### No. 14826 IN THE SUPREME COURT OF THE STATE OF MONTANA 1979

WILBUR H. 

### REINKE and OMA J. REINKE, Plaintiffs and Counter-Defendants,

VS. 

### FRANK MILLER BIEGEL and JOYCE E. BIEGEL, Defendants and Counter-Claimants and Appellants.

Appeal from: District Court of the Thirteenth Judicial District, Honorable Robert H. Wilson, Judge presiding. Counsel of Record: For Appellants: Hauf and Forsythe,Billings, Montana For Respondents: Mouat and Martinson, Billings, Montana

Submitted on briefs: October 30, 

### 1979 Decided: 

## DEC

## 2

# 71979

ClerkMr. Justice Gene B. Daly delivered the Opinion of the Court.

Frank 

### ~iller ~iegel and Joyce E. Biegel, the purchasers of two lots from Wilbur H. Reinke and Oma J. Reinke under a contract fordeed, bring this appeal from a finaljudgment of the DistrictCourt of the Thirteenth Judicial District, Yellowstone County, sittingwithout a jury. The judgment terminated a contract fordeed between the parties, declared



### a forfeiture of the down payment made by the purchasers, quieted 

### title infavor of the sellers, and 

### was entered upon

a finding that the purchasers 

### were indefault for failure to make timely payment under the contract. The DistrictCourt's judgment alsodenied the purchasers' counterclaim for damages

or injunctive relief based on the 

### sellers' alleged breach of the contract for deed by violation of a restrictive covenant and awarded reasonable attorney fees to the sellers. On February 15, 1974, Reinkes and Biegels entered into



### a contract fordeed whereby Biegels

### were topurchase from Reinkes Lots 15and 16 of Block 2 inthe Heyn Subdivision in Yellowstone County. Biegels paid $200 inearnestmoney under the contractwhich provided that

### a warranty deed for each lotbe placed inescrow and thatBiegels would obtain 

### a deed for each lotupon payment of $3100 plus 8 percent per

annum interest for each lotbefore the due date, December 31, 1975. The contract further provided thatdefault would be entered against the buyer after 30 days notice and that 

### timewas of the essence. Biegels paid in full for Lot 16 sometime inDecember 1975before the due date, obtained a deed to that lot, and completed construction of a home thereon inSeptember 1976.~einkes and Gertrude V. Heyn prepared, filed and duly recorded an amended declarationof restrictions with the subdivisionplatof the Heyn Subdivision on April 24, 1973. The restrictive covenants provided, among other things, that "no building shallbe located and erected nearer than 30 feet to the front lotline." The declaration of 

### restrictions further provided that 

### it was binding upon allheirs, assigns, devisees and parties claiming through them, and that failureby the present property owners toenforce the restrictions atthe 

### timeof any violation thereof would not be deemed 

### a waiver of thatright. Reinkes desired tobuild a house on Lot 

### 14, which they had not sold and which 

### was adjacent toLot 15, the property subject to thiscontract fordeed. They began building a house on Lot 

### 14on October 

### 1, 1974 and completed construc-- tion inthe earlypart of 1975. The house 

### was 

### set back approximately 20 feet from the front line, rather than 30 feet

### as required by the declarationof restrictions which Reinkes had prepared and filed. Reinkes did not attempt to amend this setback requirement by obtaining the signatures of 80 percent of the owners within the subdivision asprovided for inthe restrictive covenants. Instead, they sought and obtained 

### a variance of zoning restrictions from the City-County Planning Board of Yellowstone County on November 8, 1974, allowing them tobuild with a setback of only 20 feet from the frontproperty line. A notice of the variance 

### was posted on Lot 14on the 

### same date. ~einkes completed construction of the Lot 

### 14house inthe earlypart of 1975. Biegels failed topay the balance of the purchase price of Lot 15by the due date, December 31, 1975, and failed tocure the default within 30 days after receiving notice 

