Court Opinion

ID: 9865538
Source: CourtListenerOpinion
Date Created: 2023-09-25 18:52:47.900131+00
Date Added: 2024-06-11T13:36:00.307014
License: Public Domain

ON MOTION ROE REHEARING.
Counsel submit on their motion for rehearing an impressive line of argument, with authorities in support thereof which they state they had failed to discuss in their original brief. The argument now urged, as we understand it, is that, since under the minority American rule, to which this State is committed, a third person is not ordinarily permitted to enforce a promise made for his benefit, it follows that it is only because the statute here involved expressly authorized the materialman to sue on the bond that he has such right, and consequently the cause of action is under the statute and not on the bond. Thus, in what we have to say, it will be borne in mind that there are three questions involved: the major and controlling question as to whether the action is barred; the ancillary question throwing light on the controlling question, to wit, whether the cause of action lies under the statute or on the *336bond; and finally, as throwing light on the question last mentioned, the question raised on the motion for rehearing as to whether, except for the express statutory authority, the plaintiff could sue on the bond in his own name. Most of what is now said in response to the motion for rehearing will bear upon the third and last of the questions named.
While it is true that the Code, § 3-108, provides that, “As a general rule, the action on a contract, whether express or implied, or whether by parol or under seal, or of record, shall be brought in the name of the party in whom the legal interest in such contract is vested, and against the party who made it in person or by agent,” it is also true that'nearly all of the numerous decisions recognizing this statutory provision,' including the leading case of Sheppard v. Bridges, 137 Ga. 615 (74 S. E. 245), give effect to the exception to the rule, and have adopted it as a rule of procedure that a suit may be maintained in the name of a third party where the promise has been made for the express purpose of conferring a benefit upon him. See Carruth v. Ætna Life Insurance Co., 157 Ga. 608 (122 S. E. 226). In the case just cited, it was held in headnote 1, quoting from Sheppard v. Bridges, supra, that, where a “promise is made for the purpose of conferring a benefit on a person, though he be not a party to the contract, or furnish the consideration for the promise, he can bring suit upon it;” and in the same case, in headnote 1(a), it was said: “A contract for the benefit of a third person, which evidences an intent to benefit such third person and an obligation on the part of the promisee to the third person, creates an equitable right or interest in the beneficiary, growing out of the trust relationship, which may be enforced by the real beneficiary or her personal representative;” and, in headnote 1(b), it was held that, “A person not a party to the contract and not a privy to the consideration may, if the contract was entered into for his benefit, maintain an action on it if he has either a legal or equitable interest in the performance of the contract.” This rule was reiterated though not adjudicated in Stonecypher v. Coleman, 161 Ga. 403, 413 (131 S. E. 75). It appears to be the rule, as recognized by the decisions of this court, that while the provisions of the Code, § 3-108, requiring that a suit be brought “in the name of the party in whom the legal interest in such contract is vested,” bars an action by a third person who has *337merely an incidental benefit in its performance, it does not preclude an action in the name of a third person who has a direct legal or equitable interest in the performance of the contract, and for whose benefit it was expressly undertaken. In Reid v. Whisenant, 161 Ga. 503, 511 (131 S. E. 904, 44 A. L. R. 599), even the two dissenting Justices, who sought a stricter compliance with the Code section quoted, used this language: “By the weight of authority the action cannot be maintained merely because the third person will be incidentally benefited by the performance of the contract; but he must be a party to the consideration, or the contract must, have been entered into for his benefit, and he must have some legal or equitable interest in its performance.” (Italics ours.) Thus it was held by this court in American Surety Co. v. Small Quarries Co., 157 Ga. 33 (120 S. E. 617), cited by the movant, that a materialman could not sue on the bond in that case. The bond there involved was executed to the county and did not, as here, contain the additional words or their equivalent, “for the use of the obligee and of all persons doing work or Burnishing skill, tools, machinery, or materials under or for the purpose of such contract.” But in Southern Surety Co. v. Dawes, 161 Ga. 207 (130 S. E. 577), this court held that, even though the bond did not contain the' exact words just quoted from the statute, nevertheless, the materialman could sue thereon, for the reason that the obligation of the bond, while omitting the words “for the use of,” was also expressly conditioned for the benefit of materialmen as well as the city. In Southern Surety Co. v. Dawes, supra, the Small Quarries Company case was distinguished. It is true that in these two cases, in determining whether there was a proper plaintiff, the court discussed whether or not the bond sued on was a statutory bond. In the first ease, the court decided no; in the second case, yes; and accordingly it was held that the first case lacked a proper party plaintiff, and that the last case did not. But no question was before the court as to whether in either case, if the bond had in fact been executed according to the terms of the statute, that is, “for the use of materialmen,” etc., a materialman could have brought suit on the bond in his own name irrespective of whether or not the statute had so expressly authorized. It just so happens that the statutory requirement for this bond, to wit, that it should in effect be written expressly for the use of materialmen, is precisely the *338same provision which we have seen would authorize a materialman to sue thereunder without reference to and independently of any such special statutory authorization. Accordingly, the bond in the first case not coining up to the provisions of the statute, which, as stated, amounts to just what would be necessary to sue without special statutory authority, the suit was declared invalid for lack of a proper plaintiff. In the second case, the bond having in fact come up to the provisions of the statute, amounting to the same requirement which would authorize a suit without special statutory authority, the suit was declared valid. In neither case, as has been stated, was any question before the court as to whether or not a bond such as was specified by the statute could have been sued on by a. materialman, even though no special authorization so to do had been given by the statute providing for the bond. The provisions required by the statute being those which would have authorized the materialman to sue without special authorization, no necessity appeared for any such decision; and in point of fact the question.from the Court of Appeals in the first case made inquiry as to whether the suit could be maintained by the materialman “ by virtue of the provisions” contained in the statute, and in the second case the question propounded by the Court of Appeals to this court showed that the bond purported to have been given under the statute, and the suit purported to have been entered in accordance with the particular provisions therein specified. It so happens, however, that the larger ancillary question, not the ultimate question as to whether the action is barred, but the question as to wherein the cause of action lay, was in fact plainly and expressly adjudicated in Southern Surety Co. v. Dawes, supra, where the court (page 212) used this clear and emphatic language: “The cause of action, if any, arises from the contract embodied in Ike bond, not from the primary or secondary character of the paper that might be set out in a petition suing on the bond.” (Italics ours.) In making this statement in Southern Surety Co. v. Dawes, the court was considering whether under the terms of the statute the suit should be based on the bond or on a certified copy thereof furnished by the clerk. While there was a contention in that case as to whether the bond was a statutory bond by virtue of its terms, and as to whether the plaintiff had complied with the statute in bringing a suit thereon, there seems to have been no contention *339as to whether, if in fact the bond complied with the statute, a suit could be maintained by the materialman irrespective of whether the statute expressly so authorized. However, in ruling that the cause of action was not on the certified copy furnished by the clerk of the city authorities, the court ruled squarely that the cause of action lay in the contract embodied in the bond.

Rehearing denied.