[100] Walsh, Case & Coale, Chicago, Ill., for plaintiff.

Walter Cummings, Homewood, Ill., for defendant.

MEMORANDUM OPINION AND ORDER

ASPEN, District Judge:

Plaintiff Birthe Lise Robson ("Birthe") brought this action against her father-in-law, Raymond F. Robson, Sr. ("Ray, Sr.") in [101] order to obtain his performance under a contract entered into between Ray, Sr. and Birthe's husband, R. F. Robson, Jr. ("Ray, Jr.").^[1] Plaintiff asserts that under the terms of the contract, she is a third-party beneficiary with vested rights that are being infringed by the failure of Ray, Sr. to perform under the terms of the agreement. This matter is currently before the Court on cross motions for summary judgment.

The following facts are undisputed. Ray, Sr. and Ray, Jr. each owned fifty percent of the outstanding shares of P. B. Services, Inc. On July 23, 1975, they entered into a written contract in order to satisfy a twofold purpose: (1) to establish a retirement payment schedule for Ray, Sr., and (2) to provide for the ownership of their stock certificates in the eventuality of their deaths. The contract provides that each party would continue to own fifty percent of P. B. Services, Inc.; Ray, Jr. would be obligated to maintain the operation of the business; and Ray, Sr.'s only compensation from the operation of the business would be an allotment of $1,000 per month for the duration of his life. In the event of Ray, Sr.'s death, his stock certificates were to become the property of Ray, Jr., who was obliged to pay $500 per month from the proceeds of the company to his father's spouse for the duration of her life. In the event of Ray, Jr.'s death, his shares were to become the property of Ray, Sr., who thereafter was to pay $500 per month from the proceeds of the company to his son's wife (the plaintiff) for the five years immediately following Ray, Jr.'s death or until plaintiff remarried, whichever first occurred.^[2]

Subsequent to the execution of the contract, Ray, Jr. and Birthe experienced marital problems and separated, and in 1977, Ray, Jr. filed a Petition for Divorce. On February 21, 1979, Ray, Jr. and Ray, Sr. attempted to modify their contract by deleting that portion of the agreement which provided for any payment to Birthe. Ray, Jr. drew a line through the applicable portions of the contract in the presence of three witnesses and the change was initialed by both Ray, Jr. and Ray, Sr. Two days later Ray, Jr. died of cancer.^[3]

Plaintiff now seeks enforcement of the provisions of the original contract that require Ray, Sr. to pay her $500 per month for five years or until she remarries.^[4]

Under Illinois law, plaintiff has standing to sue as a third-party beneficiary under the original contract. As the Illinois Supreme Court stated in Carson Pirie Scott & Co. v. Parrett, 346 Ill. 252, 257, 178 N.E. 498, 501 (1931):

[I]f a contract be entered into for a direct benefit of a third person not a party thereto, such third person may sue for breach thereof. The test is whether the benefit to the third person is direct to him or is but an incidental benefit to him arising from the contract. If direct he may sue on the contract; if incidental he has no right of recovery thereon.

A contract need not be entered into for the sole benefit of the third person in order to enable him to enforce it, so long as it is clear that the contracting parties intended him to benefit directly.^[5]Id.; Beck v. Reynolds [102] Metals Co., 163 F.2d 870 (7th Cir. 1947); People v. Davis, 78 Ill.2d 381, 36 Ill.Dec. 338, 400 N.E.2d 918 (1980); Town & Country Bank v. James M. Canfield Contracting Co., Inc., 55 Ill.App.3d 91, 12 Ill.Dec. 826, 370 N.E.2d 630 (4th Dist. 1977). The contracting parties in the case at bar clearly intended the contract to directly benefit not only themselves, but also their wives, with respect to whom specific provisions were drafted.

The more difficult question, and the one that as far as our research discloses, has never been faced by an Illinois court, is whether contracting parties may discharge, rescind, or revoke the benefit promised to a third-party donee beneficiary prior to the vesting of the beneficiary's rights, where the beneficiary has not detrimentally relied upon receiving the benefit. Although some authorities have stated that the promisor in a third-party beneficiary contract has no right to deprive the beneficiary of his vested rights therein, I.L.P. Contracts § 321; Bay v. Williams, 112 Ill. 91, 1 N.E. 340 (1884); Town & Country Bank v. James M. Canfield Contracting Co., Inc., 55 Ill.App.3d 91, 12 Ill.Dec. 826, 370 N.E.2d 630 (4th Dist. 1977); Pliley v. Phifer, 1 Ill.App.2d 398, 117 N.E.2d 678 (1st Dist. 1954), these authorities have no bearing on the case at bar because they fail to distinguish between creditor beneficiaries (at issue in all the above-cited cases) and donee beneficiaries (at issue in the instant case), and because plaintiff's rights in the instant case had not vested at the time the contracting parties attempted to discharge Birthe's interest.

A donee beneficiary of a contract is a third-party to whom the promised beneficial performance comes without cost as a donation or gift. 4 Corbin on Contracts § 782. In contrast, if a promisee enters into a contract with a promisor with the express intent that the performance contracted for is to satisfy and discharge a pre-existing duty or liability, the third-party to whom the pre-existing duty or liability is owed is a creditor beneficiary. 4 Corbin on Contracts § 787. In the typical creditor beneficiary case, A and B enter into a contract and thereafter B and C contract to have C perform B's obligation to A. A then becomes the third-party beneficiary to the contract between B and C.

In such creditor beneficiary cases, Illinois courts have held that the party procuring the promise (B) has no legal right to discharge the person who made the promise (C) from his liability to the beneficiary (A). See, e. g., Bay v. Williams, 112 Ill. 91, 97, 1 N.E. 340 (1884); Pliley v. Phifer, 1 Ill. App.2d 398, 406-07, 117 N.E.2d 678, 681-82 (1st Dist. 1954). Underlying this doctrine is the fact that the beneficiary obtains a vested right as against the promisor at the instant the promisor agrees to undertake the promisee's duty or liability to the beneficiary. Because creditor beneficiary cases only involve situations where a pre-existing duty or liability is contractually transferred to a new party, there is never any question that the third-party beneficiary's rights vest as soon as the contract is executed. Also underlying this doctrine is the belief that the beneficiary will relax his efforts to obtain performance from the promisee upon discovering that it is now the promisor who is obligated to perform the task. See, e. g., Pliley v. Phifer, 1 Ill.App.2d at 406-07, 117 N.E.2d at 681-82. The third-party beneficiary's reliance upon the performance of the promisor thus can be presumed in creditor beneficiary cases, due to the nature of the transaction. In such cases, Illinois courts have refused to let B discharge C's duty to perform, because A, although not a party to the B/C contract, obtained a vested right in the contract and will be harmed by the discharge of C. The harm, however, does not arise because A has not received his due from C; that problem arose long before the B/C contract. It arises, rather, because the B/C contract created a time-consuming diversion, during which A looked to C for performance. Were B allowed to constantly change the cast of characters on A, contracting for and then discharging his obligations to a steady stream of Ds, Es, Fs, [103] and Gs, A, without any right to interfere in B's collateral contracts, would be impotent to stop B's diversionary and dilatory tactics. Thus, Illinois courts have consistently held that a third-party creditor beneficiary obtains an immediate vested right as against a promisor, and this right, once given, deprives the promisor of any interest or right in the subject matter of the promise, including the right to alter, rescind, or revoke it. Pliley v. Phifer, 1 Ill.App.2d at 407, 117 N.E.2d at 682 and cases cited therein.

Donee beneficiaries present very different considerations. Their interests do not vest automatically upon execution of the B/C contract because they were not owed any pre-existing duty or liability. Indeed, prior to the B/C contract, the donee beneficiary may have had no relationship whatsoever with B or C. Similarly, unlike the creditor beneficiary situation, there is no reason for the Court to presume that a donee beneficiary would act in reliance upon the B/C contract. Indeed, a donee beneficiary may acquire rights even though he is unaware that he has been made a beneficiary to the B/C contract. Thus, because there is no pre-existing duty or liability owed to the donee beneficiary, there is no reason for courts to presume that a donee beneficiary acted in reliance upon being named as a third-party beneficiary to a contract.

One reason for the analytical distinction between the rights of creditor beneficiaries and donee beneficiaries is their disparate heritage. The rights of a creditor beneficiary derive directly from contract law. It is by virtue of his contract rights against the debtor that the creditor beneficiary acquires a right to sue against the new promisor. Williston on Contracts, 3d Ed. §§ 364, 368. Determining the rights of a donee beneficiary, however, is conceptually more akin to the law of gifts than it is to the law of contracts. In that context, it is elementary that when a donor has delivered a gift to C for the benefit of A, the gift is not revocable by the donor after such delivery, even if A is unaware of it. Pocius v. Fleck, 13 Ill.2d 420, 150 N.E.2d 106 (1958); Herrin v. McCarthy, 339 Ill. 530, 171 N.E. 621 (1930); Christian v. Christian, 69 Ill.App.3d 450, 26 Ill.Dec. 326, 387 N.E.2d 1254 (1st Dist. 1979). But where the gift has not been delivered, and moreover, where the gift is made conditional upon subsequent events which may or may not occur, that gift may be revoked by the donor at any time prior to its vesting; for until delivery there exists no gift, but rather, merely the promise of a gift.^[6]Pocius v. Fleck, 13 Ill.2d 420, 150 N.E.2d 106 (1958); Meyer v. Meyer, 379 Ill. 97, 39 N.E.2d 311 1942); Hopkins v. Hughes, 340 Ill. 604, 173 N.E. 100 (1930); Strand v. United (Methodist) Church of Sheldon, 12 Ill.App.3d 917, 298 N.E.2d 779 (3d Dist. 1973), rehearing 16 Ill.App.3d 744, 307 N.E.2d 621 (1973); Dudley v. Uptown National Bank of Moline, 25 Ill.App.2d 514, 167 N.E.2d 257 (2d Dist. 1960).

Although commentators have recognized the analogy between the rights of a donee beneficiary and the rights of one receiving a gift of property, they fail to follow the analogy through to its necessary conclusion. 4 Corbin on Contracts, § 814 at 254; Williston on Contracts, 3d Ed. § 396 at 1067. Instead, both Williston and Corbin indicate that a donee beneficiary acquires a [104] right at once upon the making of the contract and that right becoms immediately indefeasible. Id. The commentators, however, fail to consider a situation such as the one at bar. Where the donee beneficiary's right is contingent upon the occurrence of certain events, it does not vest until the occurrence of those events. Cf. Dudley v. Uptown National Bank of Moline, 25 Ill. App.2d 514, 528, 167 N.E.2d 257, 264 (2d Dist. 1960). See also Pliley v. Phifer, 1 Ill.App.2d 398, 407-08, 117 N.E.2d 678, 682 (1st Dist. 1954). Until the donee beneficiary obtains vested rights, he is without power to affect the decisions made by the contracting parties.^[7]

Regardless of whether contract principles, gift principles, or estates principles are applied, Ray, Sr. and Ray, Jr. had a right to alter, rescind, or revoke any or all of their contract prior to the time that the contract vested rights in the donee beneficiaries. Had the donee beneficiary acted to her detriment in reliance upon a promise contained in the agreement, this would be a very different case. There has been no evidence presented to the Court, in affidavit form or otherwise, to indicate that plaintiff acted in reliance upon the contract entered into by Ray, Sr. and Ray, Jr. However, where the contract rights of a donee beneficiary have not yet vested and where the beneficiary has not detrimentally relied upon a promise contained in the contract, this Court will not subvert the intent of the contracting parties when it is clear that they desired to alter the terms of their contract.

Finally, plaintiff argues that the modification of the contract is invalid for lack of consideration. This argument must fail for a variety of reasons. First, lack of consideration is an argument which goes to an attempt by one party to enforce a contract against another party. In the case at bar, nobody is seeking to enforce the terms of the modified contract. Moreover, plaintiff, with no rights in the modified contract, and with only contingent unvested rights in the original contract, is in no position to challenge the adequacy of consideration. Roberts v. Carter, 31 Ill.App. 142 (1888). Indeed, even if this were a proper challenge to consideration and if plaintiff was a proper party to assert the challenge, the Illinois Supreme Court has stated that a contract modification that has been executed by the parties will not be disturbed by the court, even in the absence of consideration. Snow v. Griesheimer, 220 Ill. 106, 77 N.E. 110 (1906); Terminal Freezers, Inc. v. Roberts Frozen Foods, Inc., 41 Ill.App.3d 981, 354 N.E.2d 904 (3d Dist. 1976). Moreover, it is apparent that the modified contract did involve adequate consideration for both the contracting parties. Ray, Jr. benefitted by discharging the contingent rights of a wife for whom he no longer cared and Ray, Sr. benefitted by being released from a potential obligation to make monthly payments to the plaintiff.

For the foregoing reasons, plaintiff's motion for summary judgment is denied and defendant's motion for summary judgment is granted. It is so ordered.

[1] Since plaintiff is a citizen of Illinois, defendant is a Florida citizen, and the amount in controversy is over $10,000, diversity jurisdiction is appropriate pursuant to 28 U.S.C. § 1332.

[2] The contract also stated that by entering into the agreement, the parties did not intend to create any individual personal indebtedness, and that all funds provided for in the contract were to be payable from the proceeds of the operation of P. B. Services, Inc.

[3] At the time of his death, Ray, Jr.'s divorce action was still pending in state court.

[4] As of the date of this decision, two years have passed since Ray, Jr.'s death and plaintiff has not remarried.

[5] The decision in Searles v. City of Flora, 225 Ill. 167, 170, 80 N.E. 98 (1906), cited by defendant, is not to the contrary. In Searles, the court stated that if a contract is entered into solely for the benefit of the contracting parties, third persons cannot recover under its provisions. Contrary to defendant's argument, this does not mean that a third-party beneficiary must be the sole beneficiary in order to obtain any rights under a contract. In the instant case, the contract was drafted for the direct benefit of the contracting parties and their wives.

