Novations and offers of novation must also be distinguished from the other legal relations with which this paper deals. The aim of the novation is to substitute for an existing obligation another right. To work a novation, it is not enough that a promise has been made to the original debtor to pay the debt; nor does the assent of the creditor help the matter unless an offer was made to him. The theory of novation is that the new debtor contracts with the old debtor that he will pay the debt, and also to the same effect with the creditor, while the latter agrees to accept the new debtor for the old. A novation is not made out by showing that the substituted debtor agreed to pay the debt. It must appear that he agreed with the creditor to do so. Moreover, this agreement must be based on the consideration of the creditor's agreement to look to the new debtor instead of the old. The creditor's assent to hold the new debtor liable is therefore immaterial unless there is assent to give up the original debtor.1

Promises for the benefit of a third party must also be distinguished from promises to one who has not given the consideration for the promise. It is laid down in the books that consideration must move from the promisee, and it is sometimes supposed that infringement of this rule is the basis of the objection to allowing an action by a third person upon a promise made for his benefit. Such is not the case. In such promises the consideration does move from the promisee, but the beneficiary who seeks to maintain an action on the promise is not the promisee. The rule that consideration must move from the promisee is somewhat technical, and in a developed system of contract law there seems no good reason why A should not be able for a consideration received from B to make an effective promise to C. Unquestionably he may in the form of a promissory note,2 and the same result is generally reached in this country in the case of an ordinary simple contract.3

1 See an article on Novation by Professor Ames, 6 HARV. L. REV. 184. Also Knisely v. Brown, 95 Ill. App. 516; Hamlin v. Drummond, 91 Me. 175; Butterfield v. Hartshorn, 7 N. H. 345; Warren v. Batchelder, 15 N. H. 129; Smart v. Tetherly, 58 N. H. 310.

2 Fanning v. Russell, 94 Ill. 386; McIntyre v. Yates, 104 Ill. 491; Hall v. Jones, 78 Ind. 466; Mize v. Barnes, 78 Ky. 506; Eaton v. Libbey, 165 Mass. 218; Horn v. Fuller, 6 N. H. 511; Farley v. Cleaveland, 4 Cow. 432; 9 Cow. 739.

8 Pigott v. Thompson, 3 B. & P. 149, by Lord Alvanley; Bell v. Sappington, III Ga. 391; sec. 2747 Ga. Code; Schmucker v. Sibert, 18 Kan. 104, 111; Cabot v. Haskins, 3 Pick. 83; Palmer Bank v. Insurance Co., 166 Mass. 189, 195, 196; Van Eman v. Stanchfield, 10 Minn. 255; Gold v. Phillips, 10 Johns. 412; Lawrence v. Fox, 20 N. Y. 268, 270, 271, 276, 277; Rector v. Teed, 120 N. Y. 583.

One more preliminary distinction must be made. A trustee can make a contract for the benefit of his cestui que trust, and if the contract is not performed may sue and recover full damages. A contract by which A engages to pay B money as trustee for C is unquestionably valid.1 And if B refuses to enforce the contract, C may bring a bill in equity against A and B, the primary equity of which is to compel the trustee to do his duty, but to avoid multiplicity of actions a court of equity will decree that A pay the money.2 It is only in case the trustee, who is the promisee, refuses to act, that the beneficiary has a right to sue in this way.3

There are two quite distinct types of cases which pass current under the name of promises for the benefit of a third person. To the first class belong promises where the promisee has no pecuniary interest in the performance of the contract, his object in entering into it being the benefit of a third person. To the second class belong promises where the promisee seeks indirectly to discharge an obligation of his own to a third person by securing from the promisor a promise to pay this creditor. These two classes are frequently treated as if their correct solution depended upon the same principles, but there are important distinctions.

The first class is properly called a contract for the benefit of a third person, and the phrase "sole beneficiary" should be reserved for this class. As the promisee has no pecuniary interest in the performance of the promise, he can have, generally speaking, no other intention than to benefit the third person, to give him a right. A typical illustration is a contract of life insurance payable to some one other than the insured. Whatever may be the apparent technical difficulties, it is obvious that justice requires some

1 Such contracts are illustrated in Cope v. Parry, 2 J. & W. 538; Treat v. Stanton, 14 Conn. 445; Mass. Mut. L. I. Co. v. Robinson, 98 Ill. 324.

