Court Opinion

ID: 9832102
Source: CourtListenerOpinion
Date Created: 2023-09-01 21:37:09.101861+00
Date Added: 2024-06-11T07:43:42.027561
License: Public Domain

On Motion for Rehearing.
The case of Townsend v. Rackham, 143 N. Y. 516, 38 N. E. 731, is cited as holding that a third party cannot obtain any benefit from a contract between two other parties which provides for the benefit of third parties. That was not a case in which the laborer or materialman had performed the labor or furnished the material to erect public buildings for a municipality. The case of City of St. Louis v. Von Phul, 133 Mo. 561, 34 S. W. 843, 54 Am. St. Rep. 695, is a masterly presentation of the right of a city to require bonds of contractors and provide therein for the protection of laborers and materialmen. It is supported by reasons of justice and right that cannot be successfully answered.
As said in that case:
“The principle is that the labor expended and the material employed create the improvements, and the one benefited thereby, should see that compensation therefor is made. Through considerations of public policy the law has made no provision by lien, or otherwise, for the protection of the laborers and materialmen for labor employed or material used in improving the public streets. But it cannot he denied that the same equity exists, and that the same moral obligation rests upon the city to protect those who improve its streets as rest upon those making private improvements. * * * There can, we think, be no doubt that the duty the city of St. Louis owed to any one who should labor upon, or furnish material for, the improvements contemplated by the contract, would create such a privity between them as would entitle the latter to the benefits intended to be afforded them under the express conditions of the bond.”
This proposition is sustained by an opinion of Judge Cooley in the case of Knapp v. Swaney, 56 Mich. 345, 23 N. W. 162, 56 Am. Rep. 397, who, in speaking of a stipulation in a bond given to a county protecting laborers and materialmen, held:
“The purpose of the stipulation is very manifest. It is that a contract the county has made shall not be the means of mischief to those who, though not contractors with the county, may perform labor or furnish materials in reliance upon the moneys to be paid under it. It would seem that to prevent such mischief was a proper object to be had in view by any public board when entering into a public contract. It would seem that there was a moral obligation in the case which the board might well recognize even though not compellable to do so.”
A number of authorities are cited in the Missouri case that sustain the right of third persons “such as subcontractors, laborers, and materialmen, to maintain an action on a bond given by a contractor to a state, county, city, or school district, conditioned for the faithful performance of a contract for a public improvement, and for the payment of all claims of such third persons, though no express power was given the obligee to require such conditions.” We indorse that proposition in the interest of honesty and upright dealing. Merchants’, etc., Bank v. Mayor of New York, 97 N. Y. 357; Bank v. Winant, 123 N. Y. 267, 25 N. E. 262.
The motion for rehearing is overruled.