SINGLEY, J., delivered the opinion of the Court.
The appellant, Robert L. Spates (Robert), failing in his effort in the Circuit Court for Montgomery County to assert his rights as third-party beneficiary of a separation agreement entered into between his father, Alfred W. Spates (Alfred) and his mother, Helen A. Spates, later Helen A. Ferris (Helen), has taken this appeal.
The facts are essentially these. Alfred and Helen were married in 1929. Two children were born of the marriage, a daughter, Jane, not a party to this cause, and Robert, who was born on 23 March 1932. The marriage deteriorated, and on 10 June 1949, when Jane was 19 and Robert, 17, Alfred and Helen entered into an agreement of separation and property settlement. At the time of the marriage, Alfred was a Montgomery County farmer. When the separation occurred, he was a member of the bar.
At that time, the parties were living on the 180-acre property near Germantown, known as the Musser farm, owned by Alfred. Helen and Alfred, as tenants by the entireties, held title to the Metz farm, containing something less than 100 acres, nearby, the latter farm having been purchased in April 1948 for $12,500.00.
On 28 July 1949, in an action instituted by Helen against Alfred in Carson City, Nevada, in which Alfred
It is the agreement, of course, which is the nub of this controversy. In essence, it provided:
The critical provision which is at issue here is quoted in full:
In October 1952, Helen married Clarence A. Ferris, with whom she lived for a time on the Musser farm, and later in Bethesda. It was not until September 1954 that Alfred gave Helen the note for $10,000.00 payable 10 June 1959, which was called for by the agreement.
On 17 October 1955, Alfred satisfied the $10,000.00 note held by Helen, nearly four years before he was required to do so. On the same day Helen formally released Alfred from any further claim, and by deed in which her then husband, Clarence Ferris, joined, recorded among the Land Records of Montgomery County, conveyed all her right, title and interest in the Metz farm to Alfred.
Robert testified on deposition that he had heard rumors at the time of the divorce that he was to have an interest in the Metz farm. He said that his mother, in 1960 or 1961, shortly before her death in November 1961, had told him that his "father has taken my [Helen's] name off of the deed, of the Metz deed and he didn't put yours [Robert's] on like he was supposed to" but that he did not learn of the provisions of the agreement of separation and property settlement until September of 1970, when a friend obtained a certified copy of the Nevada divorce proceedings.
In June 1969, Alfred had sold 138 acres out of the Musser tract for $829,500.00, and later sold an additional
In May of 1970, Robert had asked James T. Lynch, a neighbor and a lawyer, to examine the Montgomery County Land Records with a view of determining whether Robert had any interest in the Metz farm. When the examination developed no indication of such an interest, Lynch suggested that he examine the record of the Nevada divorce proceeding on his way to California. As it turned out, he was unable to do this for several months, but when he located the decree in August of 1970, he telephoned Robert.
In September of 1970, Robert brought suit against Alfred, asking that full faith and credit be given the Nevada decree, seeking an accounting for one-half of the profits derived from the Metz farm, asking that a trust be imposed on all sums received by Alfred, praying that an injunction be issued against the making of further payments by the contract purchasers, and seeking a partition of the real property and an award of exemplary damages. Alfred answered, alleging that the property settlement agreement had been fully performed by his payment of $10,000.00 to Helen and the delivery of her release and deed, and interposing the defense of limitations and laches.
The lower court concluded that Alfred and Helen had the right to rescind the agreement, and did in fact rescind it; that their ability to effect a rescission was not altered by the incorporation of the agreement in the Nevada decree, and that additionally, Robert's suit was barred by limitations and laches. From an order dismissing
The critical thrust of Robert's argument is twofold:
We shall consider these contentions in order.
(i)
The right of third parties to sue and recover on a contract of which they were intended beneficiaries but to which they were not privy (although they must be privy to the promise) is well recognized in Maryland. Compare Shillman v. Hobstetter, 249 Md. 678, 687-90, 241 A.2d 570 (1968) with Hamilton & Spiegel, Inc. v. Board of Education of Montgomery County, 233 Md. 196, 199, 195 A.2d 710 (1963); Marlboro Shirt Co. v. American Dist. Telegraph Co., 196 Md. 565, 569, 77 A.2d 776 (1951) and Mackubin v. Curtiss-Wright Corp., 190 Md. 52, 56-57, 57 A.2d 318 (1948). See also Restatement, Contracts § 133, at 151 (1932); 4 Corbin on Contracts §§ 772, 776, at 2, 14 (1951); 2 Williston on Contracts § 356, at 823 (3d ed. Jaeger 1959). We have also adopted the definitions of donee beneficiary, creditor beneficiary and incidental beneficiary contained in Restatement, Contracts § 133, at 151-52 (1932); Marlboro Shirt Co. v. American Dist. Telegraph Co., supra, 196 Md. at 571-72.
