202 Mo. 451 | Mo. | 1907
The city of St. Louis, as trustee of an express trust, instituted this suit in the circuit court of that city against respondents, based upon twelve distinct bonds, each declared upon in a separate count of the petition, and each involving questions identical in principle. We will, therefore, notice only one count, and what'is said regarding that one will apply equally well to the other eleven.
The facts of the case are, substantially, as follows:
The city of St. Louis on May 18,1900, entered into a written contract with defendant Gr. H. Wright Contracting Company, whereby the latter undertook to grade and pave some streets and alleys in said city, according to certain plans and specifications on file in the office of the Board of Public Improvements, for a price therein stated, and to be paid for by special tax-bills, to be issued by the city against the lots adjoining the improvements, as provided for in the city charter. The contract provided that if the contracting party abandoned the work or otherwise defaulted, the city should have the right to cancel the contract and relet the work.
The City Trust, Safe Deposit & Surety. Company of Philadelphia executed the bond as surety and bound itself in a fixed penalty, conditioned that the Contracting Company should faithfully and properly perform the contract according to all the terms thereof, and should, as soon as the work was completed, pay to the proper parties all amounts due for materials and labor used and employed in the performance of the contract.
The language of the bond is as follows:
“In the event the said Gr. H. Wright Contracting Company shall faithfully and properly perform the
The Contracting Company refused to do any work whatever under the contract, whereupon the city relet the contract to J. E. Perkinson, for the said improvements, at an advanced price of $6,500. Perkinson made the improvements according to the second contract, and the city issued special taxbills against the adjoining lots and delivered them to him in full payment for said improvements; each taxbill, of course, bore its proportional part of the- $6,500, the increased cost of the improvements.
The cause was referred to a referee, and he found for the city and recommended a judgment agáinst appellants for the said $6,500. Upon the incoming of the report appellants filed exceptions thereto, which were overruled, and thereupon they filed their motion for a new trial and in arrest, both of which being overruled by the court, they duly appealed the cause to this court.
I. The questions involved in this case are, whether or not the city of St. Louis, under the contracts and bonds mentioned, is a trustee- of an express trust, for the use and benefit of the property-owners of the adjoining lots to the streets and alleys proposed- to be improved by the city, and whether or not the city, by authority of and in pursuance of said contracts aud bonds, can sue for and recover the damages they sus
Exhaustive research by court and counsel has faded to discover where these exact questions have ever been presented to any court in this State or elsewhere. The questions seem to be of first impression in this country, and will, on that account, have to be approached and disposed of upon principle, and not from precedent.
The general rule that third parties cannot maintain an action for damages resulting from a breach of contract by one of the parties thereto, is well grounded in the jurisprudence of this State. [Roddy v. Railroad, 104 Mo. 244-5, and cases cited.]
The reason for this rule is apparent.
There is no privity of contract nor contractual relations existing between the obligee of the contract and the third parties. As such obligee he is a stranger to the others and owes them no duty; and in the absence of duty there can be no obligation. [Savings Bank v. Ward, 100 U. S. 195-200 to 207.]
As stated by this court, speaking through Judge Maceaklane, in the case of Roddy v. Railroad, supra, “To hold that such actions could be maintained, would not only lead to endless complications, in following out cause and effect, but would restrict and embarrass the right to make contracts by burdening them with obligations 'and liabilities to others, which parties would not voluntarily assume.”
The above rule, like most other principles of law, has its well-founded limitations and exceptions; and one of those exceptions is, that a contract between two parties based upon a valid consideration may be enforced by third parties when entered into for their benefit, and that is true though such parties are not named in the contract nor are privy to the consideration.
It is sufficient in order to create the necessary
II. The city to maintain this suit proceeds upon the theory that the contract entered into between it and the appellants, whereby they obligate themselves to pave the streets and alleys mentioned, was based upon a valid consideration, and was made by it for the benefit of the adjoining property-owners; that is to say, in contemplation of law, street improvements are beneficial to the adjoiningTots which inures to the owners by virtue of their ownership. In other words, the city not only acts for itself in the matter of street improvements, but also as the legally constituted agent of the property-owners, and in that respect the contract partakes of a dual nature — first, for the benefit of the public at large; and, second, for the benefit of the property-owners.
There is a broad distinction between the principle involved where a contract is entered into between two parties for their own use and benefit, and where they make a similar contract for the benefit of a third party. A breach of the first would create no cause of' action in favor of a third party, even thougih he was thereby deprived of large benefits which would have flown to him had the contract been performed; while in the latter case the breach would create a cause of action in his favor, even though the benefits he would have received from its performance might have been insignificant as compared to those he was deprived of by the breach of the former. This proposition is fully supported by the authorities cited in paragraph one of this opinion.
From what has thus been stated, it can be seen that the character and value of the benefits and their loss or reception have no' weight whatever in determining the question as to whether or not the contract was made
Having disposed of the public branch of the question, we now come to the consideration of the branch which it is contended was intended’ for the benefit of the property-owners.
