Thomas Manufacturing Company v. Prather

• Decision Date: 29 January 1898
• Citation: 44 S.W. 218,65 Ark. 27
• Parties: THOMAS MANUFACTURING COMPANY v. PRATHER
• Court: Arkansas Supreme Court

44 S.W. 218

65 Ark. 27

THOMAS MANUFACTURING COMPANY v. PRATHER

Supreme Court of Arkansas

January 29, 1898

Appeal from Pulaski Circuit Court JOSEPH W. MARTIN, Judge.

Reversed.

Cockrill & Cockrill, for appellant.

There is no evidence that appellant made or ratified the contract sued on. Appellee can not maintain an action upon the contract sued on. To enable one not a party to a contract to sue thereon, the contract must be made for his benefit, as its object, and he must be the party intended to be benefitted. 68 N.Y. 335; 72 F. 758; 764; 93 U.S. 149; 98 U.S 123; 23 Fla. 160; 36 Kas. 246; 73 Cal. 522; 80 N.Y. 219; 69 N.Y. 280; 31 Minn. 254; 18 F. 520; 76 F. 130; 39 N.E. 601, 38 P. 620. The contract sued on was of no binding force at the time of the injury to the employee. The employee (Brown) executed a release from all liability to the appellee. That bars this action. A release or rescission by the original parties to a contract for the benefit of a third party destroys such beneficiary's right of action. Beach Contracts, § 201; Lawson, Contracts, § 113 d; 25 O St., 378; 47 Ind. 211; 30 Ind. 112; 80 Ind. 434; 30 N.Y. 432; 114 N.Y. 167; 56 Iowa 349, 353, 80 Ky. 409, 417; 38 O. St. 543, 554; Wharton, Cont. § 821, and cases cited; Beach, Cont. § 493. There was no consideration for the contract sued on. The payment of the weekly assessment was, in reality, his share of the premium on the accident policy. The items in appellant's statement made a sum total of $ 271, mid the verdict for $ 300 was unsupported by evidence.

W. S. & Farrar L. McCain, for appellee.

Appellant made the contract sued on through an authorized agent; and the subsequent conduct of the officers of appellant company is such as to amount to a ratification, if the contract was authorized. Appellee is entitled to an action against appellant under the contract made for his benefit. 31 Ark. 411; Brandt, Suretyship, § 24, 48 Ark. 335; 36 Ark. 561; 39 Ark. 173; 48 Ark. 261; Jones, Mortg. § 748-9; 43 N.Y. 339; 64 N.Y. 117; 127 N.Y. 639; 93 U.S. 149; 20 Neb. 223; 24 Cent. L. J. 110; 36 N. J. Law, 143; 35 Wis. 171; 51 Ark. 210; 4 Wend. 419; 85 N.Y. 258; 46 Ark. 132. If one primarily bound engages, on a collateral consideration, with another that such other person shall assume his duties toward the one to whom he owes them, such collateral consideration cannot be withdrawn without the consent of the beneficiary of the contract. Brandt, Suretyship, §§ 282-5; 72 N.Y. 385; 112 Ill. 91; 43 Wis. 319; 15 Am. & Eng. Enc. Law. 841; 1 Jones, Mortg. § 764; Thomas, Mortg. § 602; Wiltsie, Mortg. Foreclosures, § 282; Kerr's Supp. to Wiltsie, § 230. Acceptance of a contract for one's benefit is presumed, where no burdens are imposed. 32 Ark. 399; 60 Ark. 26; id. 503.

WOOD J. BUNN, C. J., dissenting.

OPINION

WOOD, J.

Appellee, who was a physician and surgeon, sued appellant for $ 300, the alleged value of professional services rendered by him to one Brown, an employe of appellant. Appellee alleges that appellant, for a valuable consideration, entered into a contract with Brown, whereby it was to furnish him medical attendance in case of an accidental injury while engaged in appellant's business. That part of the contract which appellee claims was for his benefit, and upon which he bases his right to recover, is as follows: "This is to certify that we are insured in a large and reliable insurance company against accidents resulting in bodily injury or death to J. R. Brown and other employees, so that we can agree that the above-named employe shall receive from us, in case of an accident received by him when actively engaged in our business, the following: (1) In case of an accidental injury a sum not exceeding," etc., * * * "and furnish medical attendance." The answer denied liability.

