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.
This rule is not confined to mortgages. If a grantee assumes and agrees to pay other debts of his grantor's, which are liens on the property conveyed, such as vendor's liens,4 judgment liens.5 or legacies charged on the realty conveyed,6 and retains enough from the purchase price to pay such debts, the owner of such debts may maintain an action against the grantee. Furthermore, this principle is not limited to conveyances of realty. If B transfers personalty to A, in consideration of which A promises to pay B's debt to C, which is a lien on the personalty conveyed, C may enforce payment against A.7 If B, who has subscribed for stock in a corporation, C, assigns such stock to A, in consideration of A's promise to pay the amount of B's subscription, C may enforce such liability against A, even if A would not have been liable in the absence of such contract.8 If B conveys goods to his creditor, A, in reliance upon A's promise to pay B's remaining creditors, C, who is one of such creditors, may enforce such promise against A.9 So if B conveys his interest in a business to A, in consideration whereof A agrees to pay B's debts to C, arising out of such business, C can maintain an action against A on such contract.10 If a bank, B, transfers all of its assets to A, in consideration of A's agreeing to pay all of B's liabilities, C, who is one of B's creditors, may maintain an action against A upon such promise.11 Where one corporation bought the business of another, agreeing therefor to issue certificates of its own stock to the stockholders of the vendor corporation, a stockholder of the vendor may sue on such contract for specific performance.12 By analogy it has been held that the United States, as the successor of Spain, became liable upon concession for submarine cables granted by Spain, while Spain was sovereign of territory which it subsequently ceded to the United States.13 It is chiefly in connection with promises by a grantee to discharge mortgages and liens that the question has been raised whether such contract is enforceable if the grantor is not personally liable on such debt.14 If money is deposited by a lessee with a lessor to pay for certain improvements to be made upon the leased premises, the party making such improvements may maintain an action against the lessor.15 On the other hand, an agreement between bondholders who have formed a new company and bought the railroad under foreclosure proceedings to set aside a sum to pay small outstanding claims against the railroad, can not be enforced by one who had constructed a station for the old company and had not been paid therefor.16 The payee of a bank check may sue on a contract between a bank and the vendee of stock, to pay a check drawn on such bank by the vendee in favor of the vendor for the purchase price of such stock, where the bank receives the proceeds of the resale of such stock amounting to more than the check.17 If a grantee agrees in the deed to himself, that a surety of his grantor's shall have a lien on the realty conveyed to indemnify him, such surety may enforce such deed.18 Under a statute which authorizes the beneficiary to recover only upon a contract which is entered into between" two other persons for his sole benefit, a lienholder can not maintain a personal action against a grantee, who has assumed and agreed to pay the liens upon the realty thus conveyed,19 since such contract is made for the benefit of the grantor as well as for the benefit of the lienholder.20
Wisconsin. Enos v. Sanger, 96 Wis. 150, 66 Am. St. Rep. 38, 70 N. W. 1069; Morgan v. Lake View Co., 97 Wis. 275, 72 N. W. 872; Carpenter v. Meachem, 111 Wis. 60, 86 N. W. 552.
If land has been conveyed under an implied covenant on the part of the grantee to assume a mortgage debt, and subsequently such land is conveyed by the grantee to the grantor under a similar covenant, the grantor can not enforce the first covenant against the grantee. Sanderson v. Turner, - Okla. - , 2 A. L. R. 347, 174 Pac. 763.
3 Porter v. Ourada, 51 Neb. 510, 71 N. W. 52.
4 Saunders v. McClintock, 46 Mo. App. 216; Johnson v. Elmen, 94 Tex.
168, 86 Am. St. Rep. 845, 52 L. R. A. 16r2, 59 S. W. 253; Strain v. Walton, 11 Tex. Civ. App. 624, 34 S. W. 293.
5Emmitt v. Brophy, 42 O. S. 82; Kehoe v. Patton, 23 R. I. 360, 50 Atl. 655.
6 Bird v. Stout, 40 W. Va. 43, 20 S. E. 852.
7Moore v. First National Bank, 38 Colo. 336, 120 Am. St. Rep. 120, 10 L. R. A. (N.S.) 260, 88 Pac. 385; Springs v. Cole, 171 N. Car. 418, 88 S. E. 721; Kollock v. Parcher, 52 Wis. 393, 9 N W. 67.
8 Edwards v. Schillinger, 245 111. 231, 33 L. R. A. (N.S.) 895, 91 N. E. 1048.
9 Weber-Wolters Dry Goods Co. v. Scott, 172 Ky. 280, 189 S. W. 223.
10 Arkansas. National Trust & Credit Co. v. Polk, 123 Ark. 24, 183 S. W. 195
Illinois. Rothermell v. Coal Co., 79 111. App. 667.
Indiana. Dickson v. Conde, 148 Ind. 279, 46 N. E. 998.
Iowa. Malanaphy v. Fuller & John-eon Mfg. Co., 123 Ia. 719, 106 Am. St. Rep. 332, 101 N. W. 640.
Minnesota. Lovejoy v. Howe, 55 Minn. 353, 57 N. W. 57.
Missouri. Schufeldt v. Smith, 139 Mo. 367, 40 S. W. 887.
Ohio. Conner v. Bramble, 6 Ohio N. P. 195.
Pennsylvania. Cox v. Philadelphia Pottery Co., 214 Pa. St. 373, 63 Atl. 749.
Virginia. Cosmopolitan Life Association v. Loegel, 104 Va. 619. 52 S. E. 166.
Wisconsin. J. & H. Clasgens Co. v. Silber. 03 Wis. 579. 67 N. W. 1122
Lenz v. Ry., 111 Wis. 198, 86 N. W. 607.
11 Moore v. First National Bank, 38 Colo. 336, 120 Am. St. Rep. 120, 10 L. R. A. (N.S.) 260. 88 Pac 385.
12 Fletcher v. Telephone Co., 55 N. J. Eq. 47, 35 Atl. 903.
13 Eastern Extension Telegraph Co. v. United States, 231 U. S. 326, 58 L. ed. 250.
14 For a discussion of this subject see Sec. 1311, 2397.
15 Beattie Mfg. Co. v. Gerradi, 166 Mo. 142, 65 S. W. 1035.
16 Mayer v. R. R., 132 Ind. 88, 31 N. E. 567. (Some stress was here laid on the fact that such sum might have been already expended in paying off prior claims.)