Drewen v. Bank of Manhattan Co. of City of NY
76 A.L.R. 2d 221, 155 A.2d 529, 31 N.J. 110 (1959)
Rule of Law:
A promisee's personal representative has standing to enforce a contract made for the benefit of a third-party donee, even if the third-party donee also has the right to sue and no direct monetary benefit accrues to the promisee's estate from the enforcement.
Facts:
- Doris Ryer Nixon and Stanhope Wood Nixon married in 1917 and had two children, Lewis and Blanche.
- On July 27, 1945, Doris and Stanhope executed an agreement settling their property rights in contemplation of a divorce, which was granted months later.
- As part of the 1945 agreement, Stanhope promised never to reduce the quantity or quality of the children's interests in his estate as set forth in a will he executed the same day.
- The 1945 will provided that each child would receive approximately 30% of Stanhope's estate in fee, with a provision for survivorship if one child predeceased the testator without issue.
- Doris Ryer Nixon died testate in California in 1948.
- In 1951, Stanhope Wood Nixon executed a new will, which revoked his 1945 will, changed the outright gifts to his children to life estates with remainders to charities, and included an in terrorem clause.
- Blanche died in 1955 without issue, survived by Lewis.
- Stanhope Wood Nixon died in 1958.
Procedural Posture:
- John Drewen, administrator c.t.a. of Doris Ryer Nixon's estate, brought suit in the Superior Court, Chancery Division, to enforce a contract against the executor of Stanhope Wood Nixon's estate.
- The Chancery Division dismissed the administrator's suit on a motion.
- The Appellate Division affirmed the dismissal, with the administrator c.t.a. as the appellant and Stanhope Wood Nixon's executor as the appellee.
- The Supreme Court of New Jersey granted certification to hear the case.
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Issue:
Does an administrator c.t.a. of a promisee's estate have standing to enforce a contract for the benefit of a third-party donee, even when the breach occurs after the promisee's death and the action does not directly result in assets for distribution to the promisee's creditors or beneficiaries?
Opinions:
Majority - Proctor, J.
Yes, an administrator c.t.a. of a promisee's estate has the power to enforce a contract made for the benefit of a third-party donee. The court reasoned that a person may legally bind themselves by contract to make a particular will, and while a third-party beneficiary like Lewis Nixon certainly has standing to sue for specific performance, the promisee (Doris Ryer Nixon) also possesses a sufficient interest in the enforcement of the promise. This interest entitles the promisee to seek damages or, where the legal remedy is inadequate, to invoke the aid of a court of equity to compel fulfillment of the promise, especially since a breach of a contract to make a will is considered a fraud. This right of action founded upon a contract survives the promisee's death and passes to their personal representative. The court cited early English common law and the Restatement of Contracts to show that a promisee's personal representative has standing to sue for breach of a third-party donee contract, regardless of whether the donee beneficiary could also sue. The administrator's standing derives from the decedent's rights, not from a lack of capacity in the beneficiary. The court clarified that the New Jersey statute N. J. S. 2A:6-46, which outlines the powers of a substituted administrator c.t.a., does not limit recovery to assets distributed through the decedent's estate but confers all rights and powers of an original executor. Furthermore, the court rejected the argument that no cause of action passed to the administrator because the breach (Stanhope's death with the new will in effect) occurred after Doris's death, affirming that contract rights enforceable in the future also survive death. The court emphasized that the administrator has the power to pursue such a claim, guided by a rule of reason in the interest of creditors and beneficiaries, and noted that no one from Doris's estate had objected to the suit. The court found no policy violated by maintaining such an action and favored the enforcement of promises made for valuable consideration.
Analysis:
This case significantly broadens the understanding of a personal representative's standing to enforce contracts, particularly those involving third-party beneficiaries. It affirms that the promisee's interest in a contract, even when primarily for a third party's benefit, is a valuable right that survives death. The ruling clarifies that the existence of a third-party beneficiary's right to sue does not preclude the promisee's estate from also seeking enforcement, reinforcing the idea that multiple parties can hold concurrent rights to enforce a single contractual promise. This decision underscores the enforceability of contracts to make a will and provides an additional avenue for ensuring such agreements are honored, thereby promoting contractual reliability.
