Rensselaer Water Co. was under contract to the City of
Rensselaer to provide water and pressure for fire hydrants. Moch's
building caught fire. The fire department arrived, but there wasn't enough
water available to put out the fire.
Moch sued Rensselaer for damages resulting from the fire.
Moch argued three things:
Breach of contract.
Common Law tort of negligence.
Breach of Statutory duty.
Rensselaer made a motion to dismiss the complaint. The
Trial Court rejected the dismissal. Rensselaer appealed.
The Appellate Court reversed and dismissed the case. Moch
appealed.
The New York Supreme Court affirmed the dismissal.
The breach of contract claim was not maintainable.
The city is under no obligation to provide protection
from fire.
Rensselaer Water was not under contract with any of the
inhabitants of the city.
The New York Supreme Court held that the only persons
that could sue for a contract action are people who are privity to the
contract. Since the contract was between the city and the water
company, Moch had no standing to sue for breach of contract.
Perhaps Moch could have argued he was a third party
beneficiary under contract law.
To hold the company liable for all possible damages would
be too great an assumption of risk.
Strictly speaking, all Rensselaer Water could possibly
owe on a breach of contract claim is the value of the water they failed
to provide.
The tort claim was not maintainable.
The Court felt that this was a case of nonfeasance,
not misfeasance. Rensselaer Water was under no obligation to
provide water to Moch. Therefore they had no duty to care, and
could not be held negligent.
If Moch and Rensselaer Water had entered into a
contract together, then there would be a duty to care.
Rensselaer argued that they didn't start the fire, and
were under no duty to put the fire out. They argued that this was
similar to a rescue case, where people are not under an obligation to
attempt a rescue.
Does the existence of the contract give Rensselaer an
affirmative duty to care? The Court didn't think so.
Did the citizens detrimentally rely on
Rensselaer to supply water? If they had known that there was no water
they would have possibly bought fire extinguishers. Does that matter?
Rensselaer could have argued that the possible fire
damages were essentially unlimited. Therefore, it would be a
discouragement to water companies to take on a contract with potential
unlimited liability.
Either that, or they'd have to pass on huge insurance
costs onto the customers.
The breach of Statutory duty was also not maintainable.
