United States Court of Appeals, Sixth Circuit
877 F.2d 453 (1989)
Mr. Wood and Mrs. Wood (defendant) were married and owned a piece of property. Mr. Wood owed a significant amount of unpaid federal taxes to the United States (plaintiff). Mr. Wood and Mrs. Wood planned to get a divorce. The Woods entered a property settlement agreement in contemplation of the divorce. Under the settlement agreement, Mr. Wood agreed to convey his entire interest in their shared property to Mrs. Wood if Mrs. Wood would agree to sell the property and use the proceeds to pay the tax debts owed by Mr. Wood to the United States. Upon executing this agreement, Mr. Wood notified a representative of the United States of the settlement agreement with Mrs. Wood. Mr. Wood later agreed to give up any future interest he might have in the property or right of redemption should the property be sold for significantly less than its value at public auction. Mr. and Mrs. Wood outlined this condition in an addendum to the settlement agreement. Mr. Wood conveyed his interest in the property to Mrs. Wood and Mrs. Wood sold the property. Mrs. Wood refused, however, to use the proceeds to pay the federal taxes owed by Mr. Wood. The United States brought suit in federal district court against Mrs. Wood seeking to recover the amount of unpaid taxes she agreed to assume for Mr. Wood pursuant to their settlement agreement. The United States argued that it had the right to assert this claim against Mrs. Wood because the Woods specifically intended the United States to be a third party beneficiary of their settlement agreement. The trial court held for the United States, and Mrs. Wood appealed.
Rule of Law
Holding and Reasoning (Jones, J.)
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