Parker v. Jeffery

• Decision Date: 10 September 1894
• Citation: 37 P. 712,26 Or. 186
• Parties: PARKER et al. v. JEFFERY et al.
• Court: Oregon Supreme Court

37 P. 712

26 Or. 186

PARKER et al. v. JEFFERY et al.

Supreme Court of Oregon

September 10, 1894

Appeal from circuit court, Multnomah county; E.D. Shattuck, Judge.

Action by C.N. Parker and others against E.J. Jeffery and others on a city contractor's bond. Judgment for plaintiffs, and defendants appeal. Reversed.

W.W. Thayer, for appellants.

Clarence Cole and A.L. Frazer, for respondents.

BEAN C.J.

This case comes here on appeal from a judgment given in favor of plaintiffs for want of an answer, the defendants electing to stand by their demurrer to the complaint, which was overruled by the court. From the complaint it appears that on November 23, 1892, the defendants Robertson Bros contracted in writing with the city of Portland to furnish the material and perform the labor necessary for the construction of a sewer in Curry street, to be completed by February 24, 1893, in good and workmanlike manner, according to plans and specifications therefor, to the satisfaction of the committee on streets and public property, and to be responsible for, and hold the city harmless from, any loss or damage resulting from carelessness or negligence in doing the work. As a part of this contract, it was stipulated and agreed that within 90 days after the completion of the work Robertson Bros. "would pay all sums of money due at the completion of the work, or hereafter to become due, for material used in and labor performed on or in connection with said work." On the 29th of November, 1892, they executed and delivered to the city their bond in the penal sum of $1,940, with the defendants Jeffery and Bays as sureties conditioned that: "Whereas, the above-bounden Robertson Bros. have this day entered into a contract with the city of Portland for the construction of a sewer in Curry street, of said city, according to the plans and specifications therefor, in accordance with the provisions of Ordinance No. 7915 of said city of Portland: Now, if said contractor shall well and faithfully perform all the covenants and conditions in said contract mentioned, then this obligation to be void; otherwise to be and remain in full force and virtue." During the progress of the work, plaintiffs sold and delivered to said contractors material to be used in the construction of the sewer to the amount and value of $127.50, and, the same not having been paid within 90 days after the completion of the work, or at all, this action is brought against the sureties on the bond to recover the amount thereof.

At the outset it may be well to observe that when the contract and bond in suit were executed the charter of the city of Portland contained no provision authorizing or requiring it to exact from contractors a stipulation to pay for labor and material used by them in the performance of their contracts and, while the absence of such a provision would not perhaps, necessarily render the stipulation inoperative ( Knapp v. Swaney, 56 Mich. 345, 23 N.W. 162), yet without it the obligation of the defendants must be determined by the same rules as would apply in the case of similar contracts between individuals. To support the judgment of the court below, the plaintiffs invoke the doctrine that, if one person makes a promise to another for the benefit of a third, the latter may maintain an action upon it, though the consideration did not move from him. Upon this question and the application of the rule, or rather the exception to the general rule that to sustain an action there must be privity of contract between the parties, the cases are discordant, and not at all reconcilable. But, whatever may be said of the doctrine elsewhere, it must be regarded as settled in this state that a third person may, under certain circumstances, enforce a contract made by others for his benefit ( Baker v Eglin, 11 Or. 333, 8 P. 280; Hughes v. Navigation Co., 11 Or. 437, 5 P. 206; Schneider v. White, 12 Or. 503, 8 P. 652; Chrisman v. Insurance Co., 16 Or. 283, 18 P. 466); and this, we believe, is generally regarded as the prevailing rule in this country (Pom.Rem. § 139; Pars.Cont. 467; Hendrick v. Lindsay, 93 U.S. 143; Lawrence v. Fox, 20 N.Y. 268). But the doctrine is not applicable to every contract made by one person with another from the performance of which a third person will derive a benefit, but is limited to contracts which have for their primary object and purpose the benefit of a third person, and which were made for his direct benefit. "To entitle him to an action," says Mr. Justice Rapallo, "the contract must have been made for his benefit. He must be the party intended to be benefited." Garnsey v. Rogers, 47 N.Y. 240. To the same effect are Vrooman v. Turner, 69 N.Y. 280; Railroad Co. v. Curtis, 80 N.Y. 219; Second Nat. Bank of St. Louis v. Grand Lodge, 98 U.S. 123; Shamp v. Meyer (Neb.) 29 N.W. 379, 24 Cent.Law J. 111, note; Austin v. Seligman, 18 F. 519; Wright v. Terry, 23 Fla. 160, 2 So. 6; Chung Kee v. Davidson, 73 Cal. 522, 15 P. 100; Burton v. Larkin (Kan.) 13 P. 398; Greenwood v. Sheldon, 31 Minn. 254, 17 N.W. 478; Depeau v. Waddington, 2 Am.Lead.Cas. 182. From these and other authorities which might be cited we take the rule to be that, to entitle a third person to recover upon a contract made by others, there must not only be an intent to secure some benefit to such third person, but the contract must have been made and entered into directly and primarily for his benefit; for, if a contract should be enforced by a person who would be incidentally or indirectly benefited by its performance, as was said by Rapallo, J., in Garnsey v. Rogers, supra: "Every agreement by which one party should agree with another, for a consideration moving from him, to become security for him to his creditors, or to advance money to pay his debts, could be enforced by the parties whose claims were thus to be secured or paid. I do not understand any case to have gone this length." There are many cases, it is true, in which the language of the court does not expressly so limit the doctrine, but would seem to extend the rule so as to allow any person to maintain an action whenever the contract contains a provision for his benefit; but an examination of the facts upon which the various decisions rest will, in most instances, we think, show that the language used in the instance referred to is broader than the case called for. Judges have differed widely as to the principle upon which the doctrine rests, and it is almost, if not quite, impossible to extract from the cases any general principle by which they can be reconciled. 23 Am.Law Reg. (N.S.) 1. But in nearly, if not quite every, case coming under our notice in which the action has been sustained, unless on a bond or obligation authorized by law, there has been some property, fund, debt, or...