Opinion ID: 1290650
Heading Depth: 1
Heading Rank: 2

Heading: Third-party-beneficiary action

Text: The second certified question is whether the bank as a judgment creditor of an indemnitee (the insured) may maintain, as a third-party-beneficiary, a direct action against the indemnitor (the insurer) when the indemnity is against loss by the indemnitee. Unlike garnishment, the third-party-beneficiary action is based not upon statutory law [5] but upon case law principles. The proper party to bring suit to recover on a fidelity bond for loss caused by the default or defalcation of a bond employee is, of course, the employer or the person for whose benefit the bond is given. 35 Am.Jur.2d Fidelity Bonds And Insurance § 87 (1967). As a general rule, the only party entitled to sue on a contract of indemnity is the indemnitee or someone in his right; one not a party to a contract of indemnity and for whose benefit it was not made may not maintain an action thereon against the indemnitor. Thus, a third person, although he may have an interest in the subject matter of the indemnity and have a right of action against the indemnitee, is not entitled to sue on the indemnity contract in his own name, not being a party thereto. 41 Am.Jur.2d Indemnity § 41 (1968). In order to maintain an action as a beneficial obligee of an indemnity bond, the plaintiff must allege and prove an interest in the performance of the duty, and that the duty was imposed either for his sole benefit or for the joint benefit of himself and others. See Clark v. Nickell, 73 W.Va. 69, 73-74, 79 S.E. 1020, 1022 (1913). This Court has heretofore spoken to the question of whether a person may maintain a third-party-beneficiary action to reach the proceeds of an insurance contract indemnifying against loss but not against liability. In State ex rel. Copley v. Carey, 141 W.Va. 540, 91 S.E.2d 461 (1956), we held that an insurance contract indemnifying against loss is for the sole and exclusive benefit of the indemnitee and does not indemnify a third party against any loss or damage sustained by him. [T]he promise of the indemnitor, in a contract of indemnity against loss sustained by the person indemnified, is not to answer for the debt, default or miscarriage of another person but is to make good the loss which results to the person indemnified from such debt, default, or miscarriage. 141 W.Va. at 549, 91 S.E.2d at 467. See also Ronnau v. Caravan International Corp., 205 Kan. 154, 159-60, 468 P.2d 118, 122 (1970). Since contracting parties are presumed to act for themselves, an intent to benefit a third person should be clearly expressed in the contract. Id., 205 Kan. at 159, 468 P.2d at 122. The personal nature of an employee fidelity insurance policy as an indemnity against lossby the indemnitee precludes an intent to benefit a third person, such as a creditor of the indemnitee. In answer to the second certified question we, in summary, hold that a judgment creditor (here, the bank) of an indemnitee (the insured) may not maintain, as a third-party-beneficiary, a direct action against the indemnitor (the insurer) when the indemnity is against loss by the indemnitee.