Lawrence v. Fox

Facts

Holly owed a debt to Lawrence. Holly then lent money to Fox for a day, and the money became Fox's own property. When Holly advanced it, he gave directions about paying it, and another person was present and heard him. Fox was to pay the money to Lawrence on Holly's debt. Fox, having received the loan, promised Holly that he would do so. The promise was made to Holly and not expressly to Lawrence. The money was not placed in Fox's hands as a trust fund (property held for another's benefit) from which he was to pay Lawrence. Fox did not pay Lawrence. Lawrence sued Fox for the money. At trial, the person who was present testified to what Holly said as he advanced the money. Fox objected that this testimony was hearsay (a report of an out-of-court statement). He also argued that his promise was void for want of consideration (something of value given in exchange for a promise). He argued as well that no privity (a direct contractual tie) existed between him and Lawrence. The jury returned a verdict, and the court said the evidence warranted it.

Issues

1. Was the testimony of the person present, who heard Holly's directions about paying the money he was advancing to Fox, incompetent hearsay?
2. Was Fox's promise to Holly to pay Holly's debt to Lawrence void for want of consideration, even though Lawrence gave nothing for it and Holly's own liability to him continued?
3. Can Lawrence sue Fox on a promise made to Holly for Lawrence's benefit, although it was not expressly made to Lawrence and the money was a loan rather than a trust fund?

Holding

Fox promised Holly, for value received from Holly, to pay Holly's debt to Lawrence. That promise had consideration and Lawrence could enforce it, although it was made to Holly and the money was a loan, not a trust fund. The testimony was competent, and the judgment was affirmed.