Walker v. Ireton, 221 Kan. 314, 559 P.2d 340 

Supreme Court of Kansas

1977

Chapter

40

Title

The Requirement Of A Written Instrument

Page

855

Topic

Specific performance of an oral contract.

Quick Notes

Walker is suing Ireton for specific performance to sell Iretons farm to Walker based on an oral agreement.  Walker said he reasonably relied on this oral agreement in which he sold his other farm.  Ireton argument is that the statute of frauds requires the sale of land to be in writing.

Statute of frauds

o         No action shall be brought to charge a party upon any contract for the sale of lands "unless the 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, . . ."

§ 197. Action in Reliance; Specific Performance.

o         A contract for the transfer of an interest in land may be specifically enforced notwithstanding failure to comply with the Statute of Frauds

o    If it is established that the party seeking enforcement,

(1)   in reasonable reliance on the contract and

(2)   on the continuing assent of the party against whom enforcement is sought,

(3)   has so changed his position that injustice can be avoided only by specific enforcement."

§ 217A. Enforcement by Virtue of Action in Reliance.

(1)   A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce the action or forbearance is enforceable notwithstanding the Statute of Frauds

a.     If injustice can be avoided only by enforcement of the promise.

b.    The remedy granted for breach is to be limited as justice requires.

(2)   In determining whether injustice can be avoided only by enforcement of the promise, the following circumstances are influential:

a.     the availability and adequacy of other remedies, particularly cancellation and restitution;

b.    the definite and substantial character of the action or forbearance in relation to the remedy sought;

c.     the extent to which the action or forbearance corroborates evidence of the making and terms of the promise, or the making and terms are otherwise established by clear and convincing evidence;

d.    the reasonableness of the action or forbearance and the misleading character of the promise."

Rule - Purely Collateral Act

o         An act which is purely collateral to an oral contract, although done in reliance on such contract is not such a part performance as to authorize the enforcement of the contract by a court of equity.

Exception To Rule

(1)   Where the agreement was made to induce the collateral act or

(2)   Where the collateral act was contemplated by the parties as a part of the entire transaction.

Rule - Restitution is restrict to what benefitted the vendor

o         Where a vendee is denied specific performance under an oral contract for the sale of land his right to restitution is restricted to expenditures or services which benefitted the vendor on the basis of quantum meruit.

§ 217A Comment b  - Reliance must be foreseeable

o         Reliance of the promisee must be foreseeable by the promisor and enforcement must be necessary to avoid injustice.

Entitled To Recover

o         His $ 50 check

o         The cost of bringing Iretons' abstract up to date on the basis of quantum meruit or unjust enrichment.

Court - Reasoning

o         These expenditures were of benefit to the Iretons and Walker is entitled to restitution for these items.

NOT Entitled to Recover

o         Not entitled to be reimbursed for his $ 75 attorney fee in obtaining a legal opinion.

Court - Reasoning

o         The Iretons received no benefit from this expenditure.

Court - Holding

o         The court concluded that under all the facts and circumstances equity did not require the statute of frauds to be removed as a defense to this action for specific performance of the oral contract. There was no claim that there was any relationship of trust or confidence between the parties. There were no allegations or evidence of false misrepresentation of existing facts. The court also found that the seller was entitled to the return of his check on the basis of quantum meruit or unjust enrichment.

Book Name

Fundamentals of Modern Property Law: Rabin; Kwall, Kwall.  ISBN:  978-1-59941-053-1.

Issue

o         Whether equitable considerations prevented the statute of frauds from being asserted as a defense to the action on the oral contract?  No, in this case, but see rules.

o         Whether or not these acts [$50 check, abstract expenses, attorney expenses, sell of other farm] of reliance are sufficient to require a court to remove the bar of the statute of frauds?  No, in this case but see rules.

Procedure

Trial

o         Saline District Court, Division No. 1 (Kansas), which granted Ireton summary judgment on the ground that the Walker was not entitled to specific performance as a matter of law because of the application of the statute of frauds.

Appellant

o         On appeal, the court affirmed, finding that the case was ripe for summary judgment

Supreme

o         The court concluded that under all the facts and circumstances equity did not require the statute of frauds to be removed as a defense to this action for specific performance of the oral contract. There was no claim that there was any relationship of trust or confidence between the parties. There were no allegations or evidence of false misrepresentation of existing facts. The court also found that the seller was entitled to the return of his check on the basis of quantum meruit or unjust enrichment. The judgment of the district court was affirmed.

Facts/Cases

Discussion

Reasoning/Key Phrase

Rules/Laws

Pl - Walker (Appellant)

Df - Ireton (Appellee)

Overview

o         This is an action for the specific performance of an oral contract for the sale of farm land.

o         Ireton, Df - asserting the defense of the statute of frauds.

o         Ireton then filed a motion for summary judgment on the ground that Walker was not entitled to specific performance as a matter of law because of the application of the statute of frauds.

