This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
In the United States the cases have been practically harmonious, and whatever discussion has arisen has been due to text-writers and to legal essayists.1 The courts have, often without discussion, assumed as a rule that the definitions of consideration already given,2 were literally true; and that if a sufficient consideration moved to the promisor, it made no difference from whom it moved.3 In a jurisdiction in which a beneficiary can not enforce a contract to which he is not a party,4 it was held that if A makes a contract with B, by which A agrees to settle a certain sum of money upon B's child, X, in consideration of A's being permitted to name such child, such contract was enforceable on the theory that X, the child, made the contract with A through its parent, B, as its agent. In this case it was either assumed that the consideration might come from B, or else the fiction that the child was really selecting its own name, was resorted to.5 If B, the broker, releases A, the vendor, from his promise to pay a commission for obtaining a buyer, X, and X promises to pay a cornmission to B if A releases X, A's release of a bona fide claim is a consideration for B's promise.6 A promise by a trustee to pay a certain sum out of the proceeds of the trust property to the creditor of the cestui que trust is supported by sufficient consideration in that the cestui que trust will discharge the trustee from his duty to account for the amount of such payment.7 A promise by A to B in consideration of B's promise to convey to A property which belongs to C, is enforceable, if C actually conveys such property to A.8 The receipt of property by A from X is consideration for a promise by A to B to pay to B a debt due from X to B.9 The promise of X to organize a corporation and to deliver certain shares of stock therein to A, is consideration for a negotiable note therefor given by A to B.10 A's indebtedness to X is a consideration for a promise by A to pay money to B, if X directs A to make such payment.11 In a contract of compromise or accord and satisfaction the consideration may move from a stranger to the creditor.11
27Dunlop Pneumatic Tyre Co. v. Selfridge , A. C. 847.
28 "My Lords, I confess that this case is to my mind apt to nip any budding affection which one might have had for the doctrine of consideration. For the effect of that doctrine in the present case is to make it possible for a person to snap his fingers at a bargain deliberately made, a bargain not in itself unfair, and which the person seeking to enforce it has a legitimate interest to enforce." Dunlop Pneumatic Tyre Co. v. Selfridge , A. C. 847.
1 See, Considerations Moving from Third Persons, by Edmund H. Bennett, 9 Harvard Law Review 233; Is Mere Gain to a Promisor a Good Consideration for His Promise? by Edmund H. Bennett, 10 Harvard Law Review 257; Two Theories of Consideration, by James Barr Ames, 12 Harvard Law Review 515, 13 Harvard Law Review, 29.
2 See S 514.
3 California. Schroeder v. Pissis, 128 Cal. 209, 60 Pac. 758.
Georgia. Bing v. Bank, 5 Ga. App. 578, 63 S. E. 652.
Indiana. Raymond v. Pritchard, 24 Ind. 318; Moore v. Hubbard, 15 Ind. App. 84, 42 N. E. 962.
Iowa. Brown v. Jennett, 130 la. 311, 5 L. R. A. (N.S.) 725, 106 N. W. 747.
Kentucky. Reynolds v. Reyiolds, 92 Ky. 556, 18 S. W. 517.
Massachusetts. Stearns v. Foote, 37 Mass. (20 Pick.) 432.
Michigan. Palmer v. Bray, 136 Mich. 85, 98 N. W. 849.
New Hampshire. Gage v. De Cour-cey, 68 N. H. 579, 41 Atl. 183.
New York. White v. Kuntz, 107 N. Y. 018, 1 Am. St. Rep. 886, 14 N. E. 423.
North Carolina. Craig v. Stewart, 163 N. Car. 531, 79 S. E. 1100. Oklahoma. Huber v. Culp, 46 Okla. 570, 149 Pac. 216.
Wisconsin. Continental National Bank v. McGeoch, 92 Wis. 286, 66 N. W. 606. "The consideration for a contract need not have moved from the party to whom the contract is made and who seeks to enforce it." Raymond v. Pritchard, 24 Ind. 318. See, to the same effect, Bing v. Bank, 5 Ga. App. 578, 63 S. E. 652. "Whether or not the consideration for the execution of the instrument sued on, passed to appellant from the payees of the note or from some one else, it would still be sufficient to sustain it if there was a valuable consideration passing to her from any one, by reason of which the instrument was executed. This is true in Indiana, even though the promise be not made directly to him who sues upon it. Miller v. Billingsly, 41 Ind. 489; Rodenbarger v. Bramblett, 78 Ind. 213; Waterman v. Morgan, 114 Ind. 237'; Bateman v. Butler, 124 Ind. 223; Stanton v. Kenrick, 135 Ind. 382; Jud-son v. Romaine, 8 Ind. App. 390." Moore v. Hubbard, 15 Ind. App. 84, 42 N. E. 962.
It will be noticed from the last quotation which is given that the court regarded cases in which B was not a party to the contract between A and X as authority for allowing B to enforce a contract with A to which X was not a party, bat for which X furnished the consideration.
"A consideration moving from one person will uphold a promise to or an agreement made with a third person." Williamson v. Yager, 91 Ky. 282, 34 Am. St. Rep. 184, 15 S. W. 660. If B agrees to convey realty to A in consideration of work and labor to be performed by X, A may enforce such contract against B. Raymond v. Pritchard, 24 Ind. 318.
4See ch. LXXIII.
5In fact the court said, "The consideration moves in part from the child,' although he is not in position personally to yield an assent to the promise at the time it is made." Gardner v. Denison, 217 Mass. 492, 51 L. R. A. (N.S.) 1108, 105 N. E. 359.
In a composition with creditors, the promise of each creditor to take less than the full amount of his debt and to surrender the residue, is a consideration for the promise of every other creditor of which the debtor may avail himself.18 A contract between several creditors and a debtor, whereby the creditors agree to forbear suit for a certain time, has been said in obiter to possess no consideration as between the debtor and his creditors, although possibly the creditors who forbore might maintain an action against those who did not. It was said that the promises were wholly for the benefit of the debtor and could not, therefore, amount to a consideration of which he could avail himself.14 In one case, however, the debtor made no attempt to enforce the contract, and the action was brought by one of the creditors to have an execution sale on a judgment of another creditor in violation of such contract, treated as a nullity and to have the property resold.15 In another case, it was held that even if such contract were good, it could not, in a state in which common-law pleading was in force, be pleaded in bar, but that it could be pleaded only in abatement.16 If extension of time is wholly for the benefit of the debtor, it is hard to see why an agreement among the creditors to take less than that full amount due, is not wholly for the benefit of the" debtor. The two classes of cases should be treated alike, and the obiter in one of the foregoing cases must be wrong.