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DUNCAN-LAGNESE AND ASSOCIATES v. STONEY CREEK VALLEY SEWER AUTHORITY (08/13/82)

filed: August 13, 1982.

DUNCAN-LAGNESE AND ASSOCIATES, INCORPORATED, A PENNSYLVANIA CORPORATION, APPELLANT,
v.
THE STONEY CREEK VALLEY SEWER AUTHORITY, BOROUGH OF INDIAN LAKE, THE BOROUGH OF SHANKSVILLE AND THE TOWNSHIP OF STONEY CREEK



NO. 566 Pittsburgh, 1981, Appeal from the Order of the Court of Common Pleas of Somerset County, Civil Division, No. 429 of 1979.

COUNSEL

William S. Smith, Pittsburgh, for appellant.

James Rill Cascio, Somerset, for Borough of Indian Lake, appellee.

Kim Richard Gibson, Somerset, for Borough of Shanksville, appellee.

William L. Kimmel, Somerset, for Tp. of Stoney Creek, appellee.

Hester, McEwen and Johnson, JJ.

Author: Mcewen

[ 303 Pa. Super. Page 238]

We here consider an appeal from an Order of the Common Pleas Court of Somerset County which sustained the preliminary objections of the Borough of Indian Lake, the Borough of Shanksville and the Township of Stoney Creek and dismissed the complaint as to those three municipal defendants.*fn1 We affirm.

The three municipalities formed the Stoney Creek Valley Sewer Authority (hereinafter Authority) so as to enable the municipalities to construct a sewage system and thereby comply with requirements of the Department of Environmental Resources acting pursuant to the Clean Streams Act. The plaintiff corporation entered into a contract with the Authority for the performance of certain engineering services in connection with the desired sewer system. The Authority negotiated a loan of $300,000 from the First National Bank of Somerset County so as to enable the Authority to provide for payment to plaintiff for its services. The Authority was able to secure the loan only after it had entered into an agreement with the three municipalities that the three municipalities would, in the event that the Authority was, on October 1, 1978, in default on the loan from the bank, purchase the final plans and specifications prepared for the Authority by the plaintiff.

The plaintiff acknowledges that there was no contract between the plaintiff and any of the three municipalities alleged in the complaint and here argues that the plaintiff was an intended third party beneficiary of the agreement between the Authority and the three municipalities that the three municipalities would purchase the plans and specifications from the Authority in the event of a default by the Authority upon the loan to the Authority from the bank.

[ 303 Pa. Super. Page 239]

The Pennsylvania Supreme Court in Spires v. Hanover Fire Insurance Company, 364 Pa. 52, 56-67, 70 A.2d 828, 830-31 (1950) expressed the still prevailing principle that the intention of the parties to a contract to create a third party beneficiary must be clearly expressed in the contract:

To be a third party beneficiary entitled to recover on a contract it is not enough that it be intended by one of the parties to the contract and the third person that the latter should be a beneficiary, but both parties to the contract must so intend and must indicate that intention in the contract; in other words, a promisor cannot be held liable to an alleged beneficiary of a contract unless the latter was within his contemplation at the time the contract was entered into and such liability was intentionally assumed by him in his ...


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