The court found the following facts, so far as may be necessary to set them out, to-wit: "That the defendant company entered into a contract by which it, in case of accident, while in its employment, to one Brown, its employee, would among other things, furnish him a physician; that on the 14th day of September, 1892, and while said contract was in force, said Brown was injured while in defendant's employment; that the plaintiff, a physician, was as such called in by Brown, and waited on him, and rendered him the services sued for, extending from September 16, 1892, to April 1, 1893, to the value of $ 300; that this employment of plaintiff as physician was known to defendant company, and by it through its officers fully approved." Appellant asked the court to find as a fact that "there was no agreement made by the Thomas Manufacturing Company with Brown to pay Dr. Prather, or any other physician, for medical attendance upon said Brown," which the court refused. And appellant asked the court to declare the following as the law: "A contract entered into upon the terms proposed in the case aforesaid would not inure to the benefit of the plaintiff, and if the court finds that the defendant made, and Brown accepted, the contract there proposed, the plaintiff cannot recover;" which the court refused, holding that "the contract entered into defendant company with Brown, and services rendered by plaintiff, with the assent and approval of defendant company, created a liability to plaintiff." Exceptions to the ruling of the court upon these points present the only question we need consider, to-wit: Was the contract for appellee's benefit.

This court long ago ruled, in line with the doctrine which generally obtains in this country, that where a promise is made to one upon a sufficient consideration, for the benefit of another, the beneficiary may sue the promisor for a breach of his promise. Chamblee v. McKenzie, 31 Ark. 155; Talbot v. Wilkins, 31 Ark. 411; Hecht v. Caughron, 46 Ark. 132. This doctrine operates as an exception to the elementary rule of law that a stranger to a simple contract, from whom no consideration moves, can not sue upon it. National Bank v. Grand Lodge, 98 U.S. 123, 25 L.Ed. 75; Mellen v. Whipple, 1 Gray 317; Greenwood v. Sheldon, 31 Minn. 254, 17 N.W. 478. Therefore it should be applied cautiously, and restricted to cases coming clearly within its compass. The following prerequisites for the application of the doctrine were announced by the court of appeals of New York in Vrooman v. Turner, 69 N.Y. 280, viz.: "There must be--First, an intent by the promisee to secure some benefit to the third party; and, second, some privity between the two,--the promisee and the party to benefited,--and some obligation or duty owing from the former to the latter which would give him a legal or equitable claim to the benefit of the promise, or an equivalent from him personally."

In Durnherr v. Rau, 135 N.Y. 219, 32 N.E. 49, the court say: "It is not sufficient that the performance of the covenant may benefit a third person. It must have been entered into for his benefit, or at least such benefit must be the direct result of performance, and so within the contemplation of the parties. " See, also, American Exch. Bank v. Northern Pac. R. Co., 76 F. 130.

"Of course the name of the person to be benefited by the contract need not be given, if he is otherwise sufficiently described or designated. Indeed, he may be one of a class of persons, if the class is sufficiently described or designated." Burton v. Larkin, 36 Kan. 246, 13 P. 398.

Applying the foregoing principles to the contract under consideration, it is manifest, from the nature and terms of the contract, that neither the appellee individually, nor any of a class to which he belonged, was intended to be considered as primarily the party in interest. Austin v. Seligman, 21 Blatchf. 506, 18 F. 519 ; Simson v. Brown, 68 N.Y. 355, 361, 362; Wright v. Terry, 23 Fla. 160, 2 So. 6; Greenwood v. Sheldon, 31 Minn. 254, 17 N.W. 478; Washburn v. Investment Co., 38 P. 620.

The clause, "We can furnish medical attendance," was solely for the benefit of Brown, and the purpose of making it upon the part of appellant was doubtless to induce him to enter its service upon terms that would, to it, be advantageous. The most that can be said about it, so far as any physician was concerned, is that, upon the happening of the contingency which it contemplated,--the accidental injury,--the performance of the contract would result incidentally to his benefit. This would not entitle him to sue the company. Chung Kee v. Davidson, 73 Cal. 522, 15 P. 100.

Moreover the contract here was "to furnish medical attendance," not to pay the wages or for the services of a physician whom Brown might employ. According to the express terms of the contract, the company did not surrender to Brown the right to bind it by contract he might make with a physician, or constitute him its agent to employ a physician, and hence the company is not bound, according to the written contract, for the services of a physician whom Brown employed. But the court found "that this employment of plaintiff as physician was known to defendant company, and by it...