Opinion ID: 879882
Heading Depth: 1
Heading Rank: 4

Heading: breach of the contract.

Text: The Kraviks admit they were unable to obtain a timely release of the mortgage as promised in both contracts. The releases were not obtained until April 11, 1986, and under the terms of the contracts the releases should have been obtained no later than May 31, 1981 for the forty acre tract and January 15, 1983 for the twenty acre tract. The Kraviks maintain, however, that their breach was not a breach which constituted default and was not sufficient enough to allow Sjoberg to stop payments. Instead, they contend that Sjoberg's sole remedy was to continue with the payments and sue for whatever damages he incurred. If a contracting party materially breaches the contract, the injured party is entitled to suspend his performance, and the determination of whether a material breach exists is a question of fact. E. Farnsworth, Contracts, § 8.16 (1982). The contracts included specific provisions directing the mortgage release. The District Court found that the specific purpose of the provision... was to allow Sjoberg to have the property free of the mortgage and subject only to the purchase contract so that he could obtain financing to begin to develop the property as a horse ranch. The District Court concluded that the Kraviks breach was a material breach. We agree with the District Court because the Kraviks breach substantially affected the purpose of the contract. Sjoberg probably would not have entered the contract had he known the mortgage would not be released. We hold that the Kraviks' breach was material and constituted a condition entitling Sjoberg to stop his payments under the contracts. The Kraviks contend that this holding would conflict with the rule that under an installment sales contract the seller does not have to produce marketable title until the date set for final payment and tender of the deed. Scheitlin v. R & D Minerals (Mont. 1985), 701 P.2d 1388, 1390, 42 St. Rep. 986, 988 (citing Silvast v. Asplund (1933), 93 Mont. 584, 592, 20 P.2d 631, 636). However, this decision does not run contrary to this rule because the parties specifically agreed the mortgage would be released no later than one year after the contracts were entered.