[6]The same result obtains even if the issue is characterized as a question of testamentary power. In Illinois, a testator may revoke a portion of his will by drawing a line through the portions to be altered with the remainder of the document being unaffected if the testator acts in accordance with Ill.Rev.Stat. ch. 110-½ ¶ 4-9, which states in full:

An addition to a will or an alteration, substitution, interlineation or deletion of any part of a will which does not constitute a revocation of a will is of no effect, unless made by the testator or by some person in his presence and by his direction and consent and unless the will is thereafter signed and attested in the manner prescribed by this Article for the execution of a will.

See Casey v. Hogan, 344 Ill. 208, 176 N.E. 257 (1931); In re Estate of Newell, 119 Ill.App.2d 385, 256 N.E.2d 53 (1st Dist. 1970). In the instant case, Ray, Sr. has stated that Ray, Jr. altered his agreement with Ray, Sr. on February 21, 1979, in the presence of LaVerne F. Robson, Karen Robson, and a nurse, and that Ray, Jr. signed his name next to the alteration.

[7] The decision in Joslyn v. Joslyn, 386 Ill. 387, 54 N.E.2d 475 (1944), is not to the contrary. Joslyn is a donee beneficiary case where the court stated, in dicta, that a promisor and promisee could not discharge the rights of the donee beneficiary. Id. at 400-01, 54 N.E.2d 475. Unlike the instant case, however, the donee beneficiary's interest in Joslyn was not conditional and consequently vested immediately upon the execution of the contract between the promisor and promisee. Moreover, in Joslyn there was no agreement between promisor and promisee to discharge the interest of the donee beneficiaries. In contrast, the one overriding and uncontested fact in the case at bar is that Ray, Sr. and Ray, Jr. clearly intended to alter their contract in order to relieve Ray, Sr. of any contingent obligations that he had under the original contract.

224 N.Y. 223
MARION E. SEAVER, Respondent,
v.
MATT C. RANSOM et al., as Executors of SAMUEL A. BEMAN, Deceased, Appellants.
Court of Appeals of New York

[234]

(Argued June 12, 1918; decided October 1, 1918.)

APPEAL from a judgment of the Appellate Division of the Supreme Court in the third judicial department, entered January 7, 1918, affirming a judgment in favor of plaintiff entered upon a decision of the court at a Trial Term, a jury having been waived.

The nature of the action and the facts, so far as material, are stated in the opinion.

Frederick H. Bryant for appellants. Plaintiff cannot recover in an action at law. In order to give a third party, who may derive benefit from the performance of a promise, an action there must be: An intent by the promisee to secure some benefit to the third party; some privity between the two, the promisee and the party to be benefited, or some obligation or duty owing from the former to the latter, which would give plaintiff a legal or equitable claim to the benefit of the promise, or an equivalent from the promisee personally. (Lawrence v. Fox, 20 N. Y. 268; Burr v. Beers, 24 N. Y. 178; Garnsey v. Rogers, 47 N. Y. 233; Vrooman v. Turner, 69 N. Y. 280; Lorillard v. Clyde, 122 N. Y. 498; Durnherr v. Rau, 135 N. Y. 219; Townsend v. Rackham, 143 N. Y. 516; French v. Vix, 143 N. Y. 90; Embler v. Hartford Steam Boiler Co., 158 N. Y. 431; Borland v. Welch, 162 N. Y. 104; Rigney v. N. Y. C. & H. R. R. R. Co., 217 N. Y. 31; Wait v. Wilson, 86 App. Div. 485; Lockwood v. Smith, 143 N. Y. Supp. 480; Coleman v. Hiler, 85 Hun. 547.) Specific performance cannot be decreed. (Phalen v. U.S. Trust Co., 186 N. Y. 178.) There is no trust, express, implied or secret. (Matter of O'Hara, 95 N. Y. 403: Amherst College v. Ritch, 151 N. Y. 282; Hamlin v. [235] Stevens, 177 N. Y. 39; Mahaney v. Carr, 175 N. Y. 454; Ide v. Brown, 178 N. Y. 26; Bull v. Bull, 31 Hun, 69; Crippen v. Crippen, 53 Hun, 233; Ahrens v. Jones, 169 N. Y. 555.)

John P. Kellas for respondent. The agreement between Mrs. Beman and her husband at the time of the execution of her will was valid and can be enforced in this action. (Amherst College v. Ritch, 151 N. Y. 282; Matter of O'Hara, 95 N. Y. 403; Crippen v. Crippen, 53 Hun, 232; Bull v. Bull, 31 Hun, 69; Burr v. Burr, 24 N. Y. 178; Clark v. Howard, 150 N. Y. 232; Ahrens v. Jones, 169 N. Y. 555; McClellan v. Grant, 83 App. Div. 599; Goldsmith v. Goldsmith, 145 N. Y. 313; Gallagher v. Gallagher, 135 App. Div. 457.)

POUND, J. Judge Beman and his wife were advanced in years. Mrs. Beman was about to die. She had a small estate consisting of a house and lot in Malone and little else. Judge Beman drew his wife's will according to her instructions. It gave $1,000 to plaintiff, $500 to one sister, plaintiff's mother, and $100 each to another sister and her son, the use of the house to her husband for life, remainder to the American Society for the Prevention of Cruelty to Animals. She named her husband as residuary legatee and executor. Plaintiff was her niece, thirty-four years old, in ill health, sometimes a member of the Beman household. When the will was read to Mrs. Beman she said that it was not as she wanted it; she wanted to leave the house to plaintiff. She had no other objection to the will, but her strength was waning and although the judge offered to write another will for her, she said she was afraid she would not hold out long enough to enable her to sign it. So the judge said if she would sign the will he would leave plaintiff enough in his will to make up the difference. He [236] avouched the promise by his uplifted hand with all solemnity and his wife then executed the will. When he came to die it was found that his will made no provision for the plaintiff.

This action was brought and plaintiff recovered judgment in the trial court on the theory that Beman had obtained property from his wife and induced her to execute the will in the form prepared by him by his promise to give plaintiff $6,000, the value of the house, and that thereby equity impressed his property with a trust in favor of plaintiff. Where a legatee promises the testator that he will use property given him by the will for a particular purpose, a trust arises. (O'Hara v. Dudley, 95 N. Y. 403; Trustees of Amherst College v. Bitch, 151 N. Y. 282; Ahrens v. Jones, 169 N. Y. 555.) Beman received nothing under his wife's will but the use of the house in Malone for life. Equity compels the application of property thus obtained to the purpose of the testator, but equity cannot so impress a trust except on property obtained by the promise. Beman was bound by his promise, but no property was bound by it; no trust in plaintiff's favor can be spelled out.

An action on the contract for damages or to make the executors trustees for performance stands on different ground. (Farmers Loan & Trust Co. v. Mortimer, 219 N. Y. 290, 294, 295.) The Appellate Division properly passed to the consideration of the question whether the judgment could stand upon the promise made to the wife, upon a valid consideration, for the sole benefit of plaintiff. The judgment of the trial court was affirmed by a return to the general doctrine laid down in the great case of Lawrence v. Fox (20 N. Y. 268) which has since been limited as herein indicated. 

Contracts for the benefit of third persons have been the prolific source of judicial and academic discussion. (Williston, Contracts for the Benefit of a Third Person, [237] 15 Harvard Law Review, 767; Corbin, Contracts for the Benefit of Third Persons, 27 Yale Law Review, 1008.) The general rule, both in law and equity (Phalen v. U. S. Trust Co., 186 N. Y. 178, 186), was that privity between a plaintiff and a defendant is necessary to the maintenance of an action on the contract. The consideration must be furnished by the party to whom the promise was made. The contract cannot be enforced against the third party and, therefore, it cannot be enforced by him. On the other hand, the right of the beneficiary to sue on a contract made expressly for his benefit has been fully recognized in many American jurisdictions, either by judicial decision or by legislation, and is said to be "the prevailing rule in this country." (Hendrick v. Lindsay, 93 U. S. 143; Lehow v. Simonton, 3 Col. 346.) It has been said that "the establishment of this doctrine has been gradual, and is a victory of practical utility over theory, of equity over technical subtlety." (Brantly on Contracts [2d ed.], p. 253.) The reasons for this view are that it is just and practical to permit the person for whose benefit the contract is made to enforce it against one whose duty it is to pay. Other jurisdictions still adhere to the present English rule (7 Halsbury's Laws of England, 342, 343; Jenks' Digest of English Civil Law, § 229) that a contract cannot be enforced by or against a person who is not a party. (Exchange Bank v. Rice, 107 Mass. 37; but see, also, Forbes v. Thorpe, 209 Mass. 570; Gardner v. Denison, 217 Mass. 492.) In New York the right of the beneficiary to sue on contracts made for his benefit is not clearly or simply defined. It is at present confined, first, to cases where there is a pecuniary obligation running from the promisee to the beneficiary; "a legal right founded upon some obligation of the promisee in the third party to adopt and claim the promise as made for his benefit." (Farley v. Cleveland, 4 Cow. 432; Lawrence v. Fox, supra; [238] Garnsey v. Rogers, 47 N. Y. 233; Vrooman v. Turner, 69 N. Y. 280; Lorillardv. Clyde, 122 N. Y. 498; Durnherr v. Rau, 135 N. Y. 219; Townsend v. Rackham, 143 N. Y. 516; Sullivan v. Sullivan, 161 N. Y. 554.) Secondly, to cases where the contract is made for the benefit of the wife (Buchanan v. Tilden, 158 N. Y. 109; Bouton v. Welch, 170 N. Y. 554), affianced wife (De Cicco v. Schweizer, 221 N. Y. 431), or child (Todd v. Weber, 95 N. Y. 181, 193; Matter of Kidd, 188 N. Y. 274) of a party to the contract. The close relationship cases go back to the early King's Bench case (1677), long since repudiated in England, of Button v. Poole (2 Lev. 210; s. c, 1 Ventris, 318, 332). (Schemerhorn v. Vanderheyden, 1 Johns. 139.) The natural and moral duty of the husband or parent to provide for the future of wife or child sustains the action on the contract made for their benefit. "This is the farthest the cases in this state have gone," says CULLEN, J., in the marriage settlement case of Borland v. Welch (162 N. Y. 104, 110).

The right of the third party is also upheld in, thirdly, the public contract cases (Little v. Banks, 85 N. Y. 258; Pond v. New Rochelle Water Co., 183 N. Y. 330; Smyth v. City of New York, 203 N. Y. 106; Farnsworth v. Boro Oil & Gas Co., 216 N. Y. 40, 48; Rigney v. N. Y. C. & H. R. R. R. Co., 217 N. Y. 31; Matter of International Ry. Co. v. Rann, 224 N. Y. 83; cf. German Alliance Ins. Co. v. Home Water Supply Co., 226 U. S. 220) where the municipality seeks to protect its inhabitants by covenants for their benefit and, fourthly, the cases where, at the request of a party to the contract, the promise runs directly to the beneficiary although he does not furnish the consideration. (Rector, etc., v. Teed, 120 N. Y. 583; F. N. Bank of Sing Sing v. Chalmers, 144 N. Y. 432, 439; Hamilton v. Hamilton, 127 App. Div. 871, 875.) It may be safely said that a general rule sustaining recovery at the suit of the [239] third party would include but few classes of cases not included in these groups, either categorically or in principle.

The desire of the childless aunt to make provision for a beloved and favorite niece differs imperceptibly in law or in equity from the moral duty of the parent to make testamentary provision for a child. The contract was made for the plaintiff's benefit. She alone is substantially damaged by its breach. The representatives of the wife's estate have no interest in enforcing it specifically. It is said in Buchanan v. Tilden that the common law imposes moral and legal obligations upon the husband and the parent not measured by the necessaries of life. It was, however, the love and affection or the moral sense of the husband and the parent that imposed such obligations in the cases cited rather than any common-law duty of husband and parent to wife and child. If plaintiff had been a child of Mrs. Beman, legal obligation would have required no testamentary provision for her, yet the child could have enforced a covenant in her favor identical with the covenant of Judge Beman in this case. (De Cicco v. Schweizer, supra.) The constraining power of conscience is not regulated by the degree of relationship alone. The dependent or faithful niece may have a stronger claim than the affluent or unworthy son. No sensible theory of moral obligation denies arbitrarily to the former what would be conceded to the latter. We might consistently either refuse or allow the claim of both, but I cannot reconcile a decision in favor of the wife in Buchanan v. Tilden based on the moral obligations arising out of near relationship with a decision against the niece here on the ground that the relationship is too remote for equity's ken. No controlling authority depends upon so absolute a rule. In Sullivan v. Sullivan (supra) the grandniece lost in a litigation with the aunt's estate founded on a certificate of deposit payable to the aunt "or in case of her death to her niece," but [240] what was said in that case of the relations of plaintiff's intestate and defendant does not control here, any more than what was said in Durnherr v. Rau (supra) on the relation of husband and wife, and the inadequacy of mere moral duty, as distinguished from legal or equitable obligation, controlled the decision in Buchanan v. Tilden. Borland v. Welch (supra) deals only with the rights of volunteers under a marriage settlement not made for the benefit of collaterals.

KELLOGG, P. J., writing for the court below well said: "The doctrine of Lawrence v. Fox is progressive, not retrograde. The course of the late decisions is to enlarge, not to limit the effect of that case." The court in that leading case attempted to adopt the general doctrine that any third person, for whose direct benefit a contract was intended, could sue on it. The head note thus states the rule. FINCH, J., in Gifford v. Corrigan (117 N. Y. 257, 262) says that the case rests upon that broad proposition; EDWARD T. BARTLETT, J., in Pond v. New Rochelle Water Co. (183 N. Y. 330, 337) calls it "the general principle;" but Vrooman v. Turner (supra) confined its application to the facts on which it was decided. " In every case in which an action has been sustained," says ALLEN, J., "there has been a debt or duty owing by the promisee to the party claiming to sue upon the promise." (69 N. Y. 285.) As late as Townsend v. Rackham (143 N. Y. 516, 523) we find PECKHAM, J., saying that "to maintain the action by the third person there must be this liability to him on the part of the promisee." Buchanan v. Tilden went further than any case since Lawrence v. Fox in a desire to do justice rather than to apply with technical accuracy strict rules calling for a legal or equitable obligation. In Embler v. Hartford Steam Boiler Inspection & Ins. Co. (158 N. Y. 431) it may at least be said that a majority of the court did not avail themselves of the opportunity to concur with the [241] views expressed by GRAY, J.,— who wrote the dissenting opinion in Buchanan v. Tilden,— to the effect that an employee could not maintain an action on an insurance policy issued to the employer, which covered injuries to employees.

