Karrels v. Karrels , 234 Wis. 44 ( 1939 )

Suit begun March 23, 1938, by John Karrels and Barbara against Ben Karrels and Mary for specific performance of an alleged oral agreement to execute a land contract claimed to have been entered into by the parties. From a judgment decreeing specific performance, defendants appeal.

The complaint alleges an agreement to sell land therein described to plaintiffs on a land contract. There are allegations of part performance on the part of the plaintiffs and an acceptance of such performance by the defendants. The defendants answer, denying the making of the contract. They admit the making of an oral offer, but allege its rejection by plaintiffs, and set up that no written agreement was entered into between the parties in accordance with such oral offer.

The trial was to the court. The following findings of fact were made: That John Karrels had been the owner of the described lands for a number of years; that the premises were to be sold under foreclosure proceedings instituted to enforce collection of a first mortgage on a part of said lands; that under those proceedings the sale occurred August 14, 1937; that the premises were purchased by the defendants, who were the owners of another mortgage upon the same premises; that the second mortgage was foreclosed and a sale thereunder occurred December 11, 1937; that on August 14, 1937, the parties entered into an agreement under which the plaintiffs were to refrain from exercising any rights of redemption or those rights existing in their favor under any moratorium statute; that the defendants were to become purchasers on the sales under both foreclosures, and were to sell the land to the plaintiffs under a land contract; that the purchase price of said farm was $8,500, to be paid at the rate of $40 per month for the first two years; and that when the principal amount of $8,500 had been reduced to $6,000, defendants were to execute a deed conveying the premises to the plaintiffs, at which time the plaintiffs were to execute a purchase-money mortgage in favor of the defendants for $6,000, at four per cent per annum, and payable in five years. It was further found that the plaintiffs in pursuance of their agreement refrained from exercising their legal rights under the foreclosure proceedings; that the plaintiffs performed. their part of said agreement; that the defendants have refused to comply with their promises; and that the plaintiffs under the agreement retained possession of the premises.

The conclusions of law were that a valid agreement was entered into binding the defendants to execute a land contract to the plaintiffs, conveying the premises described in the complaint; that the plaintiffs have fulfilled their obligation, but that the defendants refused to perform theirs; and that the plaintiffs are entitled to a decree requiring the defendants to execute the contract for the conveyance of the premises. Accordingly, a judgment was entered in which it was ordered and adjudged that the agreement set forth be specifically performed, and that the defendants execute and deliver to the plaintiffs a land contract for the conveyance of the premises. The said contract contained the terms found to have been made by the parties. It was also decreed "that the clerk of the county court of Ozaukee county, Wisconsin, pay over to the said Ben Karrels and Mary Karrels, his wife, said sum of four hundred forty-five dollars ($445), representing the payments made by the plaintiffs pursuant to the said agreement, and the sum of one hundred thirty-five and 17/100 dollars ($135.17) representing the money paid into court by the said plaintiffs for taxes for the year 1937 and accrued insurance premiums." From a judgment accordingly entered, defendants appeal. One agreeing to convey land to another upon fixed terms may be required to perform even though no written memorandum in compliance with the statute of frauds (sec. 240.08, Stats.) is made, if there has been a part performance and fraud would result from not enforcing the oral agreement. Cutler v. Babcock, 81 Wis. 195,51 N.W. 420; Estate of Powell, 206 Wis. 513, 240 N.W. 122.

The plaintiffs rest their case upon an oral agreement claimed to have been made effective by reason of what the plaintiffs did in reliance upon the defendants' promises. They claim the acts on their part, and the advantages given by them to and accepted by the defendants, constitute a part performance under sec. 240.09, Stats., which takes the oral promise out of the statute of frauds.

The general rule is that equity will enforce specific performance of an oral agreement to convey land to prevent a fraud where part performance by the purchaser is shown.Marshall Ilsley Bank v. Schuerbrock, 195 Wis. 203,217 N.W. 416. The basis of the doctrine of part performance lies in principles of equitable estoppel where it would be a fraud upon the plaintiffs if the defendants were permitted to escape performance of their part of the oral agreement after they have induced plaintiffs to forego valuable rights and have permitted them to perform in reliance upon the agreement. This doctrine was followed in Bowen v. Warner, 1 Pin. 600; Cutler v. Babcock, supra; Wall v. Minneapolis,St. P. S. S. M. R. Co. 86 Wis. 48, 56 N.W. 367; Estateof Powell, supra. See also 101 A.L.R. 935 et seq.