While we have been referred to no Maryland case, the old Restatement rule is that the promisor and promisee can make no change in the promise made to a donee beneficiary unless such a power is reserved, Restatement,
What takes this case out of the majority rule, as adopted by the Restatement (Second), Contracts § 142 (Tent. Draft 1967), however, is that Robert was 17 at the time the agreement of separation and property settlement was entered into. There is substantial authority for the view that once an infant is made the donee beneficiary of a contract between a promisor and promisee, his acceptance of the benefit is assumed, and his rights under the contract are indefeasible, unless he rejects the benefits, or a right to alter the provision made for him has been reserved, 2 Williston, supra § 396, at 1067; see 4 Corbin, supra § 814, at 247 (1951, Supp. 1971, at 97-98) and Restatement (Second), Contracts § 142, comment d, at 60 (Tent. Draft No. 3, 1967). There is what Williston terms "weighty authority" in support of this view: James v. Pawsey, 162 Cal.App.2d 740, 328 P.2d 1023, 1028 (1958); Waterman v. Morgan, 114 Ind. 237, 16 N.E. 590, 592 (1888); Henderson v. McDonald, 84 Ind. 149, 153 (1882); Rhodes v. Rhodes, 266 S.W.2d 790, 792-93 (Ky. 1953); Quinn v. Thigpen, 266 N.C. 720, 147 S.E.2d 191, 194 (1966); Thayer v. Thayer, 189 N.C. 502,
In a proper case, we might well adopt this line of authority, which is urged on us by Robert. Here, we do so only for purposes of argument, to the end that we may consider the defense of limitations, relied upon by Alfred.
(ii)
The agreement of separation and property settlement was not under seal, and standing alone, would have been subject to the three year statute of limitations provided by Maryland Code (1957, 1972 Repl. Vol.) Art. 57, § 1. However, once the agreement was incorporated into a decree, we shall assume for the purposes of the case that the agreement was subject to the 12 year period applied to specialties by Code Art. 57, § 3, see Bradford v. Futrell, 225 Md. 512, 522-23, 171 A.2d 493 (1961); Marshall v. Marshall, 164 Md. 107, 114-15, 163 A. 874 (1933).
4 Corbin, supra § 820, at 278-81 suggests that concomitantly with the fiction of the minor donee's acceptance or consent should run an equally artificial concept — that limitations run from the date of the breach.
We readily concede that the idea that limitations run against a third-party beneficiary who is a minor from
Lord Blackburn's comment in Kendall v. Hamilton, 4 Appeal Cases 504, 544 (1879) cited by Corbin, seems especially apt, particularly if paraphrased by the insertion of names:
Robert attained age 21 on 23 March 1953, and had the statute commenced to run when the agreement was signed (on the theory that Alfred and Helen undertook to vest an immediate one-third interest in the Metz farm in Robert), except for its having been tolled during his minority, any action by Robert was barred in 1965. Even if we follow the normal rule that limitations run from the date when the cause of action arose under that portion of the contract which was executory and not from the date of the promise, Killen v. George Washington Cemetery, 231 Md. 337, 343, 190 A.2d 247 (1963); Winand v. Case, 154 F.Supp. 529, 536 (D. Md. 1957), the breach by Helen (or by Helen and Alfred) in October 1955 could not be the subject of a suit after October 1967.
As a consequence, Robert's action was barred by limitations. Although he sued in equity, he could have sued at law for damages, with the result that limitations are applied in equity by analogy where the remedies are
The court below (Joseph M. Mathias, J.) made a specific finding on the evidence that Alfred thought he and Helen "were free to deal with the Metz farm as they chose and that there was no deliberate or fraudulent attempt to deprive Robert of any legal interest he may have had," a finding which we shall not disturb, Maryland Rule 886.
By 1961, Robert knew that Helen believed the agreement to have been breached. He not only took no action then (when he could have done so) but according to his own testimony and that of his father, Robert never discussed the matter with Alfred at any time prior to the institution of suit. If the result seems harsh, it was the bitter fruit of Robert's inertia.
Order affirmed, costs to be paid by appellant.
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