### as required under the contract for deed. 

### Notice of default

### was served on February 18, 1976. On April 

### 14, 1976, 25 days after the 

### timefor curing their default under the contract had expired, Biegels offered topay the $3100 contract price for Lot 15. This offer 

### was refused by the Reinkes, and Lot 15remained vacant and unimproved tothe 

### timeof trialwith Reinkes paying the property taxes. Reinkes commenced an action on August 24, 1977 toquiet 

### title and to terminate and forfeit the contract for deed because of Biegels' default. Biegels raised the affirmative defense of breach of contract and counterclaimed fordamages toLot 15 or for injunctive relief based on Reinkes' breach of the contract for deed, 

### i.e. the breach of the restrictive covenant running with the land, which rendered Reinkes unable toperform the contract for deed toconvey toBiegels the l o t i n the condition 

### it was represented tobe when the contract was entered into. The DistrictCourt made a conclusion of law that: "Defendants failed tomake timely payment under the Contract forDeed 

### as to Lot 15, Block 2, Heyn Subdivision, and 

### were indefault thereunder astoLot 15, Block 2 atthe 

### timeplaintiffs notified them inwriting of the default. Defendants failed and refused toremedy the defaultwithin the 

### timeprovided by the contract or 

### atall, and any rights they might have acquired by the contract became forfeited by reason of their failure

### to cure the default in

### a timely manner. " On March 13, 1979, the DistrictCourt entered judgment in favor of Reinkes and denied Biegels' counterclaim. The parties intheir briefs have failed to address the threshold issue involved in this appeal--that 

### is, where lots within 

### a legal subdivision 

### are sold pursuant to

### a contract

### for deed, does the sellers' breach of a 

### restrictive covenant, occurring prior tothe contracted due date and relating toa thirty foot setback requirement on sellers' adjacent lot,

excuse the buyer from his duty tomake payment by the due date so that his right torecover damages is

### not precluded by his failure tomake such payment? Because our answer to thatquestion 

### isinthe negative, 

### we must affirm the judgment of the District

### Court. Appellants contend that the recorded restrictive covenants were 

### incorporated into the contract for deed between the parties and that their contractwas made subject to those provisions so that a violation of the setback requirement by the sellerswas a breach of contract. While the contract for deed did not expressly refer to the declaration of restrictions applicable tothe Heyn Subdivision previously filed and recorded by the 

### sellers, it 

### didmake reference to the recorded plat of the Heyn Subdivision. Furthermore, the declaration of restrictions provided that: "The restrictions herein set forth shall run with the land and bind thepresent owners, their heirs, and assigns, and all

### parties claiming by, through or under them 

# . .

# ."

It 

### is

### unnecessary, however, to decide whether or not the restrictive covenants became a part of the contract for deed between the parties to this appeal. We

### reach thisconclusion because even if we assume that the restrictive covenants were incorporated into the contract for deed, the promises contained inthe restrictive covenants areindependent of the other promises inthe contract for deed. In particular, they are independent of the promise tomake payment by the due date. Therefore, Reinkes' breach of the thirty foot setback requirement on their lotadjacent to theone being sold, which occurred before the datepayment 

### was due under the contract, did not excuse Biegels' obligation tomake payment by the due date. Biegels could not stand on their contract fordeed and counterclaim for damages for breach of the restrictive covenant as a part of the contract for deed without fulfilling their obligation tomake payment by the due date. The rights created by restrictive covenants arecontractual rights. Sheridan v. Martinsen (1974), 164 Mont. 383, 523 P.2d 1392, 1395. Assuming that the restrictive covenants contained inthe recorded declaration of restrictions became incorporated into the contract for deed by reference, the governing rule 

### is stated inO'Conner v. Whitesitt (1948), 121Mont. 257, 193P.2d 365, 366: "Plaintiff's claim of right tohave a rescission of his contract because of defendant's removal of about $75worth of lumber and building materials from the premises for which plaintiff had contracted topay $5,800 cannot be sustained. This breach of agreement by the defendant went toonly a very 

### smallpart of the consideration and could easilybe compensated indamages. It cannot therefore constitute a ground for rescission of plaintiff's contract. "InJohnson v. 

