Johnson v. Holmes Tuttle Lincoln-Mercury, Inc.
California Court of Appeal
325 P.2d 193 (1958)
Caldera bought a Mercury from Holmes Tuttle Lincoln-Mercury, Inc. (Holmes) (defendant), telling the salesperson he wanted "full coverage insurance" and being assured "you are getting it," but the resulting contract provided only fire, theft, comprehensive, and collision coverage - not public liability and property damage insurance. Weeks later, Caldera was in an accident injuring passengers Johnson and Jones (plaintiffs), who obtained unsatisfied judgments against Caldera and then sued Holmes directly, arguing Holmes's failure to provide the promised liability insurance made it liable for their damages; the trial court entered judgment for Johnson and Jones, and Holmes appealed.
Whether, when one person, for valuable consideration, contracts with another to do some act for the benefit of a third person, and the agreement has not been rescinded, the third party for whose benefit the contract was made may bring an action against the promisor for breach of contract.