In Wright v. Glen Telephone Co. (48 Misc. Rep. 192, 195) the learned presiding justice who wrote the opinion in this case said, at Trial Term: "The right of a third person to recover upon a contract made by other parties for his benefit must rest upon the peculiar circumstances of each case rather than upon the law of some other case." "The case at bar is decided upon its peculiar facts." (EDWARD T. BARTLETT, J., in Buchanan v. Tilden.) But, on principle, a sound conclusion may be reached. If Mrs. Beman had left her husband the house on condition that he pay the plaintiff $6,000 and he had accepted the devise, he would have become personally liable to pay the legacy and plaintiff could have recovered in an action at law against him, whatever the value of the house. (Gridley v. Gridley, 24 N. Y. 130; Brown v. Knapp, 79 N. Y. 136, 143; Dinan v. Coneys, 143 N. Y. 544, 547; Blackmore v. White, [1899] 1 Q. B. 293, 304.) That would be because the testatrix had in substance bequeathed the promise to plaintiff and not because close relationship or moral obligation sustained the contract. The distinction between an implied promise to a testator for the benefit of a third party to pay a legacy and an unqualified promise on a valuable consideration to make provision for the third party by will is discernible but not obvious. The tendency of American authority is to sustain the gift in all such cases and to permit the donee-beneficiary to recover on the contract. (Matter of Edmundson's Estate, [1918, Pa.] 103 Atl. Rep. 277.) The equities are with the plaintiff and they may be enforced in this action, whether it be regarded as an [242] action for damages or an action for specific performance to convert the defendants into trustees for plaintiff's benefit under the agreement.

The judgment should be affirmed, with costs.

HOGAN, CARDOZO and CRANE, JJ., concur; HISCOCK, Ch. J., COLLIN and ANDREWS, JJ., dissent.

Judgment affirmed.

Action by the H. R. Moch Company, Inc., against the Rensselaer Water Company. From a judgment of the Appellate Division (219 App. Div. 673, 220 N. Y. S. 557), reversing an order of the Special Term, and granting defendant's motion for judgment dismissing the complaint for failure to state facts sufficient to constitute a cause of action, plaintiff appeals.

Affirmed.

See, also, 127 Misc. Rep. 545, 217 N. Y. S. 426.

[247 N.Y. 161]Appeal from Supreme Court, Appellate Division, Third Department.
Glenn A. Frank, of Albany, for appellant.

[247 N.Y. 162]Thomas F. McDermott, of Albany, for respondent.

[247 N.Y. 163]CARDOZO, C. J.

The defendant, a waterworks company under the laws of this state, made a contract with the city of Rensselaer for the supply of water during a term of years. Water was to be furnished to the city for sewer flushing and street sprinkling; for service to schools and public buildings; and for service at fire hydrants, the latter service at the rate of $42.50 a year for each hydrant. Water was to be furnished to private takers within the city at their homes and factories and other industries at reasonable rates, not exceeding a stated schedule. While this contract was in force, a building caught fire. The flames, spreading to the plaintiff's warehouse near by, destroyed it and its contents. The defendant, according to the complaint, was promptly notified of the fire, ‘but omitted and neglected after such notice, to supply or furnish sufficient or adequate quantity of water, with adequate pressure to stay, suppress, or extinguish the fire before it reached the warehouse of the plaintiff, although the pressure and supply which the defendant was equipped to supply and furnish, and had agreed by said contract to supply and furnish, was adequate and sufficient [897] to prevent the spread of the fire to and the destruction of the plaintiff's warehouse and its contents.’ By reason of the failure of the defendant to ‘fulfill the provisions of the contract between it and the city of Rensselaer,’ the plaintiff is said to have suffered damage, for which judgment is demanded. A motion, in the nature of a demurrer, to dismiss the complaint, was denied at Special Term. The Appellate Division reversed by a divided court.

Liability in the plaintiff's argument is placed on one or other of three grounds. The complaint, we are told, is to be viewed as stating: (1) A cause of action for breach of contract within Lawrence v. Fox, 20 N. Y. 268; (2) a cause of action for a common-law tort, within MacPherson v. Buick Motor Co., 217 N. Y. 382, 111 N. E. 1050, L. R. A. 1916F, 696, Ann. Cas. 1916C, 440; or (3) a cause of action for the breach of a statutory duty. These several grounds of liability will be considered in succession.

[247 N.Y. 164][1][2] (1) We think the action is not maintainable as one for breach of contract.

No legal duty rests upon a city to supply its inhabitants with protection against fire. Springfield Fire & Marine Ins. Co. v. Village of Keeseville, 148 N. Y. 46, 42 N. E. 405, 30 L. R. A. 660, 51 Am. St. Rep. 667. That being so, a member of the public may not maintain an action under Lawrence v. Fox against one contracting with the city to furnish water at the hydrants, unless an intention appears that the promisor is to be answerable to individual members of the public as well as to the city for any loss ensuing from the failure to fulfill the promise. No such intention is discernible here. On the contrary, the contract is significantly divided into two branches: One a promise to the city for the benefit of the city in its corporate capacity, in which branch is included the service at the hydrants; and the other a promise to the city for the benefit of private takers, in which branch is included the service at their homes and factories. In a broad sense it is true that every city contract, not improvident or wasteful, is for the benefit of the public. More than this, however, must be shown to give a right of action to a member of the public not formally a party. The benefit, as it is sometimes said, must be one that is not merely incidental and secondary. Cf. Fosmire v. National Surety Co., 229 N. Y. 44, 127 N. E. 472. It must be primary and immediate in such a sense and to such a degree as to bespeak the assumption of a duty to make reparation directly to the individual members of the public if the benefit is lost. The field of obligation would be expanded beyond reasonable limits if less than this were to be demanded as a condition of liability. a promisor undertakes to supply fuel for heating a public building. He is not liable for breach of contract to a visitor who finds the building without fuel, and thus contracts a cold. The list of illustrations can be indefinitely extended. The carrier of the mails under contract with the government is not answerable to the merchant who has lost the benefit of a bargain through [247 N.Y. 165]negligent delay. The householder is without a remedy against manufacturers of hose and engines, though prompt performance of their contracts would have stayed the ravages of fire. ‘The law does not spread its protection so far.’ Robins Dry Dock & Repair Co. v. Flint, 275 U. S. 303, 48 S. Ct. 134, 72 L. Ed. 290.

So with the case at hand. By the vast preponderance of authority, a contract between a city and a water company to furnish water at the city hydrants has in view a benefit to the public that is incidental rather than immediate, an assumption of duty to the city and not to its inhabitants. Such is the ruling of the Supreme Court of the United States. German Alliance Ins. Co. v. Homewater Supply Co., 226 U. S. 220, 33 S. Ct. 32, 57 L. Ed. 195,42 L. R. A. (N. S.) 1000. Such has been the ruling in this state (Wainwright v. Queens County Water Co., 78 Hun, 146, 28 N. Y. S. 987;Smith v. Great South Bay Water Co., 82 App. Div. 427, 81 N. Y. S. 812), though the question is still open in this court. Such with few exceptions has been the ruling in other jurisdictions. Williston, Contracts, § 373, and cases there cited; Dillon, Municipal Corporations (5th Ed.) § 1340. The diligence of counsel has brought together decisions to that effect from 26 states. Typical examples are Alabama (Ellis v. Birmingham Waterworks Co., 187 Ala. 552, 65 So. 805); California (Niehaus Bros. Co. v. Contra Costa Water Co., 159 Cal. 305, 113 P. 375,36 L. R. A. [N. S.] 1045); Georgia (Holloway v. Macon Gas Light & Water Co., 132 Ga. 387, 64 S. E. 330); Connecticut (Nickerson v. Bridgeport Hydraulic Co., 46 Conn. 24, 33 Am. Rep. 1); Kansas (Mott v. Cherryvale Water & Mfg. Co., 48 Kan. 12, 28 P. 989,15 L. R. A. 375, 30 Am. St. Rep. 267); Maine (Hone v. Presque Isle Water Co., 104 Me. 217, 71 A. 769,21 L. R. A. [N. S.] 1021);New Jersey (Hall v. Passaic Water Co., 83 N. J. Law, 771, 85 A. 349,43 L. R. A. [N. S.] 750); and Ohio (Blunk v. Dennison Water Supply Co., 71 Ohio St. 250, 73 N. E. 210,2 Ann. Cas. 852). Only a few states have held otherwise. Page, Contracts, § 2401. An intention to assume an obligation of indefinite extension to every member of the public is seen to be the more improbable when we recall the crushing burden [898] that the obligation would impose. Cf. Hone v. Presque Isle Water Co., 104 Me. 217, at p. 232,71 A. 769,21 L. R. A. (N. S.) 1021. The consequences invited would bear [247 N.Y. 166]no reasonable proportion to those attached by law to defaults not greatly different. A wrongdoer who by negligence sets fire to a building is liable in damages to the owner where the fire has its origin, but not to other owners who are injured when it spreads. The rule in our state is settled to that effect, whether wisely or unwisely. Hoffman v. King, 160 N. Y. 618, 55 N. E. 401, 46 L. R. A. 672, 73 Am. St. Rep. 715; Rose v. Pennsylvania R. Co., 236 N. Y. 568, 142 N. E. 287;Moore v. Van Beuren & New York Bill Posting Co., 240 N. Y. 673, 148 N. E. 753; Cf. Bird v. St. Paul Fire & Marine Ins. Co., 224 N. Y. 47, 120 N. E. 86,18 L. R. A. 875. If the plaintiff is to prevail, one who negligently omits to supply sufficient pressure to extinguish a fire started by another assumes an obligation to pay the ensuing damage, though the whole city is laid low. A promisor will not be deemed to have had in mind the assumption of a risk so overwhelming for any trivial reward.

The cases that have applied the rule of Lawrence v. Fox to contracts made by a city for the benefit of the public are not at war with this conclusion. Through them all there runs as a unifying principle the presence of an intention to compensate the individual members of the public in the event of a default. For example, in Pond v. New Rochelle Water Co., 183 N. Y. 330, 76 N. E. 211,1 L. R. A. (N. S.) 958,5 Ann. Cas. 504, the contract with the city fixed a schedule of rates to be supplied, not to public buildings, but to private takers at their homes. In Matter of International R. Co. v. Rann, 224 N. Y. 83, 85,120 N. E. 153, the contract was by street railroads to carry passengers for a stated fare. In Smyth v. City of New York, 203 N. Y. 106, 96 N. E. 409, and Rigney v. New York Cent. & H. R. R. Co., 217 N. Y. 31, 111 N. E. 226, covenants were made by contractors upon public works, not merely to indemnify the city, but to assume its liabilities. These and like cases come within the third group stated in the comprehensive opinion in Seaver v. Ransom, 224 N. Y. 233, 238,120 N. E. 639,2 L. R. A. 1187. The municipality was contracting in behalf of its inhabitants by covenants intended to be enforced by any of them severally as occasion should arise.

[247 N.Y. 167][3] (2) We think the action is not maintainable as one for a common-law tort.

‘It is ancient learning that one who assumes to act, even though gratuitously, may thereby become subject to the duty of acting carefully, if he acts at all.’ Glanzer v. Shepard, 233 N. Y. 236, 239, 135 N. E. 275, 276 (23 A. L. R. 1425);Marks v. Nambil Realty Co., 245 N. Y. 256, 258, 157 N. E. 129. The plaintiff would bring its case within the orbit of that principle. The hand once set to a task may not always be withdrawn with impunity though liability would fail if it had never been applied at all. A time-honored formula often phrases the distinction as one between misfeasance and nonfeasance. Incomplete the formula is, and so at times misleading. Given a relation involving in its existence a duty of care irrespective of a contract, a tort may result as well from acts of omission as of commission in the fulfillment of the duty thus recognized by law. Pollock, Torts (12th Ed.) p. 555; Kelly v. Metropolitan Ry. Co., [1895] 1 Q. B. 944. What we need to know is not so much the conduct to be avoided when the relation and its attendant duty are established as existing. What we need to know is the conduct that engenders the relation. It is here that the formula, however incomplete, has its value and significance. If conduct has gone forward to such a stage that in action would commonly result, not negatively merely in withholding a benefit, but positively or actively in working an injury, there exists a relation out of which arises a duty to go forward. Bohlen, Studies in the Law of Torts, p. 87. So the surgeon who operates without pay is liable, though his negligence is in the omission to sterilize his instruments (cf. Glanzer v. Shepard, supra); the engineer, though his fault is in the failure to shut off steam (Kelly v. Metropolitan Ry. Co., supra; cf. Pittsfield Cottonwear Mfg. Co. v. Pittsfield Shoe Co., 71 N. H. 522, 529, 533, 53 A. 807,60 L. R. A. 116); the maker of automobiles, at the suit of some one other than the buyer, though his negligence is merely in inadequate inspection ([247 N.Y. 168]MacPherson v. Buick Motor Co., 217 N. Y. 382, 111 N. E. 1050, L. R. A. 1916F, 696, Ann. Cas. 1916C, 440). The query always is whether the putative wrongdoer has advanced to such a point as to have launched a force or instrument of harm, or has stopped where inaction is at most a refusal to become an instrument for good. Cf. Fowler v. Athens City Water Works Co., 83 Ga. 219, 222, 9 S. E. 673,20 Am. St. Rep. 313.

