Hartford Accident & Indemnity Co. v. W. & J. Knox Net & Twine Co.

Bond, C. J., filed the following dissenting opinion, in which Parkji, ,J., concurred. My conclusion is opposed to that of the majority of the court. In this state we have adopted the rule that suit may be brought on a contract by one who, although not a party to it, is named in it a,s beneficiary. We have adopted what has been called the New: York rule, the majority rule, rather than the Massachusetts or the English rule on the subject.

Anson on Contracts (2nd Amer, ed.), p. 284; Small v. Schaefer, 24 Md. 143 . But the rule has not been that all stipulations between two parties for payment of a third are enforceable by that third. Some have been so enforceable, and some have not, according, in each case, as it might or might not be inferred from the particular contract in hand that the contracting parties intended to make the third party the beneficiary of their contract. “It is not every promise made by one to another from the performance of which a benefit may ensue to a third which gives a right of action to such third person, he being neither privy to the contract, nor to the consideration. The contract must be made for his benefit as its object, and he must be the party intended to be benefited.” Simson v. Brown, 68 N. Y. 355, 361 .

And it seems to me that we are slighting this distinction in holding the third party entitled to sue on the bond given the owner in this case, to enforce the stipulation that the surety “shall pay all persons who have contracts directly with the principals for labor and materials.” I see nothing in it to support the inference of intention to benefit the ⁵⁰ third party, which would, under the principle referred to, bring it on the side of contracts so enforceable. As I see it, we are allowing the third party to come in and sue on the contract merely because the parties to it have agreed that he should be paid, without reference to the intention of the parties as to his benefit or interest. This clause was a common one in the contracts of general contractors long before it was embodied in the surety bonds given by the contractors, and, a's is well known, its sole object and purpose, originally, at least, was to protect owners against mechanics’ liens on their property for unpaid bills of subcontractors. And of these stipulations, Williston said, in a discussion in 15 Harvard Law Review, 767, 783: “In most eases the fulfilment of this promise by the contractor operates to discharge a liability of the owner of the building, whose building would be liable to satisfy the liens given by the law. to workmen and materialmen.

It cannot, therefore, be inferred that the promisee requires the promise in order to benefit such creditors of the contractor. The natural