Opinion ID: 2589246
Heading Depth: 3
Heading Rank: 1

Heading: Breach of Contractual Obligation to a Third Party Beneficiary

Text: M & D argues on appeal that M & D was a third party beneficiary of the Thomas/Clegg agreement and specifically agreed to obtain financing to timely pay off M & D's interest in Calderwood. The portion of the Thomas/Clegg agreement which Blickenstaff alleges designates M & D as a third party beneficiary states: FUTURE OBLIGATIONS: Clegg and Thomas shall jointly sign such personal guarantees as deemed necessary by lenders for all future loans to Calderwood including the funds to pay off M & D Trust for the purchase of it's twenty seven (27%) percent interest for Seven Hundred Fifty Thousand ($750,000.00) Dollars. The district court found that M & D did not establish that the Thomas/Clegg agreement was made for M & D's benefit and that the agreement did not impose on Thomas or Clegg any duty to cause Calderwood to seek funds necessary for Calderwood to pay M & D in a timely manner. We agree with the district court. We have held that a contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it. Lewis v. CEDU Educational Services, Inc., 135 Idaho 139, 142, 15 P.3d 1147, 1150 (2000). However, before recovery can be had by a third party beneficiary, it must be shown that the contract was made for his direct benefit ... and that it is not sufficient that he be a mere incidental beneficiary. Dawson v. Eldredge, 84 Idaho 331, 337, 372 P.2d 414, 418 (1962). The language in the Thomas/Clegg agreement simply states that Thomas and Clegg were obligated to sign whatever documents may have been required by a lender in order to obtain financing to buy out M & D's interest in Calderwood. The language is clear that all Thomas and Clegg were stating in the agreement was that they would do what a lender may require, but it does not specifically guarantee they would obtain financing to pay off M & D. Accordingly, under the clear terms of the agreement M & D was not an intended beneficiary of any promise on the part of Thomas and Clegg. M & D argues the Thomas/Clegg agreement is ambiguous and that our precedent in such cases allows the court to consider the surrounding circumstances in addition to the document itself. We do not find the agreement to be ambiguous and accordingly decline to consider M & D's related arguments.