No. 13750
IN THE SUPREME COURT OF THE STATE OF MONTANA
1977
GAMBLES, a corporation,
Plaintiff and Appellant,
-vs-
JOHN M. PERDUE,
Defendant and Respondent.
Appeal from: District Court of Eighteenth Judicial District,
Hon. W. W. Lessley, Judge presiding.
Counsel of Record:
For Appellant:
Landoe, Gary & Planalp, Bozeman, Montana
For Respondent:
William E. Gilbert, Bozeman, Montana
Submitted on Appellant's brief
Submitted: September 6, 1977
Decided: i j ~ 2 8
c 193
Filed: ~ ~ , z-. :-? , -,:j+[j
.
.
-' -
Mr. Justice Frank I. Haswell delivered the Opinion of the Court.
A retail store sued a purchaser to recover an indebtedness
under two written installment contracts covering the purchase and
installation of carpeting in the purchaser's residence. After
execution of the contracts and installation of the carpeting, the
purchaser's wife secured a divorce, was awarded the residence
wherein the carpeting was installed, and was made solely respon-
sible for all indebtedness on the property. Following a nonjury
trial, the district court, Gallatin County, denied relief to the
retail store, entering judgment for the purchaser on the grounds
that all proper parties were not before the court. The retail store
appeals.
This appeal is prosecuted on the basis of an agreed state-
ment of the case in lieu of the usual record on appeal. The agreed
facts disclose that on March 1, 1974 and 'again on November 24,
1974, John Perdue, defendant, entered into separate retail
installment contracts with Gambles, the plaintiff, covering the
purchase and installation of carpeting in his residence. At the
time these contracts were executed defendant was married to Anna
Perdue.
On February 1, 1976, defendant owed plaintiff a balance of
$309.56 under the contracts, exclusive of attorney fees and costs
provided for therein.
On February 10, 1976, defendant and his wife were divorced.
Under the terms of the decree, Anna was awarded the marital res-
idence in which the carpeting had been installed "subject to the
indebtedness owing".
On October 12, 1976, plaintiff sued defendant for the balance
owing on the installment contracts in the justice court of Gallatin
County. Following trial, plaintiff's complaint was dismissed.
Thereafter plaintiff appealed to the district court, Gallatin
County. Plaintiff filed an amended complaint seeking recovery of
the balance owing on the contracts, finance charges, attorney
fees and costs. Defendant's answer was a general denial and
an affirmative defense that he was not responsible for the
contractual debt because the property in the contracts had been
awarded to Anna in the divorce decree.
On January 3, 1977 the district court heard the case
without a jury. Plaintiff and defendant stipulated that there
was no dispute as to the signing of the contracts nor to the facts
of the divorce decree.
On January 12, 1977 the district court entered findings
of fact, conclusions of law and judgment to the effect that plain-
tiff take nothing by its complaint and judgment be awarded to
defendant as all proper parties were not before the court. Plain-
tiff now appeals from this judgment.
The parties by written stipulation have submitted this
appeal for decision without oral argument on the basis of appellant's
brief, the agreed statement of fact, and the district court file.
The sole issue on appeal as stated by appellant is whether
all of the proper parties were before the district court.
Plaintiff's argument before the district court was that
plaintiff and defendant were the only contracting parties and no
privity of contract existed between plaintiff and any other parties;
that the divorce decree could not affect plaintiff's property
rights because plaintiff was not a party to the divorce proceedings;
and the contracts contained a nontransferability clause.
Defendants argument to the district court was that the
divorce court had the equitable power to transfer defendant's
property to Anna; that the indebtedness on the residence including
the carpeting contracts were transferred to Anna; and therefore
plaintiff's remedy was against Anna, and not against defendant.
In this case Gambles sued John Perdue for an indebtedness
he assumed by written contract. Gambles sought a personal judg-
ment against him for this indebtedness. The only contracting
parties were Gambles and John Perdue. The general rule applicable
here is that the obligation of the contracts is limited to the
contracting parties:
"As a general thing, the obligation of contracts
is limited to the parties making them, and, ordinarily,
only those who are parties to contracts are liable
for their breach. Parties to a contract cannot thereby
impose any liability on one who, under its terms,
is a stranger to the contract, and, in any event, in
order to bind a third person contractually, an expression
of assent by such person is necessary." 17 Am Jur 2d,
Contracts, S 294.
Again, in Thompson v. Lincoln Ins. Co. (1943), 114 Mont.
521, 530, 138 P.2d 951, where decedent's administrators sued
the assignee of an executory contract, this Court stated:
" * * * It is elementary law that a contract binds no
one but the contracting parties. * * * " Also see: Hyink
v. Low Line Irrigation Co. (1922), 62 Mont. 401, 205
P. 236.
It is axiomatic that the contracting obligee cannot be
deprived of recourse against the contracting obligor by a
substitution of debtors without the former's consent. Thus
John Perdue remained liable to Gambles for the indebtedness
under the installment contracts notwithstanding the provisions
of the divorce decree.
We hold that all proper parties were before the district
court. Anna was not a proper party because she was not a party
to the installment contracts. Gambles sought no relief against
Anna nor any relief involving repossession of the carpeting,
only a personal judgment for the contractual indebtedness against
John. John did not file a third party complaint against Anna to
determine the respective obligations between themselves. Under
such circumstances Gambles cannot be deprived of its remedy against
John by reason of a collateral occurrence to which it was not a
party. The transfer of the indebtedness from John to Anna in the
divorce decree bound only the parties to it, John and Anna;
just as the contractual indebtedness of John to Gambles bound only
the parties to the contract, John and Gambles.
The findings of fact, conclusions of law and judgment of
the district court arevacated. The case is remanded to the district
court with directions to determine the amount of John Perdue's
obligation to Gambles under the terms of the installment contract
and to enter findings of fact, conclusions of law and judgment in
favor of Gambles accordingly.
Justice
Wd2-& ustices
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