of its covenants. The persons who furnished labor or material to Nick J. Gaspard, it is true, were indirectly interested in the performance of the covenants in the bond, but, if they can maintain an action against the sureties, then an executory contract, under the terms of which one person agrees with another to advance money to the latter with which to pay his debts, could be enforced by any creditor of the person to whom the promise is made. No one would contend for such a doctrine.

In the case of Vrooman v. Turner, 69 N. Y. 280, 25 Am. St. Rep. 195, in which case the court reviews a number of New York cases bearing upon the rule being considered here, it was held that a mere stranger cannot claim the benefit of a contract between other parties; to entitle a third person to such benefit there must be either a new consideration or some prior right or claim against one of the contracting parties by which he has a legal interest in the performance of the agreement. In the case at bar, plaintiff, at the time of the execution of the bond, so far as the record discloses, had no right or claim against either of the parties to the bond.

had been required to pay these claims or had suffered loss on account of their nonpayment. And, again, it does not appear that there was any liability on the part of the owner to pay any claim for material and labor furnished by plaintiff, or that any liability might arise against it in favor of plaintiff. The bond was conditioned not only for the payment of claims for material and labor, but also for the completion of the work comprehended in the contract between the owner of the building and Nick J. Gaspard. So far as the petition discloses, the owner of the building may have paid to Nick J. Gaspard, prior to the time the contracts between him and plaintiff were entered into, all that was due him under it (the owner's contract), and, in that event, plaintiff would have no claim against the building or its owner. It is true that, under the lien laws of this state, plaintiff could have asserted a claim to any funds in the hands of the owner due and owing to Nick J. Gaspard, and it might occur to one that the presumption is that plaintiff, with knowledge of the existence of the bond, proceeded upon the theory that it was amply protected thereby and that it was unnecessary to avail itself of the provisions of the lien law. But it must be borne in mind that Counsel for plaintiff have cited numerous this is an action against personal sureties cases outside of Ohio, which, they insist, supon a bond, and there should be a strict inter-port their contention here. In a number of pretation of their obligations. Their liability these cases the contracts or bonds under is limited to the exact letter of the bond, and which third persons were claiming are difpresumptions cannot be indulged in to aid ferent in form and language from the one plaintiff in enforcing a liability against them. here. In other cases the facts disclosed by Recognizing, as we do, the right of a third the record are unlike those presented here. person to enforce, in his own name, an agree- In some it appears that the condition in the ment made by one person with another to pay bond was inserted for the sole and express money to such third person, nevertheless this purpose of protecting all persons who should rule is subject to the limitations and qualifi- do work or furnish material, and that such cations we have pointed out, making it in-persons did the work and furnished the maapplicable to the case at bar. We are not disposed to extend the doctrine so as to permit the maintenance of an action by a third person against sureties on a bond, where it does not appear that the bond was entered into directly or primarily for the benefit of such third person, or that there was a fixed or ascertainable liability on the part of the obligee to such third person at the time the bond was executed, or that the services and material were furnished by such third person with knowledge of or reliance on the bond. It does not appear from the petition here and we are confined to its allegations in passing upon the demurrer-that plaintiff even had knowledge of the existence of the bond when it furnished the labor and material to Nick J. Gaspard, or that it relied thereon. Such matters cannot be read into the petition where the rights of sureties are involved.

terial relying upon the provisions of the bond. Cases are cited in which a bond is given to a municipality under a statute for the benefit or security of persons not named as obligees, and where the statute expressly or by implication authorizes such persons to sue upon the bond. These cases are not in point here, and it is unnecessary to make further reference to them.

Our attention is directed to the case of American Surety Co. v. Raeder, Assignee, 15 Ohio Cir. Ct. R. 47, affirmed by this court, without opinion, 61 Ohio St. 661, 57 N. E. 1130. In that case, the bond was given by the contractor to the board of education for the building of a schoolhouse, and provided for the payment of all just and legal claims for labor performed and material furnished, and it was expressly provided in the bond that the undertaking should be for the use of any laborer or materialman having a just To repeat, the bond was for the protection claim, as well as for the board of education. of the owner of the building. To entitle In that case the main question was whether plaintiff to sue on this bond, it is not suffi- the bond could be enforced in behalf of the cient that there be a showing that a benefit laborers and materialmen. Counsel for the

given solely for the protection of the board | I set forth in some detail my reasons for of education, and inasmuch as the board was this dissent. under no legal obligation to pay a claim against the contractor for labor and material furnished, and was in no way indebted to the plaintiff in that case, no cause of action arose on the bond in his favor. The circuit court held that it was quite clear, from an examination of the language of the bond, that the parties intended to give a right of action on the bond for unpaid claims of the class of the plaintiff against the contractor. The absence in the bond here of a provision such as appeared in the bond in that case distinguishes the two cases.

