## Facts

- M. Davey and H. Koessler (sellers) sold farm property to Edward Nessan and Donald DuBeau (buyers) using contracts for deed requiring installment payments while the sellers retained legal title until paid in full.
- Connecticut Mutual Life Insurance Company (Mutual) loaned money to Nessan and DuBeau to finance the purchases and took a security interest in the buyers’ interests in the contracts for deed.
- At Mutual’s request, the sellers and Mutual also signed a separate written agreement addressing what could happen if the buyers defaulted on the contracts for deed.
- That agreement gave Mutual the right to make the contract-for-deed payments “at its election and without obligation” if the buyers defaulted.
- Nessan and DuBeau later defaulted on their loan to Mutual, and Mutual acquired the buyers’ interests in the farms/contracts for deed to satisfy its loan.
- After acquiring those interests, Mutual made the installment payments due to the sellers for several years.
- Mutual eventually reconveyed the farms back to the sellers, and the sellers accepted possession.
- Despite retaking possession, the sellers sued Nessan, DuBeau, and Mutual seeking to recover the remaining unpaid balances claimed due under the contracts for deed, arguing Mutual had assumed the buyers’ payment obligations.
- The trial court dismissed Mutual from the suit, and the remaining parties appealed that dismissal.

## Issues

1. Whether an assignee of a buyer’s interest under a contract for deed becomes personally liable for the buyer’s installment-payment obligations without an express assumption of those duties.
2. Whether Mutual’s acquisition of the buyers’ interests and its subsequent years of installment payments could create an implied assumption of the buyers’ duties despite contract language allowing payment “at its election and without obligation.”

## Decision

- The Montana Supreme Court affirmed the trial court’s dismissal of Mutual.
- The court held Mutual did not assume Nessan’s and DuBeau’s obligations under the contracts for deed.
- The separate agreement’s “at its election and without obligation” language granted Mutual a discretionary right to pay to protect its security interest, not a promise to become the payor on the contracts for deed.
- Mutual’s conduct in making payments for several years did not impose personal liability where there was no express assumption and the written agreement negated any obligation.

## Legal Principles

- An assignment transfers contract rights but does not, by itself, transfer the assignor’s contractual duties to the assignee.
- An assignee becomes liable for the assignor’s duties only by an express assumption of those duties.
- When a written agreement states an assignee may perform “without obligation,” courts will not treat voluntary performance as an assumption of the underlying debt.
- A lender’s payment of installments to protect collateral, without an express assumption, does not make the lender the buyer-obligor on a contract for deed.

## Conclusion

The Montana Supreme Court held that Connecticut Mutual’s acquisition of the buyers’ contract-for-deed interests and its voluntary installment payments did not make it responsible for the remaining balances because Mutual never expressly assumed the buyers’ payment duties, and the parties’ separate agreement expressly permitted payment “at its election and without obligation”; accordingly, dismissal of Mutual was proper.


Davey v. Nessan, 830 P.2d 92 (1992)