On the other hand, in The Cabo Villano,20 recovery was had for market value, although the bill of lading specified invoice value, because the court construed the particular clause there as an attempt to exonerate the carrier from liability, and also because the clause was ambiguous. It does not appear that any choice of rates was offered.

In Lawrence Leather Co. v. Compagnie Generale etc.,21 no value was declared, just as in the principal case, but liability was to depend on invoice value and the question was the measure of damages. Recovery was had for market value at destination, because, it was held that even had the shipper declared a value, no choice of rates at all was offered. The court says, ". . . authorities indicate that limitation of liability . . . will be sustained. . . in cases in which the limitation actually22 has been the basis of the reduced rate."

In United States Shipping Board etc. v. Rosenburg Bros.23 the court followed and cited with approval the case of St. Johns N. F. Ship Corporation v. Companhia etc.24 In that decision, allowing recovery at destination value, though the invoice value was specified in the bill of lading as the measure of recovery, the court decided that the carrier was not entitled to the benefit of the relieving clause where the contract was breached. The court in the Kilthau case followed that decision.

The court in the Kilthau case also relied upon Union Pacific R. R. v. Burke.25 There, no choice of rates at all was offered, and by the terms of the bill of lading, liability was not to exceed $100 per package. The consignee sued for the invoice value, and it was at that value that the damages were fixed. On its facts the case differs substantially from the principal case. However the Supreme Court said, “Valuation agreements have been sustained on principals of estoppel26 and . . . where a choice of rates have been given." And again, “This valuation rule where choice is given and accepted. . . is an exception to the common law rule of liability27. . . and the latter rule remains in full effect as to all cases not falling within the scope of such exception."

at place of shipment was invalid under the 1st Cummins Amendment, because not a valuation as a rate base, but a limitation of liability. Therefore, it would seem that if these I. C. C. decisions were authority before, they are certainly not at this time. It should be noted that the regulations of the Interstate Commerce Commission do not apply to the principal case as the carrier is an all water carrier. In Jakeway v. Lehigh Valley R. R., 277 Pa. 236, 241, 120 Atl. 820 (1923), Schaffer, J. said: "A statement in a bill of lading that the amount of any loss shall be computed as the value of the property at the place and time of shipment, is invalid where the loss has been occasioned by the negligence of the carrier."

2014 Fed. (2d) 978 (E. D. N. Y. 1926).

2112 Fed. (2d) 83 (S. D. N. Y. 1926).

22 Italics are the writer's.

2312 Fed. (2d) 721, 723 (C. C. A., 9th Cir. 1926).

24263 U. S. 119, 44 Sup. Ct. 30 (1923).

25 Supra note 10.

26 Supra note 9, H. W. Biklé, "Agreed Valuation as Affecting the Liability of Common Carriers in Negligence," at page 37.

27 Supra note 4.

Is there a distinction, as was contended in the Kilthau case, between a limitation to an arbitrary sum, where the limitation has no relation to the actual value, and limitation to invoice value which seems to be the actual value at time of shipment? It would seem, at least, that the latter is less arbitrary and so less objectionable.

Under the bill of lading in the principal case, however, there was no opportunity for the shipper to contract for destination value.28 His goods were of a value of less than $100 per package (he declared no value) and for such packages he was arbitrarily limited by his bill of lading to invoice value. The case would seem to hinge on the question whether, considering that commerce is carried on for profit, the carrier may stipulate legitimately to relieve himself, when negligent, from payment of increase in value which normally would have resulted from transportation, without offering a consideration. By common law, and on principle, it would seem that the shipper is entitled to the benefit of the increased valuation which he would have had were it not for the negligence of the carrier, providing he has not given up that right, for a valuable consideration.

It may be insisted that a limitation to invoice value has no tendency to induce want of care, as the carrier is still liable for what is generally full value at place of shipment.29 It may also be true that invoice value, as a limit of liability, renders adjustment of damages easy30 and tends to check litigation, and also that multiplication of rates may lead to inconveniences.

On the whole, however, since at common law the shipper has a right to the value at destination, it would seem that this should only be taken away by statute or by a valid contract based on a consideration, and that the result in the principal case is correct.

Burt Franklin.

Contracts: Liability of a water company to a private individual on its contract with a municipality.-The liability of a water company to individual citizens for its failure to furnish sufficient water for fire protection in accordance with the terms of a contract with the municipality, is involved in the case of H. R. Mach. Co. v. Rensselaer Water Co., 217 N. Y. Supp. 426 (1926). In this case the water company made a contract with the city of Rensselaer whereby it agreed to supply the city with water for the extinguishing of fires and for domestic purposes. A building near the warehouse of the plaintiff company caught fire and the flames extended to and destroyed the plaintiff's warehouse. The defendant failed in its contractual obligation to supply water of sufficient pressure to stay the fire. The court held that the contract between the water company and the

28 See WYMAN, PUBLIC SERVICE CORPORATIONS, (1911) §1005, ...it would seem that a fair option of shipping the goods at the higher rate upon common law liability must have been afforded the shipper."