Under our form of government street improvements can be paid for in two ways: first, by general taxation, where the entire public pays the cost, in which case the property-owners, as such, have no concern; and, second, by special taxation, where the cost of the improvements is assessed against the adjoining lots, and in the latter case the public is not interested. But in both cases the same result is reached by two different ways or means, both of which are equally beneficial to the traveling public, and the improvements, when completed, under either mode of taxation, are just as beneficial to the adjoining property as the other. That being true, we are unable to see how the city is
There is no express or implied authority to be found in the charter of the city of St. Louis to improve streets for the benefit of the adjoining lots, or for the benefit' of their owners, because that would be exercising the taxing power of the city for private purposes, which is' expressly prohibited by the Constitution. [Art. 10, sec. 3, Constitution of Missouri, 1875.]
The tax is imposed for public purposes in the payment of street improvements, and not for private use. As an incident only to the public improvement the adjoining property is benefited, and because of that benefit the tax is assessed against the property and not against its owners. It is optional with them to accept or reject the benefits after the work is completed.
What we have here expressed is not in conflict with the views stated by this court in the case of St. Louis to use v. Von Phul, 133 Mo. l. c. 565. That case was a suit brought by a materialman against the contractor and hi's bondsmen for materials furnished in the improvements of a street in the city of St. Louis. The bond contained, among others, the following provision:
“And shall, as soon as the work contemplated by
This court held that the plaintiff could recover in that case, because the bond expressly provided for the payment of all materials furnished the contractor; and distinguished that case, on account of that provision in the bond, from the case of Kansas City ex rel. Blumb v. O’Connell, 99 Mo. 359.
The latter case was a suit against O’Connell and his bondsmen for personal injuries received by the alleged negligence of O ’Connell while building a sewer. The bond in that case contained this provision:
“It is further distinctly agreed that the said party of the first part shall be responsible for all unlawful damages to persons or property, from negligence, or carelessness, in doing said work, or in not using proper precaution in doing said work, .... and shall indemnify the City of Kansas against all losses or claim for damages, on account of such neglect, or carelessness, .... and to pay all laborers employed on said work.”
In passing upon that case, this court said:
. “Aside from the covenants a sto laborers, the object and purpose of the bond is to secure a performance of the work according to the terms of the contract, and to protect, and save harmless, the city from damages occasioned by the negligent acts of the contractor and his servants. In these respects, it is not an agreement with the city for the benefit of third persons, but for the protection and benefit of the city. . . . This bond must be construed as a whole, and when this is done,
The same is true and may be said of the bond in this case, as there is no material difference between the provisions of the two. In the case at bar the provision of the bond is as follows:
“In the event the said Gr. H. Wright Contracting Company shall faithfully and properly perform the foregoing contract according to all the terms thereof, and shall, as soon as the work contemplated by contract is completed, pay to the proper parties all amounts due for materials and labor used and employed in the performance thereof; then this obligation to be void, otherwise in full force and effect and the same may be sued on at the instance of any materialman, laboring man or mechanic, in the name of the city of St. Louis, to the use of such materialman, laboring man or mechanic, for any breach of the condition thereof. ’ ’
The language of the bond clearly states what was the intention of the parties thereto. It first guarantees that Gr. H. Wright Contracting Company would faithfully and properly perform all the terms of the contract, and hold the city harmless for all damage it might sustain by reason of the breach thereof, and for the payment of all sums due for labor and materials performed and furnished upon the works.
The principle of expressio unius exclusio alterius applies with great clearness to the facts of the case. The bond not only named the third parties for whose benefit it was given, but it went further, by way of limitation, and stated what third parties could sue thereon. If the designation of the third parties who could sue on the bond did not amount to the limitation, the third parties for whose benefit the contract was made, then why name them at all, because otherwise not only those named but all others could maintain a suit if respondent is correct in its. contention.
In March, 1899, Howsmon’s house was burned because the Water Company failed to supply sufficient water to extinguish the fire. He sued the Water Company for damages, and alleged the breach of the contract with the city of Trenton as the cause of his injury. And the court, in passing upon that question, used the following language:
“It is not every promise made by one to another, from the performance of which a benefit may ensue to a third party, which gives a right of action to such third person, he being neither privy to the contract nor to the consideration. The contract must be made for his benefit, as its object, and he must be the party intended to be benefited.” [Citing cases.]
And, continuing, the court said:
“In other words, the rule is not so far extended as to give to the third person, who is only indirectly and incidentally benefited by the contract, a right to sue upon it.....The town of Trenton had power to pass ordinances ‘to prevent and extinguish fires’ and, as incident thereto, power to contract for a supply of water for that purpose. But it would seem, under the authorities cited, that plaintiff cannot maintain this action for cogent reasons, which may be put in several ways:
11 First. Although it was within the power of the town by contract to supply water to extinguish fires, it did not owe the duty of extinguishing fires to plaintiff. [Heller v. Sedalia, 53 Mo. 159.] Consequently, the case is not within the lines of adjudicated cases
“Second. A municipal corporation, in making contracts for its citizens, acts for them collectively, and for all of them in every act, and the relation of privity is not, and cannot be, introduced into such contracts by reason of tax-paying or the discharge of any civil duty by any individual citizen.
