Kornblut v. Chevron Oil Co.

• Citation: 62 A.D.2d 831,407 N.Y.S.2d 498
• Parties: Ethel KORNBLUT, Individually and as administratrix, etc., Plaintiff-Respondent, et al., Plaintiffs, v. CHEVRON OIL COMPANY, a California Corporation, Appellant-Respondent, Lawrence Ettinger, Inc., Appellant, et al., Defendants.
• Decision Date: 03 July 1978
• Court: New York Supreme Court Appellate Division

Page 498

407 N.Y.S.2d 498

62 A.D.2d 831

Ethel KORNBLUT, Individually and as administratrix, etc Plaintiff-Respondent, et al., Plaintiffs, v. CHEVRON OIL COMPANY, a California Corporation, Appellant-Respondent Lawrence Ettinger, Inc., Appellant, et al., Defendants.

Supreme Court, Appellate Division, Second Department.

July 3, 1978.

Rivkin, Leff & Sherman, Garden City (John F. Morrison, Garden City, of counsel), for appellant-respondent Chevron Oil Co.

George S. Pickwick, New York City (Joseph D. Ahearn, New York City, of counsel), for appellant Lawrence Ettinger, Inc.

Dweck & Sladkus, New York City (Jack S. Dweck, Edwin McMahon Singer and Vincent R. Coffey, New York City, of counsel), for plaintiff-respondent.

Before HOPKINS, J. P., and MARTUSCELLO, LATHAM and O'CONNOR, JJ.

HOPKINS, Justice Presiding.

The plaintiff-respondent has recovered a judgment after a jury trial in the sum of $519,855.98, including interest, costs and disbursements, against Chevron Oil Company (Chevron) and Lawrence Ettinger, Inc. (Ettinger) (hereafter collectively referred to as defendants) for damages arising from the death and injuries suffered by Fred Kornblut, her husband. The case went to the jury on the theory that the decedent was the third-party beneficiary of a contract between Chevron and the New York State Thruway Authority and a contract between Chevron and Ettinger.

The defendants appeal, claiming that the decedent was not a third-party beneficiary of the contracts and that, even so, they could not have reasonably foreseen the injuries to the decedent under the circumstances of this case. We reverse and dismiss the complaint. Although for certain purposes and under certain clauses of the contracts the decedent was a third-party beneficiary, no contractual obligation imposed liability on the defendants for decedent's injuries and death, neither of which could reasonably have been in the contemplation of the contracting parties.

I

On the afternoon of an extremely warm day in early August, 1970 the decedent was driving northward on the New York State Thruway. Near Sloatsburg, New York, at about 3:00 P.M., his automobile sustained a flat tire. At the time the decedent was accompanied by his wife and 12-year-old son. The decedent waited for assistance in the 92-degree temperature.

After about an hour a State Trooper, finding the disabled car, stopped and talked to the decedent. The trooper radioed Ettinger, which had the exclusive right to render service on the Thruway under an assignment of a contract between Chevron and the Thruway Authority. Thereafter, other State Troopers reported the disabled car and the decedent was told in each instance that he would receive assistance within 20 minutes.

Having not received any assistance by 6:00 P.M., the decedent attempted to change the tire himself. He finally succeeded, although he experienced difficulty and complained of chest pains to the point that his wife and son were compelled to lift the flat tire into the trunk of the automobile. The decedent drove the car to the next service area, where he was taken by ambulance to a hospital; his condition was later diagnosed as a myocardial infarction. He died 28 days later.

Plaintiff sued, Inter alia, Chevron and Ettinger alleging in her complaint causes of action sounding in negligence and breach of contract. We need not consider the issue of negligence, since the Trial Judge instructed the jury only on the theory of breach of contract, and the plaintiff has recovered damages for wrongful death and the pain and suffering only on that theory.

The plaintiff urged at the trial, and contends on this appeal, that the decedent, as a user of the Thruway, was a third-party beneficiary of the contract between the Thruway Authority and Chevron, whereby Chevron was designated as the exclusive supplier of gasoline and services along the stretch of the Thruway where the decedent's automobile became disabled. The plaintiff argues that the defendants breached the contract by not rendering service to the decedent in accordance with the contract within 30 minutes from the time the call for assistance was made, and that the decedent's exertions occurred on account of the breach, from which the death and injuries proximately were the result.

