said that "a man cannot, of his own will, pay another man's debt without his consent, and thereby convert himself into a creditor." 24

Where A contracts with B to furnish him services, although A may under some circumstances procure C to do the work, A may not confer upon C the right to require payment of B. Nor will the law impose an obligation upon B because of the acceptance of the services, where there was no intention on B's part to enter into legal relations with C.

Thus, A took ice from the B company. Disgusted with B's service, A took ice from the C company. Later, without notice to A, B bought out C, and continued to furnish A with ice. When A learned of .this fact he refused to pay for the ice. The court held that he need not pay, because B was making itself A's creditor without his consent.2

25

118. Same subject-Apparent exceptions.—Although one person may not, as a rule, by contract, impose liabilities on a third person, not a party, the doctrines of agency seem to violate this rule. The acts of an agent are done on behalf and usually in the name of his principal. But a contract by an agent binds the principal by force of a previous authority or subsequent ratification, which is really the assent of the principal to be bound. Wherefore, the contract which binds the principal is practically his contract. Thus, the liabilities are not imposed upon the principal.20

24 Durnford v. Messiter, 5 M. & S. 446 (Eng.); Borden v. Boardman, 157 Mass. 410, LEADING ILLUSTRATIVE CASES.

25 Boston Ice Co. v. Potter, 123 Mass. 28, LEADING ILLUSTRATIVE CASES. 26 See subject, AGENCY; see also subject, TRUSTS.

Similarly, where John Doe assigns his rights, in a contract with Richard Roe, to John Styles, the latter becomes, in a sense, a party to the contract. The rules of assignment will be considered in a later section.27

119. Duty of third parties.-While a contract may not impose the burdens of an obligation upon one who is not a party to it, yet a duty rests upon persons, who are not parties to the contract, not to interfere with its performance. Thus, an action in tort will lie against a third person who induces a party to the contract to break it.28 This is now the rule, regardless of malicious intention.20

In Lumley v. Gye,30 A induced a singer, B, to break his contract with C, the manager of an opera house. Csued A for maliciously procuring the breach of contract, and A was held liable. This rule has been generally followed, although some jurisdictions confine the action to contracts of master and servant.3

31

But where A induces B not to enter into a contract, there is no actionable wrong. This case is to be distinguished from the inducement to break a contract. But a conspiracy by more than one person to induce another not to make a contract may be actionable.32

120. Rights of a third person-English rule.—At early common law in England, although there is some dispute, it was said that if A and B made a contract

27 See § 125.

28 Anson, Contracts (Huffcut's 2d ed.), § 279; Walker v. Cronin, 107 Mass. 555, LEADING ILLUSTRATIVE CASES.

29 Quinn v. Leathem (1901), A. C. 495 (Eng.).

30 2 El. & Bl. 216 (Eng.).

31 Clark, Contracts (2d ed.), p. 350.

32 Vegelahn v. Gunter, 167 Mass. 92; 18 Harvard Law Review 423.

for the benefit of C, who was nearly related to the promisee, a right of action on such contract would vest in C. But later, any such doctrine was overruled by the case of Tweddle v. Atkinson,33 wherein the court held that no stranger to the consideration may take advantage of a contract, although made for his benefit. This is the English rule today, which holds that a third party, the beneficiary, has no right of action on such a contract, although executed for his benefit. This rule has been adopted by the Massachusetts courts, and a few other states.3

34

121. Same subject-New York rule. In New York, and most states, the courts have refused to recognize the doctrine that C, for whose benefit A and B have made a contract, may not sue the promisor. The leading case for this doctrine is Lawrence v. Fox.35 Therein, A loaned B a sum of money, in consideration of which B agreed to pay the same amount to C at a later date. C was a creditor of A. C sued B, and by a division of the court, four to seven, it was held that C might maintain the action. The broad rule was stated to be, that where a promise is "made to one for the benefit of another, he for whose benefit it is made may bring an action for its breach." In many cases, the rule has been repeated in these broad terms."

33 1 B. & S. 393 (Eng.).

36

34 Exchange Bank v. Rice, 107 Mass. 37; Wheeler v. Stewart, 94 Mich. 445, 54 N. W. 172. By statutes, a beneficiary of an insurance policy may sue. Wright v. Vermont Life Ins. Co., 164 Mass. 302.

35 20 N. Y. 268, LEADING ILLUSTRATIVE CASES. The modifying decisions are admirably annotated in 2 N. Y. Dig. 909.

36 Bassett v. Hughes, 43 Wis. 319; Wood v. Moriarty, 15 R. I. 518, 9 Atl. 427.

Various theories are advanced to support this departure from the common law. One is that the beneficiary should have the right to sue because he is the sole person who is injured when the contract is broken. Another is that it is a rule of convenience and procedure, because it keeps out nominal parties.37 This theory arises from provisions of code states, which state that the "real party in interest" may sue.38

122. Same subject-Limitations to the New York rule. By the weight of authority, there must be something more than a mere incidental benefit to the third person. The contract must have been entered into for his benefit, and he must have some legal or equitable interest in its performance.30 Thus, where A mortgages his land to C, then conveys that land to B, who in turn assumes the mortgage, C may sue B on the contract whereby B agreed with A to pay the mortgage to C.40 But suppose that X owns land, which he mortgages to A. X then conveys to Y, who does not assume the mortgage. Y conveys to Z, who assumes the mortgage. It is held in such a case that A cannot sue Z.11

41

In Davis v. Clinton Works,+2 the water works company agreed with the city for a certain compensation to supply water for public purposes. This included the extinguishment of fires. A, who was a resident of the city, had his house destroyed by fire because

37 Dean v. Walker, 107 Ill. 540.

38 9 Cyclopedia Law and Procedure, p. 380.

39 Durnherr v. Rau, 135 N. Y. 219.

40 Bay v. Williams, 112 Ill. 91.

41 Vrooman v. Turner, 69 N. Y. 280.

42 54 Ia. 59.

the water company failed to supply the water according to its contract. A sued the company to recover for his loss, claiming that he was the beneficiary of the contract. It was held that he could not recover, since the contract was not made for his benefit.

The apparent result, at least in New York, is that such agreements will be enforcible by a third person, only where the promisee was under a duty to provide for the third person and the contract is made to fulfill that duty.

43

123. Same subject-Release.-It is generally held that the promisee may release the promisor from his obligation, if it is done before the third party, who is the beneficiary, has accepted or acted upon the promise, but not afterwards. But if the promisor has a good defense against the promisee, it will be good against the third party. Thus, where A agrees with B to pay C, if A's promise was induced by the fraud of B, this may be proved in an action by C.

124. Same subject-Sealed contracts.-The rule of Lawrence v. Fox applies only to simple contracts. Where the contract is under seal, at common law the third party may not sue. But this rule has been modified by statutes, and decisions thereunder, which permit the beneficiary to sue on the sealed instrument.** Where the third party may sue on the sealed instrument, the question arises as to whether the defendant is limited to the defenses of an action of covenant, or may make use of those of assumpsit."

43 Kelly v. Roberts, 40 N. Y. 432,

44 Anson, Contracts (Huffeut's 2d ed.), §§ 284, 290; Webster v. Fleming, 178 Ill. 140, 52 N. E. 975.

45 See subject, PLEADING.