Allen D. Curtis and wife, Carolyn June Curtis v. William M. Rice, and Rice & Papuchis Construction Company, Inc. ( 1997 )

ALLEN D. CURTIS, )
)
Plaintiff/Appellant, ) Appeal No.
) 01-A-01-9605-CH-00211
and )
)
CAROLYN JUNE CURTIS, ) Sumner Chancery
) No. 94C-324
Intervening Plaintiff/ )
Appellant, )
)
v. )
) FILED
WILLIAM M. RICE, and )
RICE & PAPUCHIS CONSTRUCTION ) December 4, 1996
COMPANY, INC., )
) Cecil W. Crowson
Defendants/Appellees. )
Appellate Court Clerk
COURT OF APPEALS OF TENNESSEE
MIDDLE SECTION AT NASHVILLE
APPEAL FROM THE CHANCERY COURT FOR SUMNER COUNTY
AT NASHVILLE, TENNESSEE
THE HONORABLE TOM E. GRAY, CHANCELLOR
JERRY C. SHELTON
Lyell, Seaman & Shelton
611 Commerce Street, Suite 2704
Nashville, Tennessee 37203
ATTORNEY FOR PLAINTIFF/APPELLANT
CLINTON L. KELLY
Kelly and Kelly
629 East Main Street
Hendersonville, Tennessee 37075
ATTORNEY FOR INTERVENING PLAINTIFF/APPELLANT
JAMES C. BRADSHAW, III
Wyatt, Tarrant & Combs
313 East Main Street, Suite 1
Hendersonville, Tennessee 37075
ATTORNEY FOR DEFENDANTS/APPELLEES
REVERSED AND REMANDED
SAMUEL L. LEWIS, JUDGE
O P I N I O N
This is an appeal by plaintiffs/appellants, Allen D. Curtis
and his wife, Carolyn June Curtis, from a decision of the chancery
court which dissolved the partnership formed between Curtis and
defendant/appellee, William M. Rice, and which distributed the
partnership's assets.1 The facts out of which this matter arose
are as follows.
In 1976, Mr. and Mrs. Curtis acquired a tract of land as
tenants by the entirety. They later subdivided a portion of the
land into 21 lots ("The Hollows") and recorded a plat. According
to the plat, a 10 foot strip of land ran along the western boundary
of The Hollows' access road and into lot 21 of The Hollows. To the
west of the 10 foot strip and lots 15-21 was another parcel of land
known as the Yearwood Property.
The Hollows' access road was constructed by Rice & Papuchis
Construction Company, Inc., William M. Rice, President. At some
point, Rice moved some top soil for Curtis. As compensation for
Rice's services, Rice claimed that Curtis initially conveyed lot 21
1
For the purposes of this opinion plaintiff/appellant, Allen D. Curtis, will be referred to as "Curtis."
Intervening plaintiff/appellant, Carolyn June Curtis, will be referred to as "Mrs. Curtis." When discussing Curtis and
Mrs. Curtis together, they will be referred to as appellants. Defendants/appellees, William M. Rice and Rice &
Pap uchis C onstruction C omp any, Inc., will be referred to as "Rice."
of The Hollows to him orally. Rice then claimed that Curtis later
changed the compensation and orally conveyed a one-half interest in
lot 14 and a one-half interest in lot 21 to Rice. Curtis, however,
claimed that he merely gave Rice a security interest in lot 14. In
addition, Curtis claimed that the contract for the road
construction included moving the soil and that he paid the contract
price in full.
