H.R. Moch Co. v. Rensselaer Water Co.
247 N.Y. 160, 159 N.E. 896 (1928)

  • 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 New York Supreme Court found that Moch couldn’t sue for breach of contract.
      • The city is under no obligation to provide protection from fire, so there was no contract between Moch and the city that was breached.
      • Rensselaer Water was not under contract with any of the inhabitants of the city, so no contract between Moch and Rensselaer Water was breached..
      • The Court found 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?
      • The Court found that 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 Court found that Moch couldn’t sue for a tort.
      • The Court found 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 Court found that there was no breach of any Statutory duty.