This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Among examples of contracts which may give incidental benefit to a third person, but which are not intended by the parties to benefit him primarily are the following: A contract whereby the prospective vendee of a mine seeks to have liens held by third persons cleared off before he takes title,1 a promise by one to whom an administrator pays a fund, believing him to be a distributee, to repay a proportionate part of any lawful claim against the estate,2 and a contract whereby the lessee of a railway agrees to pay all taxes and assessments.3 A contract between the United States and a state for the maintenance of a canal cannot be enforced by one who has made use of water furnished from such canal.4 A covenant by vendee with his vendor to repair a ditch which has become a substitute for a natural water-course cannot be enforced by a third person who is incidentally benefited thereby.5 A contract between an employer and an employee, whereby the employer agrees to furnish his employee a physician if the employee is injured in the course of his employment cannot be enforced by a physician whom the employee engages.6 If a mortgagor of cattle, with consent of mortgagee, employs a person to take care of such cattle, this does not impose any liability upon mortgagee to pay for such care.7 Employment of an attorney by a woman to draw her will creates no liability from such attorney to her son though by gross negligence the will is so drawn as to deprive her son of a provision intended for him.8 If A is employed by B to examine an abstract of title, A is not liable for his negligence to C even if he knows that B means to use such certificate to induce C to buy or make a loan.9 Some courts hold that A is here liable to C.10 If a waterworks company makes a contract with a city to supply a certain amount of water in a given time, to maintain a certain pressure, to keep the water at a certain height in the supply pipe and the like, and by reason of a breach of such covenant loss by fire occurs to the damage of a property owner, the weight of authority holds that he cannot maintain an action against the waterworks company for a breach of such covenant.11 So an insurance company which has been obliged to pay an insurance policy on such building cannot maintain an action therefor against the waterworks company.12 This conclusion leads to the further result that no action for such loss can be maintained by anyone, since it is clear that the city as such has not suffered by the loss of the property burned. Accordingly there is a vigorous, though limited, dissent from this doctrine, and some cases hold that the injured party may maintain an action against the waterworks company.13 B granted property to A upon which was a mortgage given by B, in which B's wife C had joined to release her dower. As part of the purchase price B agreed to pay all encumbrances "by mortgage or otherwise " upon the property conveyed. A did not pay such mortgage debt and the realty was sold on foreclosure proceedings, by which C's dower was lost. C sued A on his covenant for the loss of her dower. It was held that she could not maintain such action, as the covenant was not for her benefit.14 So a contract by a bank with a depositor, evidenced by a certificate of deposit, to pay the amount of the deposit to the depositor if drawn out during her life, and if not, to a designated third person, cannot be enforced by such third person,15 and a covenant by the licensee of a patent right to give the inventor opportunities to perfect his invention cannot be enforced by the licenser.16 A contract made by a carrier with a collector of customs as a condition of permission for the goods to remain at the wharf for forty-eight hours, whereby the carrier agrees to pay to the consignee the value of goods stolen, lost, or burned, cannot be enforced by a consignee who holds a bill of lading which provides that the goods shall be at the consignee's risk of fire.17 So where B, a shipper, had a contract with C, a railroad company, to receive and transport certain goods which A, a ship owner, had delivered at a designated wharf under charter with B, A cannot maintain an action against C for breach of C's contract with B whereby A's ship is detained.18 Where two railroads had entered into a contract whereby the first railroad was to have the use of the track of the second railroad, a shipper over the first railroad cannot maintain an action against the second railroad for breach of such contract.19 So where A and B agree to form a corporation, and agree that such corporation shall, when formed, "assume" a certain lease "at the present rental," the lessor and lessee under such lease not being parties to the contract, the lessor cannot enforce such contract, against A.20 An agreement between stockholders of a corporation and such corporation whereby the stockholders agree to raise a fund to discharge certain debts of the corporation, is not intended for the benefit of such creditors of the corporation and they cannot enforce such contract even in equity.21 So an agreement by A to lend money to B gives no right in equity to B's creditors to enforce such promise though B intended to use such money to pay such debts.22 So if a street railway company accepts an ordinance requiring it to pave between the tracks, this provision is not intended for the benefit of private citizens who may be benefited thereby incidentally, and they cannot sue to enforce such covenant.23
Votaw, 75 Ia. 225; 39 N. W. 280; Davis v. Waterworks Co., 54 la. 59; 37 Am. Rep. 185; 6 N. W. 126.