Trial Court - Sustained SJ

o         The trial court sustained the defendants' motion for summary judgment and the plaintiff has appealed.

Details

o         Iretons owned a farm that was 160 acres.

o         Ireton orally agreed to sell his farm to Walker for $30,000.

o         Ireton was to forma the crop land on shares and was to pay the real estate taxes through the year 1973.

o         Walker was to be permitted to spray the trees in the pasture to kill them.

o         Walker would receive full possession of the farm in January 1974.

o         Later Ireton stated to Walker he had sold the farm to cheap.

o         Walker said he would through in another $500.

Payments Plan

o         The purchase price was to be paid as follows: $ 50 on July 30, 1973;

o         $ 7,612.50 on or before September 30, 1973;

o         $ 22,837.50 on or before January 1, 1974.

Continued to live in house

o         The Iretons were to continue to live in the house until January 1, 1974, when Walker was to take complete possession.

Approved terms, No Written K

o         Mr. and Mrs. Ireton approved the terms of the sale and Walker again suggested that a written contract be prepared. Ireton stated that his word was good and it would be prepared later.

Delivered first Payment

o         On July 30, 1973, Walker delivered his $ 50 check to Ireton.

Never endorsed or cashed

o         This check was never endorsed or cashed.

4 Attempts for Written K

o         On at least four subsequent occasions thereafter Walker attempted to convince Ireton that a written contract was needed to complete the agreement.

Ireton would not sign written K

o         At one time Walker took a written contract to the Iretons to be signed. On each occasion Ireton said that a written contract was not needed since he was honest. A written contract was never executed.

Abstract and Legal Inspection

o         $36 for abstract.

o         $75 for attorney inspection.

Iretons new home not complete

o         Walker agreed to let Iretons stay.

o         ETA Completion: Jan. 1, 1974.

Backout Offer

o         Aug. 1973

o         Offered $200 to Walker to back out.

Walker Refused

o         He sold his other farm.

Ireton Refused second payment

o         Backing out of agreement.

o         Mrs said she would pay Walker for abstract and damages.

o         Walker was evicted.

Walker filed action

o         For specific performance.

Trial Court

Ireton Arg - Oral contract was not enforceable because of the statute of frauds

Statute of frauds

o         No action shall be brought to charge a party upon any contract for the sale of lands "unless the 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, . . ."

Trial Court

o         The trial court sustained the Iretons' motion for summary judgment.

o         Accepted the plaintiff's factual contentions as true.

o         There was an oral agreement for the sale in accordance with the terms suggested by Walker.

Walker Arg - statute of frauds was not available as a defense on the basis of partial performance

o         The court then considered Walker's contention that the statute of frauds was not available as a defense on the basis of partial performance, fraud, waiver, estoppel or ratification.

Trial Court - Not sufficient equities

o         The trial court concluded that there were not sufficient equities in the case to justify the court in taking the case out of the statute of frauds.

o         This was a classic case of an oral contract for the sale of land.

o         Because of the statute of frauds the oral contract was not enforceable.

Walker - Appealed

Whether equitable considerations prevented the statute of frauds from being asserted as a defense to the action on the oral contract?

Walker Arg - statute of frauds was not available as a defense on the basis of partial performance

o         Counsel for Walker takes the position that the statute of frauds should be held to be inapplicable as a matter of law on alternative theories of fraud, estoppel, acquiescence, waiver, ratification, inconsistency in conduct, or partial performance.

o         In his brief counsel for Walker has cited a number of Kansas decisions which have approached this statute of frauds question from these various angles, using different terminology in particular cases.

Principles of Law From Past Cases Dealing with Oral Contracts

(1)   The statute of frauds does not render the oral contract void. It is valid for all purposes except that of suit. ( Weld v. Weld, 71 Kan. 622, 81 Pac. 183; Rice v. Randolph, 111 Kan. 73, 206 Pac. 314.)

(2)   Since the contract is one which cannot be enforced, no action for damages will lie for its breach. ( Fry v. Platt, 32 Kan. 62, 3 Pac. 781; Leis v. Potter, 68 Kan. 117, 121, 74 Pac. 622; Evans v. Lynch, 200 Kan. 331, 436 P. 2d 867.)

(3)   The statute of frauds was enacted to prevent fraud and injustice, not to foster or encourage it, and courts will, so far as possible, refuse to allow it to be used as a shield to protect fraud and as a means to enable one to take advantage of his own wrong. ( Hazen v. Garey, 168 Kan. 349, 212 P. 2d 288; Powell v. McChesney, 170 Kan. 692, 228 P. 2d 925.)

