### No. 81-469 INTHE SUPREME COURT OF THE STATE OF MONTANA 1982

ROY MAXTED, Plaintiff and Respondent,

KENNETH 

### P. BARRETT and VOLA J. BARRETT, husband and wife, Defendantsand Appellants.

.1from: District Court of the First Judicial District, In and for the County of Lewis and Clark HonorableMark P. Sullivan, Judgepresiding. 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: 

### APR26 

### 1982Mr. Chief JusticeFrank I. Haswell delivered the Opinion of the Court. Defendants appeal the trial court decision ordering them tospecificallyperform their agreement with the plaintiff wherein plaintiff 

### was topurchase defendants' mortgagee's interest in the Denver Block Apartments property inHelena. We affirm.On March 23, 1979, defendants sold the "Denver Block Apartments" (125Broadway, Helena) 

### to Benjamin and Annie Brown. Browns assumed a firstmortgage held by the Helena American Federal Savingsand 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 extentof the second mortgage's balance. By the early part of 1980, the Browns 

### were delinquent in theirmonthly 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. InApril 1981, plaintiff contacted the defendants regarding the possible purchase of their second mortgagee

## 's interest in the property. The Browns 

### were still indefault 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 

### realtor s buy-sell agreement (a Stevens-Ness form entitled "Receipt and Agreement to Selland 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 fullby June 

### 1storsooner, depending upon the contingencyof 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 earnestmoney at that time. On April 23, 1981, plaintiff agreed with Browns to purchase their interestand 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, firecompletely destroyed the building and thereafter plaintiff sent a rescission notice 

### to Browns, stating that the destruction of the building constituted a failureof 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



### returned them and the unexecuted Assignment form to plaint iff s attorney. On June 3, 1981, plaintiff filed suitseeking 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 thatplaintiff would be unjustly enriched. Af

### ter depositions, the Court granted plaintiffIsmotion for summary judgment, the effectof which 

### is to give the plaintiff $25,500 ($63,000 in insurance proceeds lessthe $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 determinationof thiscase. The issue on appeal is whether the lower court erred in granting summary judgment to plaintiff and ordering defendants to specificallyperform the April 15agreement. It is clear thateitherway thiscase 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 parties1con-templation at the 

### timeof contracting. Bearing this inmind, 

### we proceed to examine the parties' various contentions. Appellants firstargue that the plaintiff 

### was not entitled tospecific 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 coun

### ters by emphasizing the provision in the contract which states thatdefendants willtransfer 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 conditionprecedent to their performance ringshollow when it is considered thatelsewhere 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 thisobligation inview of the potential insurance proceeds recovery. Appellants next argue that specific performance does not liebecause the subject matter of the contract was substantially destroyed before the contract 

### was closed. Appellants cite several cases in support of thisproposition, including Geistv. Lehmann (1974), 19Ill.App.3d 557, 312 N.E.2d 42; Wheeler v. Gahan (1924), 206 Ky. 366, 267 S.W. 227 and Gamble v. Garlock (1911), 116Minn. 59, 133N.W. 175. Plaintiff argues that

### mostof appellants1cases involve a seller seeking specific performance and 

### are thus distinguishable from the case atbar where the buyer seeks the remedy. Although Wheeler and Gamble both involved optionees being denied specific performance, plaintiff argues they are not inpoint because an abatement of the purchase price

### was involved. InGamble, plaintiff leased defendant's house and lot with

a 90-day option to buy, beginning April 1, 1911. A fireoccurred April 27, 1911, and plaintiff attempted to exercise hisoption with an abatement in price for the destruction of the buildings and furniture. After being refused, plaintiff sued for specific performance with abatement. In denying plaintiff any relief, the Court stated: "The partiesdid 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." 116Minn. 

### at 

## , 133

### N.W. at 176. InWheeler, there 

### was a similar lease-option arrangement and while the plaintiff 

### was attempting 

### to exercise hisoption, a firedestroyed 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. at229. However, in neitherGamble norWheeler is there any indication that the contract specificallygave 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 specificperformance. The seller agrees that thiscontract does authorize the purchaser to enforce the remedy of specificperformance

# ." Moreover, we have a statute inMontana which provides for specific performance under the circumstances of thiscase: "27-1-411. When specificperformance 

### -- of an obligation 

### -- may be compelled. Except 

### as other

### wise provided in thispart and Title 28, chapter 2, parts 16 and 17, the specific performance of an obligationmay be compelled when:

"(4) it has been expressly agreed inwriting, between the parties 

### to the contract, that specif

### ic performance thereof may be required by eitherparty. 

# .."
We think the above statute and the language of the contract itself favors the application of specific performance in this

case. The next argument appellantsmake is thatplaintiff will be unjustly enriched by the 

### lower court's judgment. While 

### we agree that plaintiff willprofit by the resultsof the 

### lower decision, it is equallyapparent 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 distinctionbetween 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 sufficientlycertain

so the court can compel performance. Seifertv. Seifert (1977)

## , 173Mont. 501, 568 P.2d 155; section 27-1-412(6), MCA. The theory of unjust enrichment and restitution is brought intoplay when no contract between the parties existsand the court implies a contract in law. One court stated it thus: "Plaintiff alternativelycontends that he is entitled to payment by the defendant under a theoryof unjust enrichment orrecovery in quasi-contract, which allows the courts to impose a duty to refund money 

### to the person 

### to whom itrightfullybelongs. 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. 

### --- is anobligation created 

### -- by 

### law It only inthe 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

- - alreadynoted abbve, where, - asheie, - a.wri=en contractdoes exist, theduty 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 generallyDobbs, 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), 147Mont. 439, 413 P.2d 879, which holds in essence thatmutuality 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 thatboth parties shall have the remedy of specific performance and that plaintiff fullyperformed 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 specificperformance 

### -- to be mutual. (1)When eitherof 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 anyobligation 

### --- canbe 

### compelled specifically to perform unless the other party theretohasperformed 

### or is compellable specificallyto perform everything

### towhich the former is entitled undertheoobligation, -- eithercom~letelv ornearlv 

### so, tosetherwith

- - - -- - - - ~L a - 

# - - fullcompensation ---- foranywantno£entireperformance

# ." (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 tothem. 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 specificallyperform 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 toplaintiff, and there 

### is nothing unjust 

### or oppressive in requiring them 

### to followthrough 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 firedestroyed the building, the agreement is not specificallyenforceable. Plaintiff counters by relying on the rule of 

### law that a contract, freelyentered 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 thisopposition, plaintiff 

### cites Hein v. Fox (1953), 126Mont. 514, 254 P.2d 1076, and Veterans Rehabilitation Center, Inc. v. Birrer (1976), 170Mont. 182, 551 P.2d 1001. We do not agreewith appellant. While it is true that neitherparty contemplated the recovery of insurance proceeds when the buy/sell was executed, thisdoes not automatically negate the remedy of specific performance. What we 

### are called on to do here 

### is render a decision in a fact situationbeyond the scope of the agreement in the lightof subsequent happenings. The fact thatevery contingency was not included in the agreement does not render it incapable of being specificallyperformed. Affirmed

# .

Chief Justice \