No. 14882 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1979 

EDWARD R. RICKETT and LORRAINE A. 

RICKETT, husband and wife, 

Plaintiffs and Respondents, 

VS. 

KENNETH M. DOZE et al., 

Defendants and Appellants. 

Appeal from: District Court of the Thirteenth Judicial District, 

Honorable C. B. Sande, Judge presiding. 

Counsel of Record: 

For Appellants: 

Beiswanger and Jarussi, Billings, Montana 

Gary L. Beiswanger argued, Billings, Montana 

For Respondents: 

Joseph P. Hennessey argued, Billings, Montana 

Submitted: November 6, 1979 

Decided : 

Filed: 3Fp 7 
Mr. Justice John Conway Harrison delivered the Opinion of 

the Court. 

Respondents initiated this action in District Court, 

the Thirteenth Judicial District, Stillwater County, the 

Honorable C. B. Sande presiding. Respondents brought the 

action to enforce a contract entered into with appellants. 

~ppellants appeal the judgment of the District Court entered 

in June 1979 awarding respondents $25,000.00 on the contract, 

$4,452.60 in interest, and $5,330.23 in attorney fees. 

On March 26, 1973, appellants Kenneth and Virginia 

Doze, as sellers, and respondent Edward Rickett, as buyer, 

entered into a contract for deed. The deed covered some 344 

acres of real property located in Stillwater County, Montana. 

The purchase price of the property was $330,000. The contract provided for a down payment of $75,000. Of this 

amount, $25,000 was paid on the execution on the contract 

with the remaining $50,000 together with interest at 6 

percent to be paid on or before March 15, 1974. The first 

annual installment under the contract was also due on March 

15, 1974. 

The 1973 contract called for the Dozes to execute a 

warranty deed conveying the property to Rickett in fee 

simple free of all liens and encumbrances. The contract 

also provided that Rickett would be entitled to a partial 

deed release of ten or more acres of the land when ~ickett 

had paid the Dozes enough on the total purchase price to 

establish a relationship of $1000 paid for each acre to be 

released. 

Rickett took possession of the property under the terms 

of the contract. He did not, however, make any of the 

further payments called for in the contract. On March 22, 
1974, the Dozes sent Rickett a notice of default. Rickett 

failed to cure the default within the thirty-day period 

provided in the contract. Consequently, the Dozes exercised 

their acceleration option and declared the entire outstanding 

balance of the contract with accrued interest immediately 

due. In a letter dated April 25, 1974, and served on 

Rickett in May 1974, the Dozes notified Rickett of the 

default and termination. The notice provided that if the 

entire amount owing was not paid within 60 days, the Dozes 

would consider the contract terminated and retake possession 

of the property. Rickett did not pay the amount owing. 

On April 19, 1974, Rickett sent the Dozes a letter 

demanding the partial release called for in the contract. 

The Dozes did not respond. On June 26, 1974, Rickett sent 

the Dozes a notice of default for failure to comply with the 

deed release provisions of the contract. The Dozes continued to ignore Rickett's request for the deed release. 

The Dozes contend they did not execute the release because 

of Rickett's default. Rickett contends the releases were 

not executed because of a mortgage on the property preventing the Dozes from passing clear title to the property. The 

First Citizens Bank of Billings did hold a $60,000 mortgage 

on the property. 

After this period of reciprocal notices and demands, 

the parties entered into negotiations to resolve their 

differences. On August 1, 1974, Rickett and his wife, 

respondent Lorraine Rickett, and the Dozes executed a new 

contract for the same property. Under the new contract, the 

Dozes agreed to pay the Ricketts 25 percent of any future 

sales of the property not to exceed $25,000. In return 

Rickett agreed to (1) waive any rights he had in the former 
contract for deed, (2) deliver immediate possession of the 

property to the Dozes, (3) pay $530.50 for past due invoices 

for insurance premiums, horses and saddles, (4) pay $500 in 

damages, and (5) warrant that all liens on the property 

created by Rickett would be removed within thirty days of 

the agreement. 

