Garratt v. Baker

[747]

LANGDON, J.

The plaintiff appeals from a judgment entered in favor of defendants after a demurrer to her complaint was sustained without leave to amend.

The allegations of the complaint are simple. Three persons, decedent Edward G. Garratt, defendant A. H. Baker and defendant John Callahan, all married men, were engaged in business as partners. They entered into an agreement by the terms of which each agreed that in the event of the death of any one of them, the two survivors would pay to the widow of the deceased partner the sum of $500 per month as long as they and she should live. Edward C. Garratt died November 19, 1932. Plaintiff is his surviving widow. The other partners paid the monthly sum above specified for some time, and then refused to make further payments. Plaintiff brought this action for $4,750, the amount alleged to be in arrears.

The position of the defendants, in which the lower court concurred, was that the agreement as set forth in the complaint was an illegal wagering contract, and hence wholly void. It is also contended that it lacks consideration, is unenforceable by reason of the statute of frauds, and is neither a valid insurance contract nor a contract for the benefit of a third party. In our opinion, none of these contentions is sound.

The object of the agreement seems perfectly clear and thoroughly proper. Members of a partnership, desirous of continuing the business without interruption upon the death of one of them, agree that instead of permitting the business to be wound up and the partnership assets to be sold to meet the needs of the decedent’s widow, they will undertake the personal obligation of such support. It is said that such arrangements are common, and in view of the practical advantages that are realized, there is no reason why they should not be. It is also said that insurance policies are available under which the partners may “reinsure”, that is, may secure a policy which will assure payments to the partnership sufficient to meet the obligation assumed toward the widow. It is difficult to see how a contract between partners which carries out in a satisfactory manner the object of assuring support to the widow of a deceased partner can be against public policy. It has none of the characteristics of a bet or wager. None of the “ betting ’ ’ partners receives the “ stake ’ ’; the first widow is the only beneficiary. Nor is there anything