Eventually, Rice and Curtis entered into an oral partnership
agreement to purchase the Yearwood Property and to subdivide and
sell it. Rice agreed to obtain the financing, and the parties
purchased the land. Curtis orally agreed to contribute the 10 foot
strip to the partnership. In addition, Rice claimed that he and
Curtis orally agreed to contribute their interests in lots 14 and
21 to the partnership.2 Rice and Curtis filed three plats. The
final plat subdivided a portion of the Yearwood Property and
included the ten foot strip and lot 21 of The Hollows. This
subdivision became known as The Hollows Section Two. When each of
The Hollows Section Two lots which included frontage formed by the
ten-foot strip and the former lot 21 of The Hollows was sold, the
deeds were signed by Curtis, Rice, and Mrs. Curtis. Prior to the
filing of the lawsuit, all of The Hollows Section Two lots were
sold except for lot 23.3 Pursuant to the oral partnership
agreement, Rice and Curtis used the proceeds from the sales of The
Hollows Section Two lots to pay off the loan.
Curtis later had a plat prepared for the remaining portion
of the Yearwood Property. The resulting plat used lot 14 of The
Hollows as access to and from what was intended to become The
2
The parties never executed any documents conveying any property to the partnership. Instead, Rice and
Curtis agreed that all real property contributions would remain in the name of the individual partners until the
partners sold the property to third parties.
3
Lot 23 of The Hollows Section two is comprised of the Yearwood Property and a portion of the ten foot
strip. T he pa rties do not disp ute the p artnership's interest in this lot.
3
Hollows Section Three. The Sumner County Planning Commission
approved the plat and Rice signed it. Curtis, however, never
signed the plat, and neither party ever recorded it.4
Ultimately, Curtis filed a complaint for the dissolution of
the partnership. In his complaint, Curtis admitted that he
contributed the 10 foot strip and lot 21 to the partnership. Rice
claimed that lot 14 was also part of the partnership's assets.
After an unsuccessful settlement conference, the court ordered an
independent survey of several pieces of land including the 10 foot
strip and lot 14. Thereafter, the parties stipulated to the real
property values as determined by Special Commissioner William C.
Boyers.5
On 15 December 1995, the court entered its final order. The
court made the following relevant findings: 1) Curtis gave Rice a
one-half interest in lots 14 and 21 in exchange for moving the
soil; 2) Rice and Curtis contributed lots 14 and 21 to the
partnership; 3)the statute of frauds is inapplicable because this
was a contribution of land, not a sale; 4) Curtis is estopped from
relying on his interest in lot 14 as a tenant by the entirety to
prevent the contribution; and 5) the value of Curtis' contribution
of the ten foot strip was $5,000.00.
Curtis filed a motion to alter or amend the final judgement
as to the finding that the value of the ten foot strip was
$5,000.00 rather than $52,800.00 as stipulated by the parties. On
1 February 1996, the court denied the motion and stated as follows:
"The Stipulations entered into by the parties prior to trial were
4
At the time of the filing of the lawsuit, the unsold partnership property included lot 23 of The Hollows
Section Two and the remaining, undeveloped Yearwood Property. In addition, lot 14 of The Hollows over which
there is a dispute as to ownership had not been sold.
5
Mr. Boyers valued lot 21 at 25,000.00, lot 14 at $26,900.00, and the
ten foot strip at $52,800.00.
4
stipulations as to the amount of each partner's claim against the
Partnership. There was no stipulation as to the 'value' of the
various contributions of each partner."
On 7 February 1996, Mrs. Curtis filed a motion to intervene
to protect her interest in lot 14. On 15 May 1996, the court
entered its final order as to Mrs. Curtis. The order estopped Mrs.
Curtis from claiming any interest in lot 14.
On 21 February 1996, Curtis filed his notice of appeal. Mrs.
Curtis filed her notice on 29 February. On 6 March 1996, the court
entered an order granting a stay. Appellants presented the
following issues:
1. Whether the Trial Court erred in finding that
the Statute of Frauds is inapplicable to an oral
agreement to contribute real estate to a
partnership?
2. Whether the Trial Court erred in finding that
[appellants] are estopped to assert their ownership
of land as tenants by the entirety as a defense to
[Rice's] claim that [Curtis], only, orally
transferred to [Rice] one-half ownership interest
in such lands, and then [Rice and Curtis] orally
transferred full ownership of such lands to [Cutis
and Rice's] Partnership?