WANAMAKER, J. I dissent from the now the prevailing doctrine in the United judgment and syllabus of this case. Due respect for the majority opinion as well as for the importance of this case requires that

in the name of the real party in interest.” Cyc. 377 et seq.

9

"By the weight of authority the action cannot be maintained merely because the third person will be incidentally benefited by performance of the contract; but he must be a party to the consideration, or the contract must have been entered into for his benefit, and he must have some legal or equitable interest in its performance. If the person for whose benefit a contract is made has either a legal or equitable interest in the performance of the contract, he need not necessarily be privy to the consideration." 9 Cyc. 380.

Some of the states, New York for instance, have adhered very closely to the old English rule and have relaxed it only to a very limited degree, while the central and western states' decisions, as well as our federal decisions, have repudiated the English doctrine almost entirely.

The majority opinion cites with approval the Ohio cases of Crumbaugh v. Kugler, 3 Ohio St. 544, Thompson, Adm'x, v. Thompson, 4 Ohio St. 333, Bagaley & Co. v. Waters, 7 Ohio St. 359, as announcing the doctrine that a third party can sue only where there is an existing indebtedness. It must be conceded on all hands that that is not the law to-day in respect to bonds. Bonds generally relate entirely to the future and in no wise to the past. They are given expressly to guarantee the faithful performance of future personal duties, trust duties, and official duties, to provide against future defaults and defalcations. And if this be sound doctrine-that an existing indebtedness had to be the basic predicate of the right of a third party to sue -then all such contracts in futuro would be mere nullities, so far as third parties are concerned. Now there is no more reason in principle why there should be an existing indebtedness to support an action by a third party than in case of the first or second party to a contract. Raeder Case, supra.

In line with these old cases is also the case of Emmitt v. Brophy, 42 Ohio St. 82, in which again the existing indebtedness is emphasized as an essential qualification of the bond. This last case is cited with approval in the case of C., H. & D. Railroad Co. v. Bank, 54 Ohio St. 60, 42 N. E. 700, 31 L. R. A. 653, 56 Am. St. Rep. 700. Great emphasis is laid upon this last case by the majority, and Judge Spear's opinion is specially commended. The syllabus in that case reads as follows:

positor in his own favor but issued in favor of third parties, so long as the bank has the funds with which to pay. This agrees with the progressive business spirit of the times. Certainly the owner, holder, or payee of the check is the real party in interest, and I cannot believe that such a decision would receive the sanction of this court in the year 1914. Who is the "real party in interest" if not the payee of the check? Judge Spear, in that opinion, uses this language:

"Nowhere is it held that the obligation will attach in favor of future creditors not named and not known, and as to amounts not specified or then ascertainable, to the extent of giving to such creditors a right of action on the con

tract."

And yet this very court in affirming the Raeder Case, supra, four years later, repudiated the foregoing doctrine that third parties not named could bring suit and for an amount not then ascertainable.

Now it must be conceded that the intention of the parties to be determined from what they have said and done shall be the polestar in interpreting all written instruments, whether simple contracts, checks, bonds, and even statutes and constitutions. The majority opinion is strangely silent on the question of what was the intention of the parties to the bond.

The intention in the Raeder Case, supra, is manifest from the express terms of the contract, and that, too, without the aid of the last three lines of that bond. Is the intention of the parties not equally manifest from the terms of the bond in the case at bar? The part of the bond pertinent to this inquiry is as follows:

"The condition of this obligation is such that whereas the said N. J. Gaspard on the 17th day of Aug., A. D. 1909, entered into a written agreement with the said F. Zimmerman Realty Co., whereby he contracted to provide all the materials and perform all the work for the erection and completion of the carpenter work, wooden framing, frames, sash, doors, finish, flooring, roofing, sheet metal work, marble and mosaic, mantel and tile work, glass and glazing, rough and finished hardware for a three-story northeast corner of E. 86th street and Birchbrick apartment building to be erected on the dale avenue, Cleveland, O., and to furnish all tools, implements and cartage thereto as shown by drawings and specifications by architect, G. B. Bohm, and whereas said contract further provided as follows: As a condition of this contract to furnish the owner a satisfactory surety bond as agreed in the sum of six thou"An action cannot be maintained against a pletion of the work comprehended in this agreesand dollars ($6,000.00), to guarantee the combank by the holder of a check for refusal toment, and to further guarantee the payment of pay it unless the check has been accepted, although there stands to the credit of the draw er on the books of the bank a sum more than sufficient to meet the check."

