Carpenter v. Murphy , 40 S.D. 280 ( 1918 )

WHITING, P. J.

Plaintiff seeks the specific performance of a Contract to convey real property. Finding's, conclusion, and judgment were in favor of defendant. From such judgment and an- order denjing a new trial this appeal is taken-.

[1] It i-s appellant’s contention that the contract was in writing, and that the trial court erred when- it held- that such writing was “not a valid, -binding, and legal contract for the sale of -real estate, and that specific performance of same cannot be enforced-.”

Parties contracting for the sale and purchase o>f real property fallow one of two courses, either of which was 'sanctioned' -by the early common law: They attempt to put the terms of their transaction in writing to preserve indisputable evidence of' such terms; or they intentionally leave ¡part or all tine terms of the contract uneviidieniced by any writing. As said in Mull v. Smith, 132 Mich. 618, 94 N. W. 183:

“When the contract itself is in writing arid signed! by both, parties, the writing is 'the contract. When the memorandum of the oral contract is in writing and signed by the vendor, -it is not the contract, 'but a memorandum.”

Statutes of frauds have condemned oral contracts; Some by leaving suclh contracts valid, but declaring them1 unenforceable; others, like ours, by declaring the contracts • invalid unless there be some rióte or meimoraodum signed by the parties sought to be charged, which note or memorandum furnishes evidence of the materiaii terms of sUdh contracts. Sectioln 1238, C. C. The difference in the .two diasses of statutes was very fully noted in Jones v. Pettigrew, 25 S. D. 432, 127 N. W. 538, and in which we said:

“Considering now tine difference between these two classes of statutes — that undler one the contract is valid, but not enforceable without certain proof can be made, while under the other the ,contract itself never becomes valid until it is entered into (evidenced) in tlhe manner prescribed by statute or unless certain p'ant performance prescribed by statute has .taken place —iwe see that, upon the trial, if one is attempting to prove a state of facts which brings the particular case under the bar of a statute sulch as we have in South Dakota, it would be an attempt to prove am invalid contract by perfectly competent evidence; while in tire other case it would! he an attempt to enforce a .comitnadt which, under the law, was aibsolultely. valid, but by means of 'incompetent -evidence.”

[2, 3] It follows that, - under -ouir statute, tire rules of evidence would be just as at the early common- lawi. In case .oif the written contract the writing is 'the only competent evidence. In case of 'an oral contract the terms thereof iriay be established by parol. In ease the rights of a .party rest upon an ¡oral -contract two questions are presented to Itlh.e court: What were the terms of the contract? Has Hie contract ever been va-M'dated. by the party to be charged? Such oral contract can only be validated by tibe party too be charged — the vendor in this ciase — by his- executing, over Inis signature, some memorandum or memoranda evidencing all those terms of ¡the contract which affect the vendee's right of recovery. Thus an oral contract may be entered into where the whole contract is subject to' certain conditions upon which tire right to enforce the Contract depend. A memorandum of the terms of such :a contract, which memorandum omits aid reference to the condition® affecting such' contract, might evidence all the 'terms essential to a binding contract, and thus be sufficient prima facie evidence to- prove the terras of the contract as well as to prove that the party executing such memorandum 'had validated such .contract; -but yet, as a matter of fact, such oral contract wouildl not have been validated, and the party against whom it /was sought to be enforced would be at liberty, in order to prove that such oral contract ¡had not been validated, to show by parol that there were essential terms or conditions of such contract of which no written memorándum had been introduced in evidence.

It .must be rauembered that, under our statute, the party sought to be charged may admit every term of the oral contract and yet rely -upon its invalidity under the statute offrauds. As was well said in Fisher v. Andrews, 94 Md. 46, 50 Atl. 407, in speaking of a contract coming under the provisions of another section of the statute of frauds:

“The principal object in making a memorandum of sale in mercantile transactions is to comply with the requirements of the statute oif frauds, and the general rule is that, if the memorandum' does not embrace all the material terms of the verbal contract, it is not sufficient. It frequently happens, therefore, that in -such cases parol evidence is admitted, not for the purpose of varying or contradicting a written agreement, as was suggested by the appellants that the appellee w/as attempting to dO', but to show that what [wa®] professed/ to- be a memorandum of the contract idlid not in fact truly state it, but had omitted some essential terms that had been agreed upon in the verbal contract. The case of Kriete v. Myer, 61 Md. 558, is a good illustration of the sufficiency of such memorándum. There a sold note was given by the agents, of the vendor, and it was held that the memorandum of sale meed not state the time of. the 'delivery if no time was fixddi in the parol agreanierat, as the law would imply that iilt ¡i's,’im isudh case, the duty of the seller to deliver the good's in a reasonable time; or, if there be am established' custom among merchants dealing in such good® regulating the time of 'delivery, it will be dotoitro-ll-ed 'by such custom. But it was further held that, if a time fot delivery be fixed in the verbal agreement of slate, such time must be incorporated in the memorandum, and', if it is not, it is infsufficient.”

[4] In the -case before u® it i-s: absolutely without dispute that the contract was oral, and that, -after the contract was. entered into, appellant, as vendee, made the advance payment that had been agreed upon, and respondent executed to him a receipt for such payment. It is this receipt which appellant apeale® of as a written contract, but which is in, fact but a memorandum of some or all of the terms of the oral contract. It is this receipt or memorandum that the trial court held to be “not a valid, binding -and legal contract for the sale of real estate.” The oral contract was entered into April 27th- and the receipt or memorandum w'as executed that day. The -trial court finds:

“That during the negotiations between toe plaintiff and defendant tire defendant stated- in effect to- the plaintiff that if he sold toe land in controversy to the plaintiff that he needed- the money to meet -bilis--that was them coming due and wished to take aldlvantage of too discounts allowed on the bills if paid when -due, and- if toe deal could) not' be -closed by May 1, 1915, hie would not sell toe land to: -the plaintiff.”.

Appellant contends that the above fin-ding i-s unsupported by toe evidence. In this- contention -appelant is -in- error; such finding i-s fully supported by undisputed testimony. The time of do-sling the' deal to-us became a controlling provision of said canitradt, and therefore, even if toe memorandum should he held to contain amp-l-e evidence o-f all the terms essential' to a -complete contract, yet it does not contain all toe material terms audi conditions of the contract that was in fact entered into-; and, for that reason alone, i-t remained invalid -under the 'statute of frauds. Moreover, it is perfectly clear that, if there had been -a written contract embodying therein this condition upon/ which toe continued- binding force of such contract depended, -ahd such contract was not dosed within- the time provided' by su-ch condition, and this through no fault of tíre vendor, -the vendor would be released. It appears without dispute that upon examination of the abstract of title appellant refused to accept the title a's it appeared on such abstract; that he received this- abstract on A-p-ril 28th; 'and that at least one of the alleged defects could not, prior to May 11st, have been cured in the method insisted on by appellant — an action in court to quiet title. It was therefore up to, appellant (to accept the title andi close the deal or to allow the-, deal to fall through. Tb require specific performance after Mayist would have 'been to compel -respondent to do- what he had;', contracted against being compelled toi do-.

[5] It might be urged that it appeal's from the evidence-that, after May 1st, tírese .parties- were still negotiating with a. view to a possible closing of this! deal. Even though this be so,, it is immaterial in -the absence of a new and valid contract. Parties-, to an oral contract of which there is no memorandum whatsoever mlay proceed 'with their negotiations up to tíre very point of closing the deal by the delivery of a deed and tíre payment of the consideration therefor, and yet, at the last moment ,fhe vendor may law-fuly elect to refuse to- -carry -oult such) contract. At the •beat, stuch negotiations but furnish evidence of what the oral agreement was. In this case if is olear that respondent did nothing after May 11st which in any manner validated the oral contract oir which -could estop him from alleging and relying upon its invalidity.

Tire record in this- case peculiarly discloses the importance of foreclosing all chance for innocent mistake or for actual fraud in transactions of this- kind by contracting- in writing. If peo-, pie s-ee fit to enter into invalid contracts, -and thus rely upon-each -other’s honor, they must dlo s-o- at their peril.

Under tire views herein 'expressed it is clear that tíre judgt menst and- order 'appealed from should be, and- they are, affirmed.