3. If these lands so owned by [appellants] were
somehow enforceably transferred as contributions to
the Partnership, are [appellants] entitled to
compensation from the Partnership for the value of
such land?
4. Whether the Trial Court erred in finding that
[Curtis'] claim against the Curtis and Rice
Partnership for the value of a ten-foot wide strip
of land is $5,000, rather than $52,800 as
stipulated by the parties?
5. The trial court erred in ordering the sale of
lot #14 at public auction for the reason Mrs.
Curtis owns a right of survivorship in such
property created by tenancy by the entireties.
I. ISSUES ONE, TWO, THREE, AND FIVE
A. STATUTE OF FRAUDS
In finding that the transaction involved in the instant case
5
was not within the statute of frauds, the trial court stated as
follows:
The court finds the statute of frauds to be
inapplicable in this case. The issue at bar is the
oral agreement between Curtis and Rice to
contribute certain real estate to accomplish the
objective of the partnership. The statute of
frauds relied upon by plaintiff applies to
contracts "for the sale of lands, tenements, or
hereditaments."
The trial court effectively held that the statute of frauds did not
apply to either the first oral transaction where Curtis allegedly
transferred a one-half interest in lots 14 and 21 to Rice or to the
second alleged oral transaction of Curtis and Rice transferring
ownership of lots 14 and 21 to the partnership.
The General Assembly enacted subsection (a)(4) of the
Tennessee Statute of Frauds for the protection of Tennessee
residents who owned real estate. Irwin v. Dawson, 197 Tenn. 314,
317, 273 S.W.2d 6, 7 (1954). Tennessee Code Annotated section 29-
2-101 provides, in pertinent part, as follows:
(a) No action shall be brought:
. . . .
(4) Upon any contract for the sale of lands,
tenements, or hereditaments, or the making of any
lease thereof for a longer term than one (1) year;
or,
(5) Upon any agreement or contract which is not to
be performed within the space of one (1) year from
the making thereof;
unless the promise or agreement, upon which such
action shall be brought, or some memorandum or note
thereof, shall be in writing, and signed by the
party to be charged therewith, or some other person
by him thereunto lawfully authorized.
Tenn. Code Ann. § 29-2-101(a)(4) (Supp. 1996).
"The purpose of the statute of frauds 'is to reduce
contracts to a certainty, in order to avoid perjury on the one
hand and fraud on the other.'" Baliles v. City Serv. Co., 578
S.W.2d 621, 623 (Tenn. 1979)(quoting Price v. Tennessee Prod. &
Chem. Corp., 53 Tenn. App. 624, 385 S.W.2d 301 (1964)). The
6
statute of frauds protects "owners of land from hasty or
inconsiderate agreements concerning a valuable species of property,
and [guards] against misunderstanding as to the nature and extent
of such agreements." Brandel v. Moore Mort. & Inv. Co., 774 S.W.2d
600, 604 (Tenn. App. 1989). The statute also "'ensures that
transactions involving . . . realty interests are commemorated with
sufficient solemnity . . . that the parties and the public can
reasonably know when such a transaction occurs.'" D & S Coal Co.
v. USX Corp., 678 F. Supp. 1318, 1322 (E.D. Tenn. 1988)(quoting
Seale v. Citizens Sav. & Loan Ass'n, 806 F.2d 99, 104 (6th Cir.
1986)).
The "party to be charged therewith" means the owner of the
land. Patterson v. Davis, 28 Tenn. App. 571, 577, 192 S.W.2d 227,
229 (1945). The term "Sale" means alienation in its broadest sense
and includes many types of land transfers. Lambert v. Home Fed.
