Haarmann v. Davis ( 1983 )

DONNELLY, Judge.

This case was transferred by this Court upon application of plaintiffs-appellants after opinion by the Southern District of the Court of Appeals. Rule 83.03. The trial court judgment was in favor of plaintiffs-appellants in the amount of $3,252.79. The Southern District reversed. We now decide this case as if on original appeal. Mo. Const, art. V, § 10.

Plaintiffs Raymond and Norma Haar-mann, husband and wife, entered as buyers into an “Installment Contract for Sale of Real Estate” on July 8, 1973, with Arrowhead Resorts, Inc., a Missouri corporation. The contract provided that plaintiffs would purchase Lot 24 in a Wayne County subdivision for $2,900, payable by a $300 down payment and monthly payments of $40.53. Total payments, including finance charges, amounted to $3,404.52. The contract called for delivery of a warranty deed conveying merchantable title to the Haarmanns upon completion of the payments. In addition, the contract provided that all covenants and agreements therein contained should extend to and be obligatory upon the successors and assigns of the buyer. There was no analogous provision with respect to the assigns of the seller.

Plaintiffs made the down payment and twelve monthly payments to Arrowhead until July 1974. On July 19, 1974, defendant C. Ivan Davis wrote a letter to plaintiff Raymond Haarmann informing him that the contract between Arrowhead and plaintiffs had been assigned “to myself and wife.” The letter requested that the plaintiffs send the August 1,1974, payment, and all subsequent payments, to Davis. The letter also stated, “Your deed is held by [a specified attorney].... It will be mailed to you upon final payment.” Included with this letter was one dated September 24, 1973, from Arrowhead to the Davises stating that a contract for sale between Arrowhead and the Davises was paid by Arrowhead with its pledge of the Haarmann contract, among others. No copy of that contract for sale was included, nor was such contract later introduced at trial.

From August 1974, until April 1980, plaintiffs made monthly payments to defendants. When the final payment was made, Willodean Davis marked the payment record “paid in full”, signed it, and sent it to the plaintiffs. With the payment record, Davis included a quitclaim deed to Lot 24 in which the Davises were designated grantors and the Haarmanns grantees.

Immediately thereafter, the Haarmanns brought this action against the Davises in two counts, one for actual damages of $3,400 for breach of contract, the other for punitive damages for fraudulent misrepresentation. The Davises offered no evidence, and were not present at trial. The trial court, sitting without a jury, entered in favor of the Haarmanns for $3,252.79. The Davises appealed.

The Davises contend that there was no evidence that they intended or promised to assume the obligations of Arrowhead, or that plaintiffs were led to believe they would, or that plaintiffs changed their position in reliance on such a belief. In particular, they argue that although Arrowhead gave them its right to receive a portion of plaintiffs’ payments by assignment or pledge, they did not thereby assume or intend to assume Arrowhead’s contractual obligations.

By assignment of an executory bilateral contract, an assignor may transfer his rights, intending to perform his duties himself, or he may transfer his rights and delegate the duties. Hahn v. Earth City Corp., 625 S.W.2d 640 (Mo.App.1981), 4 Corbin, Contracts § 906 (1951). Traditionally, the assignee of a seller’s interest in a bilateral executory contract for sale of land is under no obligation to convey the same title, unless he assumes the obligations of the vendor. Pelser v. Gingold, 214 Minn. 281, 8 N.W.2d 36 (1943); Thompson v. Lincoln Nat. Life Ins. Co., 114 Mont. 521, 138 P.2d 951 (1943); East Asiatic Co. v. Corash, 34 A.D.2d 432, 312 N.Y.S.2d 311 (1970); Bimrose v. Matthews, 78 Wash. 32, 138 P. 319 (1914); 92 C.J.S. Vendor & Purchaser, § 310b(3), p. 191. See also 6A C.J.S. Assignments, § 95, p. 750. This holds true even if the contract for sale between the buyer and seller states that it binds their respective assigns. Pelser v. Gingold, supra; Bimrose v. Matthews, supra. The American Law Institute concurs:

“A contracts to purchase land from B. The contract provides that it is to bind the assigns of the parties. A assigns ‘the contract’ to C, and B assigns ‘the contract’ to D. These facts themselves do not show a promise by D; the Institute expresses no opinion as to whether they show a promise by C.”

