Wolosoff v. Gadsden Land & Building Corporation

• Citation: 245 Ala. 628,18 So.2d 568
• Decision Date: 01 June 1944
• Docket Number: 7 Div. 795.
• Court: Supreme Court of Alabama
• Parties: WOLOSOFF et al. v. GADSDEN LAND & BUILDING CORPORATION.

18 So.2d 568

245 Ala. 628

WOLOSOFF et al. v. GADSDEN LAND & BUILDING CORPORATION.

7 Div. 795.

Supreme Court of Alabama

June 1, 1944

Rehearing Denied June 22, 1944.

Frank Bainbridge and Bainbridge & Mims, all of Birmingham, and Julius S. Swann, of Gadsden, for appellant.

Hood, Inzer, Martin & Suttle, of Gadsden, for appellee.

FOSTER Justice.

The question on this appeal is whether the employees of Goodyear Tire and Rubber Company (hereafter referred to as Goodyear) have such an interest in a contract between Goodyear and Gadsden Land and Building Corporation (hereafter referred to as the Housing Company) as to prevent Goodyear and the Housing Company from agreeing to rescind the contract, and permit the Housing Company to sell the land to complainants freed from said contract.

The Housing Company was stipulated by the contract to own or that it will acquire five hundred and seventy-six acres of land and shall improve it "in order to provide at all times adequate housing facilities for the personnel employed by Goodyear," and shall lease the houses to such employees on stipulated rental terms, dependent on the size of the house, in preference to others; or to sell them on stipulated conditions. Providing that any modification must be in writing and executed with the same dignity as this agreement. The contract had attached as exhibits a form of lease and of sale (respectively) to be used by the Housing Company separately for employees and non-employees of Goodyear. The agreed statement of facts is short so far as here material and is as follows:

"3. At the time and just prior to the execution of the contracts, copies of which are attached to the bill of complaint as exhibits, the Goodyear Tire & Rubber Company of Alabama, had under consideration with the people of Gadsden the question of locating a large manufacturing plant at Gadsden for the manufacture of automobile casings, tires, tubes and the like, at which time the Goodyear Tire & Rubber Company also had under consideration the location of said plant at Atlanta, Georgia; that the question arose that Gadsden was a much smaller city than Atlanta, it having at that time a population, according to the federal census of something like 24,000, and that the matter of housing facilities for the Goodyear employees was of paramount importance to Goodyear.

"It is further agreed that after some negotiations, the Goodyear Tire & Rubber Company of Alabama agreed to locate said manufacturing plant at Gadsden conditioned that the people of Gadsden would give the Goodyear Company assurance that ample housing facilities for its employees would be provided at Gadsden, such as would be afforded at Atlanta should Goodyear locate said plant at that city. It was the contention of Goodyear's officers that their manufacturing processes and factory would require a high degree of skilled employees and that the number with which the operations would begin would be something like 1100 to 1200. The result of that proposition from Goodyear was the contracts in question, which were made in advance of the employment by Goodyear of its employees at Gadsden.

"As a result of the execution of the contracts, Goodyear located its manufacturing plant at Gadsden and soon thereafter some 472 houses were constructed by Gadsden Land and Building Corporation in compliance with the terms of said contracts.

"That there has never been any occasion or demand for the building of any additional houses than the 472 and that at this time there reside in the houses only 265 employees of Goodyear, the remaining houses being occupied by the public generally.

"In the beginning, Goodyear employed about 1150 employees which number has varied from time to time during the elapsing fifteen years, there being in the employ of Goodyear at this time 3340 employees and of the total number of employees of Goodyear at this time only about seven per cent have elected to reside in the houses in question.

"4. That practically all of the capital stock of the respondent Building Corporation was sold to and is now owned by citizens of Gadsden and Alabama.

"5. Since the execution of said contracts in question a large number of the former employees of Goodyear have died, moved away and are now located at points unknown."

One of the employees is made a party as the representative of them all under authority of Equity Rule 31(a) (3), Code 1940, Tit. 7 Appendix. No allegation is made in the pleading or agreed facts whether this employee or any others have made lease or purchase contracts. But the agreed facts show that two hundred and sixty-five of them reside in houses here involved. We will presume that it is by virtue of the contract here sought to be rescinded and possibly under formal lease.

The rights of a third party beneficiary of a contract between others, in which he furnishes no part of the consideration, are said to depend upon the question of whether the contract, construed in the light of attendant circumstances, is apparently for the direct benefit of such third party, or whether his benefits under it are merely incidental, indirect or consequential. Fidelity & Deposit Co. v. Rainer, 220 Ala. 262, 125 So. 55, 77 A.L.R. 13; Barlowe v. Employers Ins. Co., 237 Ala. 665, 188 So. 896; 5 Ala.Dig., Contracts, p. 79, + 187; 12 Am.Jur. 833, section 281; Lovejoy v. Bessemer Waterworks Co., 146 Ala. 374, 41 So. 76, 6 L.R.A.,N.S., 429, 9 Ann.Cas. 1068; Gulf Compress Co. v. Harris, Cortner & Co., 158 Ala. 343, 48 So. 477, 24 L.R.A.,N.S., 399; Shine v. Nash Abstract Co., 217 Ala. 498, 117 So. 47.

The law governing this situation, while dependent upon that principle, is treated under different legal topics consistent with the nature of the contract and of property rights to which it relates. Such a contract sometimes creates in the third party a trust enforcible in equity with respect to the property involved. There are many situations in which third parties are held to have a beneficial interest in property created without their procurement and without furnishing any of the consideration.

To create such a trust no particular form of words is necessary; but the instrument should with reasonable certainty manifest the nature, subject matter and objects to be attained. Wiggs v. Winn, 127 Ala. 621, 29 So. 96; Bibb v. Hunter, 79 Ala. 351; Hodge v. Joy, 207 Ala. 198 (13 and 14), 92 So. 171; Teal v. Pleasant Grove Local Union, 200 Ala. 23, 75 So. 335; Cresswell v. Jones, 68 Ala. 420.

It is said in Wiggs v. Winn, supra, that any agreement made by a person having the power to dispose of property whereby he agrees or directs that a particular parcel of property shall be held or dealt with in a particular manner for the benefit of another, a court of equity raises a trust in favor of such other person against him who made the agreement. But that principle is consistent with the one first above mentioned that the benefits must be intended directly for the third person to raise such a trust. The principle has the same qualities whether there is property involved, or some other contractual benefits. A person cannot enforce a trust merely because he incidentally may profit from the performance of a contract respecting property. 1 Scott on Trusts 643, 645, section 126. And even though the contract may create an equitable trust in some third person, it may be revoked by the parties to it, without the consent of such third person, dependent upon the nature of the right in which...