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 7 1979 

Clerk 
Mr. 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 for deed, bring this appeal from a final judgment 

of the District Court of the Thirteenth Judicial District, 

Yellowstone County, sitting without a jury. The judgment 

terminated a contract for deed between the parties, declared 

a forfeiture of the down payment made by the purchasers, 

quieted title in favor of the sellers, and was entered upon 

a finding that the purchasers were in default for failure to 

make timely payment under the contract. The District Court's 

judgment also denied 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 for deed whereby Biegels were to purchase from 

Reinkes Lots 15 and 16 of Block 2 in the Heyn Subdivision in 

Yellowstone County. Biegels paid $200 in earnest money 

under the contract which provided that a warranty deed for 

each lot be placed in escrow and that Biegels would obtain a 

deed for each lot upon payment of $3100 plus 8 percent per 

annum interest for each lot before the due date, December 

31, 1975. The contract further provided that default would 

be entered against the buyer after 30 days notice and that 

time was of the essence. Biegels paid in full for Lot 16 

sometime in December 1975 before the due date, obtained a 

deed to that lot, and completed construction of a home 

thereon in September 1976. 
~einkes and Gertrude V. Heyn prepared, filed and duly 

recorded an amended declaration of restrictions with the 

subdivision plat of the Heyn Subdivision on April 24, 1973. 

The restrictive covenants provided, among other things, that 

"no building shall be located and erected nearer than 30 

feet to the front lot line." The declaration of restrictions further provided that it was binding upon all heirs, 

assigns, devisees and parties claiming through them, and 

that failure by the present property owners to enforce the 

restrictions at the time of any violation thereof would not 

be deemed a waiver of that right. 

Reinkes desired to build a house on Lot 14, which they 

had not sold and which was adjacent to Lot 15, the property 

subject to this contract for deed. They began building a 

house on Lot 14 on October 1, 1974 and completed construc-- 

tion in the early part of 1975. The house was set back 

approximately 20 feet from the front line, rather than 30 

feet as required by the declaration of 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 as provided for in the 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 to build with a setback of 

only 20 feet from the front property line. A notice of the 

variance was posted on Lot 14 on the same date. ~einkes 

completed construction of the Lot 14 house in the early part 

of 1975. 

Biegels failed to pay the balance of the purchase price 

of Lot 15 by the due date, December 31, 1975, and failed to 
cure 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 time for curing their default under the contract 

had expired, Biegels offered to pay the $3100 contract price 

for Lot 15. This offer was refused by the Reinkes, and Lot 

15 remained vacant and unimproved to the time of trial with 

Reinkes paying the property taxes. Reinkes commenced an 

action on August 24, 1977 to quiet 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 for damages to Lot 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 to perform 

the contract for deed to convey to Biegels the l o t i n the 

condition it was represented to be when the contract was 

entered into. 

The District Court made a conclusion of law that: 

"Defendants failed to make timely payment under 

the Contract for Deed as to Lot 15, Block 2, 

Heyn Subdivision, and were in default thereunder 

as to Lot 15, Block 2 at the time plaintiffs 

notified them in writing of the default. Defendants failed and refused to remedy the default within the time provided by the contract 

or at all, 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 District Court entered judgment in 

favor of Reinkes and denied Biegels' counterclaim. 

The parties in their 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 to the contracted due date and relating to a 

thirty foot setback requirement on sellers' adjacent lot, 

excuse the buyer from his duty to make payment by the due 

date so that his right to recover damages is not precluded 

by his failure to make such payment? Because our answer to 

that question is in the 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 contract was made subject to those 

provisions so that a violation of the setback requirement by 

the sellers was a breach of contract. While the contract 

for deed did not expressly refer to the declaration of 

restrictions applicable to the Heyn Subdivision previously 

filed and recorded by the sellers, it did make 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 the present 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 this conclusion because even if we assume that the restrictive 

covenants were incorporated into the contract for deed, the 

promises contained in the restrictive covenants are independent of the other promises in the contract for deed. In 

particular, they are independent of the promise to make 

payment by the due date. Therefore, Reinkes' breach of the 

thirty foot setback requirement on their lot adjacent to the 
one being sold, which occurred before the date payment was 

due under the contract, did not excuse Biegels' obligation 

to make payment by the due date. Biegels could not stand on 

their contract for deed and counterclaim for damages for 

breach of the restrictive covenant as a part of the contract 

for deed without fulfilling their obligation to make payment 

by the due date. 

