Freigy v. Gargaro Co.

• Decision Date: 05 April 1945
• Docket Number: 28065.
• Citation: 60 N.E.2d 288,223 Ind. 342
• Parties: FREIGY v. GARGARO CO., Inc.
• Court: Indiana Supreme Court

60 N.E.2d 288

223 Ind. 342

FREIGY v. GARGARO CO., Inc.

No. 28065.

Supreme Court of Indiana

April 5, 1945

Appeal from Superior Court, Allen County; D. Burris Douglass judge.

Eggeman, Reed & Cleland and James P. Murphy all of Fort Wayne, for appellant.

Barrett Barrett & McNagny, of Fort Wayne, for appellee.

RICHMAN Judge.

This is an action by appellant for breach of a contract to which she was not a party but which she claims was made for her benefit. The court sustained a demurrer to her complaint. She refused to plead over, suffered judgment that she take nothing and appealed, assigning as error the ruling on the demurrer.

The contract, which had been fully executed by the parties, was between the City of Fort Wayne and appellee for the construction of a trunk sewer twelve to fifteen feet in diameter sixty feet beneath the surface of a paved street upon which appellant's lot abutted. Damages are sought for injuries to appellant's frame building alleged to have been caused by the settling of the foundation, support of which was weakened by drainage of the water table in the subsoil beneath the street. The vibration of heavy machinery used in digging a shaft sixty feet deep in the street in front of the house is alleged as a contributing cause.

The complaint avers that before the contract was executed the city and appellee from soil tests knew the nature of the subsoil and knew 'that if said sewer were constructed in accordance with said plans and specifications, of necessity the water would be drained from and withdrawn from the sub-soil supporting plaintiff's building and would destroy and deprive the plaintiff of the normal and natural lateral support thereof; and that with full knowledge of the inherent dangerous nature of said work and the probability of damage which would arise, by reason thereof, inserted in said contract said provision, covenants and agreements to pay any damages which would accrue or arise from said construction work, whether or not incidental or due to negligence.'

Article VI of the contract reads: 'The Contractor covenants and agrees to pay all damages for injury to real or personal property, or for any injury or death sustained by any person growing out of any act or deed of the Contractor, or of his employees, or of any of his subcontractors or their employees. The Contractor hereby agrees to idemnify and save the City of Fort Wayne harmless against all suits and actions of every name and description brought against the City of Fort Wayne, for, or on account of any such injuries to real or personal property, or injuries received or death sustained by any person or persons, caused by said Contractor, his servants, agents or employees, subcontractors or their employees, in the execution of said work; or by or inconsequence of any negligence in guarding the same; or by or on account of any omission or act of the Contractor, his agents or employees; and the said Contractor further agrees that so much of the money due him under and by virtue of this contract as shall be considered necessary by the Board of Public Works of the City of Fort Wayne to protect itself against loss [shall be retained] until such suit or claim for damages shall have been settled, and evidence to that effect shall have been furnished to the satisfaction of the said Board of Public Works.'

The bracketed words evidently were inadvertently omitted in copying. Appellant attaches no significance to the clause in which they appear. Appellee treats it as if they were present and we shall do likewise.

It is not alleged that the plans and specifications of the sewer were negligently drawn nor that the injury was the result of any negligent act or omission in the course of its construction. Rather it is contended that the contract is in the nature of insurance against incidental or consequential damages for which otherwise appellant would have no remedy.

Public work resulting in withdrawal of lateral support does not constitute a taking within our constitutional provision that 'No man's property shall be taken by law, without just compensation * * *.' Art. 1, § 21, Ind. Const. City of Lafayette et al. v. Spencer et al., 1860, 14 Ind. 399; Macy et al. v. City of Indianapolis, 1861, 17 Ind. 267; Cummins v. City of Seymour, 1881, 79 Ind. 491, 41 Am.Rep. 618; City of Valparaiso v. Hagen, 1899, 153 Ind. 337, 54 N.E. 1062, 48 L.R.A. 707, 74 Am.St.Rep. 305; Morris v. City of Indianapolis, 1911, 177 Ind. 369, 94 N.E. 705, Ann.Cas.1915A, 65; Brown v. State, 1937, 211 Ind. 61, 5 N.E.2d 527; Johnson v. City of St. Louis, 1909, 8 Cir., 172 F. 31, 18 Ann.Cas. 949; Crane v. City of Harrison, 1925, 40 Idaho 229, 232 P. 578, 38 A.L.R. 15. As said in Brown v. State, this is settled in Indiana, although in other states and under varying constitutional provisions the rule is otherwise. See notes 7 A.L.R. 806, 38 A.L.R. 19 and 44 A.L.R. 1494.

