Opinion
February Term, 1897.
William L. Jones, for the appellants.
Henry B. Loveland, for the respondent.
The plaintiffs seek to maintain this action upon the theory that, although not parties to the bond upon which their action is founded, nor privy to its consideration, they may, nevertheless, avail themselves of the indemnity which it assumes to furnish to parties who supplied labor and materials used in the performance of a contract entered into by the principal obligor with the city of Buffalo.
The case of Lawrence v. Fox ( 20 N.Y. 268) and other kindred cases of a later date are cited by the learned counsel for the plaintiffs, and it is claimed that they furnish ample authority to support the proposition thus stated.
There are few reported cases which have been cited with more inaptitude than this oft-discussed and much-misconstrued case of Lawrence v. Fox, and whatever legal principle it may establish, it certainly is not, in our opinion, authority for the one here contended for, which is, in effect, that a third person, who is not a party to an obligation similar to the one in suit, may maintain an action thereon, in the absence of any liability due or to grow due upon such obligation, from the party to whom the promise was made. In the case of Townsend v. Rackham ( 143 N.Y. 516, 522) Judge PECKHAM, with his accustomed perspicuity and terseness, reviewed and analysed Lawrence v. Fox and other related cases; and in his opinion he takes occasion to say that in none of them is there an intimation of the doctrine sought to be applied to this case; but that, on the contrary, an action like the present one cannot ordinarily be maintained by a third party in the absence of some liability to him on the part of the promisee. (See, also, Carrier v. U.P. Co., 73 Hun, 287.)
It must, therefore, be regarded as the settled law of this case that before the plaintiffs can avail themselves of any indemnity which the bond in suit assumes to afford they must show (1) an intent upon the part of the promisee to secure to them such benefit; and (2) some privity between the two, the promisee and the party benefited, and some obligation or duty owing from the former to the latter, which would give them a legal or equitable claim to the benefit of the promise. ( Vrooman v. Turner, 69 N.Y. 280.)
So far as the question of intent is concerned there is ample evidence in the record to show that one of the objects which the city of Buffalo must have had in view in requiring the defendant MacGregor to execute the bond in suit, was to secure those who might render him service or furnish him materials with which to perform his contract, for the city was under no obligation to pay them, nor would it have suffered any loss or harm had resort been had to what is known as the "Municipal Lien Law" (Laws of 1878, chap. 315, § 1).
But, as has been shown, intent is but one of the elements which must be present in this case; and by itself it is not sufficient to establish a cause of action unless there exists also some privity of contract between the plaintiffs and the city. ( French v. Vix, 143 N.Y. 90.)
The rule to which reference has just been made as having been settled by the more recent decisions, is one which is very general in its application, but it is, nevertheless, one which is subject to legislative interference, provided the intent upon the part of the Legislature to interfere is made plain and explicit. An illustration of this right of interference with the common law respecting the very question under consideration, is furnished by some of the city charters of this State, and notably that of the city of Lockport, which in express language creates a right of action upon contractors' bonds in favor of laborers and materialmen, although they may not be parties thereto. And it was held by the late General Term of the fifth department, in a case arising under that charter, that an action like the one now under consideration may be maintained. ( Wilson v. Whitmore, 92 Hun, 466.)
We do not find, however, nor is it claimed, that any such provision has been incorporated into the Buffalo charter; but in lieu thereof, our attention is directed to an ordinance or resolution adopted by the common council of that city, which reads as follows: "That the common council will hereafter require any person entering into any contract with the city of Buffalo, which requires the employment of labor or the use of materials, to give, in addition to the usual bond for the faithful performance of the contract, a bond, with sufficient sureties, conditioned that the said contractor shall pay [for] all labor and materials used in the performance of said contract, and that all advertisements for proposals shall state that such a bond will be required."
This, it is insisted, is equivalent to an organic provision of the same import; and it becomes important, therefore, to determine whether or not this contention is well founded.
The city of Buffalo, being a municipal corporation, derives all its powers from the Legislature of the State, and "it is a general and undisputed proposition of law that a municipal corporation possesses and can exercise the following powers and no others: First, those granted in express words; second, those necessarily or fairly implied in or incident to the powers expressly granted; third, those essential to the declared objects and purposes of the corporation, not simply convenient, but indispensable. Any fair, reasonable doubt concerning the existence of power is resolved by the courts against the corporation, and the power is denied. Of every municipal corporation the charter or statute by which it is created is its organic act. Neither the corporation nor its officers can do any act or make any contract, or incur any liability not authorized thereby, or by some legislative act applicable thereto. (Dillon on Mun. Corp. [4th ed.] § 89. See, also, Village of Carthage v. Frederick, 122 N.Y. 268.)
