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.
26 "Much might be urged pro and con as to the proper ground upon which to place non-liability, but we have no desire to enter upon that field of disputation. It suffices for all practical purposes of this case to say that our own decisions, in which the opinions were written by as able judges as ever occupied this bench, and in which there was no dissent, have rested the conclusion in similar cases involving public contracts upon the declaration that there was a want of privity; and this declaration has likewise been made by many other American courts enjoying the very highest reputation, if, indeed, it has not been made by all the courts of last resort which have reached the same conclusion as that we here announce. If there be those who think the decision should be rested upon the theory that the contracting company has not assumed liability for damage or loss from fire, because liability for such loss was not within the contemplation of the parties to the contract, they must admit the correctness of our holding, although not agreeing to the reason which this court and other courts have chosen to give as the basis of their decisions. When there is agreement as to the result in any case, differences as to the reasons inducing, or that should induce, that result are not vital, nor always important.
"We recognize that the absence of a remedy by suit for damages for a failure by a water company to furnish water for fire purposes, according to its contract with a city, leaves the subject 'in an extremely unsatisfactory position/ as stated in the note to Britton v. Green Bay & Ft. H. Waterworks Co., 29 Am. St. Rep. 856, 863, yet, as the learned annotator suggest, 'the only security would seem to be in legislation, or in the incorporation of some suitable provision in future contracts of this description, wherever the taxpayers desire to reserve a personal remedy against the water company.' It is not the function of a court to make law to fit hard cases." Lovejoy v. Bessemer Waterworks Co., 146 Ala. 374, 6 L. R. A. (N.S.) 429, 41 So. 76.
27 Guardian- Trust & Deposit Co. v. Fisher, 200 U. S, 67, 50 L. ed. 367; Mugge v. Tampa Waterworks Co., 62 Fla, 371, 120 Am. St. Rep. 207', 6 L. R. A. (N.S.) 1171, 42 So. 84; 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; . Graves County Water Co. v. Ligon, 112 Ky. 775, 66 S. W. 723 [following, Pa-ducah Lumber Co. v. Paducah Water Supply Co.. 89 Ky. 340. 25 Am. St. Rep. 536. 7 L. R. A. 77. 12 S. W. 554, 13 S. W. 249; Duncan v. Owensboro Water Co. (Ky.). 12 S. W. 557. 12 Ky. L. R. 35; Duncan's Executors v. Owensboro Water Co. (Ky.). 15 S. W. 523, 12 Ky. L. R. 824; Gorrell v. Greens-boro Water Supply Co.. 124 X. Car.
328, 70 Am. St. Rep. 508. 46 L. R. A. 513, 32 S. E. 720]; Jones v. Durham Water Co., 135 N. Car. 553, 47 S. E. 615.
23 Guardian Trust & Deposit Co. v. Fisher, 200 U. S. 57, 50 L. ed. 367; Mugge v. Tampa Waterworks Co., 52 Fla. 371, 120 Am. St. Rep. 207, 6 L. R. A. (N.S.) 1171, 42 So. 81; Fisher v. Greensboro Water Supply Co., 128 X. Car. 375, 38 S. E. 912
"And here we are met with the con-tention that, independently of contract, there is no duty on the part of the water company to furnish an adequate supply of water; that the city owes no such duty to the citizen, and that contracting with a company to supply water imposes upon the company no higher duty than the city itself owed, and confers upon the citizen no greater right against the company than it had against the city; that the matter is solely one of contract between the city and the company for any breach of which the only right of action is one ex contractu on the part of the city. It is true that a company contracting with a city to construct waterworks and supply water may fail to commence performance. Its contractual obligations are then with the city only, which may recover damages, but merely for breach of contract. There would be no tort, no negligence, in the total failure on the part of the company.
A covenant by a grantee to assume and pay an encumbrance is intended for the benefit of the mortgagee or, possibly, for the benefit of the grantor, but not for the benefit of one who has some other interest therein.33 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.34 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, can not be enforced by such third person,35 and a covenant by the licensee of a patent right to give the inventor opportunities to perfect his invention, can not be enforced by the licenser.36 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, can not 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.37 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 can not maintain an action against C for breach of C's contract with B, whereby A's ship is detained.38 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 can not maintain an action against the second railroad for breach of such contract.39 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 can not enforce such contract against A.40 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 can not enforce such contract even in equity.41 If A, who sells certain stock in a corporation to B, gives a guaranty to B that A will pay all the debts of the corporation, such guaranty is intended for B's benefit exclusively; and the creditors of the corporation can not maintain an action thereon.42 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.43 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 can not sue to enforce such covenant.44 A property owner is not liable to a subcontractor if the contract between the property owner and the principal contractor shows no intention to assume such liability, although the performance on the part of the subcontractor enures ultimately to the benefit of the property owner.45 A contract between A, the owner of certain realty, and B, the lessee thereof, by which B agrees to expend a certain amount of money on the improvement of the leased premises, and B deposits such amount of money with A, to be used by A in paying for such improvements, such contract is intended exclusively for the benefit of A and persons who have furnished labor or materials in making such improvements, can not maintain an action upon such contract.46 If B advances money to C under a contract by which C is to pay such money over to A to be applied in discharge of certain indebtedness, and C pays such money over to A in accordance with such contract, B can not maintain an action against A if A does not apply such funds in accordance with the provisions of the contract.47