Callano v. Oakwood Park Homes Corp.
219 A.2d 332 (1966)
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Rule of Law:
A party is not liable under a theory of quasi-contract for a benefit received when the plaintiff conferred that benefit pursuant to an express contract with a third party, and a legal remedy exists against that third party.
Facts:
- Oakwood Park Homes Corp. (Oakwood), a housing developer, contracted to sell a lot with a house to be built on it to Bruce Pendergast.
- Before the house was completed, Pendergast entered into a contract with Julia and Frank Callano, who operated a plant nursery, to deliver and plant shrubbery on the property.
- The Callanos delivered and planted the shrubbery, and a representative from Oakwood had knowledge of this action.
- Pendergast never paid the Callanos the $497.95 invoice price for the shrubbery.
- Shortly after the shrubbery was planted, Pendergast died.
- Following Pendergast's death, Oakwood and Pendergast's estate mutually cancelled the contract for the sale of the house.
- Oakwood subsequently sold the property, including the value-enhancing shrubbery, to another buyer.
Procedural Posture:
- Julia and Frank Callano sued Oakwood Park Homes Corp. in the Monmouth County District Court, which is the trial court.
- The trial court entered a judgment in favor of the plaintiffs, the Callanos, for $475.
- The defendant, Oakwood Park Homes Corp., appealed the judgment to the Superior Court of New Jersey, Appellate Division.
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Issue:
Does a quasi-contractual obligation to pay for a benefit arise when a plaintiff bestows the benefit under an express contract with a third party, and not the defendant, where the plaintiff has a legal remedy against the third party?
Opinions:
Majority - Collester, J.A.D.
No, a quasi-contractual obligation does not arise under these circumstances. To recover on a theory of quasi-contract, a plaintiff must prove not only that the defendant was enriched, but also that the retention of the benefit without payment would be unjust. Here, while Oakwood was enriched by the value of the shrubbery, its retention of that benefit was not unjust because the Callanos had an express contract with Pendergast and expected payment from him, not from Oakwood. The doctrine of quasi-contract was developed to provide a remedy where none existed; here, the Callanos have a remedy against Pendergast's estate. The court will not employ the legal fiction of quasi-contract to substitute one debtor for another.
Analysis:
This case sharply defines the limits of the unjust enrichment doctrine. It establishes that the existence of an express contract is paramount and that a plaintiff cannot bypass that contract to seek a remedy from a third party who was incidentally enriched. The decision prevents parties who enter into a contract from shifting the risk of nonpayment to a third party who was not privy to the original agreement. This solidifies the principle that quasi-contract is a remedy of last resort, unavailable when a direct remedy against the contracting party exists.
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