Court Opinion

ID: 5412992
Source: CourtListenerOpinion
Date Created: 2022-01-08 16:12:16.891622+00
Date Added: 2024-06-11T08:30:53.157121
License: Public Domain

Per Allen, J., all concurring except Earl, J.
“ To give a third party who may derive a benefit from the performance of the promise, an action, there must be, first, an intent by the promisee to secure some benefit to the third party, and second, some privity between the two, the promisee and the party to be benefited, and some obligation or duty owing from the former to the latter which would give him a legal or equitable claim to the benefit of the promise, or an equivalent from him personally.
“ It is true there need be no privity between the promisor and the party claiming the benefit of the undertaking, neither is it necessary that the latter should be privy to the consideration of the promise, but it does not follow that a mere volunteer can avail himself of it. A legal obligation or duty of the promisee to him, will so connect him with the transaction as to be a substitute for any privity with the promisor, or the consideration of the promise, the obligation of the promisee furnishing an evidence of- the intent of the latter to benefit him, and creating a privity by substitution with the promisor. * * * .
“ In the language of Judge Pap alio, ‘ to entitle him to an action, the contract must have been made for his benefit. He must be the party intended to be benefited.’ ”
How it may well be doubted, in view of the striking out of the provisions of the contract as to prevailing rate of wages, if there was any- intent whatever on the part of the promisee in the bond, the State of Hew York, “ to secure some benefit to the third party.” If, however, that may be assumed, privity between the State and the laborers must be shown. That privity is dependent upon some obligation or duty owing from the former- to the latter which would give the laborers a legal or equitable claim to the benefit of .the promise.
It is apparent at the outset that the - State was absolutely *393under no obligation to these workmen when this bond was executed. The contract itself, striking out the- stipulated wages clause, showed no interest whatever in the laborers. The matter for which the State of Bew York was contracting was the improvement of a road. That was the sole object of its solicitude.
If liens were filed by these laborers, their claims as such under ordinary circumstances could not take precedence over the claim of the State to be protected by procuring the performance of the contract for the stipulated contract price.
It is claimed, however, that, while viewed as a strict legal obligation, there was no obligation —• yet there was one of a peculiar character raised by the relation of the parties to the State. It is said that these workmen were part of the State — that they are the peculiar objects of the State’s solicitude, and that, therefore, a duty existed to them within this rule. Several cases on this question of obligation or duty are cited and relied upon by the plaintiffs. In their examination it must be constantly borne in mind that in this case the object to be attained by the State of Bew York was to procure the faithful performance of the work of improving a road. The real object of any bond at all was to secure that faithful performance.
‘ In Coster v. Mayor of Albany, 43 N. Y. 399, it was held that the plaintiff could enforce an. agreement by the city of Albany with the State of Bew York to assume the payment of certain damages caused by the making of -a public improvement. It appeared that authority existed for the making of this contract in a statute which had been passed by the State. It further appeared that, under the laws as they then existed, private property could not he taken without just compensation. While it was the fact that the State was a sovereign power and could not be sued without its consent, its agents might he sued and enjoined. The damages which might be sustained by the performance of this public improvement were those for which a valid claim could exist against the State of Bew York, even though it might be the fact that the remedy to enforce that claim did not exist at law. Moreover, it appeared -that the contract sued *394on was made for the express purpose of relieving the State from this very obligation from which it sought to be freed.
Here, therefore, was not only a clear legal duty, made out on the part of the State to the persons who might be damaged ; but it is apparent that the contract was drawn for the express purpose of freeing the State from any obligation thereon.
In Little v. Banks, 85 N. Y. 258, a statute passed by the State was held to authorize the making of a contract containing the condition upon which the action was predicated. That statute provided that the reports should be published “ by contract * * * to be entered into * * * with the person or persons who * * "x" shall agree to publish and sell ” the said reports therein mentioned “ on terms the most advantageous to the public
It was held that under the statute the State had the right to insert in the contract a provision requiring the contractor to sell to other booksellers. Such a contract was held enforceable by the person for whose benefit it was made. It was claimed in this case that the specific subject-matter of the contract was included in the condition upon which the suit was brought. It is clear that a duty existed and that the provisions of the contract were actually authorized by a specific statute.
The plaintiffs next rely on Embler v. Hartford Steam Boiler Insurance Co., 158 N. Y. 431. In that case the personal representative of the employee of the pulp company had brought an action against that company for the alleged negligent killing of plaintiff’s intestate as the result of a boiler explosion. Before that action was tried a settlement was made and release given for $1,50'0. The pulp company had insured itself with the insurance company against loss or damage to property resulting from explosion of steam boilers, and also “ against loss of human life or injury to person, whether to the assured, to employees, or to any other person or persons, caused by such explosion or rupture, payable to the assured for the benefit of the injured person or persons, or their legal representatives in case of death, and not contingent upon the legal liability-of the assured.” The amount *395of any recovery under this clause was $6,0O(X The personal representatives, having .settled with the pulp company, brought an. action on this contract under the rule of Lawrence v. Fox. Judge Gray held that, whatever the intention of the parties was, the promisee had no legal interest that the contract be performed in favor of the employee. The only obligation or duty between them consisted in the duty owed by the employer to an employee for any breach of which the law gave a right of action which had already been availed of by the personal representatives. The four judges who concurred with Judge Gray, however, held that this contract “ was at most intended as a pecuniary indemnity to the legal representatives of the deceased employee for the loss sustained by them in consequence of his death, and that hut one recovery is permitted, whether the death was caused through negligence or unavoidable accident.”
