Southern California Gas Co. v. ABC Const. Co.

• Decision Date: 19 June 1962
• Citation: 22 Cal.Rptr. 540,204 Cal.App.2d 747
• Parties: SOUTHERN CALIFORNIA GAS COMPANY, a California corporation, Plaintiff and Appellant, v. ABC CONSTRUCTION COMPANY, a California corporation, Defendant and Respondent. Civ. 25491.
• Court: California Court of Appeals Court of Appeals

Page 540

22 Cal.Rptr. 540

204 Cal.App.2d 747

SOUTHERN CALIFORNIA GAS COMPANY, a California corporation, Plaintiff and Appellant, v. ABC CONSTRUCTION COMPANY, a California corporation, Defendant and Respondent.

Civ. 25491.

District Court of Appeal, Second District, Division 4, California.

June 19, 1962.

Overton, Lyman & Prince and Ried Bridges, Los Angeles, for plaintiff and appellant.

Gendel & Raskoff, Benjamin E. King, and Mayer Chapman, Los Angeles, for defendant and respondent.

BALTHIS, Justice.

This is an appeal by plaintiff Southern California Gas Company from a judgment of dismissal entered upon the sustaining of demurrers filed by defendant ABC Construction Company.

In brief, plaintiff alleged that defendant entered into a contract with Los Angeles County Flood Control District (not a party to the action) for the installation of a storm drain. Defendants promised in such contract to comply with existing laws, orders, regulations, ordinances and decrees in any way affecting the conduct of its work, and to undertake defined responsibilities with respect to utility pipelines encountered during its operations. It was further alleged that during the course of construction, defendant breached such contract and as a result an explosion was caused which damaged plaintiff's pipeline and injured two of defendant's own workmen; the workmen sued plaintiff for personal injuries and plaintiff settled such cases by making compromise payments to them in the total sum of $90,000.

In the trial court, plaintiff was given permission to file four amended complaints in addition to the original complaint (filed December 17, 1958). When plaintiff's counsel stated in open court that he did not wish further leave to amend, the trial court sustained defendant's demurrers to the Fourth Amended Complaint without leave to amend, and Judgment of Dismissal was duly entered.

Plaintiff's appeal is confined to that portion of the judgment ordering dismissal of the third and fourth causes of action contained in its Fourth Amended Complaint, pertaining to claims for property damage and recovery for sums paid in compromise of the personal injury suit initiated by defendant's employees. Plaintiff voluntarily dismissed the first cause of action after the sustaining of defendant's demurrers to said Fourth Amended Complaint and admits that the sustaining of the demurrer as to the second cause of action was proper.

A more detailed examination of the pleadings indicates that in its third cause of action plaintiff prays for damages for injury to its property, predicated upon the breach of the contract between defendant and Los Angeles County Flood Control District. It is alleged that under the terms of the contract defendant agreed to maintain in place, support, protect and be responsible for all damage to all utility pipelines encountered in the course of said storm drain construction.

Plaintiff then states that defendant breached its contract with the Flood Control District and that as a direct and proximate result thereof, 'gas escaping from plaintiff's underground gas pipelines was * * * caused to and did ignite and explode on or about February 25, 1957' and that the underground pipelines of plaintiff were damaged in the sum of $1,206.

The fourth cause of action repeats the charging allegations of the third cause of action and further avers that as a result of the breach of contract, two of defendant's employees, Acero and Adams, sustained personal injuries and initiated an action against plaintiff in the Los Angeles County Superior Court on April 17, 1957. Plaintiff alleges that it paid a sum of money to said workmen in compromise of their action and asks for recovery against defendant for the amount paid to said workmen pursuant to such compromise, $90,000.

As plaintiff is not a party to the contract in question, the basic issue presented by the appeal is whether plaintiff may sue as a third party beneficiary for breach of the contract between defendant and the Flood Control District.

Under section 1559, Civil Code, a contract made expressly for the benefit of a third person may be enforced by him at any time before the parties thereto rescind it.

In Sheppard v. Banner Food Products, 78 Cal.App.2d 808, 812, 178 P.2d 455, 457, the action was brought by plaintiff for declaratory relief on a contract to which he was not a party. A judgment of dismissal after demurrer sustained without leave was affirmed by the appellate court. The court said 'Plaintiff has no right to enforce performance of the Bortz-Banner contract. He was not a party to it and it was not made specifically for his benefit. * * * If a contract is not made expressly for his benefit, it may not be enforced by him even though he would be incidentally benefited by performance.'

In Mottashed v. Central & Pac. Impr. Corp., 8 Cal.App.2d 256, 260, 47 P.2d 525, 527, the court states the rule: 'The rule is well established that in order to sustain such an action an intent to make the obligation inure to the benefit of the third party must have been clearly manifested by the contracting parties. [Citation.] It has frequently been held that where a contract incidentally benefits a third person, but is not expressly made for his benefit, he cannot recover thereon. [Citations.]'

The case of Marin Municipal Water District v. Peninsula Paving Co., 34 Cal.App.2d 647, 94 P.2d 404, is somewhat similar to the case at bar and the court points out that an action (ex contractu) will not lie for breach of contract. In that case the defendant paving company had entered into a contract with the state. The contract between the state and defendant expressly called the attention of defendant to the fact that certain water, gas and sewer lines were buried within the limits of the work to be done, and provided that: "The contractor shall take every precaution to protect and preserve such lines from injury or damage during construction operations." Plaintiff brought an action to recover damages for injury to its pipeline alleged to have been caused by defendant's negligence in constructing the state highway. A judgment in favor of plaintiff was reversed, the upper court holding there was no substantial evidence to support the finding of negligence.

The court pointed out there was no liability on the contract, saying (page 653, 94 P.2d page 406): 'The provision of the contract between the state and defendant above quoted that the contractor should preserve and protect the pipe line, in no way enlarged the liability of the contractor to third persons.'

If plaintiff were suing in tort, rather...