No. 13339 IN THE SUPREME COURT OF THE STATE OF MONTANA 1977

VERN J. DOBITZ, JAMES L. SCHAREN and JOHN FURGASON, Plaintiffs and Appellants,

FRED E. OAKLAND and LORETTA OAKLAND, husband and wife, and WESTERN PROPERTIES, a Montana general partnership, Defendants and Respondents.

Appeal from: District Court of the Thirteenth Judicial District, Honorable Charles Luedke, Judge presiding. Counsel of Record: For Appellants: Michael J. Whalen argued, Billings,Montana For Respondents: Moulton, Bellingham,Longo and Mather, Billings,

Montana B. E. Longo argued, Billings,Montana Hutton, Sheehy and Cromley, Billings, Montana

Submitted: January 26, 1977 Decided: 

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## 4 fgnHonorable Peter G. Meloy, District Judge, sitting in place of Mr. Justice Frank I. Haswell. This is an appeal from a declaratory judgment granted by the district court, Yellowstone County, in favor of defendants Fred E. Oakland and Loretta Oakland. The facts fromwhich this litigation arises are: Oaklands sold certain real property rental units to the plaintiffs,Vern J. Dobitz, James L. Scharen and John Furgason,

on a contract for deed,which contractcontained a provision for nonassignment unless Oaklands' consentwas given. Plaintiffs,without Oaklands' consent,entered into a contract for deed to sell to defendantWestern Properties, Inc. The contract for deed between Oaklands and plaintiffs provided that in the event of default by plaintiffs,Oaklands would give a written notice of default and plaintiffswould have 30days to cure the default. Notice of default was given on October 7, 1975. The contract furtherprovided that in the event the default was not cured within the 30 day period, that Oaklands could, by written notice,dzclare the entire balance on the contract due. Such noticewas given November 12, 1975. Plaintiffson November 13, 1975 filed this action for declaratory relief and requested an order restraining Oaklands from further action on the notice of acceleration. Thedistrict courtgranted a temporary restraining order and order to show cause. Oaklands filed an answer and a motion for a summary judgment. DefendantWestern Properties, Inc., acknowledged servicebut has not otherwisepleaded to the complaint. On December 5, 1975 a hearing before the district court

was had upon the order to show cause and themotion for summary judgment. The district court entered judgment for Oaklands holding: (1)that plaintiffs had violated the provisions of thecontractby entering into the contract with Western Properties, Inc. without first obtaining the consent of the Oaklands; (2) that a proper notice of defaultwas given by Oaklands; (3) that therewas a failure to curewithin the 30days allowed by the contractand that further notice accelerating the balance was given; and 

### (4) that the order restraining the Oaklands as to action on accelerating the balance be quashed. (Thedistrict court thereafter stayed the execution of the judgment,the effect of which restrained Oaklands from taking any further action under the defaultprovision of the contractuntil 10days after the filing of the remittitur from the Supreme Court.) On appeal plaintiffs raise issues hereinafter discussed: First: Has there been a default by plaintiffswhich

camewithin the defaultprovisions of the contract for deed? Plaintiffs contend therewas not a "default", as such, but merely a "breach". They admit therewas a breach but argue that the remedy is for damages and does not comeunder the defaultprovisions which provides for notice and an opportunity to cure the default. Plaintiffs argue the defaultprovision applies only to a failureon the part of plaintiffs to perform their affirmative obligationsunder the contract. The pertinent sections of the contract for deed are: "11. DEFAULT PROVISIONS. Should Buyer fail to make thepayment provided herein or to perform any of the other terms on Buyer's part to be performed hereunder

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## *." (The balance of the section provides for notice, etc.) "12. REMEDIES NOT EXCLUSIVE. In the event of a breach by Seller or Buyer of a provision hereof or in the event of anyadefaultas defined herein, the party aggrieved thereby shallhave all the rights and privileges accorded by law or otherwise. No remedy herein conferred upon or reserved to any of the parties herein is exclusive of any other remedy or remedies,and each and every remedy shallbe cumulativeand shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity." Plaintiffs argue Section 12makes a distinction betweenbreach and default. The question is presented as to whether the action on the part of plaintiffs in reselling the property and violating the nonassignment clausewithout consent constitutesa defaultwithin themeaning of Section 11of the contract. The district court found the failure to procure the consent constituted a default within themeaning of Section 11. We agree. We note the defaultprovision carries thewords, in addition to the failure to make payments, "or to perform any of the other terms on Buyer's part to be performed hereunder

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## *." Therewas an obligation of performance on plaintiffs' part to secure the Oaklands' consent prior to the sale to Western Properties, Inc. Such obligationwas not performed and thus such failureof performance constitutes a default within themeaning of Section 11 of the contract. Second: Was theprovision of Oakland's contract for deed prohibiting assignment or transfer of interestwithout Oaklands' prior consentvoid in contravention of public policy, and in contravention of section 67-405,R.C.M. 1947, as an unlawful restraintupon alienation? Section 67-405,provides: "Conditions restraining alienation, when repugnant to the interest created,are void." The district court found the contractprovision against transfer without the Oaklands' consentwas not void and was a condition not encompassed within the meaning of section 67-405. We agree. The general rule is stated in 4 Corbin on Contracts,

"We have substantial unanimity of authority to the effect that in contract for the future conveyance of land or goods, the vendor canlimit or forbid the purchaser's assignment of his right to transfer. The courtmay hesitate to interpret general words against assignment as being intended as such a prohibition;but such a prohibition, if made, is not invalid. Attention may again be called, however, to the difference between forbidding the assignment of a contract right to a future transfer,and forbidding a future conveyance of land or goods by the buyer after their transfer to him. The lattermay be invalid for various reasons; it is the former that is now being considered." This statement of the law recognizes the differencebetween a conveyance and a contract to convey. The land contract such as is involved here is an executory contract and the legal title does not pass until the conveyance is actuallymade. We adopt the general rule. (Compare: Rother-Gallagherv. Montana Power, 164Mont. 360, 552 P.2d 1226,wherein this Court held that the provisions for nonassignment in a contractbe upheld in Montana and cited Winslow v. Dunham, 46Mont. 71, 125 P. 136; Standard Sewing Machine Co., v. Smith, 51 Mont. 245, 152 P. 38. See also: Lipsker v. Billings Boot Shop, 129 Mont. 420, 288 P.2d 660.) Plaintiffs reason the judgment of the district court holding the new assignment clause to be valid operates to prevent plaintiffs from entering into rental agreements. There was, in this case, no default specified in the notice as to the rental agreements and isnot an issuehere. We note, however, that the default complained of here is that of the granting of

an interest which is not a terminable interest,as is the case of a month to month tenancy. Plaintiffs do not concede the so-called assignment clause is not void but contend that should this Court hold that it is not void, then plaintiffs urge this Court to adopt what the Oaklands characterize as theminority rule. Under the so-called minority rule the clause is not void, but must be of reasonable application. Plaintiffs contend the failureof Oaklands' giving of consent was unreasonable and was solelymotivated by a desire to get an increase in their interest rate.The district courtmade no findingsas to the reasonableness of the withholding of consent, and under the view of this Court such finding is not necessary. (Therewas conflict in the testimony as to the information given to Oaklands as to the terms of the resale contract and the names of the purchasers.) The judgment of the

sitting in place of stice Frank I. Haswell.

Chief Justice h

justices