Sedgwick v. Blanchard
174 N.W. 459, 1919 Wisc. LEXIS 15, 170 Wis. 121 (1919)
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Rule of Law:
A third-party beneficiary's rights under a contract are extinguished when the promisor breaches the agreement, the promisee reclaims the property, and the contract contains an express provision rendering it null and void upon such a breach.
Facts:
- On December 31, 1904, H. C. Blanchard contracted with his son, E. B. Blanchard, to transfer the family farm.
- The contract required E. B. Blanchard to support his father for life and, upon his father's death, to convey an 80-acre parcel of the farm to his sister, Edith Sedgwick.
- The contract expressly stated that failure by E. B. Blanchard to perform any condition would render the contract 'null and void.'
- On July 8, 1905, after performing for a year and a half, E. B. Blanchard became dissatisfied, breached the contract, and abandoned the farm.
- Following the breach, H. C. Blanchard re-entered and resumed exclusive control of the premises.
- About a month later, H. C. Blanchard induced his son to return under a promise of 'better terms,' and the son resumed supporting his father.
- On March 11, 1915, H. C. Blanchard executed a new deed conveying the entire farm to his son, with the new condition that the son pay Edith Sedgwick $1,000 upon the father's death.
- H. C. Blanchard died on March 23, 1915.
Procedural Posture:
- This case had a prior appeal (164 Wis. 421) where the court's decision was based on pleadings that did not allege the 1905 breach and abandonment.
- Following the prior appeal, the case went to trial where the court of first instance made findings of fact including the 1905 breach, abandonment by the son, and re-entry by the father.
- The trial court entered a judgment in favor of the plaintiff, Edith Sedgwick.
- The defendant, E. B. Blanchard, appealed that judgment to the Supreme Court of Wisconsin.
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Issue:
Does a third-party beneficiary retain enforceable rights under a contract after the promisor has breached the agreement, the promisee has re-entered the property, and the contract itself contains a provision rendering it null and void upon such a breach?
Opinions:
Majority - Owen, J.
No. A third-party beneficiary's rights are terminated when a contract is voided according to its own terms following a breach and re-entry by the promisee. The court reasoned that the plaintiff's rights were entirely dependent on the 1904 contract. That contract was terminated on July 8, 1905, when E. B. Blanchard breached it and H. C. Blanchard re-entered the property, triggering the contract's 'null and void' clause. This distinguished the case from precedents like Wetutzke v. Wetutzke, where no such termination clause or re-entry existed. Once the original contract was voided, it had no more existence than if it had never been executed, leaving the father and son free to enter into a new arrangement as if they were strangers.
Analysis:
This decision places a significant limitation on the doctrine of third-party beneficiary rights, clarifying that such rights are not indefeasible. It establishes that the original parties to a contract can extinguish a beneficiary's vested rights without their consent if the contract includes a specific termination or forfeiture clause that is triggered by a material breach. This ruling provides contracting parties with a clear mechanism to rescind an agreement that benefits a third party, emphasizing the importance of the contract's express terms over the beneficiary's expectations. Future cases will likely distinguish between contracts with and without such 'null and void' provisions when determining the durability of a third-party's rights.
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