295 N.W. 304 | Minn. | 1940
The contract contemplated excavation in solid rock, and that the work could be done only "by the use of heavy charges of explosives * * * the use and effect of which might, and very probably would be felt and cause damage * * * in the immediate vicinity." In consequence, it made defendants "liable for any damages done to the work or other structure or public or private property and injuries sustained by persons" in the operations.
The claim for defendant is that this promise was one to indemnify the city and nothing more. So, the conclusion is, plaintiff has no cause of action against defendants. That argument we consider unsound.
The question of when and under what circumstances the beneficiary of a contract, not himself a party thereto, may recover thereon has been the subject of much and conflicting decision law. For long 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. Jefferson v. Asch,
That rule recognized that the "stranger" could recover if the promisee owed him a duty against which he, the promisee, undertook to protect himself by the contract. In such case, the beneficiary could recover even though not a party to the contract. Even with the qualifications stated, the doctrine of Jefferson v. Asch *55 has been subject to so much attrition in succeeding cases2 that, in the interest of accuracy, it is in need of restatement.
1. That restatement is found in Restatement, Contracts, §§ 133-147. The rule is there declared that donee and creditor beneficiaries may recover, but an incidental beneficiary cannot. The incidental beneficiary is illustrated by a contract such as that where "B contracts with A to buy A a new Gordon automobile." The Gordon Company is an incidental beneficiary without right of recovery.
2. It is no bar to recovery by the beneficiary, if he be donee or creditor of the promisee, that the promise in his favor is conditioned, as here, upon a future event, such as damage to his property. Id. § 134.
3. Neither is it essential to the right of donee or creditor beneficiary that he be identified when the contract containing the promise is made. Id. § 139.
4. All that fits this case. The city exacted from the defendants a promise that they should be "liable for any damages done to * * * private property" in connection with the work. It is immaterial that the obligation was also in effect one to indemnify the city against claims for such damage.
Such promises, made to a municipality for the benefit of its citizens, are put in a special category by the Restatement, § 145. Provisions of that section would allow recovery in the instant case. The comment states the obvious conclusion that it is but a special application of the principles of § 133 concerning the rights of donee and creditor beneficiaries. The courts of Michigan and Arizona have expressly adopted the rules of § 145. Bator v. Ford Motor Co.
We affirm plaintiff's right to sue as a beneficiary of the contract. An opposite holding would defeat obligation where obligation is not only intended but also expressed and paid for. Implicit in such holding would be the indefensible hypothesis that, although a party to a contract may stipulate for such benefits to himself as he wants and the other party will allow, yet the two of them by the same process and for the same consideration cannot secure similar benefit to a stranger. In the contractual promise for the benefit of one not a party, there is nothing illegal or contrary to public policy. The promise is within the right of one party to exact and the other to make. No reasonable ground can be suggested for its not being enforceable according to its expressed intent.
The contrary doctrine, now altogether if not quite outmoded, was put in the main upon factors of consideration and privity. Jefferson v. Asch,
5. Many cases dealing with recovery by a third party beneficiary have also required and discussed the element of privity as prerequisite to recovery. Those dealing with promises to a public corporation for the benefit of its citizens have found that factor in the "obligation to protect its inhabitants" resting on a governmental unit in making public contracts. Rigney v. N.Y. C. H. R. R. Co.
That simple truth removes the difficulty arising from the complicated notions expressed by judges and text writers concerning privity of contract. The term has been much misused. In consequence, we have the process referred to by Judge Cardozo in Ultramares Corp. v. Touche,
Our submission is that all such discussion (including this) has no more than academic value because, the beneficiary's right to recover established, with the resulting obligation of the promisor in his favor, there arises the relation we call privity. Anyway, privity or no privity, the overwhelming weight of authority and the entire weight of all inherent factors of the problem speak for recovery by this beneficiary.
Affirmed.