The plaintiff would have us hold that the defendant, when once it entered upon the performance of its contract with the city, was brought into such a relation with every one who might potentially be benefited through the supply of water at the hydrants as to give to negligent performance, without reasonable notice of a refusal to continue, the quality of a tort. There is a suggestion of this thought in Guardian Trust & Deposit Co. v. Fisher, 200 U. S. 57, 26 S. Ct. 186, 50 L. Ed. 367; but the dictum was rejected in a [899] later case decided by the same court (German Alliance Ins. Co. v. Homewater Supply Co., 226 U. S. 220, 33 S. Ct. 32, 57 L. Ed. 195,42 L. R. A. [N. S.] 1000) when an opportunity was at hand to turn it into law. We are satisfied that liability would be unduly and indeed indefinitely extended by this enlargement of the zone of duty. The dealer in coal who is to supply fuel for a shop must then answer to the customers if fuel is lacking. The manufacturer of goods, who enters upon the performance of his contract, must answer, in that view, not only to the buyer, but to those who to his knowledge are looking to the buyer for their own sources of supply. Every one making a promise having the quality of a contract will be under a duty to the promisee by virtue of the promise, but under another duty, apart from contract, to an indefinite number of potential beneficiaries when performance has begun. The assumption of one relation will mean the involuntary assumption of a series of new relations, inescapably hooked together. Again we may say in the words of the Supreme Court of the United States, ‘The law does not spread its protection so far.’ Robins Dry Dock & Repair Co. v. Flint, supra; cf. Byrd v. English, 117 Ga. 191, 43 S. E. 419,64 L. R. A. 94; Dale v. Grant, 34 N. J. Law, 142; [247 N.Y. 169]Connecticut Mut. Life Ins. Co. v. New York & N. H. R. Co., 25 Conn. 265, 65 Am. Dec. 571; Anthony v. Slaid, 11 Metc. (Mass.) 290. We do not need to determine now what remedy, if any, there might be if the defendant had withheld the water or reduced the pressure with a malicious intent to do injury to the plaintiff or another. We put aside also the problem that would arise if there had been reckless and wanton indifference to consequences measured and foreseen. Difficulties would be present even then, but they need not now perplex us. What we are dealing with at this time is a mere negligent omission, unaccompanied by malice or other aggravating elements. The failure in such circumstances to furnish an adequate supply of water is at most the denial of a benefit. It is not the commission of a wrong.

[4] (3) We think the action is not maintainable as one for the breach of a statutory duty.

The defendant, a public service corporation, is subject to the provisions of the Transportation Corporations Act. The duty imposed upon it by that act is in substance to furnish water, upon demand by the inhabitants, at reasonable rates, through suitable connections at office, factory, or dwelling, and to furnish water at like rates through hydrants or in public buildings upon demand by the city, all according to its capacity. Transportation Corporations Law (Consol. Laws, c. 63) § 81; Staten Island Water Supply Co. v. City of New York, 144 App. Div. 318, 128 N. Y. S. 1028;People ex rel. City of New York v. Queens County Water Co., 232 N. Y. 277, 133 N. E. 889;People ex rel. Arthur v. Huntington Water Works Co., 208 App. Div. 807, 808, 203 N. Y. S. 808. We find nothing in these requirements to enlarge the zone of liability where an inhabitant of the city suffers indirect or incidental damage through deficient pressure at the hydrants. The breach of duty in any case is to the one to whom service is denied at the time and at the place where service to such one is due. The denial, though wrongful, is unavailing without more to give a cause of action to another. We may find a helpful analogy in the law of common carriers. [247 N.Y. 170]A railroad company is under a duty to supply reasonable facilities for carriage at reasonable rates. It is liable, generally speaking, for breach of a duty imposed by law if it refuses to accept merchandise tendered by a shipper. The fact that its duty is of this character does not make it liable to some one else who may be counting upon the prompt delivery of the merchandise to save him from loss in going forward with his work. If the defendant may not be held for a tort at common law, we find no adequate reason for a holding that it may be held under the statute.

The judgment should be affirmed, with costs.

POUND, CRANE, ANDREWS, LEHMAN, and KELLOGG, JJ., concur.

O'BRIEN, J., not sitting.

Judgment affirmed, etc.

[200] Before MUSMANNO, JONES, COHEN, EAGEN, O'BRIEN and ROBERTS, JJ.

James R. Hornick, with him Clair V. Duff, for appellants.

[201] James F. Manley, with him Burns & Manley, for appellee.

OPINION BY MR. JUSTICE MUSMANNO, March 17, 1964:

On December 31, 1961, the home of the plaintiffs in this case, Robert A. Doyle and his wife Frances P. Doyle, was destroyed by fire. The destruction could have been averted if the Pittsburgh Fire Department, which had responded to the fire alarm, could have obtained water from the fire hydrants, of which there were at least five in the immediate area of the house. None would yield a stream of water for the hoses ready to carry the extinguishing element to the flames which began small but eventually leaped to proportions which engulfed and consumed the dwelling.

On September 18, 1962, the plaintiffs filed in the Court of Common Pleas of Allegheny County a complaint in trespass against the South Pittsburgh Water Company averring that it was under contract to provide water for fire hydrants in the vicinity of their dwelling and to maintain those hydrants for use in emergencies for the sole purpose of fighting fires in and about the vicinity of the plaintiffs' home. The complaint charged the water company with certain acts of negligence which individually or collectively caused the destruction mentioned. The water company filed preliminary objections in which it simply said that the plaintiffs had failed to set forth a cause of action upon which relief could be granted, and moved for an order dismissing the complaint. The court sustained the objections and entered judgment for the defendant. The plaintiffs have appealed.

In their complaint the plaintiffs enumerated the items of negligence attributed to the defendant. Since the defendant demurred, the averments in the complaint will be accepted as established fact. The complaint [202] states that the defendant allowed the water in the crucial hydrants to freeze so that they became useless for fire-fighting emergencies; that it failed to inspect the hydrants, failed to maintain sufficient pressure in the hydrants, failed to replace or repair inoperative valves and, inter alia, failed to notify the plaintiffs or the Pittsburgh Fire Department that the hydrants were inoperative.

In arguing before this Court, the water company asserts that it was not the lack of water which destroyed the plaintiffs' home — it was the fire. This is like saying that a person who starves to death dies not because of lack of food but because of physical debility. The plaintiffs specifically charge in their complaint that had the defendant supplied water, their home would not have gone up in flames. This is the charge the defendant must answer to and nothing is gained by the elusive debating dialectic that it was the fire and not the lack of the drenching element which caused the loss of which the plaintiffs complain.

In attempted support of its argument that the lack of water was too remote to be a proximate cause for the plaintiffs' losses, the defendant cites the case of Grant v. Erie, 69 Pa. 420, and says: "The basic and fundamental issue before your Honors is what is the proximate cause of plaintiffs' loss, the fire or the failure of water? This precise question was answered by this Honorable Court in the case of Grant v. Erie, 69 Pa. 420, where it was clearly held that the proximate cause of the damage was the fire and the remote cause was the lack of water."

In that case the municipality of Erie was authorized by the burgess and councils of the borough "`to make and establish a sufficient number of reservoirs to supply water in case of fire.'" The reservoirs were erected but were allowed to fall into decay and, as a consequence, properties belonging to the plaintiff were destroyed [203] by fire because there was no water in the reservoirs to extinguish the flames. The appellee here says in its brief that this Court, in the Erie case, said: "`In this case it was neither the reservoir nor the amount of water in it that caused the fire. It was caused by something else than that, and whether the ultimate loss was caused by the want of water leads us too far into the region of possibility and conjecture to enable any one to say, with any certainty, that such loss can be traced directly to the want of water." Emphasis supplied by appellee's counsel.)

In offering this quotation, appellee's counsel reveals more resourcefulness than discovery because this Court did not make any such statement. The cited quotation was taken from the charge of the trial court which was not approved by this Court. In fact, this Court said much to the contrary of that alleged by the appellee, namely, "The purpose of the reservoir being to extinguish fires, and the fire having been shown not to have been extinguished in consequence of the non-performance of the duty imposed, it would be no answer, perhaps, to say that the proximate cause of the injury was the fire, and the want of water only the remote cause. If it were made the duty of a municipality to station a police officer at a particular corner, to protect the foot-passengers from being run over by passing vehicles, it may be doubted whether it would be an answer to an action, to say that the cause of the injury was the horse and wagon and not the absence of the officer." (Emphasis supplied here.)

The decision in the Erie case turned on a factor entirely absent in this case, namely, that the municipality was given only a discretionary authority to build the reservoirs and, therefore, no legal duty was imposed on it to build the reservoirs.

In the case of Eagle Hose Co. v. Elec. Light Co., 33 Pa. Superior Ct. 581, a fire horse, belonging to the [204] plaintiff hose company, was killed when it stepped on an electric wire after an arc lamp, to which the wire was attached, fell to the ground because the lamp had been held in place by a hemp rope which had been consumed by the conflagration the fire company was fighting. The plaintiff contended that in using a rope, instead of a fireproof device, the electric company committed an act of negligence which resulted in the horse's death. The trial court entered a nonsuit against the plaintiff, asserting that the proximate cause of the injury was the burning of the rope, due to a casualty which the defendant was not reasonably bound to foresee. The Superior Court reversed, declaring: "While the burning building may be treated as an inevitable accident so far as the defendant company is concerned, in that they were not in any manner identified with the cause of the fire and had no control over it, it may at least be treated as an intervening agency which brought into dangerous prominence that which a jury might find was a negligent act of the defendant, and so combined with it as to cause the plaintiff's damage. If this should be so determined against the defendant company it will be sufficient ground on which to base a verdict in the plaintiff's favor. . . . The precautions which were reasonably necessary to protect the arc lamp in its place, and whether the company failed to adopt an appliance which was recognized as safer than the one he had had in use, and was well known to be of such a character, and in general use in the community prior to the happening of this accident, was a question for the jury."

Similarly in the case at bar, the question as to whether the water company used appropriate care in maintaining the water hydrants so they would not freeze or otherwise become inoperable was a question of fact for the jury.

[205] Did the water company, by failing to properly maintain the hydrants, create a perilous condition? Certainly it could never be said that the fire was an unforeseeable event. Unfortunately, fires are always possible, and the purpose of a fire hydrant, like a Minute Man, is to be ready for fires at all times. It would be wholly unrealistic to say that the water company was not to anticipate the likelihood of a fire, in which event its failing to keep the hydrants and their appurtenances in proper repair could result in the very loss which occurred and in the very manner it occurred. Thus, the defendant cannot avoid liability merely by asserting that the fire and not the defendant's negligence was the proximate cause of the plaintiffs' loss. What was said in Stark v. Lehigh Foundries, Inc., 388 Pa. 1, 11, applies here: "`"`One who negligently creates a dangerous condition cannot escape liability for the natural and probable consequences thereof, although the innocent act of a third party may have contributed to the final result.' And when there are two contributing acts, it is not proximity in time that determines which of them is the proximate cause of the resulting injury:" Mars v. Meadville Telephone Co., 344 Pa. 29, 31. . . . In determining whether an intervening force is a superseding cause, the Supreme Court in Hendricks v. Pyramid Motor Freight Corp., 328 Pa. 570, 574, stated: "The answer to this inquiry depends on whether the (intervening) conduct was so extraordinary as not to have been reasonably foreseeable, or whether it was reasonably to be anticipated . . ."

"`"The question of what is the proximate cause of an accident is almost always one of fact for the jury:" Ashby v. Phila. Electric Co., [328 Pa.] 479; Helmick v. South Union Twp., 323 Pa. 433, 439; Murray v. Pittsburgh Athletic Co., 324 Pa. 486, 493; Restatement, Torts, sec. 447.'"

[206] The defendant company next contends that it owed no liability to the plaintiffs because it was under no duty to supply them with water. To support this thesis it cites the case of Thompson v. Springfield Water Co., 215 Pa. 275, where this Court stated that since the municipality there involved had no duty to supply water to the plaintiffs, its agent, the water company, acting for and in behalf of the municipality, similarly had no such duty. We need not say whether under similar facts that decision would today be followed. It is sufficient to state that in the Thompson case, the Court proceeded on the theory that undertaking the task of supplying water to the plaintiff, as in Grant v. Erie, supra, was discretionary with the municipality and that therefore it could not be held liable for failing to exercise a discretionary duty.

The plaintiff's claim in the Thompson case was based on the insufficiency of available hydrants near the plaintiff's property and the Court viewed the claim as being one of a breach of duty to supply water. Here the situation is entirely different. The plaintiffs are not relying on the defendant's breach of duty to supply water but on its breach of a duty to use reasonable care in the operation and maintenance of a water system which the defendant had in fact set up in the vicinity of the plaintiffs' property.

Thus, the water company is not charged with the failure, through the municipality, to perform an act, which the court in the Thompson case said was a discretionary act. The municipality here did exercise its discretion and no one challenges that exercise. As a result of the fulfillment of that choice of action, hydrants were actually set up in the vicinity of the plaintiffs' property — five of them. Hence, the situation in the case at bar is far further advanced than the one outlined in the Thompson case. Discretion having been exercised and the physical fact of that exercise having [207] become a fait accompli, reasonable care in the maintenance and repair of the planted hydrants became imperative. The failure to use that care is what the defendants are being charged with, not merely a breach of duty to supply water because of the defendant's contract with the municipality.

The duty which the defendant company owed to the plaintiffs under the facts averred in the complaint arises from the law and not from its contract with the Borough.

The physical situation in the case at bar and the facts evolving therefrom bring this litigation squarely within the rule that where a party to a contract assumes a duty to the other party to the contract, and it is foreseeable that a breach of that duty will cause injury to some third person not a party to the contract, the contracting party owes a duty to all those falling within the foreseeable orbit of risk of harm. The landmark in this field of the law is the well-known MacPherson v. Buick Motor Co., 217 N.Y. 382, where the opinion was written by Judge CARDOZO.

In that case the defendant manufactured an automobile which it sold to a retail dealer who in turn sold it to the plaintiff. While the car was in movement, one of its wheels, being made of wood and defectively constructed, crumbled, and the plaintiff was thrown out of the car and injured.