29The Hadji, supra note 5.

30 Supra note 29.

city was made for the benefit of the individual inhabitants and thus the plaintiff might maintain this action.

The weight of authority in American jurisdictions1 is contrary to the instant case. The earliest American case on this general question is Nickerson v. Bridgeport Hydraulic Co.2 The Connecticut court here decided that the lack of privity of contract between the parties was fatal. Park, C. J., speaking for the court said, "The most that can be said is that the defendants were under obligation to the city to supply the hydrants with water *** We think it is clear that there was no contract relation between the defendants and the plaintiffs, and consequently no duty which can be the basis of a legal claim.' Following this decision, the courts, in the great majority of jurisdictions where the question arose, decided these cases in accord with the ruling of the Connecticut case.

The contrary view holding the water company liable, is generally based upon the theory that the action will lie ex delicto although it will not lie ex contractu. Thus Brewer, J., in Guardian Trust and Deposit Co. v. Fisher, contends that although it is true that no one citizen is a party to the contract and, therefore, has no contractual right to recover for the failure of the company to act, yet once the water company assumes the duty it is liable for a negligent breach of that duty. The action thus is one in tort. In North Carolina' the courts hold that the officials who execute the contract are technically the agents of the people and thus the individual citizen really is the principal of the contract and can sue thereon. The problem involved in these cases may be considered from three legal aspects, namely (1) The right of third party beneficiaries to sue.

(2) Forseeable injury resulting from a negligent breach of duty. (3) Liability based upon the public service duty owed by a public service company to the person served.

'German Alliance Ins. Co. v. Home Water Supply Co., 226 U. S. 220, 33 Sup. Ct. 32 (1912); Boston Safe-Deposit Co. v. Salem Water Co., 94 Fed. 238 (Cir. Ct. Ohio 1899); Lovejoy v. Bessemer Water Co., 146 Ala. 374, 41 So. 76 (1906); Nickerson v. Bridgeport Hydraulic Co., 46 Conn. 24 (1878); Fowler v. Athens City Water-Works Co., 83 Ga. 219, 9 S. É. 673 (1889); Davis v. Clinton Water Works Co., 54 Ia. 59, 6 N. W. 126 (1880); Fitch v. Seymour Water Co., 139 Ind. 214, 37 N. E. 982 (1894); Mott v. Water Co., 48 Kan. 12, 28 Pac. 989 (1892); Howsmon v. Trenton Water Co., 119 Mo. 304, 24 S. W. 784 (1893); Wilkinson v. Water Co., 78 Miss. 389, 28 So. 877 (1900); Eaton v. Fairbury Water Works, 37 Neb. 546, 56 N. W. 201 (1893); Ferris v. Carson Water Co., 16 Nev. 44 (1881); Blunk v. Dennison Water Co., 71 Ohio St. 250, 73 N. E. 210 (1905); Beck v. Kittanning Water Co., 11 Atl. 300 (Sup. Ct. Pa. 1887); Ancrum v. Camden Water Co., 82 S. C. 284, 64 S. E. 151 (1908); Foster v. Lookout Water Co., 3 Lea 42 (Tenn. 1879).

Supra note 1.

Ibid p. 29-30.

Supra note 1.

"Guardian Trust & Deposit Co. v. Greensboro Water Supply Co., 115 Fed. 184 (Cir. Ct. N. C. 1902); Mugge v. Tampa Water Works Co., 52 Fla. 371, 42 So. 81 (1906); Graves County Water Co. v. Ligon, 112 Ky. 775, 66 S. W. 725 (1902); Gorrell v. Greensboro Water Supply Co., 124 N. Č. 328, 32 S. E. 720 (1899); Fisher v. Greensboro Water Supply Co., 128 N. C. 375, 38 S. E. 912 (1901). 6200 U. S. 57, 26 Sup. Ct. 186 (1906).

"Gorrell v. Greensboro Water Supply Co., supra note 5.

I. It is well established that in actions based on contract there must be privity between the parties. But there are certain generally accepted exceptions to this rule. In Vrooman v. Turner, a leading New York case, the court states the general rules as to when a third party beneficiary may sue:

(a)

Where there is an intent by the promisee to secure some benefit to the third party.

