No. 13750 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1977 

GAMBLES, a corporation, 

Plaintiff and Appellant, 

-vsJOHN M. PERDUE, 

Defendant and Respondent. 

Appeal from: District Court of Eighteenth Judicial District, 

Hon. W. W. Lessley, Judge presiding. 

Counsel of Record: 

For Appellant: 

Landoe, Gary & Planalp, Bozeman, Montana 

For Respondent: 

William E. Gilbert, Bozeman, Montana 

Submitted on Appellant's brief 

Submitted: September 6, 1977 

Decided: ij~c 2 8 193 

Filed: ~~,z:, . . -? -,:j+[j - . 

-' - 
Mr. Justice Frank I. Haswell delivered the Opinion of the Court. 

A retail store sued a purchaser to recover an indebtedness 

under two written installment contracts covering the purchase and 

installation of carpeting in the purchaser's residence. After 

execution of the contracts and installation of the carpeting, the 

purchaser's wife secured a divorce, was awarded the residence 

wherein the carpeting was installed, and was made solely responsible for all indebtedness on the property. Following a nonjury 

trial, the district court, Gallatin County, denied relief to the 

retail store, entering judgment for the purchaser on the grounds 

that all proper parties were not before the court. The retail store 

appeals. 

This appeal is prosecuted on the basis of an agreed statement of the case in lieu of the usual record on appeal. The agreed 

facts disclose that on March 1, 1974 and 'again on November 24, 

1974, John Perdue, defendant, entered into separate retail 

installment contracts with Gambles, the plaintiff, covering the 

purchase and installation of carpeting in his residence. At the 

time these contracts were executed defendant was married to Anna 

Perdue. 

On February 1, 1976, defendant owed plaintiff a balance of 

$309.56 under the contracts, exclusive of attorney fees and costs 

provided for therein. 

On February 10, 1976, defendant and his wife were divorced. 

Under the terms of the decree, Anna was awarded the marital residence in which the carpeting had been installed "subject to the 

indebtedness owing". 

On October 12, 1976, plaintiff sued defendant for the balance 

owing on the installment contracts in the justice court of Gallatin 

County. Following trial, plaintiff's complaint was dismissed. 

Thereafter plaintiff appealed to the district court, Gallatin 

County. Plaintiff filed an amended complaint seeking recovery of 
the balance owing on the contracts, finance charges, attorney 

fees and costs. Defendant's answer was a general denial and 

an affirmative defense that he was not responsible for the 

contractual debt because the property in the contracts had been 

awarded to Anna in the divorce decree. 

On January 3, 1977 the district court heard the case 

without a jury. Plaintiff and defendant stipulated that there 

was no dispute as to the signing of the contracts nor to the facts 

of the divorce decree. 

On January 12, 1977 the district court entered findings 

of fact, conclusions of law and judgment to the effect that plaintiff take nothing by its complaint and judgment be awarded to 

defendant as all proper parties were not before the court. Plaintiff now appeals from this judgment. 

The parties by written stipulation have submitted this 

appeal for decision without oral argument on the basis of appellant's 

brief, the agreed statement of fact, and the district court file. 

The sole issue on appeal as stated by appellant is whether 

all of the proper parties were before the district court. 

Plaintiff's argument before the district court was that 

plaintiff and defendant were the only contracting parties and no 

privity of contract existed between plaintiff and any other parties; 

that the divorce decree could not affect plaintiff's property 

rights because plaintiff was not a party to the divorce proceedings; 

and the contracts contained a nontransferability clause. 

Defendants argument to the district court was that the 

divorce court had the equitable power to transfer defendant's 

property to Anna; that the indebtedness on the residence including 

the carpeting contracts were transferred to Anna; and therefore 

plaintiff's remedy was against Anna, and not against defendant. 

In this case Gambles sued John Perdue for an indebtedness 

he assumed by written contract. Gambles sought a personal judgment against him for this indebtedness. The only contracting 
parties were Gambles and John Perdue. The general rule applicable 

here is that the obligation of the contracts is limited to the 

contracting parties: 

"As a general thing, the obligation of contracts 

is limited to the parties making them, and, ordinarily, 

only those who are parties to contracts are liable 

for their breach. Parties to a contract cannot thereby 

impose any liability on one who, under its terms, 

is a stranger to the contract, and, in any event, in 

order to bind a third person contractually, an expression 

of assent by such person is necessary." 17 Am Jur 2d, 

Contracts, S 294. 

Again, in Thompson v. Lincoln Ins. Co. (1943), 114 Mont. 

521, 530, 138 P.2d 951, where decedent's administrators sued 

the assignee of an executory contract, this Court stated: 

" * * * It is elementary law that a contract binds no 

one but the contracting parties. * * *" Also see: Hyink 

v. Low Line Irrigation Co. (1922), 62 Mont. 401, 205 

P. 236. 

It is axiomatic that the contracting obligee cannot be 

deprived of recourse against the contracting obligor by a 

substitution of debtors without the former's consent. Thus 

John Perdue remained liable to Gambles for the indebtedness 

under the installment contracts notwithstanding the provisions 

of the divorce decree. 

We hold that all proper parties were before the district 

court. Anna was not a proper party because she was not a party 

to the installment contracts. Gambles sought no relief against 

Anna nor any relief involving repossession of the carpeting, 

only a personal judgment for the contractual indebtedness against 

John. John did not file a third party complaint against Anna to 

determine the respective obligations between themselves. Under 

such circumstances Gambles cannot be deprived of its remedy against 

John by reason of a collateral occurrence to which it was not a 

party. The transfer of the indebtedness from John to Anna in the 

divorce decree bound only the parties to it, John and Anna; 

just as the contractual indebtedness of John to Gambles bound only 

the parties to the contract, John and Gambles. 
The findings of fact, conclusions of law and judgment of 

the district court arevacated. The case is remanded to the district 

court with directions to determine the amount of John Perdue's 

obligation to Gambles under the terms of the installment contract 

and to enter findings of fact, conclusions of law and judgment in 

favor of Gambles accordingly. 

Justice 

Wd2-& ------------ 

ustices