Del Rio Land, Inc. v. Haumont , 118 Ariz. 1 ( 1977 )

OPINION

HAIRE, Judge.

The principal issues raised on this appeal relate to the applicability of the Statute of Frauds to a sale of real property by an auctioneer. In the event the Statute of Frauds is found inapplicable, the appellants (Owners) also raise an additional issue concerning the effect of the “subject to the mortgage” language under which the property was advertised and sold.

The appellees (Buyers) sued the Owners for specific performance, and were initially successful in obtaining summary judgment in their favor. However, on appeal the Arizona Supreme Court reversed that judgment, finding substantial issues of material fact which precluded disposition by summary judgment. Del Rio Land, Inc. v. Haumont, 110 Ariz. 7, 514, P.2d 1003 (1973). In its opinion, the Arizona Supreme Court discussed in some detail the interpretation which the trial judge and the Buyers placed upon the language “subject to the mortgage”, and held as follows:

“Apparently the trial court concluded that the term ‘subject to the mortgage’ meant that the seller would be required to use the proceeds of the sale to pay off the mortgage. This was the position advocated by the auctioneer and Haumont. We cannot agree with this interpretation of the words used.

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A sale or auction subject to a mortgage means that the seller receives the purchase price and the buyer takes the property subject to the unpaid mortgage; while the buyer is not under a personal obligation to pay the mortgage, he must do so if he desires to retain the ownership of the property, for the seller is not required to use the funds paid him to pay off the mortgage. The terms of a sale which include a provision, ‘subject -to the mortgage’ indicates that the actual or true purchase price of the property is in actuality the amount paid to the seller plus the amount of the mortgage.” 110 Ariz. at 9, 514 P.2d at 1005.

The issues relating to the Statute of Frauds were not raised in the prior appeal, but were strongly urged by the Owners in a trial to the court after remand. The trial judge found against the Owners on their Statute of Frauds defense, and then entered judgment for the Buyers. The terms of that judgment again appear to be inconsistent with the Arizona Supreme Court’s previously established interpretation of the “subject to the mortgage” language.

Against this background, we consider now the appellants’ contention that the trial judge erred in determining that the Statute of Frauds had been satisfied. Specifically, the conclusion of law entered by the trial court was as follows:

“6. The statute of frauds applies to auctions of land such as the one here in question. The statute of frauds has been satisfied by the receipt, the purchase contract and the auctioneers agreement.”

The question of the applicability of Statute of Frauds defenses to auction sales of real property assumes two phases. The first phase involves the question of the auctioneer’s authority, which, under Arizona law, must be “in writing, subscribed by the party sought to be charged.”¹ Although some questions are raised concerning the interpretation of the written authority given to the auctioneer, no Statute of Frauds questions are presented in this appeal relating thereto.

The second phase of the Statute of Frauds question concerning sales of real

property by auctioneers is that which is normally inherent in any sale of real property. Here, the trial judge expressly found that “the Statute of Frauds applies to auctions of land such as the one here in question.” This conclusion is undoubtedly correct. See authorities cited, 7 Am.Jur.2d Auctions and Auctioneers, § 34. However, we do not find support in the record for the trial court’s further conclusion that in this ease the statute was satisfied.

A.R.S. § 44-101 provides a defense to the action here in question “unless the promise or agreement . . , or some memorandum thereof, is in writing and signed by the party to be charged, or by some person by him thereunto lawfully authorized . . .” The question of what constitutes a memorandum sufficient to satisfy the Statute of Frauds is set forth in the Restatement of Contracts, § 207, as follows:

“A memorandum, in order to make enforceable a contract within the Statute, may be any document or writing, formal or informal, signed by the party to be charged or by his agent actually or apparently authorized thereunto, which states with reasonable certainty,

(a) each party to the contract either by his own name, or by such a description as will serve to identify him, or by the name or description of his agent, and

(b) the land, goods or other subject-matter to which the contract relates, and

(c) the terms and conditions of all the promises constituting the contract and by whom and to whom the promises are made.”

This section was approved and adopted as the law in Arizona by the Arizona Supreme Court in Shreeve v. Greer, 65 Ariz. 35, 173 P.2d 641 (1946). Here, as previously stated, the trial judge found that the Statute of Frauds has been satisfied by “the receipt, the purchase contract and the auctioneers agreement.” We consider first the sufficiency of the “receipt.”

