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.
A contract whereby A agrees to indemnify B against loss is usually held not to give any right of action against A to parties holding claims whereby B will be subjected to loss for which he may have indemnity from A.1 Thus persons injured cannot have an action on a promise by a vendor of stock to protect vendee against debts owed by the corporation to third parties,2 nor on a covenant by the lessee of a railway to save the lessor harmless from damages arising out of past nor on a covenant by contractors to indemnify the owner of the building against loss by injury to others.4 So a promise by one person on consideration to save another " harmless " from his obligations and liabilities does not enure to the benefit of creditors of the promisee.5 If an insurance company A insures B against liability as employer, an employee C, who obtains a judgment against B on a liability of the sort covered by the insurance cannot maintain an action against A, even if B is insolvent.6 So an employee who has been injured by the negligence of his employer, causing the explosion of a steam boiler, and who has sued such employer, cannot maintain an action against an insurance company which had agreed to indemnify the employer against such losses.7 If, however, the contract is to pay whatever damages the insured might be liable for, and not merely to indemnify him for whatever he may be obliged to pay, the employee is allowed to recover directly against the insurance company where the employer is insolvent.8
11 Hence C can sue the insurance company. West Coast Lumber Co. v. Ins. Co., 98 Cal. 502; 33 Pac. 258; Cone v. Ins. Co., 60 X. Y. 619.
"Benge v. Hiatt, 82 Ky. 666; 56 Am. Hep. 912.
13 New York Life Ins. Co. v. Hamlin, 100 Wis. 17; 75 N. W. 421. So a rent bond taken by a court for the rent of land not under its control may be enforced by the person establishing the ownership of such land, as upon a ratification of the act of an unauthorized agent. Par-rish v. Ross, 98 Ky. 318; 25 S. W. 266.
14Peterson v. Ry., 119 Wis. 197; 96 X. W. 532.
1 German State Bank v. Northwestern, etc., Co., 104 Ia. 717; 74 N. W. 685; Union National Bank v. Rich, 106 Mich. 319; 58 Am. St. Rep. 481; 64 X. W. 339; Wolf v. Tract Society, 164 X. Y. 30; 51 L. R. A. 241; 58 X. E. 31; Reynolds v. Van Beuren, 155 X. Y. 120; 42 L. R. A. 129; 49 X. E. 763; French v. Vix, 143 X. Y. 90; 37 X. E. 612; Taylor v. Dunn, 80 Tex. 652; 26 Am. St. Rep. 773; 16 S. W. 732.
2 German State Bank v. Light Co., 104 Ia. 717; 74 X. W. 685.