H. R. Moch Co. v. Rensselaer Water Co.

Supreme Court of New York, Appellate Division, Third Department · Torts

127 Misc. 545 (1926)

Updated July 19, 2026

TortsThird-party beneficiaryPublic contractsWater company liabilityNegligenceBreach of contractpublic contractmunicipal water supply

Facts

The defendant contracted with the city of Rensselaer to supply water for inhabitants and for public uses, including extinguishing fires, and to maintain fire hydrants in proper working order. The plaintiff owned a warehouse in Rensselaer that burned after a nearby fire spread to it on December 13, 1922, while the contract was in effect. The complaint alleged that, after notice of the fire, the defendant failed to supply sufficient water and adequate pressure, although its agreed and available capacity was sufficient to prevent the fire from reaching and destroying the warehouse. The complaint further alleged that the city fire department was not negligent and that the loss resulted from the defendant's failure to perform.

Issue

May a property owner and taxpayer maintain an action against a private water company for fire loss caused by the company's failure to furnish adequate water and pressure under its contract with the city? More specifically, does such a plaintiff have rights as a beneficiary of a public contract notwithstanding the absence of direct contractual privity?

Rule

Under New York law, a third party may sue on a public contract when the municipality seeks by covenants in the contract to protect its inhabitants for their benefit. Applying the test described in Rigney, the action is maintainable where the contract shows an intent by the municipality to secure a benefit to the plaintiff's class and where there is some obligation or duty owing from the municipality to the landowner or inhabitant giving a legal or equitable claim to the contract's benefit.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

The city of Albany entered a contract with Pine Valley Water Services, a private corporation, requiring it to maintain city hydrants, keep them in working order, and provide sufficient water pressure for firefighting in exchange for annual hydrant-rental payments from the city. After firefighters responded to a blaze next to Lena Ortiz’s print shop, the company received notice of the fire but failed to deliver pressure that its system was capable of supplying, and the fire spread to destroy the shop.

If Lena sues the water company, what is the strongest argument that her complaint states a cause of action under the governing rule?

Explanation. The majority held that an inhabitant or landowner may maintain an action where the municipality’s contract with a private water company contains covenants showing an intent to protect inhabitants through fire protection, and the plaintiff falls within that protected class. Direct privity is not required in this public-contract setting. (Derived from H. R. Moch Co. v. Rensselaer Water Co. (n.d.).)