3 Kountz v. Holthouse, 85 Pa. St. 235.
1 McDonald v. Bank, 25 Mont. 456; 65 Pac. 896. (The lien holder cannot enforce such contract.)
2 Norwood v. O'Neal, 112 N. C. 127; 16 S. E. 759. (The true distributee cannot enforce such promise.)
3 Chicago, etc., Ry. v. Ottumwa,
112 Ia. 300; 51 L. R. A. 763; 83 N. W. 1074. (Neither the city nor the contractor for whose benefit the assessment is levied can sue the lessee.)
4Vought v. R. R., 58 O. S. 123; 50 N. E. 442; affirmed in Walsh v. R. R., 176 U. S. 469.
5 Case v. Hoffman, 100 Wis. 314; 44 L. R. A. 728; 75 N. W. 945.
6 Thomas Mfg. Co. v. Prather, 65 Ark. 27; 44 S. W. 218.
7 Boston, etc., Co. v. Dickson, 11 Okla. 680; 69 Pac. 889.
8 Buckley v. Gray, 110 Cal. 339; 52 Am. St. Rep. 88; 31 L. R. A. 862; 42 Pac. 900.
9 Ward v. Bank, 100 U. S. 195; Tapley v. Wright, 61 Ark. 275; 54 Am. St. Rep. 206; 32 S. W. 1072; Mallory v. Ferguson, 50 Kan. 685; 22 L. R. A. 99; 32 Pac. 410; Zwei-gardt v. Birdseye, 57 Mo. App. 462.
10 Gate City Abstract Co. v. Post, 55 Neb. 742; 76 N. W. 471; Economy, etc., Association v. Title Co., 64 N. J. L. 27; 44 Atl. 854; Dickie v. Abstract Co., 89 Tenn. 431; 24 Am. St. Rep. 616; 14 S. W. 896.
11 Boston Safe Deposit and Trust Co. v. Water Co., 94 Fed. 238; Nick-erson v. Hydraulic Co., 46 Conn. 24; 33 Am. Rep. 1; Fowler v. Waterworks Co., 83 Ga. 219; 20 Am. St. Rep. 313; 9 S. E. 673; Bush v. Water Co., 4 Ida. 618; 95 Am. St. Rep. 161; 43 Pac. 69; Fitch v. Water Co., 139 Ind. 214; 37 N. E.
982; 47 Am. St. Rep. 258; Becker v. Waterworks, 79 la. 419; 18 Am. St. Rep. 377; 44 N. W. 694; Davis v. Waterworks Co., 54 Ia. 59; 37 Am. Rep. 185; 6 N. W. 126; Mott v. Mfg. Co., 48 Kan. 12; 30 Am. St. Rep. 267; 15 L. R. A. 375; 28 Pac. 989; Howsmon v. Water Co., 119 Mo. 304; 41 Am. St. Rep.654; 23 L. R. A. 146; 24 S. W. 784; Phoenix Ins. Co. v. Water Co., 42 Mo. App. 118; Eaton v. Waterworks Co., 37 Neb. 546; 40 Am. St. Rep. 510; 21 L. R. A. 653; 56 N. W. 201; Ferris v. Water Co., 16 Nev. 44; 40 Am. Rep. 485; Akron Waterworks Co. v. Brownless, 10 Ohio C. C. 620; 5 Ohio CD.1; Beck v. Water Co. (Pa.), 11 Atl. 300; Foster v. Waterworks Co., 3 Lea (Tenn.) 42; House v. Waterworks Co., 88 Tex. 233; 28 L. R. A. 532; 31 S. W. 179; Brit-ton v. Waterworks Co., 81 Wis. 48; 29 Am. St. Rep. 856; 51 N. W. 84; Hayes v. Oshkosh, 33 Wis. 314; 14 Am. Rep. 760.
12 Phoenix Ins. Co. v. Water Co., 42 Mo. App. 118.
13 Paducah Lumber Co. v. Water Supply Co., 89 Ky. 340; 25 Am. St. Rep. 536; 7 L. R. A. 77; 12 S. W. 554; 13 S. W. 249; Gorrell v. Water Supply Co.. 124 X. C. 328; 70 Am. St. Eep. 598; 46 L. R. A. 513; 32 S. E. 720.
14Durnherr v. Rau, 135 N. Y. 219; 32 N. E. 49. The "covenant was with the husband alone."
15 Sullivan v. Sullivan. 161 N. Y. 554; 56 N. E. 116. (Distinguishing Buchanan v. Tilden, 158 N. Y. 109; 70 Am. St. Rep. 454; 44 L. R. A. 170; 52 N. E. 724; Dutton v. Pool. 1 Vent. 318; Tod v. Weber, 95 N. Y. 181; 47 Am. St. Rep. 20.)
16 Berry Harvester Co. v. Machine Co.. 152 N. Y. 540; 46 N. E. 952.
17 Constable v. Steamship Co., 154 U. S. 51.