(4)   Where it is sought to enforce an oral contract for the sale of an interest in real estate on the grounds that it has been performed by the party seeking to enforce it, it must appear that a failure to enforce would amount to a fraud against the party. ( Jay v. Ellis,–5 Kan. 272, 10 P. 2d 840.)

(5)   Absent compelling equitable considerations an oral contract within the statute of frauds will not be specifically enforced. ( Engelbrecht v. Herrington, 103 Kan. 21, 172 Pac. 715; Jay v. Ellis, supra.)

(6)   Part performance of an oral contract will not take the case out of statute where the performing party can be compensated in  [*321]  money. ( Gates v. Syndicate Oil Corp.,–2 Kan. 272, 295 Pac. 649; Engelbrecht v. Herrington, supra.)

(7)   Payment of the purchase price alone is not sufficient part performance to take a case out of the statute of frauds. Since the money can be recovered back by action, no fraud will be accomplished if the oral contract is not enforced. ( [***17]  Edwards v. Fry, supra; Engelbrecht v. Herrington, supra; Riffel v. Dieter, 159 Kan. 628, 157 P. 2d 831.)

(8)   Delivery of possession of the land alone without the making of improvements is not sufficient to take a case out of the application of the statute of frauds. ( Baldridge v. Centgraf, supra.)

Supreme Court - §197 && §271A

o         In our judgment sections 197 and 217A of Restatement 2d, Contracts (Tentative draft 1973), are clear and direct statements of the principles of law to be applied in determining whether or not an oral contract should be removed from the application of the statute of frauds and enforced by a court on equitable principles.

o         They are based upon the equitable doctrine of reliance which is the fundamental theory upon which all of our prior cases are founded.

§ 197. Action in Reliance; Specific Performance.

o         A contract for the transfer of an interest in land may be specifically enforced notwithstanding failure to comply with the Statute of Frauds

o    If it is established that the party seeking enforcement,

(1)   in reasonable reliance on the contract and

(2)   on the continuing assent of the party against whom enforcement is sought,

(3)   has so changed his position that injustice can be avoided only by specific enforcement."

§ 217A. Enforcement by Virtue of Action in Reliance.

(1)   A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce the action or forbearance is enforceable notwithstanding the Statute of Frauds

a.     If injustice can be avoided only by enforcement of the promise.

b.    The remedy granted for breach is to be limited as justice requires.

(2)   In determining whether injustice can be avoided only by enforcement of the promise, the following circumstances are influential:

a.     the availability and adequacy of other remedies, particularly cancellation and restitution;

b.    the definite and substantial character of the action or forbearance in relation to the remedy sought;

c.     the extent to which the action or forbearance corroborates evidence of the making and terms of the promise, or the making and terms are otherwise established by clear and convincing evidence;

d.    the reasonableness of the action or forbearance and the misleading character of the promise."

Determining the Results - Relationship, Misrepresentation, Possession, Improvements

Court - Equity does not require the removal of the statute of frauds as a defense

o         We have concluded that under all the facts and circumstances equity does not require the statute of frauds to be removed as a defense to this action for specific performance of the oral contract.

Court - no claim that there was any relationship of trust or confidence

o         Here there is no claim that there was any relationship of trust or confidence between the parties.

Court - no allegations or evidence of false misrepresentation

o         There are no allegations or evidence of false misrepresentation of existing facts.

o         It was stipulated that the parties understood a written contract was to be prepared.

o         Ireton simply refused to sign a written contract on four or five different occasions.

Court - Never took possession, Made No Improvements

o         Although Walker made a $ 50 down payment he never took possession of the land involved and made no improvements thereon.

o         Walker placed a hay rake on one of the pastures of the farm but this could not be considered a delivery of possession of the land.

Whether or not these acts [$50 check, abstract expenses, attorney expenses, sell of other farm] of reliance are sufficient to require a court to remove the bar of the statute of frauds?

Walkers Arg - Acts of Reliance

o         $ 50 check as an installment on the purchase price,

o         Payment of a $ 36 abstract expense.

o         A $ 75 attorney fee for an abstract examination.

o         The placing of a side-delivery hay rake on a pasture in September 1973

o         Walker sold a farm near Hedville which he had recently purchased in reliance on Ireton's promise to sell his farm.

Court - Acts are not sufficient to justify specific reliance

o         Taken together they are not sufficient to justify specific performance of the oral contract.

o         The fact that Walker sold another farm in expectation that the Iretons would sell their farm to him does not justify specific performance under the circumstances of the case.

