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UNITED STATES v. THOMAS B. BOURNE ASSOCS.

December 7, 1973

UNITED STATES of America
v.
THOMAS B. BOURNE ASSOCIATES and Henningson, Durham and Richardson, Inc.


Joseph S. Lord, III, Chief Judge.


The opinion of the court was delivered by: LORD, III

JOSEPH S. LORD, III, Chief Judge.

This is an action to recover damages in the amount of $128,000 which allegedly resulted from a breach of a contract between the plaintiff and the defendant Thomas B. Bourne Associates (hereinafter called "defendant"). Defendant has moved for partial summary judgment as to the claim for $128,000, arguing that plaintiff is entitled to nominal damages at most. We will grant the motion.

 On June 29, 1965, the plaintiff, through the Administration for International Development, granted to the Government of British Guiana the sum of $1,500,000 for the financing of improvements to Atkinson Airport in British Guiana. The Government of British Guiana became the independent Republic of Guyana on May 26, 1966 and will hereafter be referred to as "Guyana". On November 4, 1965 plaintiff entered into a contract with the defendant for the furnishing of engineering services to Guyana for on-site inspection of construction of improvements to Atkinson Airport owned by and located in Guyana. The compensation to defendant under that contract was to be made from the grant of $1,500,000. The damages claimed are alleged to have resulted from the defendant's breaches of that contract.

 It is clear that the agreement between the plaintiff and the defendant was one in which the plaintiff was the promisee in a contract under which Guyana was a third-party donee beneficiary. The ALI Restatement Contracts § 133 states:

 
"Where performance of a promise in a contract will benefit a person other than the promisee, that person is * * * (a) a donee beneficiary if it appears from the terms of the promise in view of the accompanying circumstances that the purpose of the promisee in obtaining the promise * * * is to make a gift to the beneficiary * * *."

 Here, the performance was for the benefit of Guyana, and since the services were paid for from a gift by plaintiff to Guyana, Guyana was a donee-beneficiary of the contract.

 It is well settled that the promisee of a donee-beneficiary contract having no pecuniary interest in its performance, and suffering no pecuniary damages for its breach, may recover only nominal damages.

 
"The party to the contract would have no action for its breach except for nominal damages since he was not the one who suffered by the promisor's fault." Isbrandtsen Co. v. Local 1291, etc., 204 F.2d 495, 497 (C.A. 3, 1953).

 See also ALI Restatement (Second) of Contracts § 136, comment a at 35 (Tent. Draft No. 3, 1967).

 In the present case, the services under the contract were to be rendered to and for the benefit of Guyana. If there was a breach of the contract, it was Guyana which suffered the damages and not the United States. See 2 Williston on Contracts § 357 (3rd ed. 1959). And in 5 Corbin on Contracts § 1088, p. 478 (1964), it is stated that a "* * * breach of a gift promise seldom causes any injury to the promisee, since the promised performance is to be a gift to a third party and will not benefit the promisee."

 The Government argues that the broad policy behind the grant by the Administration for International Development is to maintain the stability and freedom from Communism of underdeveloped nations and that therefore the United States does in fact have an interest in the performance of this contract. This may well be, but not only is this not a pecuniary interest, see Curtner v. United States, 149 U.S. 662, 671, 13 S. Ct. 985, 37 L. Ed. 890 (1893), but there is no allegation anywhere that this somewhat intangible and certainly unmeasurable interest has suffered in any way. It is perhaps conceivable, although we express no opinion on the matter, that if the United States could show that Guyana became unstable and the subject of Communist infiltration and if it was further shown that this unfortunate condition resulted from the failure of the defendant to perform its contract, there may be a violation of the promisee's interest. However, there is no contention presently that such is the case.

 The provisions of F.R. Civ. P. 17(a) do not affect the result we have reached. That Rule provides in pertinent part:

 
"(a) Real Party in Interest. Every action shall be prosecuted in the name of the real party in interest. * * *
 
[A] party with whom or in whose name a contract has been made for the benefit of another * * * may sue in his own name without joining with him the party for ...

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