No. 81-469 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1982 

ROY MAXTED, 

Plaintiff and Respondent, 

KENNETH P. BARRETT and VOLA J. BARRETT, 

husband and wife, 

Defendants and Appellants. 

.1 from: District Court of the First Judicial District, 

In and for the County of Lewis and Clark 

Honorable Mark P. Sullivan, Judge presiding. 

Counsel of Record: 

For Appellants: 

Small, Hatch & Doubek, Helena, Montana 

Richard J. Pyfer argued, Helena, Montana 

For Respondent: 

Hooks and Budewitz, Townsend, Montana 

Patrick F. Hooks argued, Townsend, Montana 

Submitted: April 5, 1982 

Decided : APR 2 6 1982 
Mr. Chief Justice Frank I. Haswell delivered the Opinion of the 

Court. 

Defendants appeal the trial court decision ordering them 

to specifically perform their agreement with the plaintiff 

wherein plaintiff was to purchase defendants' mortgagee's interest in the Denver Block Apartments property in Helena. We 

af firm. 

On March 23, 1979, defendants sold the "Denver Block 

Apartments" (125 Broadway, Helena) to Benjamin and Annie Brown. 

Browns assumed a first mortgage held by the Helena American 

Federal Savings and Loan Association and executed a note to 

defendants for $67,000 at 9%, secured by a second mortgage. Each 

monthly payment amounted to $848.74. Insurance payable to the 

defendants was carried to the extent of the second mortgage's 

balance. 

By the early part of 1980, the Browns were delinquent in 

their monthly payments and had not paid the real property taxes 

for 1979. Defendants filed an action to foreclose their second 

mortgage but did not pursue it, hoping that the Browns would be 

able to get their financial problems remedied. 

In April 1981, plaintiff contacted the defendants 

regarding the possible purchase of their second mortgagee ' s 

interest in the property. The Browns were still in default on 

the monthly payments and defendants were aware that the City of 

Helena had ordered the Browns to bring the building up to code by 

September 1, 1981, or have it be condemned. 

On April 15, 1981, plaintiff and defendants signed a 

real tor s buy-sell agreement ( a Stevens-Ness form entitled 

"Receipt and Agreement to Sell and Purchase" ) wherein plaintiff 

purchased defendants interest for $37, 500, which was a little 

over half of what was still due and owing on the note between the 

defendants and Brown (about $63,000). The parties inserted the 

following language in the agreement with regard to the $37,500: 

" . . . to be paid in full by June 1st or 
sooner, depending upon the contingency of rehabilitation loan from American Federal Savings to 

purchaser. (1981). Seller agrees to sell their 

entire interest in the Denver Apartments to 

purchaser upon receipt of the purchase price 

stated ." 

Plaintiff paid $100 earnest money at that time. On April 23, 

1981, plaintiff agreed with Browns to purchase their interest and 

receive a deed to the property, effective May 26, 1981. Under 

that agreement, plaintiff was to assume the Browns' indebtedness, 

including the second mortgage. On May 25, 1981, fire completely 

destroyed the building and thereafter plaintiff sent a rescission 

notice to Browns, stating that the destruction of the building 

constituted a failure of consideration. On May 29, 1981, 

plaintiff tendered to defendants a check for $37,400 and an 

Assignment of Mortgage form. Defendants refused both checks and 

re turned them and the unexecuted Assignment form to plaint iff s 

attorney. 

On June 3, 1981, plaintiff filed suit seeking specific 

performance of the agreement with defendants. Defendants 

answered, raising various defenses, including the fact that 

plaintiff had not obtained the rehabilitation loan as per the 

agreement and that plaintiff would be unjustly enriched. Af ter 

depositions, the Court granted plaintiff Is motion for summary 

judgment, the effect of which is to give the plaintiff $25,500 

($63,000 in insurance proceeds less the $37,500 payment to 

defendants). Defendants appeal. 

The insurance carrier has paid the $63,000 in insurance 

proceeds into the District Court in a separate interpleader 

action, pending the final determination of this case. 

The issue on appeal is whether the lower court erred in 

granting summary judgment to plaintiff and ordering defendants 

to specifically perform the April 15 agreement. 

It is clear that either way this case is decided, one of 

the parties is going to receive a substantial amount of money in 

insurance proceeds which was not in any of the parties1 con- 
templation at the time of contracting. Bearing this in mind, we 

proceed to examine the parties' various contentions. 