### Meiers, Mont., 164 P.2d 1012, 1014, we quoted with approval the following from 12Am.Jur., 'Contracts,' section 440: 'It 

### isnot every breach of a contract or failure exactly toperform--certainly not every partial failure toperform--that entitled the other



## .. party torescind. A breach which goes

## to only a part of the 

### consi~eration,isncidental and - -- subordinate 

## ---- tommaino= of 

### -- the contract, and 

### maybe compensated indamages does not war- 

# rant -- 

### a rescission of 

### -- thecontract;

# *injured party

## is stillbound toperform 

### ---- his part of the agreement, and his on% remedy 

### -- for the breach consists of 

### -- the damages 

### -- he has suffered therefrom. A rescission is not warranted by a 

### mere breach of contract not so substantial and fundamental astodefeat the object of the parties in making the agreement. Before partial failure of performance of one party 

### willgive the other the right of rescission, the act failed tobe performed must go to the root of the contract orthe failure toperform the contract must be in respect of matters which would render the performance of the remainder a thing different in substance from thatwhich was contracted for.'" (Emphasis added.) For statements tothe same effect, see 17A C.J.S. Contracts S344 at334: "When a covenant goes only topart of the consideration on both sides and a breach may be compensated for indamages, and 

### it 

### isonly subordinate and incidental to themain purpose of the contract, it 

### is tobe regarded as an independent covenant unless this 

### is contrary to the expressed intentof the parties"; and 17A C.J.S. Contracts S453 at 571: "A party's failure toperform an independent stipulation of a contract does not bar his right torecover for the other party's breach or excuse such other party from performing the stipulations made by him." The same rule is stated in 17Am.Jur.2d Contracts 5355 at792: 

# ".

. 

# .where the contract 

### isexecutory on both sides, the obligation of one of the parties to perform frequently depends on whether the mutual promises aredependent or independent. If the promises are independent of each other, a party must perform hispart of the contract when the 

### time for performance has arrived, irrespective of whether the other party has performed his obligation. 

# .." See alsoNolan v. Lunsford (1940), 142 Fla. 671, 196 So. 193, 128A.L.R. 649, where the court considered 

### a similar issue--namely, whether or not performance by a vendor of his covenant tomake improvements was a necessary condition to his right to foreclose on the contract. In discussing the nature of dependent and independent covenants, the court stated: "An independent covenant 

### isone which goes only toa part of the consideration on both sides and a breach of which may be paid for indamages 

# . . .

### "Indetermining whether covenants are dependent or not, the intentionof the parties is sought for and regarded in the light of all the circumstances evidenced by the contract. The court will consider whether the acts contemplated by the covenants are subordinate and incidental or whether they go to the entire consideration. 

# .." Nolan, 196 So. at 197. Applying these principles to the present case, it is clear that the restrictive covenant relating to a 30 foot setback requirementwas incidental and subordinate to the main purpose of the contract for deed and that the sellers' breach went atmost to only a part of the consideration. The primary consideration in a contract for deed is the sellers' delivery of a deed in exchange for the buyers' payment of the purchase price. The sellers' breach of the restrictive covenantwas not so substantial and fundamental

as to defeat the object of the parties in making the contract for deed. Therefore, under the rule announced in O'Conner and the other authorities cited above, Biegels, the parties injured by the Reinkes' breach of the restrictive covenant, were still bound to perform their part of the agreement by tendering payment of the purchase price on or before the due date. Having failed to do so, they cannot

now stand on the contract and recover damages. The District Court properly declared a forfeiture and denied appellants' counterclaims. Because the issue discussed is dispositive of this case, it is unnecessary to consider the other issues raised by the parties, such as the effect of asking the City for zoning variance, etc. The judgment of the DistrictCourt being fully supported by the evidence is affirmed. 

### -', \./,?+



### -JusWe 

### concur: 

# ~d4,%44 Chief Justice

,#

# - /'
'I 

### Justices