Sav. & Loan Ass'n, 481 S.W.2d 770, 773 (Tenn. 1972) (applying the
statute to the creation of mortgages and deeds of trust); Goodloe
v. Goodloe, 116 Tenn. 252, 254, 92 S.W. 767, 767 (1906) (applying
the statute to devises of land); Nunnelly v. Southern Iron Co., 94
Tenn. 397, 409-10, 29 S.W. 361, 365 (1895) (applying the statute to
the creation of easements); Perkins v. Cheairs, 61 Tenn. 194, 202
(1872) (applying the statute to parol contracts to convey land in
the future). The term includes a contract binding one to give or
donate land. Bailey v. Henry, 125 Tenn. 390, 399, 143 S.W. 1124,
1127 (1912). "[W]here one goes into possession under a parol of
donation he occupies the same relation in respect to his possession
as a purchaser by parol." Inman v. Tucker, 138 Tenn. 512, 529, 198
S.W. 247, 251 (1917). In addition, oral agreements or contracts to
enter into written agreements which are within the scope of the
statute of frauds are also within the statute because to allow the
enforcement of such an agreement would be tantamount to taking the
7
main contract out of the statute. White Motor Corp. v. Nashville
White Trucks, Inc., 5 B.R. 112, 118 (Bankr. M.D. Tenn. 1980); see
Patterson, 192 S.W.2d at 229.
"In order to satisfy the statute of frauds, the entire
agreement must be in writing. It cannot be partly in writing and
partly in parol." Eslick v. Friedman, 191 Tenn. 647, 655, 235
S.W.2d 808, 812 (1951). "'The memorandum required by the statute
of frauds must show an existing and binding contract, as
distinguished from mere negotiations, and must disclose the
particular contract sought to be enforced rather than some other
contract or promise.'" Black v. Black, 185 Tenn. 23, 30, 202
S.W.2d 659, 662 (1947)(quoting 37 C.J.S. Statute of Frauds §
180(a)). The statute of frauds "is directed at the remedy and not
the validity of the contract." Ashley v. Preston, 162 Tenn. 540,
543, 39 S.W.2d 279, 279 (1931). Therefore, a parol contract for
the sale or disposition of land is not void, but voidable. Cobble
v. Langford, 190 Tenn. 385, 390, 230 S.W.2d 194, 196 (1950).
"'A writing is indispensably requisite, under the provisions
of the Statute of Frauds whenever an estate or interest in land is
to be affected, unless the circumstances are such that a refusal to
execute the agreement would operate as a fraud.'" Bloomstein v.
Clees Bros., 3 Tenn. Chan. 433, 442 (1877)(quoting 2 Am. Ld. Cas.
558). Strict application of the statute of frauds might, under
proper circumstances, be mitigated by showing mistake, fraud, or
equitable estoppel. The fraud which will take a case from within
the operation of the statute is not fraud in making a promise with
no intention of fulfilling it. Instead, it is fraud in which one
party prevents the reduction of the agreement into a writing or
when one party induces the other into believing that a writing was
created. To explain, the party against whom the statute is
8
asserted must have intended that the agreement be put in writing,
but due to the fraud of the other party this intention was not
carried out. Hackney v. Hackney, 27 Tenn. 451, 455-58 (1847).
Part performance of a parol contract will not prevent the
application of the statute of frauds although the doctrine of
equitable estoppel has mitigated the harshness of this rule in
cases where enforcement of "the statute of frauds would make it an
instrument of hardship and oppression, verging on actual fraud."
Baliles, 578 S.W.2d at 624; accord GRW Enters., Inc. v. Davis, 797
S.W.2d 606, 611 (Tenn. App. 1970).
We think it is clear that the statute of frauds applies to
the first oral transaction and equally clear that the statute
applies to the second transaction. The contribution of real estate
to a partnership is no different than a sale because it clearly
affects the title to the real estate. To construe such a
transaction otherwise is to defeat rather than to carry out the
purpose of the statute.
The trial court, without citing any case law or statutes,
held that appellants were estopped to assert any defense to Rice's
claims to lot 14, lot 21, and the ten-foot strip. We are of the
opinion that the record does not support this conclusion with any
showing of fraud, hardship, or oppression. The record is clear
that Rice and Curtis never intended to put the alleged transfer to
Rice or the alleged transfer to the partnership in writing.