2 Gandy v. Gandy, 30 Ch. D. 57. In this case a promise by a husband to pay trustees money for the support of the promisor's wife and for the education of their children was held enforceable by the wife when the trustees refused to sue. It was said that the trustees merely intervened because husband and wife could not contract. The reasoning and distinctions in this case are not clear. The promise was to pay the trustees, who were contracting parties, but the court did not clearly distinguish the case from that of a promise to pay a beneficiary directly. Cotton, L. J., suggested as an exception to the general rule forbidding one not a party to a contract to sue that "if the contract though in form it is with A is intended to secure a benefit to B so that B is entitled to say he has a beneficial right as cestui que trust under that contract, then B would, in a court of equity, be allowed to insist upon and enforce the contract." In the same case it was held that the children could not sue.

8 Flynn v. Mass. Ben. Assoc., 152 Mass. 288.

remedy to be given the beneficiary. The original bargain was convenient and proper, and the law should find a means to enforce it according to its terms. The technical difficulty is twofold. The beneficiary is not a party to the contract, and apart from some special principle governing this class of cases cannot maintain an action. The promisee, though entitled to sue on the promise on ordinary principles of contract, having suffered no pecuniary damage by the failure of the promisor to perform his agreement, cannot recover substantial damages; and if it be granted that the wrong of the defendant, not the injury to the plaintiff, furnishes the measure of damages, the beneficiary gains nothing thereby; for it is no easier to find a principle requiring the promisee to hold what he recovers as a trustee for the beneficiary than to find a principle allowing a direct recovery by the beneficiary against the promisor.2

There is no satisfactory solution of these difficulties in the procedure of a court administering legal remedies only. But one of the functions of equity is to provide a remedy where the common law procedure is not sufficiently elastic, and no opportunity can be found for the exercise of this function more appropriate than the sort of case under consideration. Much of the difficulty of the situation arises from the fact that three parties are interested in the contract. Common law procedure contemplates but two sides to a case, and cannot well deal with more. Equity can deal successfully with any number of conflicting interests in one case, since defendants in equity need have no community of interest.

In the case under consideration the only satisfactory relief is something in the nature of specific performance. The basis for equity jurisdiction is the same as in other cases of specific performance. There is a valid contract, and the remedy at law for its enforcement is inadequate. As the promisee and the beneficiary have both an interest in the performance of the promise, either should be allowed to bring suit joining the other as co-defendant with the promisor. In this way all parties have a chance to be heard. There may always be a possible question as to the respective rights of the promisee and the beneficiary, and this question

1 West v. Houghton, 4 C. P. D. 197 (But see Lloyds v. Harper, 16 Ch. D. 290; Re Flavell, 25 Ch. D. 89, 97); Peel v. Peel, 17 W. R. 586, per James, V. C.; Burbank v. Gould, 15 Me. 118; Watson v. Kendall, 20 Wend. 201; Adams v. Union R. R. Co., 21 R. I. 134, 137.

2 Cleaver v. Mut. Reserve Fund Life Assoc., [1892] 1 Q. B. 147, 152.

should not be determined in any litigation to which either is not a party.

The right of the beneficiary in such a contract to maintain an action was suggested in a number of early English cases, but judicial opinion was almost invariably against it.1 The well-known case of Dutton v. Poole, it is true, allowed an action by a child on a promise made to her father, but this decision seems to have been exceptional, and indeed professes not to deny that only a party to a contract could sue upon it. The court held that the child might be so far identified with the parent on account of the nearness of relationship as to be regarded as a party to the contract. This fictitious identification of child with parent is more suited to the notions of early lawyers than to ours. The same kind of reasoning is to be found in cases on marriage settlements where it is said that the children of a marriage are "within the consideration of the marriage" and may sue upon the covenants for their benefit.3 Dutton v. Poole has been overruled and the marriage settlement cases are generally brought within the principle of trusts. Whatever disadvantages the English law on the question may have, it has at least the merit of definiteness. A beneficiary has no legal rights; and though the cases in equity are not all of them easy to reconcile, it seems probable that he has no equitable rights, either against the promisor or the promisee. In a recent case Lindley, L. J., said:

"An agreement between A and B that B shall pay C gives C no right of action against B. I cannot see that there is in such a case any difference between equity and Common Law. It is a mere question of contract."