He sued the manufacturer, Buick Motor Company, which defended on the basis that it had no contract with the plaintiff and therefore owed him no duty. The Court of Appeals of New York rejected this defense and held: "If the nature of a thing is such that it is reasonably certain to place life and limb in peril when negligently made, it is then a thing of danger. Its nature gives warning of the consequences to be expected. If to the element of danger there is added knowledge that the thing will be used by persons other [208] than the purchaser, and used without new tests, then, irrespective of a contract, the manufacturer of this thing of danger is under a duty to make it carefully."

To erect fire hydrants close to dwellings is to assure the inhabitants of those homes that potential fire engines stand guard to fight an invading conflagration. To erect fire hydrants and then not inspect them with some reasonable regularity is like setting sentinels and then offering them no relief or food so that they fall over from exhaustion and thereby become useless as watchful guardians. With fire hazard, unceasing vigilance is not only desirable but mandatory. As stated by Judge CARDOZO in the MacPherson case: "The presence of a known danger, attendant upon a known use, makes vigilance a duty. We have put aside the notion that the duty to safeguard life and limb, when the consequences of negligence may be foreseen, grows out of contract and nothing else. We have put the source of the obligation where it ought to be. We have put its source in the law." (Emphasis supplied.)

The New York Court of Appeals rejected the argument of the defendant that it owed a duty only to the dealer who purchased the car originally: "The defendant would have us say that he [the dealer] was the one person whom it was under a legal duty to protect. The law does not lead us to so inconsequent a conclusion. Precedents drawn from the days of travel by stage coach do not fit the conditions of travel today. The principle that the danger must be imminent does not change, but the things subject to the principle do change. They are whatever the needs of life in a developing civilization require them to be."

Could the needs of domiciliary life require anything more vitally than proper fire protection? Could anything be more cruelly deceptive than fire hydrants which do not function? Could there be a greater lapse of care than to fail to properly inspect and maintain [209] fire hydrants once they have been established and the community has accepted them as being live guardians and not mere painted cast iron?

The Buick Motor Company in the MacPherson case attempted to draw a distinction between things inherently dangerous and things imminently dangerous. Judge CARDOZO said: "The case does not turn upon these verbal niceties. If danger was to be expected as reasonably certain, there was a duty of vigilance, and this whether you call the danger inherent or imminent."

Returning to the proposition that the defendant auto manufacturer was liable to the person who was injured even though it had not dealt with that person, Judge CARDOZO said: "There is nothing anomalous in a rule which imposes upon A, who has contracted with B, a duty to C and D and others according as he knows or does not know that the subject-matter of the contract is intended for their use."

He noted that that principle of law had been accepted in England decades before: "`Whenever one person supplies goods, or machinery, or the like, for the purpose of their being used by another person under such circumstances that every one of ordinary sense would, if he thought, recognize at once that unless he used ordinary care and skill with regard to the condition of the thing supplied or the mode of supplying it, there will be danger of injury to the person or property of him for whose use the thing is supplied, and who is to use it, a duty arises to use ordinary care and skill as to the condition or manner of supplying such thing.'"

The law of Pennsylvania in this phase of the litigation was enunciated as recently as 1961 in Evans v. Otis Elevator Co., 403 Pa. 13. In that case the plaintiff Evans was injured when a board from the roof of the elevator in which he was riding fell on his head. The elevator belonged to the Sperling Company, Evans' [210] employer, which had a contract with the Otis Elevator Company whereby the latter undertook the responsibility of making periodic inspections of the elevator and accessory equipment. Evans sued the Otis Elevator Company averring that it was negligent in failing to properly inspect the elevator and in failing to notify him of its defective and dangerous condition. Otis defended on the proposition, inter alia, that it owed no duty to Evans, but only to Sperling. This defense was rejected by our Court, Justice BENJAMIN R. JONES stating: "Generally a party to a contract does not become liable for a breach thereof to one who is not a party thereto. However, a party to a contract by the very nature of his contractual undertaking may place himself in such a position that the law will impose upon him a duty to perform his contractual undertaking in such manner that third persons — strangers to the contract — will not be injured thereby: Prosser, Torts, (2nd ed. 1955), section 85, pp. 514-519. It is not the contract per se which creates the duty; it is the law which imposes the duty because of the nature of the undertaking in the contract. If a person undertakes by contract to make periodic examinations and inspections of equipment, such as elevators, he should reasonably foresee that a normal and natural result of his failure to properly perform such undertaking might result in injury not only to the owner of the equipment but also third persons, including the owner's employees: Bollin v. Elevator Construction & Repair Co., 361 Pa. 7, 17, 18, 63 A. 2d 19, and cases therein cited. The orbit of Otis' duty to third persons is measured by the nature and scope of his contractual undertaking with Sperling and, if, as presently appears, Otis undertook to inspect the elevator at regular intervals, and, if the elevator was in a defective or dangerous condition discoverable by reasonable inspection, Otis would be liable to third persons, regardless of any privity of [211] contract, who might be injured by Otis' failure to properly perform its contractual undertaking of inspection. Such principle finds support in reason, justice and precedent: (citing many cases from other jurisdictions)."

The appellee cites the case of German Alliance Ins. Co., v. Home Water Supply Co., 226 U.S. 220, in support of its position because the Supreme Court of the United States there said: "The courts have almost uniformly held that municipalities are not bound to furnish water for fire protection." But this does not settle the matter here. The quoted matter, with other sentences quoted in the appellee's brief, are merely selected apples out of a barrel which contains other fruit which give to the barrel a wholly different concept of its contents than can be gathered from the one selection made by the defendant company. The Supreme Court did state that there was no duty on the part of the defendant to supply water to the plaintiff because the contract to supply water was with the municipality and not with the public, but it very specifically pointed out that if the failure to supply water had been alleged to be the result of lack of reasonable care in the set-up, maintenance and operation of its water system, the defendant would have been liable: "It is argued, however, that even if, in the first instance, the law did not oblige the company to furnish property owners with water, such a duty arose out of the public service upon which the defendant entered. But if, where it did not otherwise exist, a public duty could arise out of a private bargain, liability would be based on the failure to do or to furnish what was reasonably necessary to discharge the duty imposed. The complaint proceeds on no such theory. It makes no allegation that the defendant failed to furnish a plant of reasonable capacity, or neglected to extend the pipes where they were reasonably required. Nor is it charged that what the company actually did was harmful in itself or [212] likely to cause injury to others, so as to bring the case within the principle applicable to the sale of unwholesome provisions, or misbranded poisons which, in their intended use, would be injurious to purchasers from the original vendee. So that, notwithstanding numerous charges of culpable, wanton and malicious neglect of duty, this suit, whether regarded as ex contractu or ex delicto — is for breach of the provisions of the contract of February 14, 1900, which must, therefore, be the measure of plaintiff's right and of defendant's liability. . .

. . .

"The plaintiff presses these decisions to their logical conclusions and sues — not for negligence in operating the plant, but for breach of the contract of construction. The complaint charges that as a direct consequence of the refusal to lay the pipes, as provided by the contract, there was no plug near enough to extinguish the fire." (Emphasis supplied.)

The appellee here also depends for nonliability on the case of Moch Co. v. Rensselaer Water Co., 247 N.Y. 160, where the Court's opinion was also written by Judge CARDOZO. In that case the plaintiff's property was destroyed because the defendant water company failed to supply an adequate water supply with sufficient pressure to extinguish a fire, even though the plaintiff had notified the water company of the fire. The Court held that there was no liability. It is to be particularly noted in that case that in its complaint the plaintiff alleged that the water company failed to "fulfill the provisions of the contract between it and the city of Rensselaer." (Emphasis supplied.) Here again the claim, entirely different from the one at bar, was predicated on a contract with the involved municipality. No breach of any duty to use reasonable care in the erection, operation and maintenance of the water system was alleged or relied upon. Under these facts, [213] which, of course, are distinguishable from those in the case at bar, Judge CARDOZO held there was no action ex contractu and no action ex delicto for a common law tort because the defendant's conduct was merely negative in withholding a benefit and it was not tortious. Judge CARDOZO sought to distinguish the Moch case from the MacPherson case where there was originally no duty toward the plaintiff but such duty arose because of the defendant's action, stating: "If conduct has gone forward to such a stage that inaction would commonly result, not negatively merely in withholding a benefit, but positively or actively in working an injury, there exists a relation out of which arises a duty to go forward (Bohlen, Studies in the Law of Torts, p. 87). So the surgeon who operates without pay, is liable though his negligence is in the omission to sterilize his instruments (cf. Glanzer v. Shepard, supra); the engineer, though his fault is in the failure to shut off steam (Kelley v. Met. Ry. Co., supra; cf. Pittsfield Cottonwear Mfg. Co. v. Shoe Co., 71 N.H. 522, 529, 533); the maker of automobiles, at the suit of some one other than the buyer, though his negligence is merely in inadequate inspection (MacPherson v. Buick Motor Co., 217 N.Y. 382). The query always is whether the putative wrongdoer has advanced to such a point as to have launched a force or instrument of harm, or has stopped where inaction is at most a refusal to become an instrument for good."

He then concluded that there was no liability on the part of the defendant company because: "What we are dealing with at this time is a mere negligent omission, unaccompanied by malice or other aggravating elements. The failure in such circumstances to furnish an adequate supply of water is at most the denial of a benefit. It is not the commission of a wrong."

[214] It must be stated, with some regret, that at this point Homer nodded. Judge CARDOZO, without apparently intending to do so, contradicted what he said in the MacPherson case which, incidentally, he cited with approval in the Moch case. A refusal to deny a benefit may in itself result in the refusal becoming an instrument of harm. Once Judge CARDOZO recognized that the defendant was guilty of a "negligent omission," he admitted that the defendant had committed a breach of duty since negligence is defined in law as a breach of duty. If there was no breach of duty on the part of the defendant, its conduct could be not characterized as a negligent omission, but would be merely an omission that did not amount to negligence.

It will be recalled that Judge CARDOZO said in the MacPherson case: "The presence of a known danger, attendant upon a known use, makes vigilance a duty.. . . We have put the source of the obligation where it ought to be. We have put its source in the law."

Commenting on Judge CARDOZO'S decision in the Moch case, Professor Seavey said in 52 Harvard Law Review, 372, 392, that here the distinguished jurist failed to pursue "his accustomed method of facing the realities." Be that as it may, the case before us comes within the principles laid down not in the Moch case but in the MacPherson case since the plaintiffs here alleged a breach of duty of the water company to use reasonable care in making proper inspection of the water hydrants when such inspection would have revealed their defective condition. Even in the Moch case, Judge CARDOZO acknowledged a breach of duty, for, as already noted, he referred to the MacPherson case as an example of where the defendant's inaction becomes an actionable tort "though his negligence is merely in inadequate inspection."

The defendant at bar also cites Reimann v. Monmouth Consolidated Water Co., 9 N.J. 134, where the [215] Supreme Court of New Jersey, with Chief Justice VANDERBILT and Justice HEHER dissenting, held that a private property owner has no action against a water company for failure to provide adequate water to fight a fire. The reasoning in the Reimann case is one which hardly recommends itself as a homily on elementary justice. The Majority Opinion advises those whose houses may be destroyed by fire, either with or without the negligence of the water company that: "There are many companies whose function is to insure against fire, and the property owner may protect himself fully against fire loss by contract with those companies."

This is similar to saying that persons who may be injured as the result of gross negligence on the part of motorists may protect themselves against monetary loss by purchasing accident insurance and, therefore, there would be no need to sue the negligent motorists. A tortfeasor has no right to immunity from liability for his wrongdoing simply because his victim may, by an outlay of money, obtain some measure of relief from the injury done to him by the tortfeasor.

Following to the ultimate the defendant's reasoning in this regard, it could be said that when one suffers illness as the result of the tortious conduct of another, he may not recover because he could have taken out health insurance. That an injured party may obtain insurance does not, under law or by the application of the simplest logic, insulate a tortfeasor from liability for his misconduct.

And then, if householders may buy fire insurance to recoup their fire losses, why may not water companies buy liability insurance to recompense them for what they owe to others who have been injured through their negligence? Railroads, power companies, canal companies, factory, mill and mine owners, and practically every large business concern dealing with the [216] public buy liability insurance. Why should water companies not anticipate the possibility of their negligence whereby, because of the absence of water, an annihilating conflagration could level a town, or, by lack of inspection, the population of a community could be poisoned by contaminated water?

In the New Jersey Reimann case the Majority Opinion said further that if water companies were liable for acts of negligence in failing to supply water to combat fires, many of them would be bankrupted or they would be left "insufficiently financed to meet the general needs of their communities." This is a strange explanation to unfold in a court of law. Responsibility in law does not depend on the thermometer of the tortfeasor's exchequer. Any legal entity which commits a wrong is bound by law to restore the injured person to status quo, to the extent that that is possible, regardless of what the malfeasant may have to undergo in accomplishing that act of justice. Equality under the law does not mean parity of bankbooks between the evil doer and his victim. If a company which has committed a palpable wrong cannot meet its responsibilities except by going out of business, it might well be out of business, so far as the general need and general good of the community is concerned.

Something possibly could be said about the practicality of shielding water companies from heavy financial burdens in their infancy as indeed all enterprises aimed at developing the resources of this country and encouraging business got reassuring concessions from government and society in the early days of America, but water companies have left their cradles long ago and must accept adult responsibility as all other public utilities are required to shoulder it. The argument that to insure safety to the public would entail great expense is, and should no longer be, a defense where a duty to life, limb and property is inherent.

[217] Depressing as the reflection may be, it is true nevertheless that the absence of financial responsibility for negligence is to encourage further negligence. To announce to water companies throughout the Commonwealth that no species of indifference on their part, no negligence, no matter how gross, will call for pecuniary answerability is to invite progressive inattention and indifference to protection against the scourge of flame and incendiary invasion.

The immunity which the New Jersey decision promulgates, and on which the defendant principally stands, cannot avail against the most rudimentary test of logic. In several cases decided by our Pennsylvania courts, liability, even on the part of the municipality, for damage done through broken or damaged pipes and hydrants was imposed. If liability attaches to a municipal corporation which is a non-profit entity, it attaches a fortiori to a water company which is strictly a profit-making organization.

