Allen v. Traylor
1919 Tex. App. LEXIS 770, 212 S.W. 945 (1919)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A promise made between two parties for a valuable consideration, intended for the benefit of a third person, is directly enforceable by that third person, regardless of whether the promisee owed any pre-existing legal duty or obligation to the third person.
Facts:
- Harry Traylor and the Rockport Land Company sold land to D. W. McKey and W. L. Pridgen, receiving vendor's lien notes as part of the payment.
- The Rockport Land Company transferred the notes to Traylor, making him the sole lienholder.
- McKey and Pridgen later conveyed the land to M. Ucovich, who took the property 'subject to' the existing vendor's lien but did not personally assume the debt.
- Subsequently, Ucovich conveyed a portion of the land to Frank Allen.
- As part of the consideration for this purchase, Allen's deed stipulated that he assumed and agreed to pay a specific portion of the original vendor's lien debt owed to Traylor.
Procedural Posture:
- Harry Traylor sued Frank Allen, D.W. McKey, and W.L. Pridgen in the district court (trial court) to recover the balance on vendor's lien notes.
- Allen failed to appear, and the trial court entered a default judgment against him, as well as against McKey and Pridgen.
- Allen appealed the judgment to the Court of Civil Appeals (intermediate appellate court).
- The Court of Civil Appeals affirmed the judgment of the district court.
- Allen was granted a writ of error to have the case heard by the Supreme Court of Texas.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a grantee's promise to their grantor to pay a vendor's lien create an enforceable obligation in favor of the lienholder, even when the grantor was not personally liable for the underlying debt?
Opinions:
Majority - Sonfield, P. J.
Yes. A grantee's promise to their grantor to pay a vendor's lien creates a directly enforceable obligation in favor of the lienholder, even if the grantor was not personally liable for the debt. The court bases this holding on the broad contractual principle of third-party beneficiaries, rejecting the more restrictive equitable subrogation theory which would require the grantor to be liable. Allen's promise to pay the lien debt was a part of the consideration he paid for the land. The law operates on this agreement to create a duty and establish privity between Allen (the promisor) and Traylor (the third-party beneficiary), allowing Traylor to sue Allen directly. The court reasoned that since Ucovich (the promisee) was not personally liable, Allen's promise could not be a mere indemnity; it must be construed as a promise for the benefit of Traylor, the holder of the notes. However, the court found Allen was not liable for attorney's fees because his promise was to pay a specific amount of 'principal and interest,' not to assume the notes in their entirety, which included the fee provision.
Analysis:
This decision formally adopts the majority American rule on third-party beneficiary contracts in the context of 'broken chain' mortgage or lien assumptions. By rejecting the equitable subrogation theory, the court clarifies that the beneficiary's right to sue is a direct contractual right, not one derived through the promisee. This significantly strengthens the position of creditors, allowing them to enforce assumption agreements against remote grantees even when an intermediate owner in the chain of title had no personal liability. The case establishes a clear precedent that the key factor is the promisor's intent to benefit the third-party creditor as part of the consideration for the contract, not the liability status of the promisee.
