Opinion ID: 1734218
Heading Depth: 1
Heading Rank: 5

Heading: agreement for option to purchase real estate

Text: This Agreement made and entered into... by and between ... Moody, hereafter Seller, and [the brother] and [the nephew], hereafter Buyer, jointly or severally. WHEREAS, Seller and Buyer had on September 29, 1993 made an oral agreement that [the nephew] would bid at the sale of the real property of the Estates of [the personal representatives' parents] ... for ... Moody as real purchaser, who would pay the consideration for the purchase, and in whose name the real property would be placed as buyer.... .... NOW THEREFORE ... Moody does grant to [the brother] and [the nephew] an option to buy the premises on the following terms and conditions which are intended to conform to the terms of the purchase of the real estate by ... Moody from the Estates of [the personal representatives' parents]. But the brother's rights under the foregoing option agreement are irrelevant to this inquiry, as in this suit his rights depend on the contract which allegedly arose out of the auction of the lands. The only parties to that putative contract are the estates and Moody. However, because an agent who, on behalf of an undisclosed principal, enters into a contract in the agent's own name is entitled to maintain an action thereon in the agent's own name, the nephew has standing to sue on this putative contract. See Harold G. Reuschlein & William A. Gregory, The Law of Agency and Partnership § 134 (2d ed. 1990). See, also, Smith v. Orion Insurance Company, 298 F.2d 528 (10th Cir.1961); Baumgartner v. Burt, 148 Colo. 64, 365 P.2d 681 (1961); Branch Banking & Trust Co. v. Bank of Washington, 255 N.C. 205, 120 S.E.2d 830 (1961). As the brother was neither a party to the putative contract nor acting as Moody's agent, he has no rights under the putative contract unless he qualifies as a third-party beneficiary thereof. In order for those not named as parties to a contract to recover thereunder as third-party beneficiaries, it must appear by express stipulation or by reasonable intendment that the rights and interests of such unnamed parties were contemplated and provision was made for them. A third-party beneficiary's rights depend upon, and are measured by, the terms of the contract between the promisor and promisee. Properties Inv. Group v. Applied Communications, 242 Neb. 464, 495 N.W.2d 483 (1993). See, also, Larsen v. First Bank, 245 Neb. 950, 515 N.W.2d 804 (1994); Lauritzen v. Davis, 214 Neb. 547, 335 N.W.2d 520 (1983). Thus, for the brother to qualify as a third-party beneficiary to the putative contract, it must appear that his rights and interests were contemplated by the parties thereto and that provision was made for them. The rights and interests of third parties are not normally taken into consideration by the seller at an auction; such a seller is interested only in receiving the highest bid possible from a group of potential buyers. It cannot be said that if the nephew's bid was accepted and therefore a valid contract resulted, the brother's rights and interests were taken into consideration by the estates. Thus, the evidence fails to establish that the brother's rights and interests were contemplated in the putative contract. As the brother was neither the agent for an undisclosed principal to the putative contract nor a third-party beneficiary thereunder, it necessarily follows that he does not have standing to enforce the putative contract and is, for that reason, not a proper party to this action. Accordingly, the remainder of the analysis which follows relates only to issues existing between the personal representatives and the nephew.