Crow & Crow, Inc. v. St. Paul-Mercury Indem. Co.

• Decision Date: 01 June 1956
• Docket Number: PAUL-MERCURY,No. 36828,36828
• Parties: CROW AND CROW, Incorporated, Appellant, v. SAINTINDEMNITY COMPANY, Respondent, Farmer & Son, Inc., Defendant.
• Court: Minnesota Supreme Court

Page 429

77 N.W.2d 429

247 Minn. 426

CROW AND CROW, Incorporated, Appellant, v. SAINT PAUL-MERCURY INDEMNITY COMPANY, Respondent, Farmer & Son, Inc., Defendant.

No. 36828.

Supreme Court of Minnesota.

June 1, 1956.

Syllabus by the Court.

A third-party beneficiary is one to whom the promisee owes or is believed to owe a duty which is discharged by the promisor's performance, and the contractual right the third-party beneficiary acquires is to enforce a promise made for his benefit which he otherwise would not be able to enforce. Held under the contracts involved in this case there is no promise made for the plaintiff's benefit and therefore it has no contractual right which it can enforce against the defendant.

Lucius A. Smith, Faribault, for appellant.

Warren D. Chamberlain, Faribault, for respondent.

FRANK T. GALLAGHER, Justice.

Appeal from an order of the district court granting a motion of the defendant Saint Paul-Mercury Indemnity Company to dismiss the action against it and for summary judgment.

The record discloses that on April 7, 1954, Farmer & Son, Inc., a contractor, entered into a contract with the Church of the Good Shepherd, Faribault, Minnesota, for the purpose of remodeling a building known as the Guild House. Farmer & Son, Inc., had made a proposal to the church pursuant to its invitation for bids. This was Exhibit A and as far as pertinent to this case contained the following provisions:

'* * * the undersigned bidder hereby agrees to furnish all materials and to perform all work for the completion of All alterations and improvements * * *.'

Certain exceptions followed which are not herein material. The proposal also contained a provision that the bidder further agreed:

'To furnish, in addition to other insurance, a satisfactory performance bond for the faithful performance of this contract.'

This proposal was then accepted and the contract above referred to entered into by the parties. The following are provisions from the contract that we are concerned with in this case:

'1. Contract Documents--That the following sections shall constitute integral parts of this agreement as fully as if hereto attached or herein repeated, the whole to be collectively known and referred to as the Contract:

'Section A--Proposal

'Section B--Agreement

'Section C--Plans and Specifications

'2. Scope of Work--That the contractor shall furnish all materials and perform all work for all alterations and improvements, * * *

'* * *pe

'7. * * * Before issuance of the final certificate the contractor shall submit evidence satisfactory to the owner or his authorized representative that all payrolls, material bills, and other indebtedness connected with the work have been paid.'

Pursuant to the contract Farmer & Son, Inc., entered into an agreement with the defendant Saint Paul-Mercury Indemnity Company on the 26th of April, 1954. This agreement states that Farmer & Son, Inc., and the Saint Paul-Mercury Indemnity Company are held and firmly bound unto the Church of the Good Shepherd, Faribault, Minnesota, as obligee in the sum of $26,324 'for the payment whereof well and truly to be made, the Principal and the Surety bind themselves.' This agreement also contains the following:

'Whereas the Principal and the Obligee have entered into a written contract, a copy of which is or may be attached hereto, dated the 26 day of April 1954, for 'Remodeling basement of Guild House,

'Faribault, Minnesota

'Now, Therefore, the condition of the foregoing obligation is such that if the Principal shall indemnify the Obligee for all loss that the Obligee may sustain by reason of the Principal's failure to comply with any of the terms of said contract, then the obligation shall be void; otherwise it shall remain in force.'

The plaintiff, Crow & Crow, Inc., alleges in its complaint that between May 21, 1954, and October 27, 1954, they furnished certain supplies and materials, to wit: Readymixed concrete in the total amount of $1,251.02, but that defendant, Farmer & Son, Inc., has failed to make payment for this concrete. It appears from an affidavit made by the attorney for defendant Saint Paul-Mercury Indemnity Company that the defendant Farmer & Son, Inc., filed a petition to be adjudged bankrupt in March 1955. It is admitted by the plaintiff in this action that they did not file a lien against the premises for the amount of the material furnished by them.

The trial court in its memorandum stated that it granted the defendant Saint Paul-Mercury Indemnity Company's motion on the ground that the complaint failed to state a claim against them. After analyzing our definition of a third-party creditor beneficiary as set forth in Northern Nat. Bank of Bemidji v. Northern Minnesota Nat. Bank, 244 Minn. 202, 70 N.W.2d 118, the court stated that it could not agree with the plaintiff that it was such a third-party creditor beneficiary, thus dismissing the action on the ground that the plaintiff had no claim against the defendant Saint Paul-Mercury Indemnity Company under its bonding contract.

On appeal to this court plaintiff assigns as error the court's granting of the motion of defendant Saint Paul-Mercury Indemnity Company to dismiss the action.

A third-party beneficiary is one to whom the promisee owes or is believed to owe a duty which is discharged by the promisor's performance, and the contractual right the third-party beneficiary acquires is to enforce a promise made for his benefit which he otherwise would not be able to enforce. Northern Nat. Bank of Bemidji v. Northern Minnesota Nat. Bank, supra. It is therefore clear that in order for the plaintiff, Crow & Crow, Inc., in this case to maintain an action against the defendant Saint Paul-Mercury Indemnity Company the latter must have made a promise to pay the plaintiff. A reading of the contract as set out above shows that there is no express promise made by the defendant Saint Paul-Mercury Indemnity Company to pay the plaintiff nor does the plaintiff take such a position. However, they do take the position that the proposal...