Rule - Purely Collateral Act

o         An act which is purely collateral to an oral contract, although done in reliance on such contract is not such a part performance as to authorize the enforcement of the contract by a court of equity.

Exception To Rule

(1)   Where the agreement was made to induce the collateral act or

(2)   Where the collateral act was contemplated by the parties as a part of the entire transaction.

Court - Walker did not advise the Iretons of his intention to sell Hedville farm

o         Walker does not contend that he advised the Iretons of his intention to sell the Hedville farm in advance of the sale.

Court - Iretons had no knowledge of sell until after it was sold

o         The Iretons had [no] knowledge concerning the sale of the Hedville farm until after it had already been sold.

Court - Walker did not say he lost money on resale of farm

o         Furthermore, Walker does not contend at any place in the record that he lost money on the resale of the Hedville farm to others.

Court - Sale of farm was a collateral matter not within the contemplation of the parties

o         We consider the resale of the Hedville farm by Walker to others as a matter wholly collateral to the Ireton contract and not within the contemplation of the parties nor within the scope of any understanding between Ireton and Walker.

Dunn v. Winans

o         There plaintiff vendee brought an action for specific performance of an oral agreement to sell certain land.

o         The petition alleged the making of some improvements on the property and further alleged that plaintiff was damaged in the amount of $ 300 for the sale of his home for the purpose of carrying out the contract with the defendant.

Court  - Denied specific performance, because part performance was insufficient

o         Denied specific performance holding that there had not been sufficient part performance to take the case out of the statute of frauds.

Entitled to Recover - Improvements to Property

o         The vendee was entitled to recover the expenses which were incurred by him for the improvements he made on the property.

NOT Entitled to Recover

o         Not permitted to recover damages on account of the sale of his former home.

In This Case

Entitled To Recover

o         His $ 50 check

o         The cost of bringing Iretons' abstract up to date on the basis of quantum meruit or unjust enrichment.

Court - Reasoning

o         These expenditures were of benefit to the Iretons and Walker is entitled to restitution for these items.

NOT Entitled to Recover

o         Not entitled to be reimbursed for his $ 75 attorney fee in obtaining a legal opinion.

Court - Reasoning

o         The Iretons received no benefit from this expenditure.

Rule - Restitution is restrict to what benefitted the vendor

o         Where a vendee is denied specific performance under an oral contract for the sale of land his right to restitution is restricted to expenditures or services which benefitted the vendor on the basis of quantum meruit.

§ 217A Comment b  - Reliance must be foreseeable

o         Reliance of the promisee must be foreseeable by the promisor and enforcement must be necessary to avoid injustice.

Court - Holding

o         In this case equity and justice do not require specific enforcement of the oral contract, nor do they require reimbursement to Walker for the sale of the Hedville farm.

Affirmed.

Rules

Statute of frauds

o         No action shall be brought to charge a party upon any contract for the sale of lands "unless the 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, . . ."

§ 197. Action in Reliance; Specific Performance.

o         A contract for the transfer of an interest in land may be specifically enforced notwithstanding failure to comply with the Statute of Frauds

o    If it is established that the party seeking enforcement,

(1)   in reasonable reliance on the contract and

(2)   on the continuing assent of the party against whom enforcement is sought,

(3)   has so changed his position that injustice can be avoided only by specific enforcement."

§ 217A. Enforcement by Virtue of Action in Reliance.

(1)   A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce the action or forbearance is enforceable notwithstanding the Statute of Frauds

a.     If injustice can be avoided only by enforcement of the promise.

b.    The remedy granted for breach is to be limited as justice requires.

(2)   In determining whether injustice can be avoided only by enforcement of the promise, the following circumstances are influential:

a.     the availability and adequacy of other remedies, particularly cancellation and restitution;

b.    the definite and substantial character of the action or forbearance in relation to the remedy sought;

c.     the extent to which the action or forbearance corroborates evidence of the making and terms of the promise, or the making and terms are otherwise established by clear and convincing evidence;

d.    the reasonableness of the action or forbearance and the misleading character of the promise."

Rule - Purely Collateral Act

o         An act which is purely collateral to an oral contract, although done in reliance on such contract is not such a part performance as to authorize the enforcement of the contract by a court of equity.

Exception To Rule

(1)   Where the agreement was made to induce the collateral act or

(2)   Where the collateral act was contemplated by the parties as a part of the entire transaction.

Rule - Restitution is restrict to what benefitted the vendor

o         Where a vendee is denied specific performance under an oral contract for the sale of land his right to restitution is restricted to expenditures or services which benefitted the vendor on the basis of quantum meruit.

§ 217A Comment b  - Reliance must be foreseeable

o         Reliance of the promisee must be foreseeable by the promisor and enforcement must be necessary to avoid injustice.

Class Notes