“Third. The benefits to be conferred upon the individual citizen by the contract are incidental to the contract, the primary object of which is the benefit of all the citizens in their corporate capacity.
“Fourth. It does not appear that it was made for the benefit of a citizen in. his individual capacity, but for the municipality, and in the absence of an express power in the municipality to make contracts for the indemnity of its individual citizens, should be so construed.
“Fifth. The relation that the contractor sustained to the town was that of its agent or servant to carry out the obligations of the contract upon its part for the benefit of all the citizens; for the enforcement of the terms thereof the citizens must look to the authorities of the city, and cannot individually maintain an action for a breach of the contract.
“Sixth. The town has no authority to make a contract to indemnify a citizen for the loss, of property, .... and therefore could not make such a contract that would he binding upon another.”
The city has no more authority in this case to make a contract to benefit the adjacent property than the town of Trenton had to indemnify a citizen for the loss of property, caused by fire. The fire protection in the one ease may be as beneficial to the property-owner as street improvements might be to him in this case.
The principle of law announced in the Trenton
III. The respondent seems to lay great stress upon its contention that the city is the legal agent of the property-owners while performing its public duties in the improvement of streets of the city.
Various phases of that question have often been before the courts of this country, and have received very careful and deliberate (Consideration.
All of the well-considered cases start out by the assertion of the broad proposition that the contract must be made for the benefit of the third parties, as its object, and they must be the parties intended to be benefited thereby. [Simson v. Brown, 68 N. Y. 355; Howsmon v. Trenton Water Co., 119 Mo. l. c. 308.]
That being true, the question naturally presents itself, for whose benefit was the contract of improvement made in that case? We attempt to answer this particular phase of the question involved in paragraph two of this opinion by citing the Constitution, which provides that all taxation shall be for public purposes, and draw the conclusion therefrom that the object of the contract — the street improvement — was for the benefit of the city and the public at.large, because it was to be paid for by, taxation, which could not be done if the improvements had been for third parties, the property-owners, who were not parties to the contract. We believe the conclusion there reached was sound, but the respondent contends that while that was one of the objects, yet there was another object or purpose intended to be accomplished by it; and that was to enhance the value of the adjacent property, and thereby create .or establish a fund, as it were, upon which the assessment could be levied for the payment of the taxbills, otherwise they would be void, their validity resting exclusively upon benefits. That i's true, but the sole intention of the city in creating that fund was to provide a fund out of which the taxbills
A personal judgment against a property-owner for ■street improvements is void, and any statute authorizing such a judgment is unconstitutional. [Neenan v. Smith, 50 Mo. 525; St. Louis to use v. Allen, 53 Mo. 44; Carlin v. Cavender, 56 Mo. 286; Louisiana v. Miller, 66 Mo. 467; Thornton v. City of Clinton, 148 Mo. l. c. 663.]
So it seems clear to us that whatever benefits may accrue to the property-owners as a result of street improvements are purely incident to the improvement, and not an object intentionally sought to be obtained .by the contract which was made for the improvements.
Third persons who are only collaterally and incidentally benefited by the terms of a contract have no cause of action for its breach. [Howsmon v. Trenton Water Co., 119 Mo. l. c. 308.]
The courts are not uniform in their opinions as to the principle upon which this class of actions are maintained. Many of them base their opinion upon the ground that the obligee in the contract owed the third party some debt or duty, either legal or equitable, and that by accepting the contract the law creates a privity of consideration between them upon which he could maintain a cause of action for its breach. [Vrooman v. Turner, 69. N. Y. 280.]
But in applying that principle to this case, we are confronted with the proposition that the city owed no duty to the property-owners to increase the value of
In answer to that contention it may be said, that in all the cases where third parties have been permitted to recover upon a contract entered into for their benefit, said third parties had either adopted the contract or complied with the provisions thereof relating to them, or the debt or duty which wa,s owing to the third party had passed to or vested in the obligee of the contract before the suit was instituted. We have examined many cases and have- not found a single exception to that rule.
The property-owners in this case do not fall under that rule. They never adopted the contract, they never performed any duty imposed upon them by it, nor has the city turned over to the appellants anything of value it owed to the property-owners as a consideration for the contract between it and the appellants.
In the whole procedure for street improvements there is not an act authorized to be done by the city that has even the color of agency about it in so far as the property-owners are concerned, except that it shall let the contract for the work to be done to the lowest bidder. But when the whole scheme of the procedure is investigated it will be seen the city does- not act for, nor pretend to act for, the property-owners.
The owners of these lots were not parties to the contract. The proceedings as to them are in invitum, and their property is not affected until it is brought within the strict meammg of the statute and even that does not affect the owner without he voluntarily accepts the benefit and pays therefor. [Thornton v.
So in the absence of an ordinance or a contract expressly providing therefor we must hold that the defendants are not liable under the bonds sued on for the damages claimed to. have been sustained by the property-owners.
IY. Both parties to this suit have presented and discussed in their briefs several other points, but the view we have taken of the case renders it unnecessary for us to discuss them in this opinion.
The city is not asking for damages in this suit in its own behalf.
For the reasons above stated the judgment of the circuit court is* reversed.