Title: RICKETT v DOZE
Citation: N/A
Docket Number: 14882
State: Montana
Issuer: Montana Supreme Court
Date: December 5, 1979

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 M r . J u s t i c e John Conway Harrison d e l i v e r e d t h e Opinion of t h e Court. Respondents i n i t i a t e d t h i s a c t i o n i n D i s t r i c t Court, t h e Thirteenth J u d i c i a l D i s t r i c t , S t i l l w a t e r County, t h e Honorable C. B. Sande presiding. Respondents brought t h e a c t i o n t o enforce a c o n t r a c t entered i n t o with a p p e l l a n t s . ~ p p e l l a n t s appeal t h e judgment of t h e D i s t r i c t Court entered i n June 1979 awarding respondents $25,000.00 on t h e c o n t r a c t , $4,452.60 i n i n t e r e s t , and $5,330.23 i n a t t o r n e y f e e s . O n March 26, 1973, a p p e l l a n t s Kenneth and Virginia Doze, a s sellers, and respondent Edward R i c k e t t , a s buyer, entered i n t o a c o n t r a c t f o r deed. The deed covered some 344 a c r e s of r e a l property located i n S t i l l w a t e r County, Montana. The purchase p r i c e of t h e property was $330,000. The con- t r a c t provided f o r a down payment of $75,000. O f t h i s amount, $25,000 w a s paid on t h e execution on t h e c o n t r a c t with t h e remaining $50,000 together with i n t e r e s t a t 6 percent t o be paid on o r before March 15, 1974. The f i r s t annual i n s t a l l m e n t under t h e c o n t r a c t was a l s o due on March 15, 1974. The 1973 c o n t r a c t c a l l e d f o r t h e Dozes t o execute a warranty deed conveying t h e property t o R i c k e t t i n f e e simple f r e e of a l l l i e n s and encumbrances. The c o n t r a c t a l s o provided t h a t R i c k e t t would be e n t i t l e d t o a p a r t i a l deed r e l e a s e of t e n o r more a c r e s of t h e land when ~ i c k e t t had paid t h e Dozes enough on t h e t o t a l purchase p r i c e t o e s t a b l i s h a r e l a t i o n s h i p of $1000 paid f o r each a c r e t o be released. R i c k e t t took possession of t h e property under t h e t e r m s of t h e c o n t r a c t . H e d i d n o t , however, make any of t h e f u r t h e r payments c a l l e d f o r i n t h e c o n t r a c t . O n March 22, 1974, t h e Dozes s e n t R i c k e t t a n o t i c e of d e f a u l t . R i c k e t t f a i l e d t o c u r e t h e d e f a u l t w i t h i n t h e thirty-day p e r i o d provided i n t h e c o n t r a c t . Consequently, t h e Dozes e x e r c i s e d t h e i r a c c e l e r a t i o n o p t i o n and d e c l a r e d t h e e n t i r e outstanding balance of t h e c o n t r a c t w i t h accrued i n t e r e s t immediately due. I n a letter d a t e d A p r i l 25, 1974, and served on R i c k e t t i n May 1974, t h e Dozes n o t i f i e d R i c k e t t of t h e d e f a u l t and termination. The n o t i c e provided t h a t i f t h e e n t i r e amount owing was n o t paid w i t h i n 60 days, t h e Dozes would c o n s i d e r t h e c o n t r a c t terminated and r e t a k e possession of t h e property. R i c k e t t d i d n o t pay t h e amount owing. On A p r i l 19, 1974, R i c k e t t s e n t t h e Dozes a letter demanding t h e p a r t i a l r e l e a s e c a l l e d f o r i n t h e c o n t r a c t . The Dozes d i d n o t respond. On June 26, 1974, R i c k e t t s e n t t h e Dozes a n o t i c e of d e f a u l t f o r f a i l u r e t o comply w i t h t h e deed r e l e a s e p r o v i s i o n s of t h e c o n t r a c t . The Dozes con- tinued t o i g n o r e R i c k e t t ' s r e q u e s t f o r t h e deed r e l e a s e . The Dozes contend they d i d n o t execute t h e r e l e a s e because of R i c k e t t ' s d e f a u l t . R i c k e t t contends t h e r e l e a s e s w e r e n o t executed because of a mortgage on t h e p r o p e r t y prevent- i n g t h e Dozes from passing c l e a r t i t l e t o t h e property. The F i r s t C i t i z e n s Bank of B i l l i n g s d i d hold a $60,000 mortgage on t h e property. A f t e r t h i s p e r i o d of r e c i p r o c a l n o t i c e s and demands, t h e p a r t i e s e n t e r e d i n t o n e g o t i a t i o n s t o r e s o l v e t h e i r d i f f e r e n c e s . On August 1, 1974, R i c k e t t and h i s wife, respondent Lorraine R i c k e t t , and t h e Dozes executed a new c o n t r a c t f o r t h e s a m e property. Under t h e new c o n t r a c t , t h e Dozes agreed t o pay t h e R i c k e t t s 25 p e r c e n t of any f u t u r e s a l e s of t h e p r o p e r t y n o t t o exceed $25,000. I n r e t u r n R i c k e t t agreed t o (1) waive any r i g h t s he had i n t h e former c o n t r a c t f o r deed, (2) d e l i v e r immediate possession of t h e p r o p e r t y t o t h e Dozes, (3) pay $530.50 f o r p a s t due i n v o