Wingart v. Baxter , 30 S.W.2d 522 ( 1930 )

In my opinion the judgment of the trial court cannot be affirmed without disregarding well-settled rules of law governing a suit to enforce a parol contract for the sale of an interest in land.

If Mrs. Baxter gave or promised any right or thing of value in consideration for appellant's promise to pay her the $1,000 awarded her by the judgment of the trial court, it was her homestead right in the premises conveyed to appellant by the assignee to whom Mr. Baxter had previously assigned all of his property for the benefit of his creditors. This assignment expressly includes the premises for sale or release of which by Mrs. Baxter appellant is shown by sufficient evidence to have agreed to pay her, as her separate funds, the $1,000.00 recovered by the judgment. Neither the pleadings of the plaintiff nor the opinion of the majority of the court can change or obscure the fact that in its essential purpose this suit is one to recover the agreed consideration for a parol sale of an interest in land, and the contract sought to be enforced is within our statute of frauds, unless excepted therefrom by reason of such part performance by appellees as would authorize a court of equity, in the prevention of fraud, to refuse to permit appellant to repudiate his contract by pleading the statute.

Appellees' brief, if not expressly so stating, presents their case as within the statute unless excepted therefrom by the equitable principle which forbids the enforcement of a rule of law designed to prevent fraud in a case in which its enforcement would perpetrate a fraud.

There is nothing in the facts of this case to invoke the equitable principle relied on by appellees to relieve the contract sued on from the application of the statute of frauds, which requires all contracts for the sale of an interest in land, or its lease for a longer term than one year, to be in writing.

The following correct and interesting statement of the genesis and evolution of the statute of frauds now found in the statutes of this state is copied from appellant's brief:

"As originally enacted by Parliament, in 1676, the act provided briefly:

"Section 1. That parol leases of real estate, or interest therein for a term of years shall have the force and effect of leases at will only;

"Section 2. Except leases not exceeding three years where the rent is 2/3 of the value of the property are enforceable.

"Section 3. Conveyances of real estate, or an interest therein, or of a lease for a term of years, must be in writing;

"Section 4. No action shall be brought (1) to charge an administrator upon a special promise to answer damages out of his own estate; (2) to charge the defendant upon a promise to answer for a debt, default or miscarriage of another: (3) to charge any person upon an agreement in consideration of marriage; (4) or upon any contract for the sale of land or any interest in or concerning land; (5) or upon an agreement not to be performed within one year from the making thereof; (6) unless the agreement upon which action is brought is in writing, signed by the person or by someone by him duly authorized;

"Section 17. No contract for the sale of goods, wares or merchandise for the price of 10 pounds, or upwards, shall be good, except the buyer shall accept part of the goods and actually receive same or give something in earnest to bind the bargain, or that some note or memorandum in writing be made and signed.

"During the reign of George IV, by what was known as `Lord Tenderden's Act,' the two further provisions were added: (1) That one shall not be held to liability for parol representations as to the character or credit of another; (2) the provisions of Section 17 above were extended to executory contracts for the sale of goods.

"Parts of the above original statutes have been carried into article 1288, Revised Statutes of 1925, of Texas, under the title, `Conveyances.' Section 4 has been carried to the title, `Frauds and Fraudulent Conveyances,' with some changes, one being that an administrator is not chargeable upon a parol agreement to answer for any debts (not damages alone) due from his intestate. Another change is that a person is not chargeable upon a parol lease of real estate for a longer term than one year. The other provisions of the original statute have been omitted in Texas.

"Here it might be noted that the original statute expressly provided that part performance did permit enforcement of a contract for the sale of goods, wares and merchandise, from which the only inference, under proper rule of construction is, that part performance as such was never intended to permit the enforcement of any contract made in violation of any other provision of the statute.

"From the wilderness of confusion in the various litigated cases, the only ground, if any exists, or ever existed, upon which the judges can be said to commonly agree, as justifying courts of equity in refusing to enforce the statute as plainly written, is that the statute may not, itself, be used to perpetrate a fraud."

In the case of Hooks v. Bridgewater, 111 Tex. 122, 229 S.W. 1114, 1116, 15 A.L.R. 216, our Supreme Court, speaking through one of its great Chief Justices, in discussing the proper application of the equitable principle invoked by appellees, says:

"Whatever may be the diversity of views upon the general subject, it is clear that to warrant equity's `breaking through the statute' to enforce such a parol contract, the case must be such that the nonenforcement of the contract — or the enforcement of the statute — would, itself, plainly amount to a fraud. This is the basis, and the only basis, for the jurisdiction which courts of equity have assumed in their creation of exceptions to the statute. When it is considered that the exercise of that jurisdiction results in any case in practically setting the statute aside, certainly there should exist some positive rule which will insure its exercise for only the prevention of an actual fraud as distinguished from a mere wrong, and by which the question of whether a failure to enforce the contract would result in such a fraud may be determined so surely as to leave the statute itself, through the exactness of the exception, with some definiteness of operation."