In Luterman v. Philadelphia, 396 Pa. 301, the plaintiff's property was severely damaged when water from a broken fire hydrant flooded his premises. The jury found an absence of negligence and this court affirmed the finding, but it in no way suggested that the plaintiff had no right to bring this action.

In McHale v. Throop Borough, 13 Pa. Superior Ct. 394, the plaintiff suffered damage to his property when the municipality failed to make adequate repairs to a broken fire hydrant and, as a result, water flowed onto his property. A verdict against the borough was affirmed.

In Boyle v. Pittsburgh, 145 Pa. Superior Ct. 325, a verdict against the City of Pittsburgh was sustained when the City failed to repair a broken water pipe which was connected with a fire hydrant on the sidewalk and, in consequence the plaintiff's property was damaged.

[218] In all these cases fire hydrants in one way or another were principal actors. It cannot be argued, therefore, that merely because a hydrant appears upon the scene the company serving that hydrant is immune from liability as a result of a negligent act in connection therewith. Suppose, while a broken hydrant (as a result of the water company's negligence) is cascading water onto the property of A, the building of B, which is next door, catches fire and, because of the damaged hydrant, the fire hoses cannot be attached and B's building burns to the ground. A's property has been flooded with water and he sues the water company and recovers damages for the losses sustained. B's building has been completely destroyed as the result of the same negligence, but, according to the defendant's argument here, B may not recover. Such a bizarre differentiation should not be in the law books to arouse the derision not only of foreign observers, but of all disciples of justice in America. It is a differentiation which could not satisfy the most elementary mind in the kindergarten of logic or the most forgiving person in the Sunday School of legal-moral responsibility.

The Majority Opinion in the Reimann case, further conjuring up disastrous results for water companies if, like everybody else, they are held responsible for their acts of negligence, said: "If such a broad liability as that sought by the plaintiff were established, the ensuing litigation would doubtless be great . . . no one can foretell the degree of confusion which would follow so revolutionary a decision; a decision which would work backward as well as forward; it would unsettle the past as well as be effective in the future."

Throughout the entire history of the law, legal Jeremiahs have moaned that if financial responsibility were imposed in the accomplishment of certain enterprises, the ensuing litigation would be great, chaos would [219] reign and civilization would stand still. It was argued that if railroads had to be responsible for their acts of negligence, no company could possibly run trains; if turnpike companies had to pay for harm done through negligence, no roads would be built; if municipalities were to be financially liable for damage done by their motor vehicles, their treasuries would be depleted. Nevertheless liability has been imposed in accordance with elementary rules of justice and the moral code, and civilization in consequence, has not been bankrupted, nor have the courts been inundated with confusion.

The plaintiffs in the case at hand charge the defendant water company with ignoring the most fundamental standards of safety, thus not only causing the destruction of the plaintiffs' property but endangering the lives of the population of the community. The company knew that water freezes in severe winter weather, yet it made no inspection to make certain that the water in its mains was liquid, it made no inspection to determine whether the valves of the hydrants functioned so that water would pour into the fire-fighting equipment which could any day, hour or minute, be summoned to combat the most dreaded calamity in civilian life. A decision which would allow a water company in such a situation to shrug away its responsibility by not even being required to answer the serious charges brought against it, would be a decision not of law and justice but of arbitrary unconcern for the law as established, it would be an ignoring of justice as understood in America and it would be a defiance of honesty and fairness which is always part of the legal code.

Chief Justice VANDERBILT of the Supreme Court of New Jersey filed in the Reimann case a dissenting opinion which appeals to logic and common sense. He said: "`Negligence law is common law, and the common [220] law has been molded and changed and brought up-to-date in many another case. Our court said, long ago, that it had not only the right, but the duty to re-examine a question where justice demands it' . . .

"`We act in the finest common-law tradition when we adapt and alter decisional law to produce commonsense justice.'"

As to whether the defendant water company would be immune from liability on the theory it was performing a governmental function as servant of the municipality by which it was employed, we need merely note that neither plaintiff nor defendant has pleaded any such master-servant relationship. Moreover, a finding of an independent contractor-principal relationship could be supported by the facts alleged in the complaint. Hence, if there was any immunity to be enjoyed by the municipality, and we need not decide that issue here, it would not be available to the independent contractor, as we clearly stated in Ference v. Booth and Flinn Co., 370 Pa. 400: "It is hornbook law that the immunity from suit of the sovereign states does not extend to independent contractors doing work for the state."

We hold, therefore, that the plaintiffs' complaint does set out a good cause of action against the defendant water company and that the preliminary objections thereto should not have been sustained.

Judgment reversed.

CONCURRING OPINION BY MR. JUSTICE ROBERTS:

I concur in the result because the complaint alleges negligence in the failure to inspect the hydrants and to replace or repair inoperative valves and in allowing the water in the hydrants to freeze.

Mr. Justice EAGEN joins in this opinion.

[221] DISSENTING OPINION BY MR. JUSTICE JONES:

I dissent from the views expressed and the conclusion reached in the majority opinion which (a) effect a completely unwarranted change in the law, (b) eliminate the tort immunity of a municipality and its agent while in the performance of governmental functions, (c) render justiciable an ex delicto action by persons to whom no duty of care is owed, and (d) recognize the nonfeasance of a contractual obligation as the basis of an ex delicto action at the instance of strangers to the contract.

The instant tort action is against a private water company for its alleged failure to properly and adequately maintain certain fire hydrants in the City of Pittsburgh as a consequence of which failure water was not available, when needed, to successfully combat a fire in plaintiffs' home. As this Court stated in Thompson v. Springfield Water Company, 215 Pa. 275, 279, 64 A. 521: "What the water company undertook and agreed to do was in the nature of a public function; that is to say, it was something that the municipality, if it chose, could have done at public expense in the exercise of rightful authority. Presumably from considerations of economy and convenience, instead of establishing a municipal water plant with the necessary equipment for the desired purpose, the municipality, by its proper authorities, engaged the [water] company owning an established water plant, to do for the public all that was deemed necessary in this regard. It thereby made the [water company] its agent to discharge for it this particular function, and since the act of the agent in the proper exercise of authority is the act of the principal, a correlative must be, that in doing the act no higher or other duty — we are now speaking of legal public duty — can rest on the agent than would have rested on the principal in the performance of the same service. The case on this point, [222] therefore, may be considered as though the municipality, and not the agent, were directly involved." The instant water company, in the performance of the service of providing fire hydrants and other facilities for fire fighting, must likewise be regarded as the agent of the municipality in performing this service.

Implicitly in the case at bar and explicitly in Malter v. South Pittsburgh Water Company, 414 Pa. 231, 198 A. 2d 850 (handed down this date), the majority opinion takes the position that, inasmuch as a municipality, or its agent, the water company, when it maintains a water system for supplying water to its inhabitants or individual consumers is performing a proprietary function,^[1] the municipality, or the water company, when it employs such water system for the supplying of water for fire-fighting purposes retains such proprietary function.^[2] The majority opinion would make no distinction whatsoever between the character of the function of the water system when it furnishes water for domestic and household use and when it is employed as a vehicle to bring water to the scene of a fire. In its failure to recognize such distinction, the majority errs. As presently relevant, the purpose of the water system vis-a-vis the plaintiffs was the public and governmental function of fire fighting and not its proprietary function of supplying water [223] for domestic use; while directed to fire fighting, the proprietary aspect of the water system became dormant to meet the emergency of the fire.^[3] The water system cannot be regarded as permanently and irreversibly frozen into a proprietary function simply because the municipality or its agent also use the water system for proprietary purposes. That the supply of water for fire fighting constitutes a public or governmental function on the part of the municipality or its agent is clearly established: Thompson v. Springfield Water Company, supra; Scibilia v. Philadelphia, 279 Pa. 549, 552, 553, 124 A. 273.

Engaged in a governmental function, a municipality is, and should be, immune from tort liability (Scibilia v. Philadelphia, supra, wherein it was said: "the fighting of fires in large cities was not, until comparatively recent years, treated as a matter for direct governmental control, but its status as a public function is now well settled". (p. 559); Anderson v. Philadelphia, 380 Pa. 528, 530, 112 A. 2d 92; Pintek v. Allegheny County, 186 Pa. Superior Ct. 366, 371, 142 A. 2d 296) and such immunity should extend to a water company when it is performing, on behalf of the municipality, a governmental function. Under the majority ruling neither the municipality nor its agent, the water company, would enjoy any such immunity in performing the governmental function of fire fighting. The attempt by the majority to justify such ruling on the ground that, once either the municipality or the water company utilize the water system for proprietary purposes, then the water system must always be considered a proprietary function even when used for fire fighting, finds no support either in law or logic. The overwhelming weight of authorities and the necessity [224] that a municipality and its agents be freed from legalistic niceties in proceeding in the performance of public functions dictate a result contrary to that reached by the majority in this case.^[4] If the majority opinion prevails, then our legislature should act promptly to retrieve our municipalities and their agents from the result of this decision. However, in the case at bar, I do not believe that either the water company or its principal, the municipality, need retreat behind the shield of governmental tort immunity in order to prevent a recovery because neither should legally be liable ex delicto in any event.

In attempting to justify actionable negligence in the case at bar, the majority opinion places great reliance on MacPherson v. Buick, 217 N.Y. 382, and would expand its ruling to a point far beyond that which the writer of the MacPherson opinion (the late Judge CARDOZO) chose to go in Moch Company v. Rensselaer Water Company, 247 N.Y. 160, 159 N.E. 896.^[5] That which Judge CARDOZO grappled with in Moch, and that which the majority opinion now sidesteps, is the problem of finding the existence of a duty on the part of the water company running to an individual whose home was destroyed by fire. It is completely unnecessary to belabor the obvious — as does the majority opinion — that [225] fire hydrants, no matter how negligently maintained, do not cause fires. At the same time, it is highly significant that the majority fails to spell out wherein any duty was owed to plaintiffs by the water company. The rationale of Moch as to whether a cause of action lies in tort against a water company by an individual whose property has been destroyed by fire when the water company, either through lack of pressure, failure to properly maintain the fire hydrants, etc., fails to provide adequate water to fight the fire may be summarized: (a) "Given a relation involving in its existence a duty of care irrespective of a contract, a tort may result as well from acts of omission as of commission. . . ." (898); (b) the search is to ascertain "not so much the conduct to be avoided when the relation and its attendant duty are established as existing" but "the conduct that engenders the relation" (898); (c) if the "conduct" has reached a stage that would "commonly result, not negatively merely in withholding a benefit, but positively or actively in working an injury, there exists a relation out of which arises a duty to go forward", such as in MacPherson; (d) the crux of the inquiry is whether the actor has reached the point "as to have launched a force or instrument of harm, or has stopped where inaction is at most a refusal to become an instrument for good" (898). Applying that rationale to the situation where a home is destroyed by fire by reason of the water company's failure to supply water for fire fighting, the Court said that the water company, under its contract with the municipality to furnish water for fire fighting, was not brought into such a relation with every inhabitant of the city who might potentially be benefited through such water supply as to raise "negligent performance" by the water company to "the quality of a tort" and that the fault of the water company was the "denial of a benefit", not [226] "the commission of a wrong" (899).^[6] As Moch indicates, MacPherson does not aid plaintiffs.^[7]

The distinction drawn in Moch is by no means novel. In Elsee v. Gatward (1793), 5 Durnford & East's 143, 150, 101 Eng. Rep. 82, 86, it was said: "`The distinction is this: If a party undertake to perform work, and proceed on the employment, he makes himself liable for any misfeasance in the course of that work; but if he undertake, and do not proceed on the work, no [tort] action will lie against him for the nonfeazance'."

In the case at bar, the Doyles recognize quite clearly that the basis of the negligence upon which they would predicate the tort liability of the water company is the "contractual agreement" between the water company and the municipality which obligated the former "to provide water for certain fire hydrants in the vicinity of [Doyles'] dwelling and to maintain said fire hydrants for use in emergencies for the sole purpose of fighting fires . . . ." What Doyles contend is that, in breach of said undertaking, the water company did not properly and adequately maintain the fire hydrants to assure the availability of water to fight the fire which threatened Doyles' property. Such failure to do so — the nonfeasance of the contractual obligation — gave rise to no relationship between the water company and Doyles so that such nonfeasance attained [227] the "quality of a tort". In Hart v. Ludwig, 347 Mich. 559, 79 N.W. 2d 895, the Court held that a defendant was not liable in tort for a refusal and neglect to care for and maintain an orchard as promised in an oral agreement with the orchard owner because, as in Moch, a remedy was sought in tort for nonfeasance of this contract. Having exhaustively reviewed authorities in other jurisdictions, that Court concluded: "The division thus made, between misfeasance, which may support an action either in tort or on the contract, and the nonfeasance of a contractual obligation, giving rise only to an action on the contract, is admittedly difficult to make in borderland cases. There are, it is recognized, cases in which an incident of nonfeasance occurs in the course of an undertaking assumed. Thus, a surgeon fails to sterilize his instruments, an engine fails to shut off steam [citing a case], a builder fails to fill a ditch in a public way [citing a case]. These are all, it is true, failures to act, each disastrous detail, in itself, a `mere' nonfeasance. But the significant similarity relates not to the slippery distinction between action and nonaction but to the fundamental concept of `duty'; in each a situation of peril has been created, with respect to which a tort action would lie without having recourse to the contract itself. Machinery has been set in motion and life or property is endangered. . . . In such cases, in the words of [Tuttle v. Gilvert Mfg. Co., 145 Mass. 169, 13 N.E. 465], we have a `breach of duty distinct from contract.' Or, as Prosser puts it (Handbook of the Law of Torts [1st ed.], § 33, p. 205), `if a relation exists which would give rise to a legal duty without enforcing the contract promise itself, the tort action will lie, otherwise not'. Before us, however, we have not such a case. We have simply the violation of a promise to perform the agreement.. . . What we are left with is defendant's failure to complete his contracted-for performance. This is [228] not a duty imposed by the law upon all, the violation of which gives rise to a tort action, but a duty arising out of the intentions of the parties themselves and owed only to those specific individuals to whom the promise runs. A tort action will not lie." Negligence is the basis of a tort action; a mere breach of a contractual promise will not suffice. Distinct from a breach of contract, a breach of duty must be shown and such breach of duty is absent in the case at bar.

