Title: Anderson v. Rexroad

State: kansas

Issuer: Kansas Supreme Court

Document:

175 Kan. 676 (1954)
266 P.2d 320
ANNA C. ANDERSON and JO ANN BREWER, Appellants,
v.
L.W. REXROAD and J.M. REXROAD, a Co-Partnership doing business as L.W. REXROAD AND SON, Appellees.
No. 39,228

Supreme Court of Kansas.
Opinion filed January 23, 1954.
Drew Hartnett, of Salina, argued the cause, and L.O. Bengtson, of Salina, was with him on the briefs for the appellants.
James P. Mize, of Salina, argued the cause, and C.L. Clark and Tom Lillard, Jr., both of Salina, were with him on the briefs for the appellees.
The opinion of the court was delivered by
PARKER, J.:
The plaintiffs brought this action as third party donee beneficiaries upon a contractual obligation alleged to have been assumed by the defendants under the terms of a contract with the City of Assaria, Kansas, wherein the defendants undertook the construction of certain street improvements, during the performance of which plaintiffs' house and personal property were totally consumed by fire. Following the overruling of motions to make more definite and certain and to strike the trial court sustained the defendants' demurrer to the petition on the ground such pleading failed to state facts sufficient to constitute a cause of action. The plaintiffs appeal from the ruling on the demurrer.
Preliminary allegations, appearing in the first five paragraphs of the petition, are of little import and need not be detailed. Stated in summary fashion they recite that on all dates in question plaintiffs, Anna C. Anderson and Jo Ann Brewer, were the owners, in undivided interests, of a five-room frame dwelling, in which were household and personal effects, located on certain lots in Assaria, *677 Kansas, a city of the third class; that the defendants, L.W. Rexroad and J.M. Rexroad, were partners doing business as L.W. Rexroad and Son; and that Harry Miller was one of their employees.
Paragraphs 5, 6, 7 and 8 of the petition are vital to the issues and should be stated at length. They read:
The next four paragraphs and the prayer of such pleading, like the preliminary portions thereof, are of little consequence. Summarized, they contain allegations to the effect plaintiffs complied with all requirements of the contract prior to the bringing of the action, including the making of a claim for the loss sustained by them, followed by a demand for arbitration, each of which was denied and refused by defendants; recitals respecting the fair and reasonable replacement value of the property destroyed by the fire and its rental value since the date thereof; and a request for judgment accordingly.
At the outset it may be stated that, although appellees have taken no appeal from the rulings on their motions to make more definite and certain and to strike, we have examined the petition and concluded the trial court properly overruled the motion to make that pleading more definite and certain. Therefore, based on what has been heretofore related, and we may add on the basis of arguments advanced by the parties in support of their respective positions, it becomes clear the over-all question involved on appellate review is whether the allegations of the petition, accepted as true and given the benefit of all reasonable inferences, are sufficient to permit a recovery under the terms of the contract between the City of Assaria and the appellees for the loss claimed to have been sustained by the appellants.
In a general way it may be said that appellants contend they are donee beneficiaries of the contract entered into between the City and the appellees for their benefit and that as a matter of law they can maintain an action and recover for their loss under the terms of such contract as against the contractor appellees. On the other hand the appellees, who claim to the contrary, advance three specific contentions as grounds for sustaining their position and the ruling of the trial court on the demurrer. Because it seems feasible to dispose of the appeal on the basis of such contentions we shall proceed to give them consideration as we deem advisable without regard to the order in which they are presented.
The first of the contentions to which we have just referred requires an interpretation of Section 10 (t) of the contract. This *679 section is referred to at length in one of the heretofore quoted paragraphs of the opinion but will be here quoted in toto for purposes of clarity and emphasis. It reads:
The gist of all arguments made by appellees on the point now under consideration is that the language of the foregoing section of the contract when considered in the light of all its other sections must be considered as comprehending less liability than its terms import. The established rule is that the intention of the parties and the meaning of a contract are to be deduced from the instrument where its terms are plain and unambiguous; that when the language is clear and unequivocal the meaning must be determined by its contents alone; that words cannot be read into a contract which import an intent wholly unexpressed when it was executed; and that the court may not make an agreement for the parties which they did not make for themselves (See West's Kansas Digest, Contracts, § 143; Hatcher's Kansas Digest [Rev. Ed.], Contracts, § 40). When analyzed the terms of the quoted section of the contract, particularly those emphasized, are express, clear and unequivocal and we find nothing elsewhere in the contract conflicting therewith. It follows the language used in such section must be given its plain and ordinary meaning without resort to further rules of construction. When this is done we are forced to the conclusion it means exactly what it says, i.e., that the contractor shall be liable for all damages to buildings or other property, at least such as were located in the City of Assaria, resulting from the work performed under the contract and that if this court were to hold otherwise it would be making an agreement for the parties which they did not make for themselves.