(b) Where there is some privity between the parties, the promisee and the party to be benefited, and some obligation or duty owing from the former to the latter which would give him a legal or equitable claim to the benefit of the promise, or an equivalent from him. personally.

The courts which hold that the water company is not liable, 10 maintain that the first essential laid down by Vrooman v. Turner" permitting a third party beneficiary to sue, is lacking. They insist that the contract is made with the municipality and in no proper sense could it have been meant for any one individual citizen's benefit. The benefit to the citizen is incidental to the primary purpose of the contract. As stated by the Supreme Court of South Carolina,12 a contract entered into by a city is presumed to be for the benefit of the city, as a municipality. Its purpose is to promote the prosperity of the city. This is done by lessening the risk of destruction of property by fire, lowering insurance rates and increasing the general security of the community. These are the inducements to the city for entering into the contract. Thus, since the contract does not purport specifically to protect the individual, he cannot maintain an action based thereon.

In jurisdictions which limit the rights of a third party beneficiary to the rules of Vrooman v. Turner, the position taken by those courts is tenable. The individual citizen does not come within the generally accepted limits of the rules and, thus, the action based upon that theory should be denied.

In New York within recent years13 the Court of Appeals has seemed desirous of broadening the rules of Vrooman v. Turner as to the right of a third party beneficiary to sue. The present accepted doctrine in this state is stated in Seaver v. Ransom.14 The court in that case classifies the case in which a third party beneficiary is permitted to sue. The catagories are:

(1) Those cases where there is a pecuniary obligation running from the promisee to the beneficiary.

(2) Where the contract is made for the benefit of the wife, affianced wife, or child of a party to the contract.

Phalen v. United States Trust Co., 186 N. Y. 178, 186, 78 N. E. 943 (1906). 969 N. Y. 280 (1877).

10Wainright v. Queens County Water Co., 78 Hun (N. Y.) 147, 28 N. Y. Supp. 987 (1894); Wilkinson v. Water Co. of Jackson, supra note 1; House v. Houston Water Co., 88 Tex. 233, 31 S. W. 179 (1895).

"Supra note 9.

12 Ancrum v. Camden Water Co., supra note 1 at p. 295.

13(1918) 4 CORNELL LAW QUARTERLY 53.

14224 N. Y. 233, 237, 120 Ñ. E. 639 (1918).

(3) Public contract cases.

(4) Cases, where at the request of a party to the contract, the promise runs directly to the beneficiary, although he does not furnish the consideration.

The facts of the instant case place it in the third group, namely— public contract cases. But in Wainright v. Queens County Water Co.,15 the court had this problem before it and on facts similar to those of the instant case held that the water company was not liable. "Privity of contract" said the court "is an essential element to an action founded on a breach of contract, and whether the action be in form on contract or for a wrong, it can only be maintained by a party to the contract." Again in 1903 in Smith v. The Great South Bay Water Co.16 the court held that "the contract between the defendant and the town of Islip was not made for the benefit of the plaintiff's assignor, within the meaning of the rule invoked by the plaintiff in this action. But in 1906 in Pond v. New Rochelle Water Co.,17 where the defendant's assignor contracted with the village of Pelham to supply private consumers and corporations in the village with water at specified rates, the court held that this contract was for the benefit of private individuals and, accordingly, the plaintiff could enjoin the defendant from raising the rate beyond that established by the contract. Although the facts of this case are not identical with those of the instant case, yet the same legal problem is involved. Thus it would seem that this case decided in 1906, and the inference drawn from Seaver v. Ransom18 decided in 1918, show a decided policy by the courts of New York favoring the broadening of the doctrine of Vrooman v. Turner.

II.-Liability in tort is, of course, always based upon a breach of duty. The duty19 may arise from a contract or by virtue of the parties being in such relationship that the defendant can reasonably forsee that the events may culminate in injury to the plaintiff. Thus, in these water company cases, the plaintiff must prove a breach of duty20 in order to establish a cause of action in tort. The water company by contract undertakes to supply water of sufficient pressure to stay a fire. It is true that if the water company failed to commence the performance of the contract, it would be liable to the city only for the breach of its contractual obligation. There would be no tort action for this nonfeasance. But if the water company commences performance under the contract and acts so negligently as to injure a private individual, that person should have an action in tort for this malfeasance. The water company in making such a contract should reasonably anticipate that supplying water of sufficient pressure is essential, and thus forsee that its negligence may result in injury to private property. Cardozo, J., in Mac Pherson v. Buick Motor Co.,21

15 Supra note 10.

1682 App. Div. 427, 81 N. Y. Supp. 812 (2nd Dept. 1903).

17183 N. Y. 330, 76 N. E. 211 (1906).