The receipt itself is very limited in content, and was given on the afternoon of the auction sale by the auctioneer's clerk. Although denominated “receipt”, the document does not purport to actually be a receipt for any particular sum of money. The auctioneer’s name and address is printed in the upper right hand corner and the receipt contains the following additional information:

UNIT PRICE pr acre 2600.00; BUYER NO. 176; AMOUNT_; real estate —72.31 acres; LOT NO. 97;

and, apparently as a signature, the hand-printed initials “W. M.” (Material in capital letters was in bold face print in the receipt, with the lower case letters and numerals written in ink).

The fact that the receipt was not signed by the “party to be charged” does not appear to present a problem. In recognition of the practicalities and exigent circumstances generally involved in auction sales, the law recognizes that an authorized auctioneer or his clerk may make and sign a memo on behalf of both the buyer and seller immediately after the sale, if done before the auctioneer’s power is revoked.² Although there is some evidence which would indicate that the auctioneer’s power was revoked prior to the issuance of this receipt, taking the evidence most strongly in favor of the prevailing party in the trial court (the Buyers), we must conclude that the receipt was issued and signed by the auctioneer’s clerk before the auctioneer’s authority was revoked, and thus, for the purposes of the Statute of Frauds, constitutes the signature of “the party to be charged.” However, when the remainder of the contents of the receipt are compared with the requirements set forth in the Restatement § 207, we find several deficiencies which render the receipt inadequate as a memorandum sufficient to satisfy the requirements of the Statute of Frauds.

While arguably the total purchase price could be computed from the per acre price given in the receipt, there is nothing stated concerning the terms and conditions of payment. Inasmuch as the alleged oral contract provided for down payment with monthly installment payments thereafter, the receipt is insufficient in that regard. (See Illustration 3, Restatement of Contracts, § 207). Nor does the receipt contain any reference to the “subject to the mortgage” condition, the interpretation of which has been such a problem in this litigation.

Another deficiency in the receipt relates to the failure to identify with any certainty the land involved. If we assume for present purposes that the notation “LOT NO. 97” in the signed writing (the receipt) constitutes an adequate reference to an unsigned writing (the auction advertising brochure, Exhibit 17)³, we find no additional description in that brochure, merely the following: “LOT NO. 97 (72 acres A-2) real estate” (matter in parenthesis penciled in on Exhibit 17). In view of the foregoing deficiencies in the receipt rendering it insufficient as a Statute of Frauds memorandum, we need not discuss other possible deficiencies therein relating to the identity of the parties.

We turn now to the purchase agreement and consider its sufficiency as a Statute of Frauds memorandum. This purchase agreement was apparently prepared on the afternoon following the auction by a real estate broker contacted by an employee of the auctioneer. We find the purchase agreement insufficient in two aspects. First and foremost, it was never signed by the Owners. It is true that the purchase agreement was signed by an independent real estate broker contacted by the clerk of the auctioneer, and this broker’s signature is relied upon by the Buyers as constituting a sufficient signature so as to authenticate the terms of the sale on behalf of the Owners. However, there is a complete absence of any evidence which would indicate that the broker was authorized to sign on behalf of the Owners, and in fact, he did not purport to do so. The authority of the .auctioneer and his clerk to sign a memorandum on behalf of the parties, discussed supra, is very limited and cannot be extended so as to allow him to further delegate that authority to a real estate broker having no connection with the Owners.

In addition to not being signed by the party sought to be charged, there is a further defect in the purchase agreement which prohibits its use as a memorandum of the alleged oral contract. The purchase agreement is a standard form “Purchase Contract and Receipt” and contains as one of its terms the following:

“Eleventh: This deposit is accepted subject to prior sale and subject to approval of owner.”

This provision would, of course, allow the Owners to subsequently approve or disapprove the Buyers’ offer, and entirely negates its value for the purposes sought. A party cannot on one hand assert that a written document constitutes a memorandum of the parties’ agreement, and then pick and choose those terms and conditions of the written document which he is willing to abide by, excluding others which he alleges do not constitute a part of the sought-to-be-enforced oral contract.