The basic premise on which appellees found their next contention is that the terms of the agreement disclose no such privity of contract between appellees and appellants as will authorize the latter *680 to maintain an action as third party donee beneficiaries against appellees to recover for the destruction of the involved property.
In view of the limited scope of appellees' position under the foregoing contention there is no occasion to here write a thesis on the right of a third person to enforce a contract between other persons for his benefit. While it has not always been so the general rule, now well established in the United States, including our own jurisdiction, is that he may avail himself of such a contract when made for his benefit and maintain an action thereon notwithstanding he was a stranger thereto and paid no part of the consideration therefor or had no knowledge thereof and was not identified therein when it was made. For statements of the rule in other jurisdictions see 12 Am. Jur., Contracts, 825, § 277; 17 C.J.S., Contracts, 1121, § 519 (c); Restatement of Law, Contracts, §§ 133, 135, 139. For our latest decisions recognizing and applying such rule see Holmes v. Kalbach, 173 Kan. 736, 252 P.2d 603; In re Estate of Hilliard, 172 Kan. 552, 241 P.2d 729; Cory v. Troth, 170 Kan. 50, 223 P.2d 1008. For many others see Hatcher's Kansas Digest, (Rev. Ed.), Contracts, § 98; West's Kansas Digest, Contracts, § 187.
The question of what constitutes privity of contract is all important in disposing of the second contention advanced by appellees. They place great weight on the early case of Mott v. Water Co., 48 Kan. 12, 28 Pac. 989, wherein it was held:
In our opinion waterworks cases, such as the one from which we have just quoted, are in a class by themselves and are not decisive, as appellees contend, of the question of privity involved in the instant case. Even so it must be conceded the case on which appellees rely tends to support their position and should be considered.
The rule announced in Mott v. Water Co., supra, and other similar cases, where it is still adhered to, has been severely criticized. In fact it may be said the fallaciousness of the reasons assigned for the *681 pronouncement of such rule has been fully demonstrated (4 Corbin on Contracts, 204 to 211, incl. § 806; 1 Farnham, Waters and Water Rights, 848, § 160b; 62 A.L.R., Anno., 1212). Be that as it may there are other sound reasons for holding the rule in the Mott case, to the effect there was no such privity of contract between the parties as would authorize the plaintiff to maintain the action, is no longer to be regarded as sound and should be disapproved. In the years since its decision there has been steady progress on the part of the courts in the extension of the right of a third party to sue on a contract made for his benefit and it has been stated frequently that in the light of modern developments privity in the sense it was used prior to recognition of the present third party beneficiary doctrine is no longer necessary in order for the beneficiary to maintain an action or recover on a contract intended for his benefit.
See 12 Am. Jur., Contracts, 830, § 278, where the following statement appears:
See, also, 12 Am. Jur., Contracts, 835 to 838, incl., § 284, for further statements of like import. Also 81 A.L.R., Anno., 1289 where it is said "The very essence of the American rule is that such privity is not necessary."
In 4 Page On The Law Of Contracts, 4211, § 2388, it is said:
For a similar statement see 2 Page Supp., On The Law Of Contracts, 1685, § 2388.
See, also, 4 Corbin On Contracts, 29, § 778, which states:
Moreover in the light of the modern doctrine now prevailing with respect to the maintaining of actions on contract by third party beneficiaries, and independent of questions pertaining to the legality of the contract involved, the great weight of authority in the United States now holds that where an improvement, such as is here involved, is made under a contract between a municipality and the contractor making it, by which the contractor assumes liability for all damages to buildings or other property resulting from the work of constructing the improvement, such contract is to be regarded as for the benefit of an injured property owner who may maintain an action, and if the facts warrant recover, on such contract. See 10 McQuillin (3rd Ed.) Municipal Corporations, 503, 504, § 29.129; 13 McQuillin (3rd Ed.) Municipal Corporations, 629, 631 to 634, incl., §§ 37.231, 37.233; Restatement Of Law, Contracts, § 145; 4 Corbin On Contracts, 83, 201, §§ 782, 805; 63 C.J.S., Municipal Corporations, 994, 1025, §§ 1259 (d) (2), 1289; 38 Am. Jur., Municipal Corporations, 411, § 708; 43 Am. Jur., Public Works and Contracts, 825, § 82, and cases there cited.
