Opinion
No. 4724.
Argued April 7, 1959.
Decided May 21, 1959.
1. Where the defendants purchased for themselves with their own funds a certain lot of land situated between their land and that of the plaintiffs and refused to convey one half thereof to the plaintiffs in accordance with an oral agreement between them that the lot was to be purchased one half by each with each paying one half of the purchase price the agreement was held to be a contract for the sale of land and unenforceable under the statute of frauds (RSA 506:1).
2. The mere refusal of the defendants to perform their oral promise to convey a portion of the lot to the plaintiffs did not constitute fraud or impose upon the defendants a constructive or resulting trust in favor of the plaintiffs in the absence of any relationship of trust and confidence between the parties or part performance by the plaintiffs.
BILL IN EQUITY, praying that the court decree that the defendants hold title to certain real estate in trust for the benefit of the plaintiffs, and that they be ordered to make a conveyance of the real estate to the plaintiffs. The defendants filed a demurrer based on the statute of frauds, and after arguments before the Trial Court the defendants' demurrer was sustained. The plaintiffs excepted to the Court's ruling on the ground that the Court erred as a matter of law in sustaining the demurrer for the reason that the facts set forth in the pleadings show an implied trust and that a trial should have been allowed. The plaintiffs' bill of exceptions was allowed and transferred by Grimes, J.
In summary the plaintiffs' pleadings allege that they own certain land in the town of Tuftonboro, known as lot no. 7; that the defendants own lot no. 5, and that lot no. 6 was purchased by the defendants for $1,000 "in accordance with [an oral] agreement" between the parties to purchase the same, each to purchase one half of said property and each to pay one half of the price. It was further alleged that in pursuance of this oral agreement lot no. 6 was surveyed and descriptions of each half of the lot were prepared, but that the defendants have refused to convey one half thereof to the plaintiffs for which they have tendered $500. It was also alleged that the original oral agreement to purchase lot no. 6 from the owner was made by the plaintiffs prior to the oral agreement of the plaintiffs and defendants to each purchase one half of lot no. 6.
Preston B. Smart for the plaintiffs.
Philip J. Ganem and James J. Kalled (Mr. Ganem orally), for the defendants.
The statute of frauds in this state provides as follows: " 506:1 SALE OF LAND. No action shall be maintained upon a contract for the sale of land unless the agreement upon which it is brought, or some memorandum thereof, is in writing and signed by the party to be charged, or by some person by him thereto authorized by writing." In the present case it is not disputed that the oral agreements between plaintiffs and defendants related to the sale of land and are within the statute of frauds unless the plaintiffs can bring themselves within some exception to it. Langdon v. Sibley, 100 N.H. 373, 375. The plaintiffs rely on the familiar principle that the statute of frauds has no application to cases involving trusts concerning lands which arise or result by implication of law. RSA 477:17; Foley v. Foley, 90 N.H. 281; Bailey v. Scribner, 97 N.H. 65. It is claimed that French v. Pearson, 94 N.H. 18, is a precedent which will allow the plaintiffs to prevail in this action. That case, however, is distinguishable in that the plaintiff had an equitable interest in the land under a written contract of sale with the owner, and that money was advanced under a loan agreement in behalf of the prevailing party. In the present case we have only an oral agreement to sell to the plaintiffs, with no payment or advancement of money by them. "If the defendant contracted to buy land with his own money, and later to convey it to the plaintiff, or to hold it in trust for the plaintiff, as long as the plaintiff has not paid the price, or otherwise performed to the enrichment of the defendant, there is no basis for a constructive trust." 2 Corbin on Contracts, s. 401, p. 373.
It is the general rule, supported by the great weight of authority, that an oral agreement to purchase land and to convey to another the whole or part of the property is a contract within the meaning of the statute of frauds and will not be enforced unless there is fraud or violation of a confidential relationship which will give rise to a constructive or resulting trust. Annos. 42 A.L.R. 10, 13, 63; 135 A.L.R. 232; 27 A.L.R. (2d) 1285. The refusal to carry out an oral promise to convey land standing by itself is not fraud, and will not give rise to a constructive trust. Ranicar v. Goodwin, 326 Mass. 710. Exceptions are made to this rule in cases where a relation of trust and confidence exists. Kachanian v. Kachanian, 100 N.H. 135; Chase v. Aetna Rubber Co., 321 Mass. 721. It does not appear from the pleadings in the present case that the parties occupied a relationship of trust or confidence with each other.
The law seeks to alleviate the harshness of the statute of frauds (Restatement, Trusts, s. 45) but it requires some operating fact such as fraud, part performance, or the violation of a confidential or fiduciary relationship. 3 Bogert, Trusts and Trustees, part I, s. 479. It is the general rule that the mere nonperformance without more of an oral agreement to sell land will not give rise to a constructive or a resulting trust. In 4 Scott, Trusts (2d ed.) s. 499.1, the rule is phrased in the following language: "On the other hand, if all that appears is that B has orally agreed with A that he will purchase certain land in which A has no pre-existing interest and will resell it to A, and B purchases the land with his own money and refuses to sell it to A, A cannot compel him to resell it, since the agreement is unenforceable because of the statute of frauds. The mere agreement by B to resell the land does not place him in a fiduciary relation to A, and since he has used his own money in purchasing the land, A has no other basis for compelling B to hold the land upon a constructive trust or a resulting trust for him." P. 3229.
In this case there is no fraud, the plaintiffs have not paid money or taken action constituting part performance and they are not the beneficiaries of a relationship of confidence and trust which will operate to take their agreement out of the statute of frauds. In such a situation the plaintiffs cannot prevail. McDonald v. Conway, 254 Mass. 429. The rule is stated in 2 Williston, Contracts (Rev. ed.) s. 489, p. 1408, as follows: "Where a man merely employs another person by parol as an agent to buy an estate, who buys it for himself and denies the trust, and no part of the purchase money is paid by the principal, and there is no written agreement, he cannot compel the agent to convey the estate to him, as that would be directly in the teeth of the Statute of Frauds, either of the section invalidating oral trusts or that invalidating oral contracts to sell land."
In this jurisdiction the decisions have attempted to prevent the statute of frauds from operating as a defense where there was a basis for imposing a constructive or resulting trust. This keeps the statute within proper confines and enables the court to prevent injustice in many cases. However, it has not gone so far as to say that the statute is not to be applied where a party is guilty only of violation of a naked oral promise to convey land without more.
Plaintiffs' exception overruled.
All concurred.