Court Opinion

ID: 3510988
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:21:42.541981+00
Date Added: 2024-06-11T14:24:52.478040
License: Public Domain

I concur, but with respect to the main proposition on a somewhat different ground than that assigned by the majority opinion. The contracts sued upon were for the benefit of persons not parties thereto. They were beneficiaries rather than parties, and we are sustaining their right of recovery by the assertion that "they were persons for whose benefit the contract was made and had a right of action on it. They had a legal or equitable claim to the benefit of the promise." That proposition is supported by the cases cited, Clark v. Clark,164 Minn. 201, 204 N.W. 936; Gaffney v. Sederberg, 114 Minn. 319,131 N.W. 333; St. Paul Foundry Co. v. Evenson, 169 Minn. 485,211 N.W. 834, 213 N.W. 352. But, in essence, it is in derogation of Jefferson v. Asch, 53 Minn. 446, 55 N.W. 604,25 L.R.A. 257, 39 A.S.R. 618, wherein it was held that "a stranger to a contract between others, in which one of the parties promises to do something for the benefit of such stranger, there being nothing but the promise, no consideration from such stranger, and no duty or obligation to him on the part of the promisee, cannot recover upon it."
This case may be within that rule because it has something more than the bare promise, in that the plaintiffs continued to labor as *Page 303 
contemplated by the contracts of which they were the beneficiaries. But in my judgment the time has come definitely to overrule Jefferson v. Asch instead of gradually and without much frankness to slip away from it, as we have been doing in Clark v. Clark, 164 Minn. 201, 204 N.W. 936, and St. Paul Foundry Co. v. Evenson, 169 Minn. 485, 211 N.W. 834,213 N.W. 352. In the latter case [at p. 488] we expressly recognized a "trend of the law" which "favors the right of the third party beneficiary to recover in his own name in an action at law." The cases are gathered and reviewed in Williston, Contracts, § 360, et seq. and Jefferson v. Asch is in the minority. The "trend of the law" elsewhere is well illustrated by Seaver v. Ransom, 224 N.Y. 233, 120 N.E. 639, 2 A.L.R. 1187, which shows that there the holding is ultimately going to be that any contract for the sole benefit of a third person may be en. forced by him in the absence of defenses other than that predicated upon the mere fact that he is not a party to it. In New Jersey recovery is allowed a beneficiary who was undetermined when the contract was made. Whitehead v. Burgess,61 N.J.L. 75, 38 A. 802. Tentatively, the American Law Institute has agreed, without a dissenting voice, that the doctrine of Jefferson v. Asch is not the law. 5 Proceedings American Law Institute, 375, et seq.
Aside from being out of line with a weight of authority which vastly preponderates against it, Jefferson v. Asch seems to me unsound in principle. It prevents obligation where obligation is not only intended but also expressed and paid for. That anomalous result is put upon reasons referable, in the main, to factors of consideration and privity. Consideration is a test of actionability, a determinant of the presence of obligation, and not of its quantity or the identity of the obligee. In express contract we look not at all to the source of the consideration but exclusively to the terms of the agreement to determine by whom and against whom its obligations are enforceable, and it is common to find an enforceable obligation in favor of one who has furnished no consideration. It is therefore no objection to an action on an express contract by a beneficiary of it that he did not furnish or was not a party to the consideration. *Page 304 
Another reason formerly urged in support of the doctrine of Jefferson v. Asch was that a beneficiary, as distinguished from a party to a contract, was not in privity with those who were parties. With respect to contracts, privity is an effect rather than a cause. It denotes "mutual or successive relationship to the same rights of property" (6 Wd.  Phr. 5606) or "the relationship" between contracting parties. 3 Bouvier, Law Dic. 2722. It signifies a relationship and not what creates it. Privity of contract arises from the agreement which vests certain rights and imposes obligations from which privity results. So, with respect either to a party or a beneficiary, the first thing to determine is what rights he has under the contract; and if the presence of right be determined, privity necessarily follows. And if, with respect either to a party or a beneficiary, there is a right to enforce a contract, there is necessarily the relationship called privity. Therefore to say that there is no right because there is no privity, rather than that there is no privity because there is no right, is a plain case of transposing cart and horse.
Because Jefferson v. Asch is clearly out of line, not only with the preponderating weight of authority but also with the reason of the case, I think it is time to overrule it instead of continuing to create exceptions from it, and frankly to assign the contrary doctrine as the ground of decision in cases of this kind. *Page 305