It is interesting to note that as early as Jenree v. Street Railway Co., 86 Kan. 479, 121 Pac. 510, this court recognized the modern trend, as well as the doctrine adhered to in the heretofore cited authorities, when at page 486 of the opinion it said:
After a review of the foregoing authorities, followed by a somewhat exhaustive examination of the numerous decisions cited supporting the rules therein announced, we have little difficulty in concluding the allegations of the instant petition were sufficient to withstand any claim made against it on the basis of lack of privity and that appellees' contention the demurrer was properly sustained upon that basis lacks merit and cannot be upheld.
In reaching the conclusion just announced we have disregarded, not overlooked, the numerous Kansas cases and decisions from *683 other jurisdictions, cited by appellees' astute and industrious counsel, holding that a municipality is not liable, in the absence of a statute imposing liability, for the wrongful acts of city officials or employees, performed in the exercise of governmental functions; also authorities holding that so long as an independent contractor is guilty of no negligence in his performance of municipal improvement work, he is entitled to share the immunity from liability possessed by the city. We have no quarrel with such decisions. The trouble with them from appellees' standpoint, as well as our own, is that they are of little value on the point just decided, particularly in a case where  as here  it appears from the face of the record that whatever immunity the contractor might otherwise have been entitled to had been contracted away under the terms of the agreement.
Finally appellees contend that with the construction we have given section 10 (t) of the contract such section is unenforceable and no action can be maintained thereon because it is unsupported by consideration and beyond the city's power to make.
There are two short and simple answers to arguments advanced respecting lack of consideration. In the first place, as was pointed out early in this opinion, the validity of a contract containing a clause providing benefits for a third person does not depend upon payment of consideration on the part of the third party. Indeed if that were the rule, we would have no third party donee beneficiary contracts. In the next place an examination of the instant contract discloses that it included all obligations imposed by its terms. Under such circumstances the total consideration agreed to be paid by the city was a consideration for everything agreed to by the appellees. (See Barton v. Hackney, 167 Kan. 754, 208 P.2d 590.)
We are not too certain appellees' claim, the action of the city in entering into the contract requiring the contractors to indemnify property owners against risks for which the city would have no liability was ultra vires, is sound. Much that is said and held in Robertson v. Labette County Comm'rs, 122 Kan. 486, 252 Pac. 196; and Robertson v. Labette County Comm'rs, 124 Kan. 705, 261 Pac. 831, indicates that under the confronting facts and circumstances such action would not exceed the powers conferred upon it by law. Be that as it may, we are not confronted with or required to pass upon that question.
Assuming, but not deciding, the city's action was ultra vires *684 appellees' contention on this point cannot be upheld. Instruments attached to and made a part of the petition disclose the contract in question was executed on August 31, 1951; that it provided the work was to be completed within 140 days thereafter; and that the claim herein involved was made on August 15, 1952. We are told, and it is not denied, the contract was completely executed on the part of the signatories thereto some months prior to the commencement of this action. Without these undenied statements we would nevertheless be bound to assume that such was the case. In addition it must be conceded the action of the city was not expressly prohibited by statute and that the most that can be said, even from appellees' standpoint, is that it possessed only such powers as were conferred by law, and had acquired none by implication, on the date of the execution of the contract. Under such conditions and circumstances the rule is that it does not lie in the mouths of the appellees to raise the question of ultra vires in order to avoid liability under the contract. See 38 Am. Jur., Municipal Corporations, 183, § 507, where, in discussing the doctrine of ultra vires as applied to municipal corporations, it is said "However, an ultra vires contract which has been fully performed by both parties is no longer assailable by either party." See, also, 38 Am. Jur., Municipal Corporations, 191, § 514, which states:
In view of what has been heretofore said and held we are constrained to hold the allegations of the petition were sufficient to state a cause of action and that the trial court erred in sustaining the demurrer to such pleading. It follows its action in that respect should be vacated and set aside and the cause remanded with instructions to overrule the demurrer and proceed with the cause in accord with the views expressed in this opinion.
It is so ordered.