In the case of Purcell v. Coleman, 71 U.S. (4 Wall.) 513, 517, 18 L. Ed. 435, it is said:

"The statute, which requires such contracts to be in writing, is equally binding on courts of equity as on courts of law. * * *

"A mere breach of a parol promise will not make a case for the interference of a chancellor. It is plain that a party who claims such interference has the burden of proof thrown on him. He knows that the law requires written evidence of such contracts. * * * When he requests a court to interfere for him, and save him from the consequences of his own disregard of the law, he should be held rigidly to full, satisfactory, and indubitable proof —

"First. Of the contract, and of its terms. Such proof must be clear, definite, and conclusive, and must show a contract, leaving no jus deliberandi, or locus poenitentiae. * * *

"Third. Such a part performance of the contract that its rescission would be a fraud on the other party, and could not be fully compensated by recovery of damages in a court of law."

The opinion of the majority gives no effect to the tendered written transfer of the lease attached to plaintiff's pleading, and such tendered transfer was manifestly insufficient to defeat defendant's right to plead the statute in defense of plaintiffs' suit on the parol contract declared on in their petition.

So the only question upon which my dissent from the majority arises is whether the evidence is sufficient to authorize the application of the principle of equity on which the majority bases the conclusion that the trial court properly held that the statute of frauds pleaded by appellant was not a defense to plaintiff's suit. That it was prima facie a complete defense cannot be questioned, and if, as seems to be well settled, the burden was upon appellees to show that the enforcement of the statute would perpetrate a fraud upon them for which the law gives no adequate compensation, I think the evidence not only fails to discharge this burden, but affirmatively shows that no fraud or wrong would be perpetrated on appellees by denying a recovery of the $1,000 agreed to be paid Mrs. Baxter by appellant.

The undisputed evidence shows, as stated in the opinion of the majority, that the property for the sale or release of which appellant is shown to have agreed to pay Mrs. Baxter $1,000 consisted of a leasehold interest under a lease originally executed by the owner of the property to appellee Mr. Baxter and appellant, and which at the time the contract declared on in this suit was made would not terminate for two years or more. The property covered by this lease was a store building and lot in the town of La Ward and several other small buildings situated on the storehouse lot, also a dwelling house on a nearby lot, and a small parcel of land lying between the storehouse lot and the lot on which the dwelling house was situated. While this lease continued to be held in the name of Wingart Baxter, some time prior to his assignment for the benefit of his creditors, Mr. Baxter had repaid appellant the amount advanced by him for the lease and for the purchase of the business operated thereon and was the sole owner of the lease and the mercantile business which he conducted thereon. As stated in the majority opinion, appellant's connection with the original transaction was solely for the benefit of Mr. Baxter, who was at all times the real owner of the lease and the business.

This was the situation when, his business becoming insolvent, Mr. Baxter on March 9, 1927, made a general assignment under the statutes of this state for the benefit of his creditors. The deed of assignment expressly conveys to the trustee named therein for the benefit of his creditors the leasehold interest before described, which was valued in the deed at $500. The trustee, after due notice, sold the property conveyed to him by the deed of assignment at public sale on March 29, 1927. The appellant became the purchaser at this sale, and the property was conveyed to him by the trustee. Immediately after his purchase, appellant took possession of all of the property except the dwelling house and lot on which it was situated, and placed Mr. Baxter in charge of the business under an agreement by which the business and all of the property conveyed to him by the trustee could be repurchased by Baxter if and when he could raise the money to repay appellant the amount paid for its purchase from the trustee. Baxter and his family continued to occupy the dwelling house until May 5, 1927, when they voluntarily, without any demand or request on the part of appellant, moved to another place of residence, in another town. Baxter managed the business for only a few days, as appellant became dissatisfied with the way in which he performed his duties. On April 13th, before Baxter and his family moved from the dwelling, appellant was notified by an attorney for Baxter and his wife that they, or Mrs. Baxter, claimed homestead rights in the property conveyed appellant by the trustee. After getting this notice, appellant called on Baxter on May 9, 1927, and requested that the original lease of property be turned over to him. Baxter agreed to do this if appellant would pay a $1,500 debt of his for which appellant was surety. Appellant agreed to this, and in a few days the original lease was turned over to appellant by Baxter's attorney, and thereafter appellant paid the $1.500 in accordance with his agreement. Appellant did not use or rent the dwelling house from which the Baxters moved on May 5, 1927, until January, 1928. After the agreement with Baxter above stated, no demand or claim was made upon appellant for any homestead interest in the property nor for the payment of the $1,000 involved in this suit until the suit was filed on February 4, 1929, or shortly prior thereto.

In my opinion these facts, which are uncontroverted, fall far short of meeting the burden upon appellees to show that a rescission of the contract because not in writing would be a fraud upon appellees. On the contrary, it seems to me that the equities of the case are with appellant.

In addition to this, a refusal of the court to enforce this contract because it is not in writing as required by the statute will not leave appellees without a remedy for any wrong they may thereby sustain, as there is no hindrance to the prosecution of a suit for damages for the rental value of the property and recovery of same if they have not been paid such rental value.