i c e s f o r insurance premiums, h o r s e s and s a d d l e s , ( 4 ) pay $500 i n damages, and (5) w a r r a n t t h a t a l l l i e n s on t h e p r o p e r t y c r e a t e d by R i c k e t t would be removed w i t h i n t h i r t y days of t h e agreement. The Dozes had s o l d a l l t h e land involved by January 1978. They r e f u s e d , however, t o pay t h e R i c k e t t s t h e $25,000 as provided i n t h e agreement of August 1, 1974. The R i c k e t t s i n i t i a t e d t h i s a c t i o n t o e n f o r c e t h e 1974 c o n t r a c t . A nonjury t r i a l was h e l d on May 22, 1979. From a judgment i n favor of t h e R i c k e t t s , t h e Dozes appeal. The s o l e i s s u e on appeal i s whether t h e 1974 c o n t r a c t w a s supported by c o n s i d e r a t i o n . This c a s e i n v o l v e s t h e a p p l i c a t i o n of one of two b a s i c r u l e s of c o n t r a c t law. I t i s hornbook law t h a t a promise t o perform a n e x i s t i n g l e g a l o b l i g a t i o n does n o t c o n s t i t u t e c o n s i d e r a t i o n f o r a c o n t r a c t . 17 Am.Jur.2d C o n t r a c t s 8119, a t 465; Heckman and S h e l l v. Wilson (1971), 158 Mont. 47, 59, 487 P.2d 1 1 4 1 , 1147. I t i s e q u a l l y w e l l - e s t a b l i s h e d t h a t t h e relinquishment of a l e g a l o r c o n t r a c t r i g h t i s s u f f i c i e n t c o n s i d e r a t i o n t o support a c o n t r a c t . 17 Am.Jur.2d C o n t r a c t s 9109, a t 455; Sunburst O i l and Gas Company v. N e v i l l e (1927), 79 Mont. 550, 564, 257 P. 1016, 1020. To r e s o l v e t h e problem i n t h e c a s e a t b a r , w e must determine which of t h e above r u l e s apply. I f t h e 1974 c o n t r a c t merely r e q u i r e d R i c k e t t t o perform h i s o b l i g a t i o n s under t h e 1973 c o n t r a c t , t h e second c o n t r a c t i s void f o r l a c k of c o n s i d e r a t i o n . I f , however, R i c k e t t r e l i n q u i s h e d some c o n t r a c t u a l r i g h t s when he and h i s w i f e e n t e r e d i n t o t h e second c o n t r a c t , t h e waiver c o n s t i t u t e d c o n s i d e r a t i o n f o r t h e 1974 agreement. The 1974 c o n t r a c t would thus be enforceable. Looking t o t h e f a c t s , R i c k e t t i n i t i a l l y v i o l a t e d t h e terms of t h e 1973 c o n t r a c t by f a i l i n g t o pay t h e balance of t h e down payment o r t h e f i r s t annual payment when due on March 15, 1974. The Dozes took appropriate s t e p s under t h e d e f a u l t provisions of t h e f i r s t c o n t r a c t t o terminate R i c k e t t ' s r i g h t s under t h e c o n t r a c t . R i c k e t t received f i n a l n o t i c e of t h e d e f a u l t i n May 1974. H i s r i g h t s under t h e c o n t r a c t terminated 6 0 days l a t e r . Meanwhile, on A p r i l 19, 1974, R i c k e t t requested t h e Dozes t o execute a p a r t i a l deed a s required by t h e 1973 c o n t r a c t . The Dozes, f o r whatever reason, f a i l e d t o execute t h e deed r e l e a s e . This p u t t h e Dozes i n d e f a u l t under t h e t e r m s of t h e f i r s t c o n t r a c t . Thus, on August 1, 1974, when t h e p a r t i e s executed t h e second c o n t r a c t , both had defaulted on t h e f i r s t . I n para- graph 6 of t h e 1974 c o n t r a c t , t h e R i c k e t t s and t h e Dozes agree t h a t : ". . . t h e p a r t i e s h e r e t o and each of them do hereby mutually r e l e a s e and discharge t h e o t h e r p a r t y , t h e i r h e i r s , executors, a d m i n i s t r a t o r s , and assigns, from any and a l l l i a b i l i t y and damages whatsoever, i n any way, r e l a t e d t o s a i d c o n t r a c t f o r deed dated March 15, 1973 . . ." Under t h i s c l a u s e of t h e second c o n t r a c t , t h e Dozes agreed n o t t o hold R i c k e t t l i a b l e f o r h i s breach of t h e 1973 con- t r a c t . The c l a u s e a l s o p r o h i b i t s R i c k e t t from suing t h e Dozes f o r damages f o r n o t r e l e a s i n g a p o r t i o n of t h e con- t r a c t property. Both p a r t i e s relinquished l e g a l r i g h t s i n executing t h e 1974 c o n t r a c t . Under t h e second r u l e set o u t above, both p a r t i e s gave consideration f o r t h e second con- t r a c t . The D i s t r i c t Court, t h e r e f o r e , acted properly i n enforcing t h e c o n t r a c t . Affirmed. W e concur: a ' , ~ d P c ~ , ~ CQief J u s t i c e / P -\ C ' f ~ i p - 4; > L ~ A - ~ Jbstices / Mr. Justice Daniel J. Shea concurring: I would affirm the judgment--there was a valid con- sideration 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 con- cerning 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 plain- tiffs 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.