Another essential infirmity in the majority's position is that it does not consider what duty, if any, is owed by the water company to the plaintiffs. It is not enough to say, as does the majority say inferentially, that the duty is to be found in the law and cite MacPherson as authority. In Palsgraf v. Long Island R. Co., 248 N.Y. 339, 162 N.E. 99, it was said: "Negligence is not actionable unless it involves the invasion of a legally protected interest, the violation of a right. `Proof of negligence in the air, so to speak, will not do' [citing authorities]" (99) and "back of [any given] act must be sought and found a duty to the individual complaining, the observance of which would have averted or avoided the injury" (pp. 99, 100). (Emphasis supplied). To paraphrase Palsgraf, Doyles must sue in their own right for a wrong personal to them, and "not as the vicarious beneficiar[ies] of a breach of duty to another" (100). When a person enters into a contractual undertaking, he intends to benefit the other contracting party and such persons as may properly be classified as third parties specifically intended to be benefited. The majority of this Court, inferentially, would read into the water company-municipality contract an intent to benefit all who might, by incidence, be benefited thereby. As was said in Moch, supra (897): "In a broad sense it is true that every city contract, not improvident or wasteful, is for the benefit of the public. More than this, however, [229] must be shown to give a right of action to a member of the public not formally a party. The benefit, as it is sometimes said, must be one that is not merely incidental and secondary. Cf. Fosmire v. National Surety Co., 229 N.Y. 44, 127 N.E. 472. It must be primary and immediate in such a sense and to such a degree as to bespeak the assumption of a duty to make reparation directly to the individual members of the public if the benefit is lost. The field of obligation would be expanded beyond reasonable limits if less than this were to be demanded as a condition of liability. . . . By the vast preponderance of authority, a contract between a city and a water company to furnish water at the city hydrants has in view a benefit to the public that is incidental rather than immediate, an assumption of duty to the city and not to its inhabitants. Such is the ruling of the Supreme Court of the United States. German Alliance Ins. Co. v. Homewater Supply Co., 226 U.S. 220, 33 S. Ct. 32, 57 L. Ed. 195, 42 L.R.A. (N.S.) 1000.

. . .

"If the plaintiff is to prevail, one who negligently omits to supply sufficient pressure to extinguish a fire started by another assumes an obligation to pay the ensuing damage, though the whole city is laid low. A promisor will not be deemed to have had in mind the assumption of a risk so overwhelming for any trivial reward."

The only obligation on the part of the water company under the instant circumstances arose from its contract with the municipality to provide water for the fighting of fires in the municipality. The parties never intended that, for a breach of such contracting obligation, a right of action, either ex contractu or ex delicto, would arise on the part of strangers to that contract. Whether averred or not, any duty must arise [230] from the water company-municipality agreement for the supply of water to fight fires and to any such agreement plaintiffs are strangers to whom no duty arose on the part of the water company. However, even if such a duty did arise, certainly the nonfeasance of any such contractual duty cannot furnish the basis of an action ex delicto.

Although severely rejected by the majority, the denial of recovery under the instant circumstances is also based on a sound public policy. The Supreme Court of New Jersey in Reimann v. Monmouth Consolidated Water Co., 9 N.J. 134, 87 A. 2d 325, well stated this public policy: "Water companies sell a commodity and their rates have been established and approved by the Board of Public Utility Commissioners upon that basis, not upon the assumption that, without an undertaking to that end, they are responsible for fire losses. A way of business has grown up on that understanding. . . . Water rates are uniform; they do not rise or fall with the inherent danger. If the principle for which appellant contends were the law there would be no predetermined limit of liability. There are large water companies and small water companies; companies with ample supply of water and companies with limited and inadequate supply and perhaps with inability to increase the water resources; companies of such size that a considerable verdict against them for a fire loss would bankrupt them or leave them insufficiently financed to meet the general needs of their communities.. . .

"If such a broad liability as that sought by the plaintiff were established, the ensuing litigation would doubtless be great. . . . No one can foretell the degree of confusion which would follow so revolutionary a decision; a decision which would work backward as well as forward; it would unsettle the past as well as [231] be effective in the future."^[8] In my opinion, a sound public policy militates against a recovery in this case, although on such ground alone I would hesitate to base my decision in this case. See: Patton v. U.S., 281 U.S. 276, 74 L. ed. 854, 50 S. Ct. 253.

In my view, the rationale of Moch, German Alliance Insurance Co., Thompson v. Springfield Water Company, supra, and several Pennsylvania authorities^[9] control the instant situation. The present majority opinion marks a complete departure from well-settled principles in this area of the law not only in this Commonwealth but in a vast majority of jurisdictions in this country which have been presented with the instant problem.^[10] Such a departure is completely unwarranted and unjustified.

Mr. Justice COHEN joins in this dissenting opinion.

[1] Durham Terrace v. Hellertown Borough Authority, 394 Pa. 623, 148 A. 2d 899, aff'g. 16 Pa. D. & C. 2d 231; Helz v. Pittsburgh, 387 Pa. 169, 173, 127 A. 2d 89; Lehigh Water Company's Appeal, 102 Pa. 515, 528; City of Philadelphia v. Gilmartin, 71 Pa. 140; Penn Iron Co. Ltd. v. City of Lancaster, 25 Pa. Superior Ct. 478, 482, 483.

[2] The majority suggests that the case at bar falls within the rule in Jolly v. Monaca Borough, 216 Pa. 345, 65 A. 809. In Jolly, the sole issue was the right of a municipality, supplying water to its inhabitants for domestic use, to charge for such use; no question was therein raised as to the capacity in which a municipality acts when it provides water for fire-fighting purposes. See: Canavan v. Mechanicville, 229 N.Y. 473, 128 N.E. 882, 883.

[3] Cf. Herlihy Mid-Continent Company v. Bay City, 293 F. 2d 383.

[4] German Alliance Insurance Co. v. Home Water Co., 226 U.S. 220, 227, 228, 33 S. Ct. 32; McQuillin, Municipal Corporations (3rd ed. rev.), §§ 53.52, 53.53, 53.104, 53.105, 53.106 and cases therein cited.

[5] The majority opinion states that Judge CARDOZO "nodded" in Moch, in that, while he characterized the water company's conduct as "negligent omission", at the same time he failed to find any "breach of duty". Judge CARDOZO declared in Moch that, even though there had been reckless or wanton negligence by the water company, there might be difficulty in finding liability in the absence of a breach of duty. It is obvious that it is the majority of this Court which now "nods" in its equation of "negligent omission" with "breach of duty".

[6] As examples of what might result from a contrary holding the Court noted a coal dealer, under contract to supply coal to a shop, would be liable to the shop's customers if coal was not delivered, a goods manufacturer would be liable not only to the buyer but to those looking to the buyer for their sources of supply, etc. The Court noted: "The law does not spread its protection so far". See also: Spiegler v. School District of City of New Rochelle, 242 N.Y.S. 2d 430.

[7] Evans v. Otis Elevator Co., 403 Pa. 13, 168 A. 2d 573, relied on by the majority, likewise does not aid the majority's position. Cf. Wroblewski v. Otis Elevator Co., 193 N.Y.S. 2d 855, 856.

[8] See also: Miralago Corp. v. Village of Kenilworth, 290 Ill. App. 230, 7 N.E. 2d 602, 607; Gilbertson v. City of Fairbanks, 262 F. 2d 734, 738, 739.

[9] Grant v. City of Erie, 69 Pa. 420; Beck v. Kittanning Water Co., 8 Sadler 237; Stone v. Uniontown Water Co., 16 Pa. C.C. Rep. 329; St. Mary's Greek Catholic Church of Taylor v. Scranton-Spring Brook Water Service Co., 51 Lacka. Jur. 227; Hudak v. Scranton-Spring Brook Water Service Co., 39 Pa. D. & C. 346; Hay v. Connellsville Water Co., 4 Pa. D. & C. 731.

[10] See: 62 A.L.R. 1205. A contrary view is entertained in only three jurisdictions — Kentucky, Florida and North Carolina —; only the latter two jurisdictions recognize a cause of action in tort in this situation.

147 Md. 588 (Md. 1925)

Crane Ice Cream Co. v. Terminal Freezing & Heating Co.

Court of Appeals of Maryland

February 25, 1925

PARKE, J., delivered the opinion of the Court.

The appellee and one W.C. Frederick entered into a contract for the delivery of ice by the appellee to Frederick, and, before the expiration of the contract, Frederick executed an assignment of the contract to the appellant; and on the refusal of the appellee to deliver ice to the assignee, it brought an action on the contract against the appellee to recover damages for the alleged breach. The common counts of the declaration were abandoned, leaving an amended special count on the contract and assignment, to which a demurrer was filed and sustained. It is from the judgment against the appellant on this demurrer that the appeal was taken.

The demurrer admitted the following material allegations: At the execution of the contract, the Terminal Freezing and Heating Company, appellee, was a corporation engaged in the manufacture and sale of ice at wholesale within the State of Maryland, and William C. Frederick made and sold ice cream in Baltimore, where his plant was located. The original contract between these two parties was made on April 2d 1917, and ran until April 2d 1920 . The contract was modified on June 3rd, 1918, by the increase of the original contract price of ice from $2.75 a ton to $3.25, and, before its expiration, the contract was renewed by the parties for another three years, so that the contract was continued until April 2d 1923, without change, save as to the higher agreed cost of the ice delivered.

The contract imposed upon the appellee the liability to sell and deliver to Frederick such quantities of ice as he might use in his business as an ice cream manufacturer to the extent of two hundred and fifty tons per week, at and for the price of $3.25 a ton of two thousand pounds on the loading platform of Frederick. The contractual rights of the appellee were (a) to be paid on every Tuesday, during the continuation of the contract, for all ice purchased by Frederick during the week ending at midnight upon the next preceding Saturday; (b) to require Frederick not to buy or accept any ice from any other source than the appellee,  except in excess of the weekly maximum of two hundred and fifty tons; (c) to annul the contract upon any violation of the agreement by Frederick; and (d) to sustain no liability for any breach of contract growing out of causes beyond its control. The converse of these rights and liabilities of the appellee were the correlative liabilities and rights of Frederick under the contract.

There was a further provision that the contract in its entirety should continue in force from term to term, unless either party thereto gave to the other party at least sixty days' notice in writing before the expiration of the term of the intention to end the contract. The contract did not expressly permit or inhibit an assignment, but neither did it contain any word, such as assigns, to indicate that the parties contemplated an assignment by either.

Before the first year of the second term of the contract had expired, Frederick, without the consent or knowledge of the appellee, executed and delivered to the appellant, for a valuable consideration, a written assignment, dated February 15th, 1921, of the modified agreement between him and the appellee. The attempted transfer of the contract was a part of the transaction between Frederick and the appellant, whereby the appellant acquired by purchase the plant equipment, rights and credits, choses in action, "good will, trade, custom, patronage, rights, contracts" and other assets of Frederick's ice cream business, which had been established and conducted by him in Baltimore. The purchaser took full possession and continued the former business carried on by Frederick. It was then and is now a corporation "engaged in the ice cream business upon a large and extensive scale in the City of Philadelphia, as well as in the City of Baltimore, and State of Maryland," and had a large capitalization, ample resources and credit, to meet any of its obligations, "and all and singular the terms and provisions" of the contract; and it was prepared to pay cash for all ice deliverable under the contract.

As soon as the appellee learned of this purporting assignment  and the absorption of the business of Frederick by the appellant, it notified Frederick that the contract was at an end, and declined to deliver any ice to the appellant. Until the day of the assignment the obligations of both original parties had been fully performed and discharged.

It may be stated as a general rule that a contract cannot be enforced by or against a person who is not a party to it, but there are circumstances under which either of the contracting parties may substitute another for himself in the rights and duties of the contract without obtaining the consent of the other party to the contract. The inquiry here is whether the facts bring the case within the scope of the general rule, and the answer must be found from a consideration in detail of the relation of the parties concerned, the subject matter of the contract, its terms, and the circumstances of its formation.

The basic facts upon which the question for solution depends must be sought in the effect of the attempted assignment of this executory bilateral contract on both the rights and the liabilities of the contracting parties, as every bilateral contract includes both rights and duties on each side while both sides remain executory. 1 Williston on Contracts, sec. 407. If the assignment of rights and the assignment of duties by Frederick are separated, they fall into these two divisions: (1) The rights of the assignor were (a) to take no ice, if the assignor used none in his business; but, if he did (b) to require the appellee to deliver, on the loading platform of the assignor, all the ice he might need in his business to the extent of two hundred and fifty tons a week; and (c) to buy any ice he might need in excess of the weekly two hundred and fifty tons from any other persons; and (2) the liabilities of the assignor were (a) to pay to the appellee on every Tuesday during the continuance of the contract the stipulated price for all ice purchased and weighed by the assignor during the week ending at midnight upon the next preceding Saturday, and (b) not, directly or indirectly, during the existence of this agreement, to buy or accept any ice  from any other person, firm or corporation than the said Terminal Freezing and Heating Company, except such amounts as might be in excess of the weekly limit of two hundred and fifty tons.

Whether the attempted assignment of these rights, or the attempted delegation of these duties, must fail because the rights or duties are of too personal a character is a question of construction to be resolved from the nature of the contract and the express or presumed intention of the parties. Williston on Contracts. sec. 431.