1 See Viner's Abr. I. 333-337.

2 1 Vent. 318, s. c. T. Jones 103; 2 Lev. 210.

8 See Peachey on Marriage Settlements, 56 seq.; Pollock on Contracts, 7th ed., 210. 4 Tweddle v. Atkinson, 1 B. & S. 393; Cleaver v. Mutual Reserve Fund Life Assoc., [1892] 1 Q. B. 147. In the latter case, Lord Esher said that apart from statute a policy of insurance on A's life payable to his wife gave her no rights. It would be payable to A's executors, and they would not hold as trustees.

So in Ireland, McCoubray v. Thomson, 11 Ir. Rep. C. L. 226; Clitheroe v. Simpson, L. R. 4 Ir. 59; and Canada, Faulkner v. Faulkner, 23 Ont. 252.

A possible exception to the general rule in England arises where a devise is made subject to the condition that the devisee shall pay a sum of money to another. The acceptance of the devise was held by Lord Holt to create a personal liability to the beneficiary. Ewer v. Jones, 2 Ld. Ray. 937; 2 Salk. 415; 6 Mod. 26. This was followed in Webb v. Jiggs, 4 M. & S. 119, and not denied in Braithwaite v. Skinner, 5 M. & W. 313, but it was suggested that the value of the devise limited the liability of the devisee. For American cases holding the devisee liable see post, p. 782, n. 3. 5 Re Rotherham Alum & Chemical Co., 25 Ch. D. 103, III. See also Eley v.

The denial of relief to a beneficiary is so obviously unsatisfactory in the case of life insurance policies that by the Married Women's Property Act in England a wife or husband or children, named as beneficiary in a policy, are entitled to the proceeds of the policy though not to sue for them directly.1 But the same reasons which demand that relief shall be given in the case of an insurance policy apply to other contracts where the intention of the promisee was to stipulate for a benefit to a third person. Such bargains are unquestionably valid contracts and the law should have sufficient adaptability to enforce them according to their terms.

The case of Tweddle v. Atkinson,2 for instance, is open to as serious criticism as the life insurance case. There the father and father-in-law of the plaintiff agreed that each should pay the plaintiff a sum of money and that he should have power to sue for it. It was held he could not recover on the promise. If the plaintiff could not recover against one who promised to pay him the money, it seems clear that he could have no more rights against the promisee if the latter collected the money from the promisor by way of damages for breach of contract.

Were it not for strained decisions on the law of trusts, the English courts would be obliged to make more unfortunate decisions than they do. In Moore v. Darton,3 money was lent to Moore for which he gave this receipt: "Received the 22d of October, 1843, of Miss Darton, for the use of Ann Dye £100, to be paid to her at Miss Darton's decease, but the interest at 4 per cent to be paid to Miss Darton." The court held that a trust for Ann Dye had been created; but the provision as to interest is clear evidence that the transaction was a loan, which Moore promised to repay to a beneficiary instead of to the lender.

The second type of case to which reference has been made — a contract to discharge an obligation of the promisee—has been held in England enforceable only by the promisee. This rule does not

Postive, etc., Life Assurance Co., 1 Ex. D. 88; Melhado v. Porto Alegre Ry. Co., L. R. 9 C. P. 503; Re Empress Engineering Co., 15 Ch. D. 125; Gandy v. Gandy, 30 Ch. D. 57. The remarks in Touche v. Metropolitan Ry. Warehousing Co., L. R. 6 Ch. 671, must be regarded as overruled.

The Irish case of Drimmie v. Davies, [1899] 1 I. R. 176, however, was a clear case of a promise for the benefit of a third person, and the promise was enforced. 1 45 & 46 Vict., c. 75, §11.

2 1 B. & S. 393.

De G. & S. 517; Ames, Cas. Trusts, 2d ed., 39. See also M'Fadden v. Jenkyns 1 Phillips 153; Ames, Cas. Trusts, 47.

4 Crow v. Rogers, 1 Strange 592; Price v. Easton, 4 B. & Ad. 433; Re Empress