Restatement, Second, Contracts § 328, Illustration 4.

The general rule in Missouri is “that a mere assignment of rights under an executory contract [pertaining to real estate] does not cast upon the assignee any of the personal liabilities imposed by the contract under the assignor.” Senn v. Manchester Bank of St. Louis, 583 S.W.2d 119, 127 (Mo. banc 1979). Cf. § 400.2-210, RSMo 1978 [pertaining to contract not involving real estate]. However, under certain circumstances, an assignee may be held in Missouri to have impliedly assumed the contractual obligation of the assignor. State ex rel. Hoyt v. Shain, 338 Mo. 1208, 1218, 93 S.W.2d 992, 997 (1936); see also McFarland v. Melson, 323 Mo. 977, 986, 20 S.W.2d 63, 67 (1929) and Carter v. Burns, 332 Mo. 1128, 1143, 61 S.W.2d 933, 940 (1933). We note language in Senn, supra, quoting Walker v. Phillips, 205 Cal.App.2d 26, 22 Cal.Rptr. 727, 731 (1962), to the effect that an assignee’s assumption of the obligations of the contract “may be implied from acceptance of benefits under the contract.” We now disavow such a broad rule. While an assignee’s assumption of contractual obligations may be implied from clear and convincing evidence that the parties agreed to a contract of assumption, mere acceptance of benefits under the contract of sale is not sufficient. However, the result in Senn did not depend upon the Walker Rule, but upon the particular facts of the Senn case. Senn is distinguishable.

As in Shain, supra, there was no express agreement on the part of the Davises to assume personal liability for the obligations imposed upon Arrowhead under the Arrowhead/Davis contract. We turn then to whether a contract of assumption was created by implication. Under the circumstances of this case, the Davises, as assignees, cannot be held to have impliedly assumed the contractual obligations of the assignor. The “Contract of Sale” mentioned in the September 24, 1973, letter from Arrowhead to the Davises was not introduced into evidence. The September 24 letter itself concerns only the right of the Davises to payments under the Arrowhead/Haarmann contract and those between Arrowhead and several other parties. That letter contains no evidence of an assumption of Arrowhead’s obligations under those contracts. The July 19, 1974, letter from Mr. Davis to Mr. Haarmann does state that “Your deed ... will be mailed to you upon final payment.” However, that statement is ambiguous as to the nature of such deed. And, even if the deed referred to was a warranty deed, the statement does not constitute a binding promise from Davis to Haarmann. As it was not accompanied by consideration, it was a nudum pactum. Nor can the July 19, 1974, letter be enforced on the grounds of equitable or promissory estoppel. Both require an injury or detriment resulting from reliance on the acts of another. Peerless Supply Co. v. Industrial Plumbing & Heating Co., 460 S.W.2d 651 (Mo.1970); Edwards v. Smith, 322 S.W.2d 770 (Mo.1959); Katz v. Danny Dare, Inc., 610 S.W.2d 121 (Mo.App.1980). There has been no showing in this case that plaintiffs’ conduct was in any way affected by the letter from Mr. Davis. Nor was Mr. Davis’ statement in the letter that the attorney held the deed shown to be a misrepresentation. In an interrogatory, Davis claimed he understood that the attorney had the deed but later learned that he did not.

The judgment is reversed.

WELLIVER and HIGGINS, JJ. and KELSO, Senior Judge, concur. BLACKMAR, J., dissents in separate opinion filed. RENDLEN, C.J., and GUNN, J., dissent and concur in separate dissenting opinion of BLACKMAR, J. BILLINGS, J., not sitting.