### 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 7Mr. Justice John Conway Harrison delivered the Opinion of the Court. Respondents initiated this action inDistrict Court, the Thirteenth Judicial District, Stillwater County, the Honorable C. B. Sande presiding. Respondents brought the action toenforce a contract entered intowith appellants. ~ppellants appeal thejudgment of the DistrictCourt entered inJune 1979 awarding respondents $25,000.00 on the contract, $4,452.60 ininterest, and $5,330.23 inattorney fees. On March 26, 1973, appellants Kenneth and Virginia Doze, as 

### sellers, and respondent Edward Rickett, asbuyer, entered into a contract for deed. The deed covered some 344

acres of real property located inStillwater County, Montana. The purchase price of the property was $330,000. The contractprovided 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

### at6 percent tobe 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 toRickett infee simple freeof allliens and encumbrances. The contract alsoprovided thatRickettwould be entitled toa partial deed release of ten ormore acres of the land when ~ickett had paid the Dozes enough on the totalpurchase price to establish a relationship of $1000 paid for each acre tobe 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 inthe contract. On March 22,1974, the Dozes sentRickett a notice of default. Rickett failed tocure the defaultwithin the thirty-day period provided inthe contract. Consequently, the Dozes exercised their acceleration option and declared the entireoutstanding balance of the contractwith accrued interestimmediately due. In a 

### letter dated April 25, 1974, and served on Rickett inMay 1974, the Dozes notified Rickett of the default and termination. The notice provided that if the entireamount owing was notpaid within 60 days, the Dozes would consider the contract terminated and retake possession of the property. Rickett did notpay the amount owing. On April 19, 1974, Rickett sentthe Dozes a 

### letter demanding thepartial release called for inthe contract. The Dozes did not respond. On June 26, 1974, Rickett sent the Dozes a notice of default for failure tocomply with the deed release provisions of the contract. The Dozes continued toignore 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 FirstCitizens Bank of Billings did hold a $60,000 mortgage

on the property. After thisperiod of reciprocal notices and demands, the parties entered intonegotiations toresolve their differences. On August 1, 1974, Rickett and hiswife, respondent Lorraine Rickett, and the Dozes executed a new contract for the 

### sameproperty. Under the new contract, the Dozes agreed topay the Ricketts 25 percent of any future salesof theproperty not toexceed $25,000. Inreturn Rickett agreed to 

### (1)waive any rights he had inthe formercontract 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 allliens on the property created by Rickettwould be removed within thirtydays of the agreement. The Dozes had sold allthe land involved by January 1978. They refused, however, topay the Ricketts the $25,000



### as provided inthe agreement of August 

### 1, 1974. The Ricketts initiated this action to enforce the 1974 contract. A nonjury trialwas held on May 22, 1979. From a judgment infavor of the Ricketts, the Dozes appeal. The sole issue on appeal 

### iswhether the 1974 contract



### was supported by consideration. This case involves the application of one of two basic rules of contract law. It 

### ishornbook law that

### a promise to perform an existing legal obligation does not constitute consideration for 

### a contract. 17Am.Jur.2d Contracts 8119, at465; Heckman and Shellv. Wilson (1971), 158Mont. 47, 59, 487 P.2d 1141, 1147. It 

### isequally well-established that the relinquishment of a legal or contract right 

### is sufficientconsideration to support a contract. 17Am.Jur.2d Contracts 9109, at455; Sunburst Oiland Gas Company v. Neville (1927), 79 Mont. 550, 564, 257 P. 1016, 1020. To resolve the problem inthe case atbar, 

### wemust determine which of the above rules apply. If the 1974 contractmerely required Rickett toperform hisobligations under the 1973contract, the second contract isvoid for lack of consideration. If, however, Rickett relinquished

some contractual rightswhen he and hiswife entered into the second contract, the waiver constituted considerationfor the 1974 agreement. The 1974 contract would thus be enforceable. Looking to the facts, Rickett initiallyviolated the terms of the 1973 contract by failing topay the balance of the down payment or the firstannual payment when due on March 15, 1974. The Dozes took appropriate stepsunder the defaultprovisions of the firstcontract to terminate Rickett's rights under the contract. Rickett received final notice of the default inMay 1974. Hisrights under the contract terminated 60 days later. Meanwhile, on April 19, 1974, Rickett requested the Dozes toexecute 

### a partial deed asrequired by the 1973 contract. The Dozes, forwhatever reason, failed to execute the deed release. This put the Dozes indefault under the 

### terms of the firstcontract. 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 allliability and damages whatsoever, inany way, related to said contract for deed dated March 15, 1973

# . . ." Under this clause of the second contract, the Dozes agreed not tohold Rickett liable for hisbreach of the 1973 contract. The clause alsoprohibits Rickett from suing the Dozes for damages for not releasing a portion of the contractproperty. 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 DistrictCourt, therefore, acted properly in enforcing the contract. Affirmed.We concur: 

# a',~dPc~,~ CQief Justice / 

### P

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# 4; 

# >L~A-~ Jbstices 

## /

### Mr. Justice Daniel J. Shea concurring:

Iwould affirm the judgment--therewas 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 contractwas 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 contractwas signed that itwas 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 ismade to hiddthe defense of no consideration. This is a rather strange set of circumstances to be asserting that defense.