The final document found by the trial judge as constituting a satisfaction of the Statute of Frauds is the auctioneer’s contract. This contract was entered into more than one month prior to the transaction alleged here, and separate and apart from its efficacy as showing the authority of the auctioneer, cannot be considered as evidencing in any way the alleged oral contract subsequently entered into between the Buyers and the Owners.

We have discussed the contents of the receipt, the purchase agreement and the auctioneer’s agreement separately, and have demonstrated that individually none of these items furnishes adequate satisfaction of the requirements of the Statute of Frauds. The trial judge’s conclusion of law referred to these items conjunctively, and therefore we now consider the question of whether these items can be considered together in determining whether there was a sufficient memorandum.

The Restatement of Contracts, § 208 sets forth the general principles governing the circumstances under which several writings may be considered collectively for the purpose of satisfying the memorandum requirements:

“The memorandum may consist of several writings,

(a) if each writing is signed by the party to be charged and the writings indicate that they relate to the same transaction, or

(b) though one writing only is signed if

(i) the signed writing is physically annexed to the other writing by the party to be charged, or

(ii) the signed writing refers to the unsigned writing, or

(iii) it appears from examination of all the writings that the signed writing was signed with reference to the unsigned writings.

The provisions of subsection (a) are not applicable since each writing was not signed by the party sought to be charged. Likewise, the provisions of subsection (b) are inapplicable, since the signed writing (the receipt) was not physically annexed to any of the other writings, did not refer to any of the writings, nor is there any indication that the signed writing was signed with reference to the other writings. See also, 7 Am.Jur.2d, Auctions and Auctioneers, § 42. We therefore hold that the documents expressly relied upon by the trial judge as constituting satisfaction of the Statute of Frauds requirements were not sufficient for that purpose when considered separately, and could not be considered collectively for that purpose.

One further contention relating to the satisfaction of the Statute of Frauds was urged in the Buyers’ post-trial memorandum in the trial court and in the answering brief on appeal. This contention was that the signed deposition of the auctioneer constituted an adequate memorandum. The major difficulty with this contention is that the deposition of the auctioneer was not taken until almost 23 months after the auction sale. While, as stated in the Restatement of Contracts § 212, the auctioneer is generally held to have authority to sign a memorandum on behalf of both parties, this authority is limited to the period “immediately after the sale.”⁴ A delay of 23 months can hardly be considered as coming within the authorized period. In addition, as stated in § 212(2), the power of the auctioneer to sign a memorandum on behalf of a buyer or seller may be revoked at any time before the exercise of that power. Here, the evidence is uncontradicted that the auctioneer’s authority was expressly terminated in writing on December 12, 1968, long before the taking of his deposition.

Since we have concluded that the Statute of Frauds was applicable and not satisfied, we next consider whether, as found by the trial court, the Owners were estopped to assert the Statute of Frauds as a defense. The principle that a party may be estopped to assert the Statute of Frauds as a defense is well established in Arizona. Custis v. Valley National Bank of Phoenix. 92 Ariz. 202, 375 P.2d 558 (1962); Waugh v. Lennard, 69 Ariz. 214, 211 P.2d 806 (1949); Cress v. Switzer, 61 Ariz. 405, 150 P.2d 86 (1944); Gene Hancock Construction Co. v. Kempton & Snedigar Dairy, 20 Ariz.App. 122, 510 P.2d 752 (1973); Gray v. Kohlhase, 18 Ariz.App. 368, 502 P.2d 169 (1972).⁵ The facts giving rise to an estoppel must be more than the mere fact that the charged party has admittedly entered into an oral agreement which he subsequently refuses to perform, thereby depriving the plaintiff of the benefits of the oral agreement. Stated another way, the plaintiff must show substantial additional detriment separate and apart from the failure to receive the benefits he would have received under the oral agreement. Custis v. Valley National Bank of Phoenix, supra; Gray v. Kohlhase, supra.