The Dozes had sold all the land involved by January 

1978. They refused, however, to pay the Ricketts the $25,000 

as provided in the agreement of August 1, 1974. 

The Ricketts initiated this action to enforce the 1974 

contract. A nonjury trial was held on May 22, 1979. From a 

judgment in favor of the Ricketts, the Dozes appeal. 

The sole issue on appeal is whether the 1974 contract 

was supported by consideration. 

This case involves the application of one of two basic 

rules of contract law. It is hornbook law that a promise to 

perform an existing legal obligation does not constitute 

consideration for a contract. 17 Am.Jur.2d Contracts 8119, 

at 465; Heckman and Shell v. Wilson (1971), 158 Mont. 47, 

59, 487 P.2d 1141, 1147. It is equally well-established 

that the relinquishment of a legal or contract right is 

sufficient consideration to support a contract. 17 Am.Jur.2d 

Contracts 9109, at 455; Sunburst Oil and Gas Company v. 

Neville (1927), 79 Mont. 550, 564, 257 P. 1016, 1020. 

To resolve the problem in the case at bar, we must 

determine which of the above rules apply. If the 1974 

contract merely required Rickett to perform his obligations 

under the 1973 contract, the second contract is void for 

lack of consideration. If, however, Rickett relinquished 

some contractual rights when he and his wife entered into 

the second contract, the waiver constituted consideration 
for the 1974 agreement. The 1974 contract would thus be 

enforceable. 

Looking to the facts, Rickett initially violated the 

terms of the 1973 contract by failing to pay the balance of 

the down payment or the first annual payment when due on 

March 15, 1974. The Dozes took appropriate steps under the 

default provisions of the first contract to terminate 

Rickett's rights under the contract. Rickett received final 

notice of the default in May 1974. His rights under the 

contract terminated 60 days later. 

Meanwhile, on April 19, 1974, Rickett requested the 

Dozes to execute a partial deed as required by the 1973 

contract. The Dozes, for whatever reason, failed to execute 

the deed release. This put the Dozes in default under the 

terms of the first contract. 

Thus, on August 1, 1974, when the parties executed the 

second contract, both had defaulted on the first. In paragraph 6 of the 1974 contract, the Ricketts and the Dozes 

agree that: 

". . . the parties hereto and each of them do 

hereby mutually release and discharge the other 

party, their heirs, executors, administrators, 

and assigns, from any and all liability and 

damages whatsoever, in any way, related to said 

contract for deed dated March 15, 1973 . . ." 

Under this clause of the second contract, the Dozes agreed 

not to hold Rickett liable for his breach of the 1973 contract. The clause also prohibits Rickett from suing the 

Dozes for damages for not releasing a portion of the contract property. Both parties relinquished legal rights in 

executing the 1974 contract. Under the second rule set out 

above, both parties gave consideration for the second contract. The District Court, therefore, acted properly in 

enforcing the contract. 

Affirmed. 
We concur: 

a',~dPc~,~ CQief Justice 

/ P 

-\ C ' 

f~ip- 4; > L~A-~ 

Jbstices / 
Mr. Justice Daniel J. Shea concurring: 

I would affirm the judgment--there was a valid consideration for the second contract. What bothers me, however, 

is the fact that defendants asserted in District Court and 

before this Court that the second contract was not supported 

by a valid consideration. Defendants' counsel was involved 

in the drafting, or at least in advising his clients concerning the execution of both the first and the second contract. 

Did the defendants and their counsel believe even before 

the second contract was signed that it was not supported by a 

valid consideration and thus that plaintiffs in fact could 

not enforce the contract against the defendants? Or, did 

the defendants and their counsel, when faced with plaintiffs' 

attempted enforcement of the second contract, suddenly arrive 

at the no consideration defense in a last ditch attempt to 

avoid enforcement? 

We have a situation here where I assume counsel advised 

his clients to sign the second contract. The assumption 

would be, of course, that the defendants believed they were 

signing a legally enforceable contract. But when the plaintiffs sought enforcement against the defendants, an attempt 

behind 

is made to hiddthe defense of no consideration. This is a 

rather strange set of circumstances to be asserting that 

defense.