The evidence upon which the trial court relied in reaching its conclusions supports the findings of fact, for it appears therefrom that the defendant Ben Karrels told his brother, the plaintiff John, that John could have the farm on a land contract if Ben got the title; and that John was not to interfere with the confirmation of the sale. At the time of the first conversation there was an expectation that the farm could be bid in for $7,500, but whatever the cost to Ben would be, it was to be assumed by John. John testified: "I agreed to let the foreclosure proceeding go through. . . . He said that as soon as I reduced the principal to $6,000 he would accept the mortgage at four per cent for five years. . . . I told my attorney not to interfere with the confirmation of the Neuhengen sale. Ben Karrels' foreclosure against me was pending at that time."

After the sale under the Ben Karrels mortgage, the parties met on December 31, 1937. They then knew that $8,500 was the amount John and his wife were to pay. The terms of the agreement were settled and a memorandum thereof made as found by the court. The fact that on August 14th the exact amount could not be ascertained does not leave matters in such uncertainty as to negative the completeness of a contract. There was then a standard for determining the price, and the agreement to subsequently incorporate that amount as a term of the contract was enforceable, especially where the amount became known and the agreement was confirmed. The circumstances definitely show a meeting of the minds. 13 C. J. p. 292, § 100; 12 Am. Jur. p. 554, § 64; p. 561. § 70; Restatement, Contracts, § 32; Kipp v. Laun,146 Wis. 591, 131 N.W. 418; Hayes v. O'Brien, 149 Ill. 403, 37 N.E. 73; Jungdorf v. Little Rice, 156 Wis. 466,145 N.W. 1092; Hopedale Electric Co. v. Electric StorageBattery Co. 96 A.D. 344, 89 N.Y. Supp. 325 (affirmed184 N.Y. 356, 77 N.E. 394). The ground on which the court holds that part performance takes a contract out of the purview of the statute of frauds is the inducement or allowing a party to so change his position on the faith of the contract as to subject him to great disadvantage amounting to a fraud. In addition to permitting the title to be acquired by defendants, the plaintiffs made some payments, and under the agreement resumed or retained possession of the farm. They have been ready to carry out their part of the bargain and have demanded the land contract they were to have. Defendants having changed their minds as to the advisability, from their standpoint, of giving a land contract, refused to comply with the demand and offered to lease the farm to plaintiffs. This suit resulted. At the trial testimony to support defendants' contention that the plaintiffs were responsible for the breaking off of contractual relations was offered, but the evidence accepted by the trial court as controlling brings forth a case of a complete contract and a part performance under it, sufficient to result in a right to a decree of specific performance. There is an exposition of this doctrine of part performance as applied to equivalent facts in the case of Cutler v. Babcock,supra. In that case one Babcock in possession of and owner of land mortgaged it to Cutler. In order to clear the title Babcock allowed Cutler to foreclose the mortgage and bid in the land under an oral promise on Cutler's part to reconvey. The owner was to pay the costs and expenses of the foreclosure. Cutler bid in the land but refused to reconvey the lots in question. It was ruled that there was part performance taking the case out of the statute of frauds, and that a decree of specific performance was justified. It appears that the mortgagee's refusal to reconvey was a sufficient fraud to make the buyer a trustee ex maleficio for the mortgagor. There, as here, the parties stood in relation of mortgagor and mortgagee; the mortgagor who was also the prospective title holder after a sale had possession before the foreclosure and retained it after; and there was forbearance in reliance on the oral promise. See Scheuer v. Cochem,126 Wis. 209, 214, 105 N.W. 573; Henrikson v. Henrikson,143 Wis. 314, 319, 127 N.W. 962; Estate of Powell, supra. See also 2 Pomeroy, Eq. Jur. (4th ed.) p. 1929, § 921; 2 Story, Eq. Jur. (14th ed.) p. 424, § 1046 ff; 5 Pomeroy, Eq. Jur. (2d ed.) p. 5011, § 2243.

The party getting title in a foreclosure sale, under a parol contract to reconvey, cannot be allowed to repudiate the contract when it comes time for him to perform. Paine v. Wilcox, 16 Wis. *202.

By the Court. — Judgment affirmed.

FOWLER and FRITZ, JJ., dissent.