Gary Grayson and Dale Grayson v. Grayson Armature Large Motor Division, Inc.

Summary

The Texas Fourteenth Court of Appeals affirmed summary judgment enforcing a settlement agreement involving claims concerning shareholder interests and real property. The court held that Grayson Armature was entitled to enforce the agreement as an intended third-party beneficiary and rejected the appellants’ defenses of mutual mistake and impossibility of performance.

Holdings

1. A litigant may enforce a contract if it is a party to the contract or an intended third-party beneficiary. The settlement agreement clearly manifested an intent to confer a direct benefit on Grayson Armature through the release of claims concerning interests in that company; therefore, Grayson Armature was an intended third-party beneficiary entitled to enforce the agreement.
2. The appellants did not raise a genuine issue of material fact on mutual mistake because they did not contend that the settlement agreement failed to reflect the parties' common intention; they only asserted that they mistakenly believed they owned the property.
3. The appellants' lack of title made performance subjectively, not objectively, impossible. Subjective impossibility does not prevent contract formation or discharge a contractual duty, so the appellants could not avoid liability on that defense.

Questions Presented

1. Whether Grayson Armature was entitled to enforce the settlement agreement as a contracting party or intended third-party beneficiary and whether that question was jurisdictional.
2. Whether the appellants raised a genuine issue of material fact on their affirmative defense of mutual mistake.
3. Whether the appellants raised a genuine issue of material fact on their affirmative defense of impossibility of performance because they lacked title to the property they promised to convey.

Disposition

affirmed