McWhirter Material Handling Co. v. Georgia Paper Stock Co.

164 S.E.2d 852, 118 Ga. App. 582, 1968 Ga. App. LEXIS 1465

• Court: Court of Appeals of Georgia
• Decided: October 1, 1968
• Docket: 43607
• Status: Published

Opinions

Pannell, Judge.

This is an appeal by two of the defendants in the lower court, McWhirter Material Handling Company, Inc. and Travelers Insurance Company, its surety, based on an order of the trial court on January 22, 1968, overruling their motions to dismiss for failure to state a claim and for judgment on the pleadings, and reserving any ruling on motions to strike various allegations of the plaintiff, Georgia Paper Stock Company, Inc. A third defendant, DeKalb County, is a nominal appellee. The action is based on the alleged breach of two contracts, one between the plaintiff and the county to supply the plaintiff with waste paper corrugated boxes picked up in garbage and trash collections, and another subsequent contract between the county and McWhirter for handling garbage and trash collections in certain areas of the county. DeKalb County’s contract with Georgia Paper Stock Company, Inc., so far as here material, is one whereby “the county . . . agrees to deliver all the waste paper cardboard corrugated boxes collected by the trucks of the sanitation department, and if possible those boxes collected by its independent contractors or agents, to the plant of the” plaintiff, for which the county was to receive certain compensation. The county contracted with McWhirter Material Handling Company, Inc., for the collecting of garbage, etc., in a certain area of the county, and the contract required that the McWhirter Material Handling Company give a performance bond. This performance bond was furnished by the Travelers Indemnity Company in which the county was named as owner and which bond expressly provided as follows: “No right of action shall accrue on this bond to or for the use of any person or corporation other than the owner named herein or the heirs, executors, administrators or successors of the owner.” The contract between the county and the McWhirter Material Handling Company recited: “Contractor is required as a condition precedent to the execution of the contract to furnish bond guarantee for performance and payment on the commercial type form. The amount of the penal sum of such bonds shall be in penal sums of $25,000 each. “The bond furnished by the contractor shall meet the requirements of and be acceptable to the county. The surety company shall be licensed to do business in Georgia and must be acceptable to the county.” Held:

1. While a promisee in a contract may maintain an action on it although a stranger to the consideration (Code § 20-306), as well as a third person for whose benefit it is made (Code § 3-108, as amended by the Act of 1949, Ga. L. 1949, p. 455, adding a sentence to that section as follows: “The beneficiary of a contract made between other parties for his benefit may maintain an action against the promisor on said contract”), the subcontract here and the contract of the surety do not name or refer to the plaintiff as a promisee, nor is the plaintiff a contractual beneficiary thereof. While the contract between DeKalb County and McWhirter Material Handling Company, Inc., contained the following provision: “DeKalb County and Georgia Paper Stock Company have entered into a contract whereby Georgia Paper Stock Company has agreed to buy all cardboard picked up by the county trucks or their agents. The successful low bidder [McWhirter Material Handling Company, Inc.] shall arrange with the Chief of the Sanitation Division to place containers at designated spots and to deliver such material at the designated place. All monies realized from this venture shall be divided 60% for the county and 40% for the contractor,” such provision does not constitute a contract between the McWhirter Material Handling Company, Inc., and Georgia Paper Stock Company, Inc., so as to make the Georgia Paper Stock Company, Inc., a promisee, nor is it a contract for the benefit of Georgia Paper Stock Company, Inc. That the plaintiff may benefit by the performance of the subcontract does not make it a “beneficiary of a contract” (the subcontract) as contemplated under Code § 3-108 as amended, as the benefits provided did not originate on that contract but originated on the contract between the plaintiff and the county. There was no intent either express or implied that this additional language to the statute makes a subcontractor liable as if he were the original contractor.

If this be not a proper construction of the law then a secondary contractor, who agrees with the primary obligor to perform the obligation to the primary obligee may be sued by the primary obligee because of his default in performing the latter contract. This would mean that any employee or agent of the primary obligor, engaged in performing the latter contract could be sued for a breach of contract, not upon the primary contract based upon theory of assumption thereof, but upon breach of the latter contract occasioned by the employee’s or agent’s default in performing the latter undertaking. This, we conceive, is not the intent of the law.

Argued May 8, 1968 Decided October 1, 1968 Rehearing denied October 31, 1968 Shoob, McLain & Jessee, C. James Jessee, Jr., Thomas A. Rice, for appellants. Samuel L. Eplan, James A. Mackay, George P. Dillard, Herbert O. Edwards, for appellees.

Since the pleadings with the exhibits attached thereto show affirmatively that no claim exists in behalf of the plaintiff against the McWhirter Material Handling Company, it is our opinion that the trial court erred in refusing to grant a judgment on the pleadings in this respect.

2. Since the principal, the McWhirter Material Handling Company, is not liable, neither is its surety. Accordingly, the trial court erred in refusing to dismiss the claim against this defendant.

Judgment reversed.

Bell, P. J., Eberhardt, Quillian and Whitman, JJ., concur. Felton, C. J., Jordan, P. J., Hall and Deen, JJ., dissent.