Lonsdale v. Chesterfield

In 1968, Chesterfield Land, Inc. (Chesterfield) (defendant), a land developer, developed a community known as Sansaria (defendant) on the Oregon coast. Chesterfield then sold 81 plots in the development to various purchasers via real estate contracts. In each of these contracts, Chesterfield agreed to install a water system for use of the plot. In turn, each purchaser agreed to pay a portion of the installation and use of the water system. Chesterfield later sold some of its vendor’s interest in these real estate contracts to investors, including Lonsdale (plaintiff). The investors received an assignment of Chesterfield’s interest in the plots as well as a deed to the land corresponding to the real estate contract. The purpose of providing the investors with the deed was to enable them to secure payment of any outstanding balance on the real estate contract. In 1969, Jack Chesterfield, owner of Chesterfield, died. His widow sold the remaining undeveloped portion of the development to Sansaria. Sansaria took on Chesterfield’s obligation to install a water system on each plot, including the portion of Chesterfield’s obligation that was already sold via the real estate contracts. Despite this arrangement, neither Chesterfield nor Sansaria ever completed installation of the water systems. As a result, many of the purchasers of the plots through the real estate contracts defaulted. Several obtained judgments against Chesterfield and Sansaria. As a result of these judgments, the investors’ interests in the property (including the interest of Lonsdale) became worthless. Lonsdale and the other investors brought suit in Washington state court against Chesterfield, seeking to recover for Chesterfield’s failure to install the water system. Lonsdale and the other investors also sued Sansaria on the ground that they were third party beneficiaries of the contract between Chesterfield and Sansaria whereby Sansaria assumed Chesterfield’s obligation to install water systems. The trial court concluded that Lonsdale and the investors were not third party beneficiaries and dismissed the case. After several appeals on other issues, Lonsdale and the other investors now raise the issue of whether they are third party beneficiaries on appeal.