Instead, they knowingly relied on oral conveyances and agreements.
Given the parties' intentions and actions, this court is of the
opinion that if there were any fraud on the part of appellants it
was not the type of fraud which would take the transaction out of
the statute of frauds.
9
Moreover, the record does not show that the enforcement of
the statute of frauds would make it an instrument of hardship and
oppression. Regardless of any decision by this court to modify the
trial court's order, Rice has reimbursed himself from partnership
funds for all but $6,313.00 of his total expenditures. In
addition, he received an additional $12,500.00 from the sale of lot
28 of The Hollows Section Two and will receive one-half of the
profits realized from the sale of the remaining partnership
property. In other words, Rice has already recouped all of his
investment and made over $6,000.00 in profits.
Curtis has received $12,500.00 from the sale of lot 28 while
incurring expenses totaling more than $26,000.00. If appellants
are estopped from asserting their defenses, they would lose their
ownership interest in lot 14 of The Hollows and any reimbursement
for lot 14, lot 21, or the ten-foot strip.
As to distribution of partnership assets, this court is of
the opinion that appellants should receive compensation for lot 21
of The Hollows. Lot 21 has been subsumed into the lots of The
Hollows Section Two. The parties sold the lot prior to this action
and used the proceeds to pay off The Hollows Two mortgage and/or to
reimburse Rice for his partnership contribution. We are of the
opinion that the partnership should pay the sum of $25,000.00 to
appellants based on the stipulations of Rice and Curtis. As to lot
14, it appears it is still included within The Hollows. We are of
the opinion that the lot is free of any enforceable claims by Rice
or the partnership and that it is the property of appellants.
Thus, it was error for the court to order the property sold at
auction with the proceeds going to the partnership. The property
shall remain that of appellants. The issues relating to the ten
foot strip are addressed below.
10
B. TENANCY BY THE ENTIRETY
"A tenancy by the entireties is created when property is
conveyed to a husband and wife, without more." 14 Tenn. Jur.
Husband and Wife § 13 (1996); accord Young v. Brown, 136 Tenn. 184,
187, 188 S.W. 1149, 1150 (1916). Under tenancy by the entirety,
neither of the tenants may alienate any portion of the estate
except his or her right of survivorship without the consent of the
other. Any attempt to do so without the consent of the other is
void. Robinson v. Trousdale, 516 S.W.2d 626, 632 (Tenn. 1974).
Here, it is undisputed that the land which comprised lot 14, lot
21, and the ten foot strip were conveyed to "Allen D. Curtis and
wife, Carolyn June Curtis" and that appellants held the property as
tenants by the entireties.
Therefore, even if Curtis made an enforceable conveyance to
Rice of a one-half interest in lot 21 and a one-half interest in
lot 14, the conveyance is void except as to Curtis' right of
survivorship. Given this, Rice never had a viable ownership
interest in these lots to contribute to the partnership. If any
contribution of the property was made to the partnership, it was
made by appellants only and only they have a claim against the
partnership for compensation. Nevertheless, it is the opinion of
this court that Curtis did not make an enforceable conveyance to
Rice because there was no writing and because Rice failed to
establish that the statute of frauds should not apply.
II. WHETHER THE TRIAL COURT AWARDED THE PROPER AMOUNT OF
DAMAGES FOR THE TEN-FOOT STRIP.
Curtis contends that the only issues before the trial court
involved the allowance of claims submitted by Curtis and Rice
against the partnership. Curtis and Rice stipulated to the amount
11
of the claims in writing. Except for Curtis' claim to the ten-foot
strip, the trial court when awarding damages either allowed the
claim and awarded an amount equal to the stipulated value or
disallowed the claim entirely.
