Ridder v. Blethen, 29756.

• Decision Date: 28 February 1946
• Docket Number: 29756.
• Citation: 24 Wn.2d 552,166 P.2d 834
• Parties: RIDDER et al. v. BLETHEN et al.
• Court: Washington Supreme Court

166 P.2d 834

24 Wn.2d 552

RIDDER et al. v. BLETHEN et al.

No. 29756.

Supreme Court of Washington

February 28, 1946

Department 2

Action by Herman H. Ridder and Clarance B. Blethen, II, against Rae Kingsley Blethen and others, as executors of the estate of Clarance B. Blethen, deceased, and others to establish plaintiff Blethen's position as a third-party beneficiary under a contract between deceased and others. From a judgment of dismissal, plaintiffs appeal.

Affirmed.

Appeal from Superior Court, King County; Robert M Jones, judge.

Jones &amp Bronson, of Seattle (H. B. Jones, Story Birdseye, and H. B Jones, Jr., all of Seattle, of counsel), Oppenheimer Hodgson, Brown, Donnelly & Baer, of St. Paul, Minn. (M. J. Brown, of St. Paul, Minn., of counsel), and Amend & Amend, of New York City (Myles B. Amend, of New York City, of counsel), for appellants.

Holman, Sprague & Allen, Hulbert, Helsell & Paul, and McMicken, Rupp & Schweppe, all of Seattle, for respondents.

BLAKE Justice.

Clarance B. Blethen died testate October 30, 1941. Four sons survived him--Clarance B. Blethen, William K. Blethen, John Alden Blethen, and Francis A. Blethen. On December 30, 1929, some twelve years Before his death, Colonel Blethen, on the one hand, and Bernard H. Ridder, Joseph E. Ridder, and Victor F. Ridder, co-partners, on the other, entered into a contract which contained the following paragraph:

'Eighth: Blethen agrees, immediately after the issuance of Class B common stock to him to make a last Will and Testament, or some other instrument in writing, which will provide in effect that his Class B common stock be held in trust by his Trustees after his death for a period of twenty-one years after the date hereof. Such last Will and Testament or other trust instrument shall also provide that Blethen's Class B common stock shall not be sold by his trustees until the termination of such trust. Such last Will and Testament or other trust instrument shall constitute, nominate and appoint the widow of said Blethen as one of the trustees, Bernard H. Ridder, another of such trustees, and Elmer E. Todd, the third of such trustees. It shall further provide that in the event of the death, resignation or disability of his widow at any time, the vacancy caused thereby shall not be filled but the surviving trustees shall act. In the event of the death, resignation or disability of Bernard H. Ridder at any time, one of his brothers shall act as trustee in his place and stead and, in the event of the death, resignation or disability of Elmer E. Todd at any time, one of the partners of the law firm now representing Blethen shall act as trustee in his place and stead. Such last Will and Testament or other trust instrument shall also provide that upon the termination of the trust, Blethen's Class B common stock shall be distributed by the trustees among the surviving sons of said Blethen and the issue of such of them as may be deceased, in equal shares, per stirpes. Such last Will and Testament, or other trust instrument, shall further provide that, in case of any difference or differences of opinion between the said trustees as to any question connected with the management of the corporation, the Class B common stock of which is to constitute the corpus of the trust, any trustee may submit such a question for arbitration, upon notice to the other trustees, to the then general manager of The Associated Press, and in any such case the decision of the said then general manager of The Associated Press shall be final and conclusive and be binding upon all of said trustees.'

In his last will and testament, executed December 4, 1940, Colonel Blethen disinherited his son Clarance and bequeathed the class B stock of the Seattle Times Company--a corporation organized pursuant to the agreement with Ridder Brothers--to his sons William K., John Alden, and Francis A.

Clarance B., Jr., assigned his alleged rights under the contract of December 30, 1929, executed by his father and Ridder Brothers, to Herman H. Ridder. The latter, with Clarance, Jr., joining as coplaintiff, brought this action to establish the latter's position as a third-party beneficiary under the contract.

We shall not attempt to summarize the pleadings upon which issue was joined. It will suffice to say that the question presented to the trial court was whether Blethen, Jr., was a donee beneficiary in contemplation of the contract between his father and Ridder Brothers. It he was, he and his assignee are entitled to maintain the action. If, however, he was merely an incidental beneficiary in contemplation of the contract, he has no enforcible interest. 12 Am.Jur. 831, § 279.