The contract was made by a corporation with an individual, William C. Frederick, an ice cream manufacturer, with whom the corporation had dealt for three years, before it executed a renewal contract for a second like period. The character, credit, and resources of Frederick had been tried and tested by the appellee before it renewed the contract. Not only had his ability to pay as agreed been established, but his fidelity to his obligation not to buy or accept any ice from any other source up to two hundred and fifty tons a week had been ascertained. In addition, the appellee had not asked in the beginning, nor on entering into the second period of the contract, for Frederick to undertake to buy a specific quantity of ice, or even to take any. Frederick simply engaged himself, during a definite term, to accept and pay for such quantities of ice as he might use in his business to the extent of two hundred and fifty tons a week. If he used no ice in his business, he was under no obligation to pay for a pound. In any week, the quantity could vary from zero to two hundred and fifty tons, and its weekly fluctuation, throughout the life of the contract, could irregularly range between these limits. The weekly payment might be nothing or as much as $812.50; and for every week a credit was extended to the eighth day from the beginning of every week's delivery. From the time of the beginning of every weekly delivery of the ice to the date of the payment therefor, the title to the ice was in the purchaser, and the seller had no security for its payment except in the integrity  and solvency of Frederick. The performances, therefore, were not concurrent, but the performance of the non-assigning party to the contract was to precede the payments by the assignor.

When it is also considered that the ice was to be supplied and paid for, according to its weight, on the loading platform of Frederick, at an unvarying price, without any reference either to the quantity used, or to the fluctuations in the cost of production, or to market changes in the selling price, throughout three years, the conclusion is inevitable that the inducement for the appellee to enter into the original contract and into the renewal lay outside the bare terms of the contract, but was implicit in them, and was the appellee's reliance upon its knowledge of an average quantity of ice consumed, and probably to be needed, in the usual course of Frederick's business, at all times throughout the year, and its confidence in the stability of his enterprise, in his competency in commercial affairs, in his probity, personal judgment, and in his continuing financial responsibility. The contract itself emphasized the personal equation by specifying that the ice was to be bought for "use in his business as an ice cream manufacturer" and was to be paid for according to its weight "on the loading platform of the said W.C. Frederick."

When Frederick went out of business as an ice cream manufacturer, and turned over his plant and everything constituting his business to the appellant, it was no longer his business, or his loading platform, or subject to his care, control or maintenance, but it was the business of a stranger, whose skill, competency and requirements of ice were altogether different from those of Frederick. The assignor had his single plant in Baltimore. The assignee, in its purchase, simply added another unit to its ice cream business, which it had been, and is now, carrying on "upon a large and extensive scale in the City of Philadelphia and State of Pennsylvania, as well as in the City of Baltimore and State of Maryland." The appellee knew that Frederick could not carry  on his business without ice wherewith to manufacture ice cream at his plant for his trade. It also was familiar with the quantities of ice he would require, from time to time, in his business at his plant in Baltimore; and it consequently could make its other commitments for ice with this knowledge as a basis.

The appellant, on the other hand, might wholly supply its increased trade, acquired in the purchase of Frederick's business, with its ice cream produced upon a large and extensive scale by its manufactory in Philadelphia, which would result in no ice being bought by the assignee of the appellee, and so the appellee would be deprived of the benefit of its contract by the introduction of a different personal relation or element, which was never contemplated by the original contracting parties. Again, should the price of ice be relatively high in Philadelphia in comparison with the stipulated price, the assignee could run its business in Baltimore and furnish its patrons, or a portion of them, in Philadelphia, with its product from the weekly maximum consumption of two hundred and fifty tons of ice throughout the year. There can be no denial that the uniform delivery of the maximum quantity of two hundred and fifty tons a week would be a consequence not within the normal scope of the contract, and would impose a greater liability on the appellee than was anticipated. 7 Halsbury's Laws of England, sec. 1015, p. 501.

Moreover, the contract here to supply ice was undefined except as indicated from time to time by the personal requirements of Frederick in his specified business. The quantities of ice to be supplied to Frederick to answer his weekly requirements must be very different from, and would not be the measure of, the quantities needed by his assignee, and, manifestly, to impose on the seller the obligation to obey the demands of the substituted assignee is to set up a new measure of ice to be supplied and so a new term in the agreement that the appellee never bound itself to perform. Up to two hundred and fifty tons of ice a week, Frederick  engaged not to buy or accept any ice from any other party than the appellee. After Frederick had sold away his business, this covenant could not bind the assignee of his business, and even if it continued to bind Frederick, his refraining from not buying ice elsewhere was not a contemplated consideration for selling ice to any one except Frederick himself. Kemp v. Baerselman (1906), 2 K.B. 604, 608, 609. It was argued that Frederick was entitled to the weekly maximum of two hundred and fifty tons, and that he might have expanded his business so as to require this weekly limit of ice, and that, therefore, the burdens of the contract might have been as onerous to the appellee, if Frederick had continued in business, as they could become under the purporting assignment by reason of the increased requirements of the larger business of the assignee. The unsoundness of this argument is that the law accords to every man freedom of choice in the party with whom he deals, and the terms of his dealing. He cannot be forced to do a thing which he did not agree to do because it is like and no more burdensome than something which he did contract to do.

Under all the circumstances of the case, it is clear that the rights and duties of the contract under consideration were of so personal a character that the rights of Frederick cannot be assigned nor his duties be delegated without defeating the intention of the parties to the original contract. When Frederick went out of the business of making ice cream he made it impossible for him to complete his performance of the contract, and his personal action and qualifications, upon which the appellee relied, were eliminated from a contract which presupposed their continuance. Frederick not only attempted an assignment, but his course is a repudiation of the obligations of the contract. He is not even alleged to be ready to pay for any ice which might be delivered after the date of the purporting assignment, but the allegations of the declaration simply aver that the assignee alone had undertaken to perform the further contractual obligations of the assignor. Frederick, however, cannot be heard to say that  he has not repudiated a contract, whose contemplated performance his own act has made it impossible for him to fulfill. Eastern Advertising Co. v. McGaw, 89 Md. 86, 88.

While a party to a contract may as a general rule assign all his beneficial rights, except where a personal relation is involved, his liability under the contract is not assignable inter vivos, because any one who is bound to any performance whatever or who owes money cannot by any act of his own, or by any act in agreement with any other person than his creditor or the one to whom his performance is due, cast off his own liability and substitute another's liability. If this were not true, obligors could free themselves of their obligations by the simple expedient of assigning them. A further ground for the rule is that not only is a party entitled to know to whom he must look for the satisfaction of his rights under the contract but, in the familiar words of Lord Denman in Humble v. Hunter, 12 Q.B. 317, "you have a right to the benefit you contemplate from the character, credit and substance of the person with whom you contract." For these reasons it has been uniformly held that a man cannot assign his liabilities under a contract but one who is bound so as to bear an unescapable liability may delegate the performance of his obligation to another, if the liability be of such a nature that its performance by another will be substantially the same thing as performance by the promisor himself. In such circumstances the performance of the third party is the act of the promisor, who remains liable under the contract and answerable in damages if the performance be not in strict fulfillment of the contract. British Waggon Co. v. Lea, 5 Q.B.D. 149; Robson Sharpe v. Drummond, 2 B. Ad. 303; Anson on Contracts, 218, 219 (4th Am. Ed.), pp. 377-380; 7 Halsbury's Laws of England, p. 495; Eastern Advertising Co. v. McGaw, 89 Md. 86-88; Tarr v. Veazey, 125 Md. 199; 1 Williston on Contracts,secs. 411, 412, 418, 421, 420, note 48, at pp. 784, 785; Arkansas Valley Smelting Co. v. Belden Mining Co., 127 U.S. 379; Edison v. Babka, 111 Mich. 235; Schultz v. Johnson, 5 B.  Mon. 497; Lansden v. McCarthy, 45 Mo. 106; Hardy etc. Co. v. South Bend Co., 129 Mo. 222; Paige v. Faure, 229 N.Y. 114.

However, the analysis of the facts on this appeal leaves no room for doubt that the case at bar falls into the category of those assignments where an attempt is made both to transfer the rights and to delegate the duties of the assignor under an executory bilateral contract, whose terms and the circumstances make plain that the personal qualification and action of the assignor, with respect to both his benefits and burdens under the contract, were essential inducements in the formation of the contract; and further that the assignment was a repudiation of any future liability of the assignor. The attempted assignment before us altered the conditions and obligations of the undertaking. The appellee would here be obliged not only to perform the subsequent stipulations of the contract for the benefit of a stranger and in conformity with his will, but also to accept the performance of the stranger in place of that of the assignor with whom it contracted, and upon whose personal integrity, capacity and management in the course of a particular business he must be assumed to have relied by reason of the very nature of the provisions of the contract and of the circumstances of the contracting parties. The nature and stipulations of the contract prevent it being implied that the non-assigning party had assented to such an assignment of rights and delegation of liabilities. The authorities are clear, on the facts at bar, that the appellant could not enforce the contract against the appellee.

The principle applicable here has been enforced by this Court in Eastern Advertising Company v. McGaw, 89 Md. 72, and in Tarr v. Veazey, 125 Md. 199. In the latter of these two cases the Court said: "The rule was thus stated in Delaware County v. Diebold Safe Co., 133 U.S. 488, and in Burck v. Taylor, 152 U.S. 651: `A contract to pay money may doubtless be assigned by the person to whom the money is payable, if there is nothing in the terms of the contract  which manifests the intention of the parties to it that it shall not be assignable. But when rights arising out of contract are coupled with obligations to be performed by the contractor, and involve such a relation of personal confidence that it must have been intended that the rights should be exercised, and the obligations performed by him alone, the contract, including both his rights and his obligations, cannot be assigned without the consent of the other party to the original contract.'" Kemp v. Baerselman (1906), 2 K.B. 604; Demarest v. Dunton Lumber Co., 161 Fed. 264; Paige v. Faure, 229 N.Y. 114, 127 N.E. 898, 899; Burck v. Taylor, 152 U.S. 651.

The authorities cited on appellant's brief have been examined, and they are not in conflict with the principles of law controlling this case, but rather serve to illustrate their application to other and different combinations of facts, which do not afford any ground for this Court to change its conclusion on the non-assignable character of the burdens and benefits arising from the stipulations and the nature of the contract in this appeal. The appellant stressed the case of Tolhurst v. Associated Portland Cement Manufacturers (1903), A.C. 414, as supporting its contention that the attempted assignment of the instant case involved no element of personal qualification or action. It may be said of this case, that it raised a great difference of opinion. It was decided one way by the King's Bench; and another way by the Court of Appeal, and there was a marked divergence of views in the House of Lords, which affirmed the Court of Appeal, with the Earl of Halsbury doubting, and Lord Robertson vigorously dissenting. (1901) 2 K.B. 811; (1902) 2 K.B. 660; (1903) A.C. 414.

The decision has never been accepted as wholly satisfactory and was not regarded as controlling in Kemp v. Baerselman (1906), 2 K.B. 604, where it was distinguished, and Lord Alverstone stated that the House of Lords had decided "in that particular case the contract for the supply of chalk for fifty years was to be treated as a contract for  the supply to a given cement-making place, and not a personal contract." p. 608.

Tolhurst was the owner of chalk quarries and made a contract with the Imperial Portland Cement Company, Limited, by which it was agreed that he would for fifty years supply to the company, and that the company should take and buy from him, at least seven hundred and fifty tons of chalk per week at a certain price, and so much more as the company should require for the whole of their manufacture of Portland cement upon their land near the quarries. The Imperial Company was formed for the purpose of establishing cement works on land obtained from Tolhurst, near the chalk quarries, which were to supply the chalk to be used in making the cement. Tolhurst had built a tramway to the boundary of the land of the Imperial Company, which was to continue the tramway on its own land to a convenient place in order to enable him to deliver chalk at the company's plant.

The Imperial Company sold out to a new and larger company, and went into voluntary liquidation, and its affairs had been fully wound up and all its assets had been distributed, when the assignee of its business and this contract brought an action against Tolhurst, claiming a declaration that the contract was binding upon Tolhurst, and that he must supply the chalk to the assignee in accordance with the contract.

It will be observed that the cement works and the chalk quarries were on parts of a tract of land that was originally owned by Tolhurst, and that the cement company was formed for the commercial exploitation of the chalk deposit. The location of the enterprise was obviously induced by the advantages of a continuous supply from the quarries, and so the contract was drawn that, on completion of the extension of the tramway on its land by the Imperial Company, "the said Alfred Tolhurst will, for a term of fifty years, to be computed from the 25th day of December, 1897, or for such shorter period (not being less than thirty-five years) as he shall be possessed of chalk available and suitable for the  manufacture of Portland cement, and capable of being quarried and got in the usual manner above water level, supply to the company, and the company will take and buy of the said Alfred Tolhurst at least seven hundred and fifty tons per week, and so much more, if any, as the company shall require for the whole of their manufacture of Portland cement upon their said land." The contract was, in substance, a sale of all the chalk in the quarries by weekly deliveries, less what might be sold by Tolhurst to others. As was said by Williston in his able work on contracts: "The case must be rested on a construction of the contract making the test of the amount of chalk to be furnished not the personal needs of the original promisee, but the capacity of that promisee's land, and the machinery thereon." Williston on Contracts, sec. 421, p. 786; Kemp v. Baerselman (1906), 2 K.B. 604, 608.

It is manifest that this case is to be distinguished from the one at bar, but, if not, this Court would not be prepared to follow the reasoning of the final decision, because the Imperial Company had renounced its obligations under the contract; had gone out of business, and had disposed of all its assets so as to be no longer able to pay the agreed price, and thereby the seller had lost the credit of the original contracting party, and the decision compelled Tolhurst to give credit to the assignee only. We take it to be sound doctrine that where one contracting party repudiates his obligations, the other party has the right of declining to be bound to a stranger by its terms. See Anson on Contracts (4th Am. Ed. by Corbin), note 2, pp. 378, 379; 1 Williston on Contracts, sec. 420; Hand v. Evans Marble Co., 88 Md. 226, 229, 230.

As it is the opinion of the Court that the judgment below was in accordance with the principles of law applicable to the facts admitted by the demurrer, the judgment will be affirmed without comment on the ability of an assignee of an executory contract for the sale of goods to bring an action in  his own name. See Code, art. 8, sec. 1; Banks v. McClellan, 24 Md. 62, 80; Hand v. Evans Marble Co.,88 Md. 226, 229, 230.

Judgment affirmed, with costs to the appellee.