In this case there is no question hut that the employer owed a duty to his employees then employed or to he thereafter employed. It is true that at that time its legal liability to such an employee would rest only upon a finding of its negligence — a failure to furnish a reasonably safe place in which to work, and the various other duties which an employer owed at that time to an employee. But it. was apparently in the mind of the pulp company that there might be cases where there would he a fine line of distinction between. its negligence and unavoidable accident. Claims might be made against it for deaths where, though it might be finally determined it was not legally liable, it proposed to have the ■benefit of an insurance with an insurance company which would bear the brunt of both the investigation and the final settlement of such a claim. The four concurring judges themselves did not apparently intend that the doctrine of this case should he carried beyond the facts involved. A ■ clear distinction exists between the case from the standpoint of the four concurring judges and the one at bar.
It is in the fact that in the pulp company’s ease the very subject-matter of the contract which it made with the indemnity company was to procure insurance against loss, which, while payable to it, was payable in terms for the direct *396“ benefit of the injured person or persons or their legal representatives in case of death, and not contingent upon the legal liability of the assured.”
Kb such situation exists in the case at bar.
The same line of distinction can be drawn in the case of Pond v. New Rochelle Water Co., 183 N. Y. 330, although" other distinctions equally exist. There the defendant was a municipal corporation. It entered into a contract with a water company for the delivery to the village of water through hydrants for the extinguishment of fires and for other public purposes. It added to the terms of the contract a provision that the water company would supply private consumers and corporations for a term of years with pure and wholesome water at a rate per annum, not exceeding a designated amount. The successor of the water company notified private consumers, residents of the village, that after a certain date no water would be furnished except through meters, and at rates largely in excess of those fixed by the contract. It was held that such resident might maintain an action for permanent injunction restraining the company from enforcing collection of the water rate in excess of that fixed by the contract. With reference to the duty which the municipal corporation owed to the plaintiff, resident of the village, the court says: “ In the case before us we have a municipality entering into a contract for the" benefit of its inhabitants, the object being to supply them with pure and wholesome water at reasonable rates. While there is not presented a domestic relation like that of father and child or husband and wife, yet it cannot be said that this contract was made for the benefit of a stranger. In the case before us the-municipality sought to protect its inhabitants, who were at the time of the execution of the contract consumers of waters, and those who might thereafter become so, from extortion by a corporation having granted to it a valuable franchise extending over a long period of time.”
It may be said as to this case that the duty to the inhabitants of this corporation which was then pointed out may be found in section 81 of the Transportation Corporations Law. There the municipal corporation was given the *397right to permit this water company to lay conduits in the ground. Manifestly, if the sole purpose to be subserved was to procure a supply of water for the extinguishment of fires ■and for sanitary and public purposes alone, such a privilege would be of little value to the water company. That section provided in terms that such a corporation should not only supply the authorities, but “ any of the inhabitants of any * * * village through which the conduits or mains of such corporation may pass * * * with pure and wholesome water at reasonable rates and cost.”
When, therefore, the board of trustees of the village added these terms to the contract, it may well be' said that they contracted with reference to the duty which they owed to the residents of that village, to protect them in procuring what the statute required “ pure and wholesome water at reasonable rates and cost.”
The authorities cited on this proposition by one of the defendants are equally to 'be distinguished. These are Sullivan v. Staten Island El. R. Co., 50 App. Div. 558; Woodward v. Mutual Reserve Life Ins. Co., 178 N. Y. 485.
In all the cases cited the condition deemed enforceable in favor of a third person was one directly connected with the main purpose which the contract was intended to subserve. Where official action was involved, the -authority for such action was directly conf erred, or a statute was involved broad enough in its terms to make the provision of the contract reasonably within the powers of the officials making it.
Here no statute other than the one shown to be inapplicable requires or authorizes the insertion of this provision in the bond.
The provision is not one in which the indemnity company directly agrees to pay the wages stipulated, but instead appears to be one intended to indemnify the State. The State would run no legal danger whatever of loss in this regard. It is not liable to the laborers for their wages. Its rights are superior to any lie-ns which they may impose upon the amount due the contractor.
To give this term in the bond any effect will be to hold substantially that, though nothing w.as s-aid in the contract *398on this subject, the State by taking this bond put itself in the position where it could not claim the rights of an individual on a broken contract as to sums of money properly withheld from the contractor.
A -liability would, therefore, be created as against the State, and -this liability so created w-onld be upon the theory that the -State owed not a legal or equitable obligation to the laborers employed on this contract, but a -duty based solely upon the regard which it might have for its citizens. This proposition does not appear to me to he tenable.
To hold the .¿Etna Indemnity Company liable to these plaintiffs upon -any such theory would be an extension of the rule of Lawrence v. Eox beyond the limits which have been placed upon it.
It is undoubtedly true that the plaintiffs were entitled to receive their full compensation, hut that fact conceded would not permit this court to -exact su-oh payment from defendants who were neither' liable at law nor in equity.
The plaintiffs have failed to make out -a cause of action against the State -of Yew York as well as the defendant .¿Etna Indemnity Company.
The defendants claiming a cause of action -against the State and -against the .¿Etna Indemnity. Company have equally failed in their contention.
The defendants State of Yew York and .¿Etna Indemnity Company are entitled to judgment dismissing the complaint against them upon the merits; but, under the circumstances of this case, no costs will be -allowed as against the plaintiffs or defendants making such claim.
Final decision may he prepared in accordance with this opinion.
Judgment accordingly.