Marlboro Shirt Co. v. American Dist. Tel. Co.

• Decision Date: 10 January 1951
• Docket Number: No. 35,35
• Citation: 77 A.2d 776,196 Md. 565
• Parties: MARLBORO SHIRT CO., Inc. v. AMERICAN DIST. TEL. CO.
• Court: Maryland Court of Appeals

Page 565

196 Md. 565

77 A.2d 776

MARLBORO SHIRT CO., Inc. v. AMERICAN DIST. TEL. CO.

No. 35.

Court of Appeals of Maryland.

Jan. 10, 1951.

A. Frederick Taylor, Baltimore (Harry W. Allers and Allers & Cochran, Baltimore, on the brief), for appellant.

Joseph T. Brennan, 2nd, Baltimore (Hilary W. Gans, Baltimore, on the brief), for appellee.

Before MARBURY, C. J. and DELAPLAINE, COLLINS, GRASON and HENDERSON, JJ.

GRASON, Judge.

S. Rosenbloom, Inc., owned a building known as 410 W. Lombard Street, Baltimore, Maryland, and rented a part thereof to the Marlboro Shirt Co., Inc. At the time of the lease, the building was equipped with a sprinkler system. On December 18, 1941, the lessor, S. Rosenbloom, Inc., entered into a written contract with the American District Telegraph Co., whereby the latter agreed to install and maintain on the sprinkler system an automatic central station signaling device which would signal a leakage of water in the sprinkler system to the office of the appellee. Some time between the 8th and 10th of February, 1947, a leak occurred in the sprinkler system, causing a discharge of water in the premises rented by the appellant, which continued until discovered on Monday morning, February 10, 1947, and which caused damage to certain stock and equipment of appellant stored therein. The alarm system failed to operate.

The appellant instituted suit in the Superior Court of Baltimore City against the appellee for damages resulting to its stock of goods and equipment. The appellee demanded particulars of the appellant's claim, and to its second amended declaration as particularized the appellee demurred. The demurrer was sustained, and from a judgment entered thereon an appeal was taken to this court.

The declaration contained two counts. After setting out the facts above stated, the first count alleges: 'The damage to said stock and equipment owned by the Plaintiff was caused by the negligence of the Defendant, its agents or servants, and there was no negligence on the part of the Plaintiff which directly contributed thereto.'

The second count contains the same facts, and alleges: '* * * and for that as a result of the failure of the Defendant to perform the aforesaid contract or detect the aforesaid water flow and notify the proper authorities, the Plaintiff sustained great damage to its stock and equipment, * * *.'

It will be noted that the first count sounds in tort and the second count is grounded on the breach of a contract. The question posed by the appellant in this case: 'Is the lower court correct in sustaining Appellee's demurrer where the facts alleged show negligence on the part of Appellee and where the facts further show that the contract in question of necessity had to be for the benefit of the Appellant?' The appellee contends that the contract in question was not entered into for the purpose of benefiting the appellant.

It has been stated by this court that at common law privity between the plaintiff and defendant is requisite to maintain an action on a contract, even though the contract is for the benefit of a third party. But that rule has gradually relaxed, so that now, in this State, a person for whose benefit a contract is made can maintain an action upon it. But before one can do so it must be shown that the contract was intended for his benefit; and, in order for a third party beneficiary to recover for a breach of contract it must clearly appear that the parties intended to recognize him as the primary party in interest and as privy to the promise. An incidental beneficiary acquires by virtue of the promise no right against the promisor or the promisee. 'In order to recover it is essential that the beneficiary shall be the real promisee; i. e., that the promise shall be made to him in fact, though not in form. It is not enough that the contract may operate to his benefit. It must clearly appear that the parties intend to recognize him as the primary party in interest and as privy to the promise.' (Quoting authorities.) Mackubin v. Curtiss-Wright Corp., 190 Md. 52, 57 A.2d 318, 321.

In Restatement of the Law, Contracts, section 133, a donee beneficiary, creditor beneficiary, and incidental beneficiary are defined as follows:

'(1) Where performance of a promise in a contract will benefit a person other than the promisee, that person is, except as stated in Subsection (3):

'(a) a donee beneficiary if it appears from the terms of the promise in view of the accompanying circumstances that the purpose of the promisee in obtaining the promise of all or part of the performance thereof is to make a gift to the beneficiary or to confer upon him a right against the promisor to some performance neither due nor supposed or asserted to be due from the promisee to the beneficiary;

'(b) a creditor beneficiary if no purpose to make a gift appears from the terms of the promise in view of the accompanying circumstances and performance of the promise will satisfy an actual or supposed or asserted duty of the promisee to the beneficiary, or a right of the beneficiary against the promisee which has been barred by the Statute of Limitations or by a discharge in bankruptcy,...