159 N.E. 896, 897 (N.Y. 1928)
The defendant Rensselaer Water Co. made a contract with the city of Rensselaer for the supply of water during a term of years.1 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 at the rate of $42.50 a year for each hydrant.2 Water was also to be furnished to private takers within the city at their homes and factories at reasonable rates not exceeding a stated schedule.3
A building caught fire while this contract was in force.4 The flames spread to the plaintiff H. R. Moch Co.'s warehouse nearby and destroyed it and its contents.5 The defendant was promptly notified of the fire.6 However, it omitted and neglected after such notice to supply or furnish a sufficient or adequate quantity of water with adequate pressure to stay, suppress or extinguish the fire before it reached the warehouse.7 The pressure and supply which the defendant was equipped to supply and furnish, and had agreed by the contract to supply and furnish, was adequate and sufficient to prevent the spread of the fire to and the destruction of the plaintiff's warehouse and its contents.8
By reason of the failure of the defendant to fulfill the provisions of the contract between it and the city of Rensselaer, the plaintiff suffered damage and demanded judgment.9 A motion in the nature of a demurrer to dismiss the complaint was denied at Special Term.10 The Appellate Division reversed by a divided court.11
Whether the plaintiff may maintain an action for breach of contract against the water company as a third-party beneficiary of the city's contract?12
A member of the public may enforce a contract between a city and a water company only when the contract manifests a clear intention that the promisor shall be answerable directly to individual inhabitants rather than solely to the city in its corporate capacity.13 The benefit conferred must be primary and immediate, not merely incidental or secondary to the municipality's own interests.14 When a contract divides its promises into separate branches, one serving the city as an entity and another serving private takers, the hydrant service falls within the corporate branch and creates no enforceable duty to third parties.15
No. The contract between the defendant and the city of Rensselaer placed hydrant service in the branch benefiting the city in its corporate capacity rather than the branch benefiting private takers.16 No language in the contract indicates that the defendant assumed a duty to compensate individual property owners for fire losses.17 The benefit to the plaintiff from adequate hydrant pressure is therefore incidental.18 The crushing liability that would follow from recognizing a duty to every inhabitant confirms that no such intention existed.19
The plaintiff may not maintain an action for breach of contract as a third-party beneficiary.20
Whether the plaintiff may maintain a cause of action for common-law tort against the water company based on its performance of the contract with the city?
One who assumes to act, even gratuitously, may become subject to a duty of care.21 However, the duty arises only when the actor has advanced to a point where inaction would actively work an injury rather than merely withhold a benefit.22 A negligent omission in the performance of a contract does not create tort liability to an indefinite class of potential beneficiaries unless the actor has launched a force of harm or entered a relation carrying an independent duty of care.23
No. Although the defendant entered upon performance of its contract with the city of Rensselaer, the only omission alleged is the failure to furnish adequate pressure at the hydrants after notice of the fire.24 That failure constitutes at most the denial of a benefit to the plaintiff rather than the commission of an affirmative wrong.25 The relation created by the contract does not extend a duty of care to every property owner who might be saved from fire.26 Recognizing such a duty would hook the defendant into an involuntary series of new relations with an indefinite number of potential beneficiaries.27
The facts show no malicious intent or reckless indifference that might alter the analysis.28
The plaintiff may not maintain a cause of action for common-law tort.29
Whether the plaintiff may maintain an action against the water company for breach of a statutory duty under the Transportation Corporations Law?
A public service corporation subject to the Transportation Corporations Law owes its statutory duty to furnish water at reasonable rates to the specific inhabitant or municipality that demands service at the time and place the service is due.30 Breach of that duty gives a cause of action only to the person denied service, not to a third party who suffers indirect or incidental damage from the denial.31
No. The defendant is subject to the Transportation Corporations Law and must furnish water through hydrants upon demand by the city according to its capacity.32 The breach alleged is the failure to supply adequate pressure at the hydrants during the fire, which caused incidental damage to the plaintiff's warehouse.33 The statute does not enlarge the zone of liability to encompass such indirect harm.34 A railroad's duty to accept merchandise does not make it liable to a third party counting on timely delivery.35
The facts establish no direct denial of service to the plaintiff at its own premises.36
The plaintiff may not maintain an action for breach of statutory duty.37