This syllabus is absolutely without any relevancy to the case at bar, and I further contend and maintain that it is not sound doctrine as applied to existing commercial transactions with a modern-day bank, in which all checking accounts are expressly made subject to the payment of all checks

any claims there may be for the payment of material and labor required in the erection of this building'; and whereas, in lieu of a surety bond, it is agreed between the said parties that said N. J. Gaspard may furnish a bond signed by individuals: Now, therefore, if the said N. J. Gaspard shall well and truly perform all the terms and conditions contained in said contract and complete said work as therein provided and pay or cause to be paid all claims contracted in reference thereto for material and labor, then the above obligation to be void; otherwise the same shall remain in full force

Now it is admitted that a bond shall be "(1) To guarantee the completion of the work construed strictly, but that strict construc- comprehended in this agreement; and (2) to tion must likewise be a just and reasonable there may be for the payment of material and further guarantee the payment of any claims construction, and must accord with the inten-labor required in the erection of this building." tion of the parties. It is not limited to the letter of the bond as therein written, but to justify the judgment, contains this lanNow, the syllabus of this case, which seeks what is necessarily implied in the bond is as much a part of it as what is expressly written in the bond.

In the second paragraph of the bond quoted above, suppose we add a parenthesis so that the italicized part will read as follows: "And to further guarantee the payment of any claims there may be for the payment of material and labor required in the erection of this building (to whomsoever shall furnish such material and labor in accordance with the contract)"

-and the same parenthesis in the last paragraph of the bond quoted:

"To pay or cause to be paid all claims contracted in reference thereto for material and labor (to whomsoever shall furnish such material or labor in accordance with the contract)."

Why are these parenthetical parts not as much a part of the bond as if they were written in the bond? All parties must have so understood it, because it is so obviously and necessarily implied. If now they are a part of this bond, how, then, is this case distinguishable in principle from the Raeder Case, supra, which has been recognized as the law by this court?

Indeed, in order in any wise to justify the construction placed upon this bond by the majority of this court, something additional

needs to be read into the bond, else this language of the bond means nothing, accomplishes nothing, obligates nobody.

The language that must of necessity be

read into this bond is substantially this parenthesis:

"And to further guarantee the payment of any claims there may be for the payment of material and labor required in the erection of this building (provided the owner of the building has been compelled to make previous payment, or the materialmen and laboring men have filed mechanics' liens upon the building, for which the building would be liable)."

So that it turns out that the majority opinion does not adhere to the strict letter of the bond but reads into it something that limits and qualifies the language used, so as to destroy the protection evidently to be furnished to the subcontractors, materialmen and laboring men in the erection of the building.

Returning again to the particular bond in this case, it will be noticed that the bond itself expressly mentions "sheet metal work." What for? Was it not intended thereby to specially guarantee under this bond the payment of all sheet metal work? And who furnished the sheet metal work, the owner of the building or the plaintiff subcontractor? Manifestly the payment must be made to the party who furnished the work and material. Again, the language of the bond in the second paragraph is:

guage:

"That the bond

is for the protec

tion of the owner of the building, and an action on the bond against the sureties thereon cannot be maintained by a company [subcontractor] for the payment of claims against the contractor," etc.

Of course I admit that it is for the protection of the owner of the building, but I deny that it is exclusively for his protection. The language just quoted following (1) shows that it was to guarantee the completion of the contract, and (2) to guarantee the payment of claims for material and labor required in the erection of this building. What I claim is that, while this is for the protection of the owner primarily, it is also for the subcontractors secondarily, who have to do protection of all laborers, materialmen, and with "erection of this building." The course of reasoning following in the opinion justifies, yes demands, the reading of the word "exclusively" after the word "is," so that the syllabus would read "is exclusively for the protection of the owner of the building." Let us analyze this language of the bond from another angle:

not to the owner certainly, for on comple"And to further guarantee the payment” tion of the contract the owner was to pay and not to be paid.

"Of any claims"-claims of whom? Not

the owner, because he had not any, but the laborers, subcontractors, and materialmen. Again, note the broad, comprehensive scope of the words "any claim," which would include, of course, accounts, notes, liens, etc.

"There may be for the payment of material and labor"-past or future, which; and for "material and labor"-who furnished it, the owner or third parties?

"Required in the erection of this building" this is as broad in scope as words can be.

After assembling these separate italicized phrases and clauses beginning these several paragraphs, ask yourself the question: If it was not intended to include the claims of subcontractors, laborers, and materialmen, pray what was all this language used for anyhow?

The construction of the majority utterly disregards and destroys all these words that appear in two separate paragraphs of the bond in substantially the same style of speech. The old elementary rule of construction that the court shall give effect, if possible, to all parts of the contract is clearly and radically violated.

