Source: https://www.legalcrystal.com/case/91194/german-alliance-ins-co-vs-home-water-supply
Timestamp: 2019-04-26 00:27:45+00:00

Document:
Appellant German Alliance Ins. Co.
Respondent Home Water Supply Co.
In Guardian Trust Co. v. Fisher, 200 U. S. 57 , the contract with the water company expressly provided for liability of the company to third parties, and the state court having held that, under the law of North Carolina, an action of this nature can be maintained, that question was not in issue in this Court.
Guardian Trust Co. v. Fisher did not overrule National Bank v. Grand Lodge, 98 U. S. 124 , holding that a third person cannot sue for the breach of a contract to which he is a stranger unless in privity with the parties, and is therein given a direct interest.
In Ancrum v. Camden Water Company, 82 S.C. 284, the Supreme Court of South Carolina, construing a contract much like the one here involved, held that a taxpayer could not maintain an action against a water company for damage due to its failure to furnish water as required by such an agreement with the city. The plaintiff, however, contends that, although the present suit is for damage to property located in South Carolina, that decision is not of controlling authority, because it was rendered two years after this action was begun. Relying on Burgess v. Seligman, 107 U. S. 20 , it insists that, when the contract was made, February, 1900, there was no settled state law on the subject, and therefore the federal courts must decide for themselves, as matter of general law, the much controverted question as to a water company's liability to a taxpayer for failure to furnish fire protection according to the terms of its contract with the city.
sort of agreement, we find no record of a suit like this prior to 1878, when the Supreme Court of Connecticut, in a brief decision ( Nickerson v. Hydraulic Co., 46 Conn. 24), held that the property owner was a stranger to the agreement with the municipality, and therefore could not maintain an action against the company for a breach of its contract with the city. Since that time. similar suits, some in tort and some for a breach of the contract, have been brought in many other states. In view of the importance of the question, the subject has been examined and reexamined, the contract subjected to the most critical analysis, and many elaborate opinions have been rendered. They are cited in 3 Dillon, Munic.Corp. § 1340, and in the Ancrum case, supra.
Nat. Bank v. Grand Lodge, 98 U. S. 124 . Cf. Hendrick v. Lindsay, 93 U. S. 149 ; National Savings Bank v. Ward, 100 U. S. 202 , 100 U. S. 205 .

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