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.
The most common cases in which the rights of the beneficiary are involved are cases in which B has placed money or other property in A's hands, out of which A agrees to pay money to C.1 B's motive for entering into a transaction of this sort is usually one of two things. In one case B owes a debt to C, and B enters into the contract with A, so that he can secure payment of such debt. In the other class of cases, C is related to B, and B enters into the contract with A in order to make some provision for C. At early English law, one who placed money in the hands of another to be expended in a certain way, or who allowed another to receive money from third persons to be paid over to the person granting such authority, could bring an action of account against the person in whose hands such money was, to compel him to state the amount thus received and the disposition which he had made of it. If B placed money in A's hands under a contract by which A agreed to pay such money over to C, C could have an action of account against A to compel A to account to C for the money thus paid over.2 At the outset the right of the third person seems to be limited to acoount. It is said that account will lie but that debt will not.3 After assumpsit develops, it is assumed that if B places money in A's hands in reliance on A's promise to pay such money over to C, and A converts the money to his own use, B may have the action of account against A, or the action on the case, but C can have only the action of account.4
4 See Sec. 2380.
5 See Sec. 2381 et seq. 1See Sec. 2402.
2 Y. B., 6 Hen., IV f, 7 pi. 33; Robsert v. Andrews, Cro. Eliz. 82; Dyer, f 21a, pl. 128.
For a thorough discussion of this subject see. The Limitations of the
Action of Assumpsit as Affecting the Right of the Beneficiary, by Crawford D. Hening. 43 American Law Register (N.S.) 764, 44 American Law Register (N.S.) 112, and 56 Pennsylvania Law Review 73.
3 Y. B., 6 Hen., IV f, 7 pl. 33.
4 Anonymous, Keilw., 77 pl. 25.