We need not analyze the evidence at the trial at length. It suffices that we find that the evidence supports the jury's implicit determination that the defendants did not render service to the decedent in the manner and within the time stipulations set forth in the contract. The engrossing questions on this appeal, rather, are whether the decedent was a third-party beneficiary of the defendants' promises and whether, assuming the decedent's status as a third-party beneficiary, the decedent's resulting death and injuries may be considered to have reasonably been within the contemplation of the parties.

II

The plaintiff chose to seek recovery on the theory that the decedent was a third-party beneficiary of the contract between Chevron and the Thruway Authority, and in making that choice risked the consequences which follow the theory of contractual obligation (cf. Prosser, Torts (4th ed.), § 92, pp. 618-622). We must treat the Thruway Authority as a creation of the State, carrying out a governmental function (Public Authorities Law, § 353) including, among other things, the construction of "suitable facilities for gas stations", which "shall be publicly offered for leasing for operation * * * under rules and regulations to be established by the authority" (Public Authorities Law, § 354, subd. 10), and the operation and maintenance of the Thruway, either by its own equipment or by agreement with independent contractors, or both (Public Authorities Law, § 360). Hence, the contract between Chevron and the Thruway Authority and the contract between Chevron and Ettinger must be considered in the light of the law controlling the relationship between the government and its contractor and a third party claiming injury arising out of a breach of the contract.

The Restatement of Contracts denies recovery by a third party who is a member of the public, such as the decedent, derived from a breach of an agreement between a state and its contractor, unless the third party establishes either (1) an intention manifested "in the contract, as interpreted in the light of the circumstances surrounding its formation, that the promisor shall compensate members of the public" or (2) that the contract "is with a municipality to render services the non-performance of which would subject the municipality to a duty to pay damages to those injured thereby" (Restatement, Contracts, § 145, p. 173). The plaintiff's burden, under the facts of this case, must fall within the first alternative of this rule.

The rule shaped by the Restatement fairly reflects the precedents in New York (see, e. g., 4 Corbin, Contracts, § 827, pp. 302-310). It is true that some of the expressions in the earlier cases are wider in effect than the rule laid down by the Restatement. ¹ (Cf. McMahon v. Second Ave. R.R. Co., 75 N.Y. 231; Coster v. Mayor, 43 N.Y. 399.) But the doctrine in the language stated in Moch Co. v. Rensselaer Water Co., 247 N.Y. 160, 164, 159 N.E. 896, 897, is more circumscribed:

"In a broad sense it is true that every city contract, not improvident or wasteful, is for the benefit of the public. More than this, however, must be shown to give a right of action to a member of the public not formally a party. The benefit, as it is sometimes said, must be one that is not merely incidental and secondary cf. Fosmire v. Nat. Surety Co., 229 N.Y. 44, 127 N.E. 472. It must be primary and immediate in such a sense and to such a degree as to bespeak the assumption of a duty to make reparation directly to the individual members of the public if the benefit is lost."

We must look, then, to the terms of the contract sought to be enforced. Chevron agreed to provide "rapid and efficient roadside automotive service on a 24-hour basis from each gasoline service station facility for the areas * * * when informed by the AUTHORITY or its police personnel of a disabled vehicle on the Thruway". Chevron's vehicles are required "to be used and operated in such a manner as will produce adequate service to the public, as determined in the AUTHORITY's sole judgment and discretion". Chevron specifically covenanted that it would have "sufficient roadside automotive service vehicles, equipment and personnel to provide roadside automotive service to disabled vehicles within a maximum of thirty (30) minutes from the time a call is assigned to a service vehicle subject to unavoidable delays due to extremely adverse weather conditions or traffic conditions." The contract prescribed the rates for the service, among which was a charge of $3.00 on roadside calls between 8 A.M. and 6 P.M., and $5.00 on such calls between 6 P.M. and 8 A.M. Moreover, Chevron undertook to stop and service any vehicle in distress while en route to or from a roadside call. In the event an improper charge was made by Chevron, it agreed to make a refund to the person overcharged. All of these terms were a part of the general agreement between Chevron and the Authority relating to the operation of the gas stations enumerated.

In interpreting the contract, we must bear in mind the circumstances under which the parties bargained. The New York Thruway is a limited access toll highway, designed to move traffic at the highest legal speed, with the north and south lanes separated by green strips. Any disabled vehicle on the road impeding the flow of traffic may be a hazard and inconvenience to the other users. The income realized from tolls is generated from the expectation of the user that he will be able to travel swiftly and smoothly along the Thruway. Consequently, it is in the interest of the authority that disabled vehicles will be repaired or removed quickly to the end that any...