp because he feared exceeding the scope of his engagement. Kennedy v. Parrott, 243 N.C. 355, 90 S.E.2d 754 (N.C.1956); Mohr v. Williams, 95 Minn. 261, 104 N.W. 12, 15 (Minn.1905). There might be medical reasons for him to decline to remove it; it might be beyond his competence; but if it were within his competence, we would want him to act because the patient if he could be consulted would want him to act. Similarly, if a consultant discovers a problem that is outside the strict terms of his engagement but within the range of his competence, the client would want him to bring the problem to the client’s attention without fear of being sued should the solution involve the termination of a contract. So likely is this to be what the client would want that we can assume, just as in the surgical case, that it is an implied term of the engagement.

Podany, however, went further than merely advising Massell to stop installing J.D. Edwards’ software. He ordered the SNE executive in charge of implementation of the contract with J.D. Edwards to stop paying Edwards. This went well beyond his original engagement, but the engagement had been enlarged by Massel, who had directed everyone in his company to “have all computer related purchases approved by Randy [Poda-ny].” Podany’s stop-payment orders were within the implied scope of this new engagement.

The problem with the defendants’ assertion of the consultant’s privilege is not that Podany exceeded the scope of their engagement; it is that a reasonable jury could find that he acted in bad faith. Podany knew very little about the software that was being supplied by J.D. Edwards. The only software program he was familiar with was-BPCS. So he maneuvered to replace Edwards’ software with BPCS, even though BPCS lacked a configurator, which SNE had wanted. The reason he gave was that the only one of Massel’s three divisions that was able to provide Massel with timely and accurate financial data had BPCS, and he ascribed the division’s success in this regard to BPCS. But he did not attempt to trade off this advantage against the disadvantage, for SNE, that BPCS lacked a configurator. He arranged things so that BPCS would be selected without a fair comparison with J.D. Edwards’ software. And, what is critical-for mistakes do not void the consultant’s privilege-he did all this in order to land himself a lucrative job with SNE’s parent as director of information services. And having done so he procured further engagements of his former employer, Mercer. During the 18 months that he remained employed by SNE, he earned $370,000 and Mercer billed SNE $1.6 million. But BPCS was a flop; it was never successfully installed in SNE. One reason it was a flop was that it lacked a configu-rator.

If Podany was simply a fool, and got SNE to replace J.D. Edwards’ software with BPCS because he ignorantly believed that the latter really was superior for SNE’s needs even though it lacked a configurator, he and his employer would be sheltered from liability by the consultant’s privilege. They would be, indeed, securely within the core of the privilege. But if Podany’s only object was to enrich himself-and Mercer-the privilege is forfeited. Here we pause to observe that the parties have not tried to distinguish Mercer’s liability from Podany’s. It has been understood that they sink or swim together. Podany was acting to further Mercer’s interests as well as his own, thus making Mercer liable for Podany’s intentional tort under the doctrine of respondeat superior. Illinois Founders Ins. Co. v. Smith, 231 Ill.App.3d 269, 172 Ill.Dec. 780, 596 N.E.2d 59, 64 (Ill.App.1992); Rice v. Nova Biomedical Corp., 38 F.3d 909, 913 (7th Cir.1994) (applying Illinois law); McGanty v. Staudenraus, 321 Or. 532, 901 P.2d 841, 846 (Ore.1995).

In pointing to Podany’s motives, we do not make the mistake of confusing bad faith with greed. A consultant might be in consulting purely for the money, but as long as he made his money by offering honest advice within the scope of his employment, his private motives would be irrelevant. In re Estate of Albergo, supra, 211 Ill.Dec. 905, 656 N.E.2d at 104; Los Angeles Airways, Inc. v. Davis, 687 F.2d 321, 328 (9th Cir.1982); Restatement, supra, § 772 comment *1025c. It is when a consultant decides to make money by rendering dishonest advice (or going outside the terms of his engagement) that he loses the protection of privilege and assumes the usual liabilities.

Podany denied any such ulterior motive. But his credibility was impeached, and the jury was not required to believe him. His lack of credibility, like pretext in a discrimination case, combined with circumstantial evidence to justify the jury in finding bad faith. A plaintiff cannot win just by putting the defendant on the stand and asking the jury to disbelieve him. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256-57, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Bose Corp. v. Consumers Union of United States, Inc., 466 U.S. 485, 512, 104 S.Ct. 1949, 80 L.Ed.2d 502 (1984); United Steelworkers of America v. Phelps Dodge Corp., 865 F.2d 1539, 1542 (9th Cir.1989) (en banc); Dyer v. MacDougall, 201 F.2d 265, 268-69 (2d Cir.1952) (L.Hand, J.). But if there is other evidence of liability, then unconvincing denials by the defendant can help persuade the jury that the plaintiffs story is true. E.g., Coco v. Elmwood Care, Inc., 128 F.3d 1177, 1179 (7th Cir.1997); United States v. Zafiro, 945 F.2d 881, 888 (7th Cir.1991), aff'd, 506 U.S. 534, 113 S.Ct. 933, 122 L.Ed.2d 317 (1993). The other evidence in this case included the fact that, after rejecting the concept of reengineering in parallel and on the basis of that rejection halting the implementation of the contract with J.D. Edwards, Podany had SNE install BPCS on the same basis-that is, in parallel with the specification of SNE’s needs. The justification for rigging the software selection process to assure the selection of BPCS-the only software he could work with-that he offered (the success of BPCS in generating prompt and accurate financial information for another division) was inadequate given BPCS’s lack of a configurator, which SNE had deemed essential. He misrepresented the relative cost of the two software packages. He pronounced the J.D. Edwards software a “piece of shit” without knowing enough about it to have an opinion. Of course all these things could have been innocent mistakes. But the more, and the more egregious, a consultant’s mistakes, the less innocent they are likely to be. And when on top of this the defendants’ efforts to show that they were innocent (maybe negligent, but not deliberate) foundered, there was enough to justify a reasonable trier of fact in rejecting the defense of privilege. That doesn’t mean that the jury was right in this case. But its decision was not so unreasonable as to warrant reversal.

Affirmed.

8.3.2 Restatement (3d) of Torts 17 8.3.2 Restatement (3d) of Torts 17

Restatement (Third) of Torts -- 17

(1) A defendant is subject to liability for interference with contract if:

(a) a valid contract existed between the plaintiff and a third party;

(b) the defendant knew of the contract;

(c) the defendant engaged in wrongful conduct as defined in Subsection (2);

(d) the defendant intended to cause a breach of the contract or disruption of its performance;

(e) the defendant's wrongful conduct caused a breach of the contract or disruption of performance; and

(f) the plaintiff suffered economic loss as a result.

(2) Conduct is wrongful for purposes of this Section if:

(a) the defendant acted for the purpose of appropriating the benefits of the plaintiff's contract;

(b) the defendant's conduct constituted an independent and intentional legal wrong; or

(c) the defendant engaged in the conduct for the sole purpose of causing harm to the plaintiff.