Appellants first argue that the plaintiff was not entitled 

to specific performance because he failed to perform the contingencies required by the contract, i .e. the contract required 

the plaintiff to obtain a rehabilitation loan from American 

Federal Savings and Loan which he failed to do. Plaintiff counters by emphasizing the provision in the contract which states 

that defendants will transfer their interest to plaintiff on 

receipt of the purchase price, which defendants failed to do. 

According to plaintiff, the source of the money is immaterial . 

We agree with the plaintiff. The important fact here is 

that the defendants had received the full $37,500 purchase price 

by May 29, 1981, and they refused to assign their interest to 

plaintiff. Appellants emphasis of the need to obtain the funding 

from American Federal as condition precedent to their performance 

rings hollow when it is considered that elsewhere in their brief 

appellants concede that, af ter the fire, there was no way for 

plaintiff to obtain a rehabilitation loan because the buiilding 

no longer existed. 

Also, we are mindful of the fact that appellants were 

willing to rid themselves of Brown as a debtor and accepted an 

approximate 50% reduction in the value of the note Brown had executed to them. They are now attempting to relieve themselves of 

this obligation in view of the potential insurance proceeds 

recovery. 

Appellants next argue that specific performance does not 

lie because the subject matter of the contract was substantially 

destroyed before the contract was closed. Appellants cite 

several cases in support of this proposition, including Geist v. 

Lehmann (1974), 19 Ill.App.3d 557, 312 N.E.2d 42; Wheeler v. 

Gahan (1924), 206 Ky. 366, 267 S.W. 227 and Gamble v. Garlock 

(1911), 116 Minn. 59, 133 N.W. 175. Plaintiff argues that most 
of appellants1 cases involve a seller seeking specific performance and are thus distinguishable from the case at bar where the 

buyer seeks the remedy. Although Wheeler and Gamble both 

involved optionees being denied specific performance, plaintiff 

argues they are not in point because an abatement of the purchase 

price was involved. 

In Gamble, plaintiff leased defendant's house and lot with 

a 90-day option to buy, beginning April 1, 1911. A fire occurred 

April 27, 1911, and plaintiff attempted to exercise his option 

with an abatement in price for the destruction of the buildings 

and furniture. After being ref used, plaintiff sued for specific 

performance with abatement. In denying plaintiff any relief, the 

Court stated : 

"The parties did not contemplate that a fire 

might occur, and that the offer should still 

hold good, subject to adjustment of damages. 

The owner was willing to part with the entire 

property as it stood for $6,000, but she might 

not have been willing to sell the land for that 

price less the amount of damages by a fire." 

116 Minn. at , 133 N.W. at 176. 

In Wheeler, there was a similar lease-option arrangement 

and while the plaintiff was attempting to exercise his option, a 

fire destroyed the building and nearly all improvements. The 

Kentucky Court of Appeals reversed the lower court order, which 

had granted plaintiff specific performance with an abatement in 

price, and made the following statements : 

"To require specific peformance under such 

changed conditions, not brought about by either 

party, is to make for the parties a new 

contract--one not contemplated in their original 

negotiations. For these reasons we are of opinion that appellee was not entitled to specific 

performance of the contract, and that the chancellor erred in holding otherwise. 206 Ky. at 

, 267 S.W. at 229. 

However, in neither Gamble nor Wheeler is there any indication that the contract specifically gave the optionee the right 

to specific performance. Here, paragraph five of the buy/sell 

states : 
"5. The purchaser agrees that this contract does 

authorize the seller to enforce the remedy of 

specific performance. The seller agrees that 

this contract does authorize the purchaser to 

enforce the remedy of specific performance ." 

Moreover, we have a statute in Montana which provides for specif ic performance under the circumstances of this case: 

"27-1-411. When specific performance -- of an 

obligation -- may be compelled. Except as otherwise provided in this part and Title 28, chapter 

2, parts 16 and 17, the specific performance of 

an obligation may be compelled when: 

"(4) it has been expressly agreed in writing, 

between the parties to the contract, that specif ic performance thereof may be required by 

either party. . ." 

We think the above statute and the language of the contract 

itself favors the application of specific performance in this 

case. 