In support of the principle enunciated in the foregoing citation, the learned author quotes the late Chief Justice SHAW, who, speaking of municipal and public corporations, says, they "can exercise no powers but those which are conferred upon them by the act by which they are constituted or such as are necessary to the exercise of their corporate powers, the performance of their corporate duties, and the accomplishment of the purposes of their association. This principle is fairly derived from the nature of corporations, and the mode in which they are organized, and in which their affairs must be conducted." ( Spaulding v. Lowell, 23 Pick. 71, 74.)
One of the powers which may fairly be regarded as incidental to those which are expressly granted undoubtedly is that of adopting suitable and proper ordinances for the regulation and operation of the municipality. These ordinances, however, must be reasonable and lawful, and they can neither enlarge, diminish nor vary the powers of the charter from which municipal existence is derived. (Dillon on Mun. Corp. § 317.)
This last proposition is one which is almost self-evident, for if the municipality can create, extend and define its powers by mere resolution, what need is there in any organic law? But the plaintiffs, if their attitude toward this feature of the case is correctly apprehended, claim that the city of Buffalo was duly authorized to enact this particular ordinance, and in support of that claim cite section 9 of title 3 of its charter as it stood at the time the ordinance in question was enacted, which read as follows: "The common council shall * * * have power * * * to make such ordinances and regulations as are not inconsistent with the laws of the State, and which they shall deem expedient for the good government of the city * * * and the benefit of trade and commerce, * * * and such other ordinances and regulations as may be necessary to carry into effect the power given to said council by this act, and for these purposes are hereby particularly authorized to enact ordinances."
This provision, as we view it, confers no additional power upon the governing council of the municipality, for it simply permits the adoption of such ordinances and regulations as are not inconsistent with the laws of the State, and such as are necessary to carry into effect the powers given by the charter, which is nothing more than the grant of a right or privilege incidental to the charter itself, and one which may be exercised within proper limitations without any express authority. (Dillon on Mun. Corp. § 315.)
The difficulty with the ordinance relied upon by the plaintiffs is that it is, in its terms, inconsistent with the law of the State, as we understand and have endeavored to state it, in so far as it has any relation to a bond given in pursuance of statutory authority, and, therefore, to give to it the force necessary, in order to sustain the plaintiff's contention, we must assume that it was the intention of the Legislature to authorize this municipality to adopt ordinances which should be superior to the common law of the State upon the particular subject we have been considering, and such an assumption cannot be indulged in without doing violence to well-established canons of construction. (Dillon on Mun. Corp. §§ 317, 319, and cases cited in notes.)
But there is another obstacle to the plaintiff's recovery in this action which, to our mind, is fraught with quite as much difficulty as the one already stated. The liability of the defendants, other than the principal obligor, was that of sureties upon a bond which contained this condition, viz.: "If the above-bounden John MacGregor, heirs * * * shall well and truly pay, * * * and shall pay when the same shall become due, the price of all materials provided or used in the performance of said work pursuant to the provisions of a resolution * * * then this obligation shall cease, otherwise be and remain in full force and virtue."
From this it will be seen that the limit of the sureties' undertaking was that their principal should pay the price of all materials purchased by him when "the same shall become due." Now, it appears by evidence which is uncontroverted that the materials supplied by the plaintiffs were all furnished prior to June 10, 1891. One of the plaintiffs testified that the account for such materials became due and payable on that day, and that payment could properly have been demanded therefor at any time thereafter. It further appears that the plaintiffs had other claims against MacGregor which, with the one in question, amounted in the aggregate to $1,273.23, and that on the 26th of September, 1891, they took MacGregor's note for this sum "in payment" for the amount owing by him. This note matured in three months, with interest, and it was renewed from time to time until it was separated into two notes to cover some additional indebtedness, and these notes were not only negotiable, but they were actually negotiated for the accommodation of the plaintiffs.
Inasmuch as the plaintiffs say their account was due on the 10th day of June, 1891, and in their complaint demand interest from May 15, 1891, the giving of these notes must, we think, be regarded as an extension of time to the principal debtor, notwithstanding the claim which is now urged, that they were given in pursuance of an agreement to carry him along until he could realize from the city on his contract.
It follows, therefore, that if such was their effect, they operated to release the sureties from whatever obligation they were under by reason of having joined in the execution of the bond, they not having assented to such extension. ( Gahn v. Niemcewicz, 11 Wend. 312; Dunham v. Countryman, 66 Barb. 268; Shipman v. Kelley, 9 App. Div. 316; McNulty v. Hurd, 18 Hun, 1; Powers v. Silberstein, 108 N.Y. 169.)
We have examined the several exceptions to the admission of evidence which are noted upon the brief of the defendant's counsel without finding any which appear to present reversible error. We conclude, therefore, that the judgment appealed from should be affirmed.
FOLLETT and GREEN, JJ., concurred; HARDIN, P.J., concurred in result; WARD, J., not voting.
Judgment affirmed, with costs.