Another question concerns the admissibility of certain defences by the promisor. When sued by the third person, the promisor may rely on facts showing that the promisee could not enforce the contract. Is the third person barred because the promisee would be? It is necessary to observe some distinctions here. The foundation of any right the third person may have, whether he is a sole beneficiary or a creditor of the promisee, is the promisor's contract. Unless there is a valid contract no rights can arise in favor of any one. Moreover, the rights of the third person, like the rights of the promisee, must be limited by the terms of the promise. If that is in terms conditional, no one can acquire any rights under it unless the condition happens.99 Further, if there is a contract valid at law, but subject to some equitable defence - as fraud,1 mistake,2 or failure of consideration,3 - the defence may be set up against the third person. If the undertaking is to pay a debt or discharge a duty of the promisee, the rights of the third person can be derived only through the promisee, and whatever defence affects the latter affects the creditor. In the case of a promise for the sole benefit of a third person, the beneficiary may indeed be regarded as having a direct right, but he is in the position of a donee. It is no more equitable for a sole beneficiary, though himself innocent to try to enforce a promise procured by the fraud of another, than for the donee of trust property to insist on bis legal title as against the cestui que trust.
Jolmsou v. Shuey, 40 Wash. 22, 82 Pac. 123. In this connection may be considered also the continuing liability of a lessee though the lease has been assigned by him and his assignee has also become liable. Wood, Landlord and Tenant (2d ed.), Sec.Sec. 330, 337; Zinwell Co. v. Ilkowitz, 144 N. Y. 8. 815, 83 Misc. 42; Johnson v. Seaborg, 69 Or. 27,137 Pac. 191.
98 Roberto v. Abney (Tex. Civ. App.), 189 8. W. 1101.
99 Ellis v. Conrad Seipp Brewing Co., 207 111. 291, 88 N. E. SOS; Russell v. Western Union Tel. Co., 57 Kan. 230, 45 Pac. 596; Fenn v Union Central Life Ins. Co., 48 La. Ann. 541, 19 So. 623; Gill v. Weller, 52 Md. 8; Browning v. North Mo. Cent. Ry. Co. (Mo.), 188 8. W. 143. But see Orman v. North Alabama Co., 53 Fed. 469, 66 Fed. 18, 13 U. S. App. 215, 5 C. C. A. 22; East v. New Orleans Ins. Assoc., 76 Miss. 697, 26 So. 691; Oakland Ins. Co. v. Bank of Commerce,
47 Neb. 717,66 N. W. 646,36 L. R. A. 673, 68 Am. St. Rep. 663. See also Dark v. Dunn, 121 Mo. App. 490, 97 S. W. 226. In the first case the person to whom a telegram was sent, who was treated as the beneficiary of the contract with the telegraph company, was held subject to the requirement in that contract that the claim must be presented within 60 days. In the last two cases a mortgagee was allowed to sue on policies of insurance taken out by the mortgagor "loss payable to mortgagee" though the mortgagor had acted in such a way as would avoid the policy as to him.
1 Green v. Turner, 80 Fed. Rep. 41, 86 Fed. Rep. 837, 69 U. S. App. 252, 30 C. C. A. 427; Lloyd v Lowe (Colo. 1917}, 165 Pac. 609; Union City Ac. Co. v. Wright, 145 Ga. 730, 89 S. E. 822; Benedict v. Hunt, 32 Ia. 27; Maxfield v. Schwarti, 46 Minn. 150, 47 N. W. 448, 10 L. R. A. 606; Ellis v. Harrison, 104 Mo. 270, 278,16 S. W.
198; Saunders 0. McClintock, 46 Mo. App. 216; American Nat. Bank v. Klock, 58 Mo. App. 336; Johnson v. Major, 194 Mo. App. 169, 187 S. W. 143; Wise v. Fuller, 29 N. J. Eq. 257; Arnold v. Nichols, 64 N. Y. 117; Moore v. Ryder, 65 N. Y. 438; Trimble v. Strother, 26 Ohio St. 378; Bradshaw v. Provident Trust Co., 81 Oreg. 55, 158 Pac. 274; Janneea v. Simpson, 84 Vt. 127, 78 Atl. 886; Osborne v. Cabell, 77 Va. 462. But see contra, Georgia Home Ins. Co. v. Boykin, 137 Ala. 350, 34 So. 1012. Fitsgerald v. Barker, 96 Mo. 661, 10 S. W. 46, and Klein v. Isaacs, 8 Mo. App. 568, also to the contrary must be regarded either as overruled or distinguished on the ground that the plaintiff bought the note, payment of which was assumed, on the faith of the defendant's prom-iae to pay it.
2Episcopal Mission v. Brown, 158 U. S. 222, 15 S. Ct. 833, 39 L. Ed. 960; Jones v. HigginB, 80 Ey. 400; Bogart v. Phillips, 112 Mich. 607,71N. W. 320; Rogers v. Castle, 51 Minn. 428, 53 N. W. 651; Gold v. Ogden, 61 Minn. 88, 66 N. W. 266; Bull v. Titsworth, 20 N. J. Eq. 73; Stevens Institute of Technology v. Sheridan, 30 N. J. Eq. 23; O'Neal v. Clark, 33 N. J, Eq. 444; Green P. Stone, 54 N. J. Eq. 387, 34
Atl. 1099, 65 Am. St. Rep. 577; Crowe v. Lewin, 95 N. Y. 423; Wheat v. Rice, 97 N. Y. 296; Broadbent v. Hutter, 163 Wis. 380, 157 N. W. 1006.
3Clay v. Woodrum, 45 Kan. 116, 26 Pac. 619; Amonett v. Montague, 75 Mo. 43; Judson v. Dada, 79 N. Y. 373, 370; Osborne v. Cabell, 77 Va. 462.
Several decisions present the case of a purchaser with warranty of land subject to a mortgage, who has been evicted from the premises and is thereafter sued by the holder of the mortgage. The defence was held good in Dunning v. Leavitt, 85 N. Y. 30, 39 Am. Rep. 617; Crowe v. Lewin, 05 N. Y. 423; Gifford p. Father Matthew Society, 104 N. Y. 139, 10 N. E. 39. But see contra, Blood v. Crew Levick Co., 177 Pa. 606, 35 Atl. 871, 55 Am. St. Rep. 741; Hayden v. Snow, 0 Biss. 611, 14 Fed. 70; s. c. rub nam. Hayden v. Drury, 3 Fed. 782. In the last case the decision was based on the fact that the plaintiff was a purchaser for value of the mortgage note after the defendant had assumed the mortgage. See also Knapp v. Connecticut Mut. L. I. Co., 85 Fed. 329, 56 U. S. App. 452, 40 L. R. A. 861, 29 C. C. A. 171; Connecticut Mut. L. I. Co. v. Knapp, 62 Minn. 405,64 N. W. 1137.