In Re Marriage of Smith & Maescher
93 Cal. Daily Op. Serv. 9471, 26 Cal. Rptr. 2d 133, 21 Cal. App. 4th 100 (1993)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
When a promisor breaches a contract benefiting a third-party donee beneficiary, the promisee's remedy is limited to specific performance or nominal damages; the promisee cannot recover monetary damages equal to amounts they voluntarily paid to or on behalf of the beneficiary.
Facts:
- In 1976, Donald Maescher and Daphne Smith entered into a marital separation agreement.
- The agreement obligated Maescher to pay for the undergraduate college education of their son, Peter.
- Maescher paid for Peter's first three years of college.
- For Peter's senior year, Maescher informed Peter he would only reimburse tuition costs if Peter achieved a 'B' average, and would only pay for room and incidental expenses upfront.
- After Peter was denied financial aid, Smith loaned him $11,109 to cover his tuition and other expenses for his senior year.
- Peter did not achieve a 'B' average during his senior year.
Procedural Posture:
- Daphne Smith filed a complaint against Donald Maescher in a California trial court to enforce their marital separation agreement.
- Smith sought reimbursement for college expenses she advanced to their son Peter, and for alleged child support arrearages.
- The trial court denied Smith's claim for child support but awarded her $11,109 for the college expenses and $1,000 in attorney fees.
- Maescher, as appellant, appealed the trial court's order regarding the college expenses and attorney fees to the intermediate court of appeal.
- Smith, as appellee and cross-appellant, cross-appealed the denial of her child support claim.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a promisee in a third-party beneficiary contract, where the beneficiary is a donee, have a right to recover monetary damages from the promisor for breach, equal to the amount the promisee voluntarily loaned to the beneficiary?
Opinions:
Majority - Work, J.
No. A promisee in a third-party donee beneficiary contract is limited to seeking specific performance or recovering nominal damages for the promisor's breach. The court reasoned that Peter was a 'donee' beneficiary, not a 'creditor' beneficiary, because Smith had no independent legal obligation to pay for his college education. When Maescher breached his promise, Smith suffered no direct legal or economic injury, as she was not liable to Peter for the tuition. Her decision to loan Peter the money was a voluntary act that did not create a right to recover those funds from Maescher as damages. The proper remedy for a promisee in this situation is to sue for specific performance to compel the promisor to fulfill their obligation directly to the beneficiary.
Analysis:
This decision clarifies the distinct remedies available to a promisee based on the type of third-party beneficiary. By adopting the principles from the Restatement (Second) of Contracts, the court solidifies the rule that a promisee for a donee beneficiary suffers no recoverable financial damages from a breach. This precedent directs promisees in similar family law and contract disputes away from seeking monetary reimbursement and towards the equitable remedy of specific performance. The ruling prevents a promisee from unilaterally creating their own damages by voluntarily covering a promisor's defaulted obligation and then seeking repayment.
