Opinion ID: 886660
Heading Depth: 1
Heading Rank: 5

Heading: issues

Text: ¶ 29 Did the District Court err in concluding J.G.L.'s breach of contract in assigning the Option to Hobbs was not sufficient to warrant a forfeiture of J.G.L.'s rights under such Option? ¶ 30 The Nicholsons appeal the District Court's conclusion that even though J.G.L. breached that portion of the Option requiring written consent to assignment of J.G.L.'s rights under the contract, the breach did not terminate J.G.L.'s rights under the Option. ¶ 31 The Nicholsons assert it is important for the general public to know that if a contract states it is not assignable, then it is not assignable. The Nicholsons further assert, in breaching the consent to assignment clause, J.G.L. defeated every purpose the Nicholsons had in entering the contract. We disagree. ¶ 32 First, it is well settled law in Montana that contract clauses requiring consent prior to assignment are enforceable, and that any assignment in violation of such clause is void. See, e.g., Hedges v. Woodhouse, 2000 MT 220, ¶ 13, 301 Mont. 180, ¶ 13, 8 P.3d 109, ¶ 13; Rother-Gallagher v. Montana Power Co. (1974), 164 Mont. 360, 364, 522 P.2d 1226, 1228. It is also well settled that where the contract contains such a clause, assignment without consent destroys or precludes the establishment of privity between an alleged assignee and the other party. Rother-Gallagher, 164 Mont. at 364, 522 P.2d at 1228. However, as J.G.L. and Hobbs point out, this does not answer the question of what affect the voided assignment has on the rights of J.G.L. ¶ 33 In determining remedies for breach of contract, Montana distinguishes between material breaches, which entitle the non-breaching party to terminate the contract, and incidental breaches, which only entitle the non-breaching party to sue for damages. Norwood v. Service Distributing Inc., 2000 MT 4, ¶ 29, 297 Mont. 473, ¶ 29, 994 P.2d 25, ¶ 29. A material breach is one that touches the fundamental purpose of the contract and defeats the object of the parties in making the contract. Norwood, ¶ 29. The party claiming a material breach must show the deficient performance on the part of the other party is, in fact, material to the contract. Norwood, ¶ 33. ¶ 34 The District Court concluded, violation of [the consent to assignment clause] was not of such consequence to be considered a material breach of contract. The facts, that is, what happened here, are not at issue. Based on our review of the record, we hold the District Court's conclusion was correct when the law is applied to the facts presented. We fail to see how every purpose the Nicholsons had in entering the Option was defeated by the assignment. By their own admission, the Nicholsons were not aware of the assignment until after they sent notice of forfeiture to J.G.L. for missing the April 2001 payment, and they suffered no damage as a result of the assignment. ¶ 35 The assignment only became material to the Nicholsons once they realized they could sell two lots in the newly subdivided property for an additional profit of $135,000 and retain the remaining lot for themselves. To hold the assignment in question would be a material breach of the contract extinguishing J.G.L.'s right to exercise its option to purchase would cause the Nicholsons to be unjustly enriched. See Erban v. Monforton (1987), 227 Mont. 531, 740 P.2d 677.