Anderson v. Howard Hall Co., 6 Div. 897

• Court: Supreme Court of Alabama
• Writing for the Court: LAWSON
• Citation: 179 So.2d 71,278 Ala. 491
• Decision Date: 24 June 1965
• Docket Number: 6 Div. 897
• Parties: Leona ANDERSON v. HOWARD HALL COMPANY, Inc.

Page 71

179 So.2d 71 278 Ala. 491 Leona ANDERSON
v.
HOWARD HALL COMPANY, Inc. 6 Div. 897. Supreme Court of Alabama. June 24, 1965.
Rehearing Denied Oct. 21, 1965.

[278 Ala. 492] John J. Smith and Geo. S. Brown, Birmingham, for appellant.

Lange, Simpson, Robinson & Somerville, Birmingham, for appellee.

LAWSON, Justice.

This is an appeal from a judgment of nonsuit taken on account of the sustaining [278 Ala. 493] by the trial court of defendant's demurrer to the complaint as amended. § 819, Title 7, Code 1940.

The judgment will support the appeal in that after sustaining the demurrer and noting the motion of the plaintiff for a nonsuit, it recites: 'It is ordered and adjudged by the court that this motion be and the same is hereby granted and a nonsuit is ordered and the case is dismissed; costs taxed against the plaintiff for which execution may issue.' While it is usual for such judgment entries to contain the words, 'let the defendant go hence,' that is the legal effect of the judgment in the instant case, though it is not so recited in terms. Gentry v. Swann Chemical Co., 234 Ala. 313, 174 So. 530; Potts v. Ellis, 238 Ala. 155, 190 So. 73; Carter v. City of Gadsden, 264 Ala. 544, 88 So.2d 689.

On April 5, 1958, Mrs. Leona Anderson was injured and her automobile damaged in a collision with a truck tractor being driven by its co-owner, one James Earl

Page 72

Haynes. The truck tractor had been leased by James Earl Haynes and Glenora T. Haynes to Howard Hall Company, Inc., a corporation, on April 4, 1958.

Mrs. Anderson brought suit in the Circuit Court of Jefferson County against Howard Hall Company and against James Earl Haynes to recover for personal injuries which she suffered in the collision on April 5, 1958. Howard Hall Company was sued on the theory that at the time of the collision Haynes was an employee of that company who was then acting within the line and scope of his employment. In that case, No. 42927-X in the Circuit Court, Mrs. Anderson recovered a judgment against Haynes in the amount of $5,500. There was a verdict in favor of the defendant Howard Hall Company in accordance with the direction of the trial court. From a judgment in favor of Howard Hall Company, Mrs. Anderson appealed to this court. We affirmed. Anderson v. Howard Hall Co., Inc., et al., 272 Ala. 466, 131 So.2d 417.

The execution which was issued on the judgment in favor of Mrs. Anderson against Haynes was returned 'No Property Found.'

Thereafter Mrs. Anderson brought this suit against Howard Hall Company to recover the amount of her judgment against James Earl Haynes on the theory that she was a third party beneficiary of an agreement by Howard Hall Company to procure public liability and property damage insurance covering the truck tractor which was involved in the collision.

The lease agreement, made an exhibit to the amended complaint, provides in pertinent parts as follows:

'5. The Company agrees to provide as included in the stipulated rental, * * * (b) Public Liability Property Damage * * * insurance of the same type and limits as carried on its own equipment * * *

* * *

* * *

'7. A--Owner agrees that the Public Liability of the Company insofar as use of the vehicle leased is concerned is restricted to time and places only when and where the owner is pulling a trailer on company business and that no other use personal or otherwise is authorized. Owner specifically and generally assumes all responsibility for all other times and hereby agrees to protect and indemnify the company.'

The amended complaint alleges that the policy of public liability insurance which the defendant Howard Hall Company carried on its own equipment at the time of the 'injury complained of' contained provisions for coverage of bodily injury and property damage.

It is further alleged in the amended complaint that 'the defendant breached said contract [lease agreement] by failing to provide Public Liability and Property Damage Insurance of the same type and limits as was carried on its own equipment,' and that the plaintiff, Mrs. Anderson, 'was at [278 Ala. 494] the time of said collision a member of the public and entitled to the protection of the quoted provision of said contract and that if the defendant had not broken its contract with the said James E. Haynes by failing to provide him with 'Public Liability and Property Damage * * * insurance and the same type and limits as carried on its own equipment,' the plaintiff would have been protected by the coverage afforded the said James Earl Haynes.'

The demurrer of Howard Hall Company takes the point that the amended complaint fails to show the right of Mrs. Anderson to maintain an action on the lease agreement under a claimed status as a third-party beneficiary.

The rule in this state, which is in accord with the great weight of American authority, is that a third person may enforce a promise made for his benefit even though he is a stranger both to the contract

Page 73

and the consideration. Barlowe v. Employers Ins. Co. of Alabama et al., 237 Ala. 665, 188 So. 896; Employers Ins. Co. of Alabama v. Johnston, 238 Ala. 26, 189 So. 58; Fite v. Pearson, 215 Ala. 521, 111 So. 15; Tennessee Coal, Iron & Railroad Co. v. Sizemore, 258 Ala. 344, 62 So.2d 459; Mutual Benefit Health and Accident Ass'n of Omaha v. Bullard, 270 Ala. 558, 120 So.2d 714.

But the question frequently arises as to when a contract will be considered made for the benefit of a third person, and the effect of our holdings is that the contract must have been intended for the direct benefit of the third person, as distinguished from a mere incidental benefit to him, in order to entitle such third person to sue for a breach of the contract. Wolosoff v. Gadsden Land & Building Corp., 245 Ala. 628, 18 So.2d 568; Fidelity & Deposit Co. of Baltimore, Md., v. Rainer, 220 Ala. 262, 125 So. 55, 77 A.L.R. 13; Lovejoy v. Bessemer Waterworks Co., 146 Ala. 374, 41 So. 76, 6 L.R.A.,N.S., 429; Gulf Compress Co. v. Harris, Cortner & Co., ...