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Hamilton and Spiegel Inc. v. Board of Education of Montgomery County

Decided: December 16, 1963.

HAMILTON AND SPIEGEL, INC.
v.
BOARD OF EDUCATION OF MONTGOMERY COUNTY



Appeal from the Circuit Court for Montgomery County; Shook, J.

Brune, C. J., and Hammond, Prescott, Horney and Sybert, JJ. Hammond, J., delivered the opinion of the Court.

Hammond

Technical Engineers and Contractors, Inc. (Technical) agreed by a written contract to build a school for the Board of Education of Montgomery County (the Board). The United States Fidelity and Guaranty Company (the Bonding Company) became surety on the payment bond required by Code (1963 Cum. Supp.), Art. 90, Sec. 11. Appellant, Hamilton and Spiegel, Inc. (Hamilton), a roofing and sheet metal contractor, supplied material and labor for the school building at the request of the prime contractor.

To recover a claimed unpaid balance of $3,501.82, Hamilton brought suit against Technical, the Bonding Company and the Board. The counts of the declaration claiming against Technical and the Bonding Company are not before us in this appeal except as far as the allegations of fact therein are incorporated in the claim against the Board, which is said to be liable for two reasons: first, Hamilton says it is a creditor beneficiary under the contract between Technical and the Board and second, the Board became unjustly enriched at Hamilton's expense by availing itself of Hamilton's labor and materials "without paying full and reasonable value of the goods and services rendered."

The Board demurred to the declaration against it on the grounds that no cause of action was stated and the contract under which the balance due was claimed was one between Technical and the Board only, so that there was no privity between the claimant and the Board. Judge Shook sustained the demurrer without leave to amend and the appeal followed.

This Court has recognized the right of a third party beneficiary to avail himself of the benefits intended for him by a contract to which he is not a party, and has adopted the definitions of such beneficiaries set out in Restatement, Contracts, Sec. 133. Mackubin v. Curtiss-Wright Corp., 190 Md. 52, 56-57; Marlboro Shirt Co. v. Am. Dis. Tel. Co., 196 Md. 565, 569-570.

Sec. 133 says that where performance of a promise will benefit a person other than the promisee that person is a donee beneficiary "if it appears from the terms of the promise in view of the accompanying circumstances that the purpose of the promisee * * * is to make a gift to the beneficiary or to confer upon him a right against the promisor to some performance neither due nor supposed or asserted to be due from the promisee to the beneficiary," and that person is a creditor beneficiary "if no purpose to make a gift appears * * * and performance of the promise will satisfy an actual or supposed or asserted duty of the promisee to the beneficiary * * *."

Appellant makes no claim to being a donee beneficiary. It argues it is a creditor beneficiary in that the performance (to the extent of $3,501.82, the amount Hamilton claims it is due) of the Board's promise to pay will benefit it and satisfy a duty of the Board to it.

In determining whether one is a creditor beneficiary (as is true in the case of a donee beneficiary) the intention of the contract, revealed by its terms, in the light of the surrounding circumstances is the controlling determinative.

It is not enough that the contract may operate to the benefit of the one claiming to be a beneficiary. "[I]t must be shown that the contract was intended for his benefit; and, in order for a third party beneficiary to recover for a breach of contract it must clearly appear that the parties intended to recognize him as the primary party in interest and as privy to the

promise. An incidental beneficiary acquires by virtue of the promise no right against the promisor or the promisee." Marlboro Shirt Co. v. Am. Dis. Tel. Co., supra (p. 569 of 196 Md.). Mackubin v. Curtiss-Wright Corp., supra (p. 58 of 190 Md.), put it thus: "In order to recover it is essential that the beneficiary shall be the real promisee; i. e., that the promise be made to ...


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