It sometimes happens that a person who is neither the promisee of a contract nor the party to whom performance is to be rendered will derive a benefit from its performance. A typical case is where A promises B to pay him money for his expenses. A creditor of B is not generally allowed to sue A.25 It is obvious that such a creditor's right can at most be only a derivative one.
So under a promise made in a building contract that there may be retained from payments due the contractor a sufficient sum to pay claims for labor and material, there can be no recovery by a creditor of the contractor for labor or material.26
In Missouri and Nebraska, however, bonds for the erection of public buildings containing such a clause are intended for the protection of the creditors as well as of the public corporation erecting the building, and the creditors are allowed to sue on the promise.27
Mayor of Albany, 43 N. Y. 399; Rior-don v. First Church, 26 N. Y. S. 38, ft N. Y. Misc. 84; Vulcan Iron Works v. Pittsburg Eastern Co., 144 N. Y. App. Div. 827, 129 N. Y. S. 676; Lockwood v. Smith, 81 N. Y. Misc. 334,143 N. Y. S. 480; Emmitt v. Brophy, 42 Ohio St. 82; Hughes v. Oregon Ry. & N. Co., 11 Oreg. 437, 5 Pac. 206; McDowell v. Laev, 36 Wis. 171; Bassett v. Hughes, 43 Wis. 319; Houghton v. Milbum, 64 Wis. 564,12 N. E. 23,11 N. E. 617; Stites v. Thompson, 98 Wis. 320, 331, 73 N. W. 774. A third person was allowed to enforce a promise under seal also in the following cases, but the point was not discussed: South Side Assoc, v. Cutler Co., 64 Ind. 660; Anthony p. Herman, 14 Kan. 494; Brenner v. Luth, 28 Kan. 681. See also Va. Code, Sec.2415; Newberry Land Co. v. Newberry, 96 Va. 111, 27 S. E. 897.
25Cragin v. Lovell, 109 U. S. 194, 199, 3 S. Ct. 132, 27 L, Ed. 903; Thomas Mfg. Co. v. Prather, 66 Ark. 27, 44 S. W. 218; Burton v. Larkin, 36 Kan. 246, 13 Pac. 398, 59 Am. Rep. 641. See also Jackson Iron Co. v.
Negaunee Concentrating Co., 65 Fed. 298, 31 U. S. App. 1, 12 C. C. A. 636; Hill v. Omaha, etc., R. Co., 82 Mo. App. 188; Lockwood v. Smith, 81 N. Y. Misc. 334, 143 N. Y. S. 480; Fish * Hunter Co. v. New England Home-stake Co., 27 S. D. 221,130 N. W. 841. But see contra Rothwell v. Skinker, 84 Mo. App. 169; Rounsevel v. Osgood, 68 N. H. 418, 44 Atl. 635; Houghton v. Milbura, 54 Wis. 554, 12 N. E. 23, 11 N. E. 517. And where an insurance company had reinsured its risks, a policy holder was allowed to sue the reinsuring company directly in Glen v. Hope Mut. Life Ins. Co., 56 N. Y. 379; Fischer v. Hope Mut Life Ins. Co., 69 N. Y. 161; Johannes v. Phenix Ins. Co., 66 Wis. 60, 27 N. W. 414, 57 Am. Rep. 249.
26Kellas v. Slack & Slack Co., 129 Md. 535, 99 Atl. 677; Grassmann v. Bonn, 30 N. J. Eq. 490; United States Fidelity, etc., Co. v. Newark, 79 N. J. Eq. 684,81 Atl. 758, 37 L. R. A. (N. S.) 575; Standard Gas Power Corp. v. New England Casualty Co., 90 N. J. L 670, 101 Atl. 281.