Much evidence was introduced to determine the status of Blethen, Jr. The trial court held that he was merely an incidental beneficiary, and entered judgment dismissing the action. Plaintiffs appeal.

Appellants' assignments of error raise but two questions: (1) Whether parol evidence was admissible to establish the status of Clarance, Jr., as a third-party beneficiary--donee or incidental; and (2) whether, under the evidence, the court was warranted in finding him to be merely an incidental beneficiary.

First. The generally accepted definition of a donee beneficiary is stated in 1 Restatement of the Law of Contracts, p. 151, § 133, as follows:

'(1) Where performance of a promise in a contract will benefit a person other than the promisee, that person is, * * *:

'(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; * * *.'

Appellants' assertion that Clarance, Jr., comes within this definition, under the express terms of the contract between his father and the Ridder Brothers, cannot be denied. They contend, therefore, that since the terms of the contract are plain and unambiguous, resort may not be had to parol evidence to show his status to be other than a donee beneficiary. Solution of the question, however, is not quite so simple as that. To constitute one a donee beneficiary, it must appear that the contract was designed for his benefit, or that it was the intent and purpose of the parties to bestow a benefit or gift upon him. Simson v. Brown, 68 N.Y. 355; Riegel v. Central Hanover Bank & Trust Co., 266 A.D. 586, 42 N.Y.S.2d 657; Burton v. Larkin, 36 Kan. 246, 13 P. 398, 59 Am.Rep. 541; Seaver v. Ransom, 180 A.D. 734, 168 N.Y.S. 454, affirmed 224 N.Y. 233, 241, 120 N.E. 639, 2 A.L.R. 1187; Ball v. Cecil, 285 Ky. 438, 148 S.W.2d 723; O'Neil v. Ross, 98 Cal.App. 306, 277 P. 123.

The purpose and intention of the parties is to be ascertained from the contract as a whole, construed in the light of the circumstances under which it is made. Grand Lodge, Etc., v. United States F.& Co., 2 Wash.2d 561, 98 P.2d 971; Fidelity Trust Co. v. Travelers' Ins. Co., 320 Pa. 161, 181 A. 594; and in Sayward v. Dexter Horton & Co., 9 Cir., 72 F. 758, 765, 19 C.C.A. 176, it is stated:

'It is not every contract for the benefit of a third person that is enforceable by the beneficiary. It must appear that the contract was made and was intended for his benefit. The fact that he is incidentally named in the contract, or that the contract, if carried out according to its terms, would inure to his benefit, is not sufficient to entitle him to demand its fulfillment. It must appear to have been the intention of the parties to secure to him personally the benefit of its provisions. National Bank v. Grand Lodge, 98 U.S. 123 ; Wright v. Terry, 23 Fla. 160, 2 So. 6; Burton v. Larkin, 36 Kan. 246, 13 P. 398 ; Chung Kee v. Davidson, 73 Cal. 522, 15 P. 100; [Lake Ontario Shore] Railroad Co. v. Curtiss, 80 N.Y. 219; Vrooman v. Turner, 69 N.Y. 280 ; Greenwood v. Sheldon, 31 Minn. 254, 17 N.W. 478; Austin v. Seligman, C.C., 18 F. [519], 520. There is nothing in the contract made by Harrington & Smith with Herrick indicative of an intention to protect Sayward from suit except for Herrick's own benefit. The parties to that agreement evidently had in view their own advantage, and not Sayward's. It was clearly for Herrick's protection primarily and chiefly that the stipulation in question was inserted. If it was the intention to protect Sayward also, that purpose was only incidental and secondary.'

Unless the contract is expressly designed for the benefit of a third party, resort, of necessity, must be had to extrinsic evidence to ascertain whether it was the purpose and intent of the parties to the contract to bestow a benefit or gift upon a third party. This necessity was recognized by this court in Hutton v. Gonser, 159 Wash. 219, 292 P. 743, to which we shall advert later at some length. Appellants themselves recognized this, for, when the case was called for trial, their counsel, in the course of his opening statement to the court, said:

'Of course, under many of the authorities the contract which the parties had made and the language which they have used is deemed sufficient to indicate their purpose, at least prima facie, and it was upon that theory that it seemed to me there was no occasion or would be in the opening case no occasion to go further. In fact, I think it was urged on the last hearing of the general demurrer that because the complaint did not contain specific allegations of the purpose and intent on the part of the promisee, that the demurrer should be sustained. But, nevertheless, the whole background and testimomy might just as well, I think, be presented and the logical way...