Opinion ID: 450493
Heading Depth: 1
Heading Rank: 3

Heading: georgia railroad as a third-party beneficiary

Text: 20 Georgia Railroad first notes that under the terms of the P & A agreement, the Receiver was obligated to certify all valid non-contingent balance sheet liabilities to First Atlanta for payment. Georgia Railroad then points to language in the Contract of Sale between the Receiver and the Corporation which required the Corporation to assume and discharge any duties owed by the Receiver to the Assuming Bank pursuant to the Purchase and Assumption Agreement. Georgia Railroad argues that it is a third-party beneficiary of these agreements and that the Receiver violated its duty by refusing to certify the subordinated capital note to First Atlanta as a valid non-contingent balance sheet liability. Allegedly, the Corporation in turn breached its agreement to assume the Receiver's duties under the P & A agreement. 21 Our holding above that the term valid non-contingent balance sheet liability did not include Georgia Railroad's subordinated capital note and that a contrary holding would be clearly erroneous also controls the resolution of the third-party beneficiary issue. Under Georgia law, a person cannot be deemed a third-party beneficiary unless it clearly appears from the contract that the contract was intended for the benefit of the third person. Moreover, the mere fact that the third party would benefit from performance of the agreement is not alone sufficient; both parties to the contract must intend that the third person be the beneficiary. Donalson v. Coca Cola Co., 164 Ga.App. 712, 298 S.E.2d 25 (1982); LDH Properties v. Morgan, 145 Ga.App. 132, 243 S.E.2d 278 (1978); Stewart v. Gainesville Glass, 131 Ga.App. 747, 206 S.E.2d 857 (1974), aff'd on other grounds, 233 Ga. 578, 212 S.E.2d 377 (1975). Since it is clear that neither party to the P & A agreement intended for the term valid non-contingent balance sheet liability to include a subordinated capital note such as the one held by Georgia Railroad, it follows that neither party intended for Georgia Railroad to be a third-party beneficiary of the contract. Thus, the district court properly granted the Corporation's motion for summary judgment on this issue. 22 For the above-stated reasons, the decision of the district court is 23 AFFIRMED in part and REMANDED.