The next argument appellants make is that plaintiff will 

be unjustly enriched by the lower court's judgment. While we 

agree that plaintiff will profit by the results of the lower 

decision, it is equally apparent that appellants would gain 

substantially if the decision were reversed. Further, appellants 

have not cited any case where unjust enrichment was considered 

dispositive in a specific performance action. This is not 

surprising due to the distinction between specific performance 

and unjust enrichment. In a specific performance action, the 

plaintiff seeks to enforce the terms of an agreement between the 

parties and the contractural terms must be sufficiently certain 

so the court can compel performance. Seifert v. Seifert (1977) , 

173 Mont. 501, 568 P.2d 155; section 27-1-412(6), MCA. 

The theory of unjust enrichment and restitution is brought 

into play when no contract between the parties exists and the 

court implies a contract in law. One court stated it thus: 

"Plaintiff alternatively contends that he is 

entitled to payment by the defendant under a 

theory of unjust enrichment or recovery in 

quasi-contract, which allows the courts to impose 

a duty to refund money to the person to whom it 
rightfully belongs. This argument also must 

fail. A quasi or constructive contract rests 

upon the equitable principle that a person shall 

not be allowed to enrich himself at the expense 

of another. --- It is an obligation created -- by law 

--- only in the absence -- of an agreement between the 

parties. Bradkin v. Leverton, 26 N.Y.2d 192, 

309 - - N.Y.S.2d 192, 257 N.E.2d 643 (1970). As 

already noted abbve, where, - as heie, - a.wri=en 

contract does exist, ---- the duty of the courts is 

- to enforce - it. . . " (Emphasis added. ) Fox 

Lummus Co. (S.D.N.Y. 1981), 524 F.SUPP. 27, 

29-30. 

Here it is undisputed there was a contract between the parties 

and appellants unjust enrichment arguments are not well taken. 

See generally Dobbs, Handbook on the Law of Remedies (1973 ), 9 

Appellant's next contention is that specific performance 

does not lie because there is no mutuality of remedy, citing 

Schultz v. Campbell (1966), 147 Mont. 439, 413 P.2d 879, which 

holds in essence that mutuality requires that the decree will 

operate without injustice or oppression to plaintiff or 

defendant. Plaintiff, on the other hand, argues that there is 

mutuality of remedy by the provisions of paragraph five of the 

buy/sell, supra, which state that both parties shall have the 

remedy of specific performance and that plaintiff fully performed when 

he tendered the remaining amount due on May 29, 1981. Both parties cite section 27-1-414, MCA, which provides : 

"27-1-414. Right to specific performance -- to be 

mutual. (1) When either of the parties to an 

obligation is entitled to a specific performance 

thereof according to the provisions of 27-1-411, 

the other party is also entitled to it, though 

not within those provisions. 

"(2) Neither party -- to any obligation --- can be compelled specifically to perform unless the other 

party thereto has performed or is compellable 

specifically to perform everything to which the 

former is entitled undertheoobligation, -- 

either - - - - - - - com~letelv or nearlv so, tosether with - ~L a - - - 

full compensation ---- for any wantno£ entire performance ." (Emphasis added. ) 

Applying the words of the statute to the present circumstances, 

the appellants were entitled to receive $37,500 for their 

mortgagee's interest, which, it is uncontroverted, was tendered to 
them. The source of the money was immaterial until the prospect 

of insurance proceeds arose. Thus they received everything they 

were entitled to and could be compelled by the lower court to 

specifically perform their part of the obligation. 

Further, we do not view our decision today as being unjust 

or oppressive to appellants, Schultz, supra. Appellants were 

more than ready to rid themselves of Brown as an obligor, as evidenced by their taking a substantial reduction in the sale of the 

note to plaintiff, and there is nothing unjust or oppressive in 

requiring them to follow through with their end of the deal. The 

only thing they are losing is the recovery of insurance proceeds. 

See section 27-1-415 (2) and 27-1-413, MCA. 

Finally, appellants contend that the parties contemplated 

the sale of a building and, since the fire destroyed the 

building, the agreement is not specifically enforceable. 

Plaintiff counters by relying on the rule of law that a contract, 

freely entered into, cannot later be avoided when 20-20 hindsight 

indicates the terms are not as favorable as they once appeared to 

be. In support of this opposition, plaintiff cites Hein v. Fox 

(1953), 126 Mont. 514, 254 P.2d 1076, and Veterans Rehabilitation 

Center, Inc. v. Birrer (1976), 170 Mont. 182, 551 P.2d 1001. 

We do not agree with appellant. While it is true that 

neither party contemplated the recovery of insurance proceeds 

when the buy/sell was executed, this does not automatically 

negate the remedy of specific performance. What we are called on 

to do here is render a decision in a fact situation beyond the 

scope of the agreement in the light of subsequent happenings. 

The fact that every contingency was not included in the agreement 

does not render it incapable of being specifically performed. 

Af f irmed . 

Chief Justice \