The rights created by restrictive covenants are contractual rights. Sheridan v. Martinsen (1974), 164 Mont. 

383, 523 P.2d 1392, 1395. Assuming that the restrictive 

covenants contained in the recorded declaration of restrictions became incorporated into the contract for deed by 

reference, the governing rule is stated in O'Conner v. 

Whitesitt (1948), 121 Mont. 257, 193 P.2d 365, 366: 

"Plaintiff's claim of right to have a rescission 

of his contract because of defendant's removal 

of about $75 worth of lumber and building materials from the premises for which plaintiff had 

contracted to pay $5,800 cannot be sustained. 

This breach of agreement by the defendant went 

to only a very small part of the consideration 

and could easily be compensated in damages. It 

cannot therefore constitute a ground for rescission of plaintiff's contract. 

"In Johnson v. Meiers, Mont., 164 P.2d 1012, 

1014, we quoted with approval the following 

from 12 Am.Jur., 'Contracts,' section 440: 'It 

is not every breach of a contract or failure 

exactly to perform--certainly not every partial 

failure to perform--that .. entitled the other 

party to rescind. A breach which goes to only 

- a part -- of the consi~eration,isncidental and 

subordinate ---- tommaino= of -- the contract, 

and may be compensated in damages does not war- rant -- a rescission -- of thecontract; * injured 

party is still bound to perform ---- 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 as to defeat the object of the parties in 

making the agreement. Before partial failure of 

performance of one party will give the other the 

right of rescission, the act failed to be performed must go to the root of the contract or 
the failure to perform the contract must be in 

respect of matters which would render the performance of the remainder a thing different in 

substance from that which was contracted for.'" 

(Emphasis added.) 

For statements to the same effect, see 17A C.J.S. Contracts 

S344 at 334: "When a covenant goes only to part of the 

consideration on both sides and a breach may be compensated 

for in damages, and it is only subordinate and incidental to 

the main purpose of the contract, it is to be regarded as an 

independent covenant unless this is contrary to the expressed 

intent of the parties"; and 17A C.J.S. Contracts S453 at 

571: "A party's failure to perform an independent stipulation of a contract does not bar his right to recover for 

the other party's breach or excuse such other party from 

performing the stipulations made by him." 

The same rule is stated in 17 Am.Jur.2d Contracts 5355 

at 792: 

". . . where the contract is executory on both 

sides, the obligation of one of the parties to 

perform frequently depends on whether the mutual 

promises are dependent or independent. If the 

promises are independent of each other, a party 

must perform his part of the contract when the 

time for performance has arrived, irrespective 

of whether the other party has performed his 

obligation. . ." 

See also Nolan v. Lunsford (1940), 142 Fla. 671, 196 So. 

193, 128 A.L.R. 649, where the court considered a similar 

issue--namely, whether or not performance by a vendor of his 

covenant to make 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 is one which goes only 

to a part of the consideration on both sides and 

a breach of which may be paid for in damages . . . 
"In determining whether covenants are dependent 

or not, the intention of 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 requirement was incidental and subordinate to the 

main purpose of the contract for deed and that the sellers' 

breach went at most 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 covenant was 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 District Court being fully supported 

by the evidence is affirmed. 

-', 

\. /,?+ 

- Jus 
We concur: 

~d4,%44 Chief Justice 

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'I 

Justices