Opinion ID: 1160469
Heading Depth: 3
Heading Rank: 1

Heading: Joyner Created a New Agreement, with Vitale as a Third-Party Beneficiary.

Text: Judge Souter found that a valid contract existed between Joyner and the Karpinia estate, that Vitale was a third-party beneficiary of that contract, and that the contract required Joyner to pay Vitale $40,000, unconditionally, at 5% interest. His factual findings in this matter find ample support in the record, and his decision is correct as a matter of law. A valid purchase contract existed between Joyner and the Karpinia estate, with consideration received by both sides. Consideration may consist of performance for ... a third party. Johnson v. Schaub, 867 P.2d 812, 817 (Alaska 1994). The statutory warranty deed expressly provided that the Karpinia-Joyner sale was subject to the Vitale deed of trust and that Joyner assumed the obligation on the deed of trust. The purchase deed was consistent with the language of the pre-deed agreements, which included the earnest money agreement, the escrow instructions addendum, and the settlement sheet. Walter Karpinia, Jr. also testified that Joyner orally agreed to satisfy the debt to Vitale. Each of the three pre-deed agreements indicates that Joyner agreed to value the obligation to Vitale that he assumed at $40,000. When a purchaser assumes a mortgage, under the most common view, the mortgagee is a third-party beneficiary of the contract between mortgagor and purchaser. Grant S. Nelson & Dale A. Whitman, Real Estate Finance Law 319 (3d ed. 1993); 4 Corbin on Contracts § 796 at 146 (1951); John D. Calamari & Joseph M. Perillo, The Law of Contracts 703 (3d ed. 1987). A mortgagee may recover, as a third-party beneficiary of the assumption agreement, from a purchaser who assumed the mortgage. Cleveland Trust Co. v. Elbrecht, 137 Ohio St. 358, 30 N.E.2d 433, 435-36 (1940); Restatement (Second) of Contracts, § 304 & illus. 2 (1981); 2 Williston on Contracts § 382 at 1024 (3d ed. 1959). As a third-party beneficiary of the Karpinia-Joyner contract, Vitale may recover from Joyner. Furthermore, a third-party beneficiary's right against the promisor is not subject to claims and defenses of the promisee against the beneficiary unless the contract so provides. Restatement (Second) of Contracts § 309, cmt. c & illus. 11 (1981); see also Williston, supra, § 386A at 1044-45. Under this rule, and because the Karpinia-Joyner contract did not provide for Joyner to invoke Karpinia's defenses against Vitale, Joyner may not do so. Therefore, Joyner may not raise defenses, including those under the statute of limitations, that Karpinia might have asserted against Vitale. Under the purchase and assumption agreements, Joyner promised that he would honor the Karpinia estate's debt to Vitale. He agreed to pay Vitale $40,000 at 5% interest. Karpinia's attorney, executor and heirs believed that this payment would satisfy the Karpinia estate's obligation to Vitale, as did Vitale. Joyner kept private his doubts about the validity and amount of that obligation. The law simply requires Joyner to honor his contractual promise. Therefore, Joyner is obligated to pay Vitale $40,000 at 5% interest.