Here, giving the Buyers the benefit of a favorable resolution of evidentiary conflicts, they were advised by December 12, 1968, at the latest, of the Owners’ refusal to perform the alleged oral agreement of November 22, 1968. What detriment of a nature other than those discussed above, did the Buyers incur prior to that date? The only detriment urged by the Buyers is that the Owners permitted the Buyers to arrange for financing⁶ and to present a check to the auctioneer for what the Buyers considered to be the down payment. This alleged detriment is not sufficient to create an estoppel, and in fact constitutes nothing more than part performance by payment of a portion of the purchase price, which alone does not bar the assertion of the Statute of Frauds defense so as to permit specific performance of the oral contract. The applicable principles are set forth in Restatement of Contracts, § 197, adopted and approved in Condon v. Arizona Housing Corporation, 63 Ariz. 125, 160 P.2d 342 (1945), as follows:

“Where, acting under an oral contract for the transfer of an interest in land, the purchaser with the assent of the vendor

(a) makes valuable improvements on the land, or

(b) takes possession thereof or retains a possession thereof existing at the time of the bargain, and also pays a portion or all of the purchase price, the purchaser or the vendor may specifically enforce the contract.”

It is evident that the payment of a portion of the purchase price alone is not such a detriment or such part performance as will create an estoppel or part performance removing the bar of the Statute of Frauds. The Buyers in their claim of estoppel rely heavily upon Zuhak v. Rose, 264 Wis. 286, 58 N.W.2d 693 (1953). The primary question in that case was whether the seller could effectively withdraw land from sale after the bidding had started at an auction advertised as “without reserve.” The court held that the seller could not do so, and that an effective oral contract had been entered into with the highest bidder, and then disposed of the seller’s Statute of Frauds defense as follows:

“The trial court found the memorandum actually given by Bohr [auctioneer] and his associate was sufficient under the circumstances. We think it is immaterial here. Defendant discharged the auctioneer, thereby revoking his authority to give any memorandum and defendant left the scene. Under the circumstances he cannot complain that plaintiff has no memorandum.”

Initially, we note that the Wisconsin Court cites no authority for its position, which appears to be directly in conflict with subsection (2) of the Restatement of Contracts, § 212, quoted supra. Secondly, we note that the trial court in Zuhak found that the auctioneer did in fact make a sufficient memorandum, contrary to the facts in the case sub judice. Here, although the auctioneer’s authority was not terminated until some three weeks later, he never made a sufficient memorandum.

We cannot consider that the failure of the auctioneer to make a memorandum was immaterial, since to so hold would have the effect of rendering the Statute of Frauds inapplicable to auction sales, contrary to the universally accepted view in that regard. See 7 Am.Jur.2d, Auctions and Auctioneers, § 34; Restatement of Contracts, § 212, supra.

We therefore conclude that the Statute of Frauds was applicable here and not satisfied, and that the Owners were not es-topped to assert that defense. Having arrived at this conclusion, we need not consider the Owners’ additional contention that the trial court’s judgment violated the Arizona Supreme Court’s interpretation of the contract words “subject to the mortgage” in its prior opinion in this case, and that such interpretation constituted the law of the case, binding upon remand.

The judgment is reversed and the matter is remanded with directions to enter judgment for the appellants.

FROEB, C. J., concurring.

1 . A.R.S. § 44-101 provides:

No action shall be brought in any court in the following cases unless the promise or agreement upon which the action is brought, or some memorandum thereof, is in writing and signed by the party to be charged, or by some person by him thereunto lawfully authorized:

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6. Upon an agreement for leasing for a longer period than one year, or for the sale of real property or an interest therein. Such agreement, if made by an agent of the party sought to be charged, is invalid unless the authority of the agent is in writing, subscribed by the party sought to be charged.

2 . The Restatement of Contracts, § 212 provides:

(1) In a sale and in a contract to sell at auction the auctioneer or his clerk, if not interested in the subject matter of the sale otherwise than in his functions as auctioneer or auctioneer’s clerk, is authorized to make and sign a memorandum on behalf of both the buyer and the seller, immediately after the sale.

(2) The power of the auctioneer and of his clerk to sign a memorandum as stated in Subsection (1) may be revoked by a buyer or seller at any time before the power is exercised.

3 . See Restatement of Contracts, § 208 infra.

4 . See Restatement of Contracts, § 212, illustration 1, which indicates that a memorandum made by the auctioneer on the following day would be insufficient.

5 . The doctrine of estoppel is not applicable to A.R.S. § 44-101(7) concerning real estate brokers’ agreements. See Gibson v. W. D. Parker Trust, 22 Ariz.App. 342, 527 P.2d 301 (1974).

6 . The only evidence in the record which this Court has found concerning the arrangements made for financing is the Buyer’s testimony that he called the bank, told them the amount of money he would need, and that he would be down shortly to pick up the check.