On appeal from judgment of the Mercer County Court of Common Pleas.
For the appellant, James J. McGoogan.
For the respondent, Wicoff & Lanning (Kenneth H. Lanning, of counsel).
Before Brogan, Chief Justice, and Justices Trenchard and Heher.
The opinion of the court was delivered by
HEHER, J. Respondent brought this action to recover the amount due on a promissory note, in the sum of $1,625, made by Charles M. McDermott, and endorsed for his accommodation by defendant-appellant, Collier. The answer admitted the allegations of the complaint, but set up, as an affirmative defense, that this was a renewal note; that respondent-bank, before the maturity thereof, or of one of several prior renewals, agreed that a fund of approximately $10,000, in its hands, belonging to McDermott, "should be used by plaintiff in paying said note endorsed by defendant;" that respondent, in violation of the agreement, did not use said fund, or any part thereof, for the stipulated purpose, but applied it to its own use, and that, in the circumstances, appellant was released from his obligation as an endorser of the note. By counter-claim appellant alleged that respondent retained said sum of $1,625 for its own use, and that therefore it "holds money that, in equity and good conscience, it ought to pay over to" appellant, and judgment for that sum, with interest, was demanded.
A verdict for plaintiff was directed by the trial judge, and from the judgment entered thereon Collier appeals, alleging error in the action thus taken, and in the denial of his motion for a direction of a verdict in his favor on the counter-claim.
The holder of a real estate mortgage in the principal sum of $60,000 authorized McDermott, a real estate and mortgage broker, to effect a sale of the security, and agreed to pay him a commission of $10,000, if, through his efforts, a sale should result. McDermott urged Collier, who was obligated as endorser on several of his outstanding notes, to purchase the mortgage. Collier declined, and suggested that he "take it to a bank he owed the less money to." McDermott, acting
on that suggestion, began negotiations with the respondent-bank, which resulted in the sale of the mortgage to it for the full principal sum thereby secured. McDermott's indebtedness to the bank on promissory notes held by it, in addition to the note in suit, totaled approximately $8,000. This indebtedness was satisfied from the moneys due McDermott for services in effecting the sale of the mortgage. Other obligations of McDermott were liquidated, and the balance then remaining, $250, was paid to appellant. The bank insists that these moneys were actually turned over to McDermott, and disbursed by him. Appellant maintains that we must regard the substance and not the form of the transaction, and that the bank, in fact, disbursed the fund, and, in liquidating all of McDermott's obligations to it, except the one is suit, violated the agreement alleged.
But the evidence did not establish the agreement pleaded. Appellant's sole reliance, on this crucial phase of his case, is placed upon two letters. On October 8th, 1930, after respondent, it seems, had agreed to purchase the mortgage, he forwarded a letter to Mr. John V. B. Wicoff, one of its vice-presidents, and also its counsel, stating that, "as I advised Mr. Charles McDermott to take the mortgage to your institution in order to settle his indebtedness as well as my note endorsed there, I feel that I should be taken care of in this matter. * * * I have helped Charlie to the extent of about $12,000 and am now paying the interest for him for this amount, and so I feel that it is only fair to me to be given this break. I trust you will appreciate my position and take care of me." Mr. Wicoff replied: "I have your letter in re McDermott and shall be very glad to comply with your wishes."
The trial judge apparently ruled, and properly so, that there was no evidence tending to establish the agreement pleaded. The letters did not constitute an agreement between the parties. An offer, to constitute a contract, must be one which is intended of itself to create legal relations on acceptance. 6 R.C.L. 600. The agreement must purport to produce a legally binding result, ...