"Stipulations are binding on the parties as well as the
court. A party cannot assert a position contrary to that which he
has stipulated." Rutherford Builders, et al v. Security Federal
Savings & Loan, No. 87-114-II, 1987 WL 18958, at * 5 (Tenn. App. at
Nashville October 28, 1987). Here, the language of the
stipulations is clear and unambiguous. Section three states: "The
real property values determined by Special Commissioner William C.
Boyers . . . are stipulated and agreed to by the parties." The
appraisal assigned a total value of $52,800.00 to the ten foot
strip, and the stipulations listed $52,800.00 as the "[v]alue of
10-foot [s]trip."6 The transcript reveals that there was no
confusion by the court, Rice's attorney, or Rice regarding the
binding effect of the stipulations as to the valuation of the
property. For example, Rice's attorney stated: "Your Honor, the
value of the ten-foot strip and lot 21 has been stipulated. If
counsel is trying to inquire as to what the value of that is, it's
been stipulated."
Although the trial court could have decided that the
partnership should not compensate Curtis for the ten foot strip,
once it determined that it should allow the claim the court should
have awarded damages equal to the stipulated value of $52,800.00.
We are of the opinion that the trial court made a finding that was
inconsistent with the stipulations which were binding on the
parties and the court. In addition, Mrs. Curtis is entitled to
6
Mr. Boyers actually assigned two values to the property. First, he assigned a nominal value of $5,000.00
to the property. Ne xt, he co nsidered the deve lopm ent costs for the ro ads and wa ter lines alo ng the ten foot strip.
Based on this, he concluded that the development costs equaled $47,816.00. After adding together both values and
rounding off the numbers, Mr. Boyers concluded that the ten foot strip had a total value of $52,800.00.
12
one-half of the compensation from the partnership because she owned
a one-half interest in the property. Thus, the trial court should
have awarded Curtis $26,400.00 and Mrs. Curtis $26,400.00.
III. CONCLUSIONS
Therefore, it results that the statute of frauds is a
defense to the enforcement of any of the alleged oral transfers of
lot 14, lot 21, or the ten foot strip of The Hollows. Appellants
are not estopped from asserting their interests as tenants by the
entireties as a defense to Rice's claims. Appellants are entitled
to reimbursement by the partnership for the $25,000.00 value of lot
21 and for the $52,800.00 value of the ten foot strip. Ownership
of lot 14 has not been transferred to the partnership and remains
in appellants.
The judgment of the trial court is reversed, and the cause
is remanded to the trial court with orders to enter judgment
consistent with this opinion and for any further necessary
proceedings. Costs on appeal are assessed to defendants/
appellees, William M. Rice and Rice & Papuchis Construction
Company, Inc.
__________________________________
SAMUEL L. LEWIS, JUDGE
CONCUR:
_________________________________
HENRY F. TODD, P.J., M.S.
_________________________________
WILLIAM C. KOCH, JR., JUDGE
13
IN THE COURT OF APPEALS OF TENNESSEE
MIDDLE SECTION
AT NASHVILLE FILED
August 1, 1997
ALLEN D. CURTIS and wife, )
CAROLYN JUNE CURTIS, ) Cecil W. Crowson
) Appellate Court Clerk
Plaintiff/Appellants, ) Appeal No.
) 01-A-01-9605-CH-00211
v. )
) Sumner Chancery
WILLIAM M. RICE, and ) No. 94C-324
RICE & PAPUCHIS CONSTRUCTION )
COMPANY, INC., )
)
Defendants/Appellees. )
ORDER
Defendants have filed a most respectful petition for rehearing of this court's opinion
which the court has considered and finds to be without merit. Each of the matters discussed in the
petition for rehearing were considered in the original opinion and found to be without merit.
It is therefore ordered that the petition for rehearing be and the same is overruled with
costs to the defendants.
Enter this ______ day of August, 1997.
_________________________________
HENRY F. TODD, PRESIDING JUDGE, M.S.
_______________________________________
SAMUEL L. LEWIS, JUDGE
_______________________________________
WILLIAM C. KOCH, JR., JUDGE