As a corollary to this rule, in the absence of negligence in planning or constructing the public work resulting in withdrawal of lateral support, the abutting owner has no remedy since the injury is classed as damnum absque injuria. This principal is of ancient origin. Governor, etc., of Cast Plate Manufacturers v. Meredith et al., 1792, 4 Durnford & East 794; Wilson v. Mayor, etc., of New York, 1845, 1 Denio 595, 43 Am.Dec. 719; Radcliff's Ex'rs v. Mayor, etc., of Brooklyn, 1850, 4 N.Y. 195, 53 Am.Rep. 357; Smith v. Corporation of Washington, 1857, 20 How. 135, 15 L.Ed. 858; Snyder v. President, etc., of Rockport, 1855, 6 Ind. 237; Macy v. City of Indianapolis, 1861, supra; Rice v. City of Evansville, 1886, 108 Ind. 7, 9 N.E. 139, 58 Am.Rep. 22; Morris v. City of Indianapolis, supra. Recognized in some of these cases, among them Snyder v. President, etc., of Rockport, supra, is the power by statute to provide a remedy but we are cited to no such Indiana legislation.

The contract before us must be deemed to have been executed with knowledge of the law as above stated. But the contractual provisions are not necessarily limited or controlled by these principles, for frequently the purpose of a contract is to give rights or relief not otherwise existing. Appellant contends that it was so in this case. The first sentence of Article VI seems to sustain the contention. Unless some word or words therein are ambiguous or considered in their context require a different interpretation, appellant is within the class of those whose real property might be injured by an act or deed of the contractor or his subordinates in carrying out the contract, and, though unnamed therein, may recover as a third party beneficiary if she can prove the causal connection.

In E. I. DuPont De Nemours & Co., Inc. v. Ferguson, 1927, 86 Ind.App. 429, 158 N.E. 488, it is said: 'That a promise of one person to another for the benefit of a third may be enforced by the person for whose benefit it was made is not questioned by appellee, nor can it be, but it must clearly appear from the terms of the contract that it was the intention of the contracting parties to impose the obligation in favor of the party claiming the right to sue. Reed v. Adams [Steel &] Wire Works, 1914, 57 Ind.App. 259, 106 N.E. 882; Rawlings v. Vreeland, 1920, 76 Ind.App. 209, 127 N.E. 786; Irwin's Bank v. Fletcher [Savings &] Trust Co., [Rec.], 1924, 195 Ind. 669, 692, 145 N.E. 869, 146 N.E. 909.'

The words 'clearly appear' are traceable to the Reed case and were later used in the Irwin's Bank case of which we recently said in Nash Engineering Co. v. Marcy Realty Corp., 1944, 222 Ind. 396, 416, 54 N.E.2d 263, 271: 'We do not understand that the intention of the parties as to third party beneficiaries is to be tested by any stricter or different rule than their intention as to other terms of the contract.'

In Carson Pirie Scott & Co. v. Parrett et al., Ex'rs, 1931, 346 Ill. 252, 178 N.E. 498, 501, 81 A.L.R. 1262, the court used slightly different and, we think more accurate language: 'The rule is that the right of a third party benefited by a contract to sue thereon rests upon the liability of the promisor, and this liability must affirmatively appear from the language of the instrument when properly interpreted and construed. The liability so appearing cannot be extended or enlarged on the ground alone that the situation and circumstances of the parties justify or demand further or other liability.'

The controversy centers in the first sentence of Article VI. Appellee insists that the word 'damages' therein was used in the legal sense as defined by Webster of 'compensation or satisfaction imposed by law for a wrong or injury caused by violation of a legal right' and, therefore, supplies by implication the intent that only for negligent acts of the contractor or his subordinates was he to become liable. Cited to this effect is Jones, Rec. v. Lathrop-Moyer Co., 1934, 99 Ind.App. 127, 190 N.E. 883, wherein is a quotation from Randall v. Hazelton, 1866, 94 Mass. 412, 415, 12 Allen 412, 415, in substantially the same language as that of Webster. See also Rawles' 3d Revision of Bouvier's Law Dictionary, Title 'Damages', p. 749, and City of North Vernon v. Voegler, 1885, 103 Ind. 314, 2 N.E. 821. This view assumes either that the word has no other meaning or that the context shows that this was the sense in which it was used.

But Webster also defines 'damages' as: 'The estimated reparation in money for detriment or injury sustained.' This does not imply a wrongful or illegal act. Nor does the synonym 'injuries' also given by Webster. Obviously we can rule out the latter by substituting it in the sentence as follows: 'pay all injuries for injury to real or personal property.' But the other definition is not so easily discarded. Detriment or injury may...