Now every owner of a building in contemplation of erection feels at least a moral obligation to have all laborers, materialmen, and subcontractors fully paid. He does not

take any pleasure in having some one pass his building and say:

"I put $1,000 worth of labor or $1,000 worth of material into that building and it never was paid for."

By the same doctrine, a thing which is clearly implied in the contract must be as much a part of the contract as if it were within the letter or words of the contract, all of which I hold justifies reading into the bond the parenthetical words heretofore referred to.

"The obligation is 'to make full payments to all persons supplying it with labor or materials in the prosecution of the work provided for in said contract.' light of the statute, looks to the protection of This language, read in the those who supply the labor or materials provided for in the contract, and not to the parlabor or materials were supplied. If the conticular contract or engagement under which tractor sees fit to let the work to a subcontractor, who employs labor and buys materials which are used to carry out and fulfill the engagement of the original contract to construct a public building, he is thereby supplied with the materials and labor for the fulfillment of his engagement as effectually as he would have

been had he directly hired the labor or bought

the materials."

Men in this age are trying to get away from the old, narrow, selfish idea of every man for himself, and, upon the contrary, the individual does feel that he is, in some sense, "his brother's keeper." It was the most natural thing for the owner of this building to undertake to provide by a proper bond that all claims "for material and labor required in the erection of this building" should he paid for under the bond. The policy of our federal laws in this respect has been ably discussed and determined in Hill v. American Surety Co., 200 U. S. 197, 26 Sup. Ct. 168, 50 L. Ed. 437, decided January 2, 1906. The syllabus reads as follows: "The act of August 13, 1894, c. 280, 28 Stat., 278 [U. S. Comp. St. 1901, p. 2523], was passed, as the title declares, for the protection of While there is a statute governing this persons furnishing materials and labor for the matter in national public work, it is equally construction of public works, and nothing in the statute, or in the bond therein authorized, the policy in the several states, not merely limits the right of recovery to those furnishing as to public work but as to private work, material or labor to the contractor directly; and specially where bonds are executed for but all persons supplying the contractor with the faithful performance of such work. labor or materials in the prosecution of the work are to be protected. The rule which permits a surety to stand upon his strict legal rights does not prevent a construction of the bond with a view to determining the fair scope and meaning of the contract. Such statutes are to be liberally interpreted and not to be literally construed so as to defeat the purpose of the Legislature. Under the circumstances of this case, a materialman, who had complied with the provisions of the statutes as to filing notice, was entitled to recover from the surety company on a bond given under the statute, although the materials were furnished to a subcontractor and not directly to the contractor." Judge Day in his opinion uses this lan

guage:

"The courts of this country have generally given to statutes intending to secure to those furnishing labor and supplies for the construction of buildings a liberal interpretation, with a view of effecting their purpose to require payment to those who have contributed by their labor or material to the erection of buildings to be owned and enjoyed by those who profit by the contribution of such labor or materials. * And the rule which permits a surety to stand upon his strict legal rights, when applicable, does not prevent a construction of the bond with a view to determining the fair scope and meaning of the contract in the light of the language used and the circumstances surrounding the parties."

*

If there should be a liberal construction of a statute to effect its purpose, why should there not be at least a fair and reasonable construction of a contract or of a bond with a view of effecting its purpose?

Judge Day goes on in the following lan

guage:

"Statutes are not to be so literally construed as to defeat the purpose of the Legislature. A thing which is within the intention of the makers of the statute is as much within the statute as if it were within the letter.'"

A more recent case by the Supreme Court of the United States, in which the same judge, Judge Day, rendered the opinion, was decided December 1, 1913, under the title of United States Fidelity & Guaranty Co. v. United States, for the Benefit of Bartlett, 231 U. S. 237, 34 Sup. Ct. 88, 58 L. Ed. 200. This was a suit on a bond which included this provision, i. e., that the contractor or contractors would "promptly make payments to all persons supplying him or them labor and materials in the prosecution of the work provided for in such contract." In the contract it was provided that the contractor should be held responsible for and pay all liabilities incurred in the prosecution of the work for labor and material. The contractor, Donavin, executed the bond. There was no existing indebtedness, and Bartlett's name was not mentioned in the bond. The lower courts held with Bartlett. The Supreme Court affirmed their judgment.

The New York decisions, of course, support the doctrine announced and defended in the majority opinion, but Iowa, Nebraska, Michigan, Minnesota, and some other central and western states, together with the federal decisions, strongly support the doctrine here contended for. And why should we virtually overrule the Raeder Case? There is now no occasion for any backward step. Between the strict technical interpretation of the eighteenth century that severely followed the letter that killeth, and the liberal, progressive interpretation of the twentieth century that follow the spirit and maketh alive, giving wages to labor and payment to subcontrac tors and materialmen, I prefer the latter.