Summary
In Krause v. Holand, 33 Wis.2d 211, 214, 147 N.W.2d 333 (1967), this court relied on Heins in setting forth the scope of the trial court's discretion in awarding specific performance on a contract for the sale of real estate. "When one has clearly established the terms of his contract to buy real estate, he is entitled to specific performance which is not to be denied by judicial arbitrariness.
Summary of this case from Anderson v. OnsagerOpinion
November 29, 1966 —
January 3, 1967.
APPEAL from a judgment of the circuit court for Door county: RAYMOND J. RAHR, Circuit Judge. Affirmed.
For the appellant there were briefs by Kaftan, Kaftan Kaftan of Green Bay, and oral argument by Fred F. Kaftan.
For the respondents Ivar Holand, Pearl Holand, Swanhild Johnson, Harold Holand, Mary Holand, and Vallee Ditchen there was a brief by Stephan Kirkegaard of Sturgeon Bay, and oral argument by Edwin C. Stephan.
For the respondent Joseph Jungwirth there was a brief and oral argument by Thorval T. Tort of Sturgeon Bay.
This action was commenced by Alvin Krause for specific performance of an alleged agreement to sell certain real estate located in Door county, Wisconsin.
The defendants Ivar Holand, Harold Holand, Swanhild Johnson, and Vallee Ditchen are brothers and sisters, each of whom inherited an undivided one-fourth interest in the estate of their father, H.R. Holand, who died intestate on August 8, 1963. One parcel of real estate was included in the estate, and this parcel is described as follows:
"All of the Southwest Quarter (SW 1/4) of the Northeast Quarter (NE 1/4) of Section Twenty-seven (27), Township Thirty-one (31) North of Range Twenty-seven (27) East lying on the Southeast side of Highway 42 excepting 11.80 acres described in volume 65 of Deeds, page 151, and one acre described in volume 117 of Deeds, page 523, Door County records, this remaining tract known as the H.R. Holand Estate containing about 16 acres."
Ivar Holand was appointed administrator of the estate, and after the final judgment in the estate was entered on April 24, 1964, he placed an advertisement in the Door County Reminder offering certain real property for sale as administrator.
On August 23, 1964, the plaintiff Mr. Krause and his wife discussed purchase of the property with Ivar Holand. After some negotiations, the plaintiff apparently agreed to purchase it for $16,000 and gave Ivar Holand a check for $200 as down payment. Ivar Holand signed a receipt which acknowledged the $200 payment and stated that the balance was $15,800.
The receipt also contained the words "Down payment on H.R. Holand Estate. About 15 acres," but there is a dispute, unresolved by the trial court, as to when this notation was placed on the receipt. In addition, the following words were written on the back of a carbon copy of the receipt: "Subject to securing a loan by 8/31/64. Otherwise down payment will be refunded. O. K. Ivar Holand."
It appears that Mr. Krause had some difficulty regarding a loan. The trial judge determined that Mr. Krause "did not secure a loan or make any tender of the funds to Ivar Holand on August 31, 1964." There was testimony that Mr. Krause could have obtained financing after this time, but Ivar Holand became impatient and accepted a down payment on the property from the defendant Joseph Jungwirth in November, 1964.
The plaintiff subsequently started this action for specific performance. After a trial, the court below determined that the writing did not satisfy the requirements of sec. 240.08, Stats., and also that Mr. Jungwirth was a good-faith purchaser. The court entered a judgment dismissing the plaintiff's complaint, from which the plaintiff appeals.
Statute Involved.
"240.08 Contract for lease or sale to be in writing. Every contract for the leasing for a longer period than one year or for the sale of any lands or any interest in lands shall be void unless the contract or some note or memorandum thereof, expressing the consideration, be in writing and be subscribed by the party by whom the lease or sale is to be made or by his lawfully authorized agent."
When one has clearly established the terms of his contract to buy real estate, he is entitled to specific performance which is not to be denied by judicial arbitrariness. Heins v. Thompson Flieth Lumber Co. (1917), 165 Wis. 563, 573, 163 N.W. 173. However, if the essential terms of the contract are not established with clarity, it is a proper prerogative of a court of equity to deny specific performance. In Fontaine v. Riley (1926), 189 Wis. 226, 235, 207 N.W. 256, the court said:
"However, a contract of this kind requires not only a reasonably accurate description in order that specific performance may be decreed, but the other essential terms of the contract must also be shown by clear, satisfactory, and convincing evidence."
Similar expressions are found in Estate of Shinoe (1933), 212 Wis. 481, 487, 250 N.W. 505, and Estate of Powell (1932), 206 Wis. 513, 516, 240 N.W. 122.
Contracts which are vague and uncertain have long encountered judicial unwillingness to grant specific performance. Thus, in Park v. M., St. P. S. S. M. R. Co. (1902), 114 Wis. 347, 352, 89 N.W. 532, it was said:
"At least as early as Lord Eldon's day it was decided that courts of equity would exercise their discretion against undertaking specific enforcement of incomplete contracts, lacking certainty as to essential terms, although the uncertainty existed by reason of defendant's fault. Wilks v. Davis, 3 Mer. 507. That view has been followed with surprising unanimity by courts since."
In Dewey v. Spring Valley Land Co. (1897), 98 Wis. 83, 86, 73 N.W. 565, the court stated that for specific performance "the contract sought to be enforced must be fully and clearly proved in all its parts."
The trial court declined to grant specific performance in the case at bar and, in our opinion, such determination was correct. The transaction is replete with gaps and uncertainties, all of which vigorously militate against the plaintiff's claim to specific performance.
There is a serious doubt that the contract has been "subscribed by the party by whom the lease or sale is to be made or by his lawfully authorized agent." Sec. 240.08, Stats. Although there were four owners, the written receipt was signed only by Ivar Holand. To that extent the receipt may have been sufficient to bind him as an owner of an undivided one-fourth interest; however, it is apparent that the negotiations were designed to involve the interests of all the owners of this property. At the time that the contract was made, Ivar Holand did not have written authority to bind his brother and sisters. However, parol authority may create an agency relationship which will permit the agent to bind the principal by a written contract to sell real estate, but such parol authority must be clear and express. In Lauer v. Bandow (1878), 43 Wis. 556, 563, involving an analogous situation, Mr. Chief Justice RYAN stated: "Parol agency to charge a principal's realty ought to be express, and clearly established." To the same effect see Challoner Bouck (1883), 56 Wis. 652, 14 N.W. 810.
The existence of parol authority in the case at bar is far from certain. Portions of an adverse examination of one of the sisters, Vallee Ditchen, were introduced into evidence, but her testimony is inconclusive on the question of whether she gave parol authority to Ivar Holand to act as her agent. Evidence by the other owners was not presented at the trial.
Not only is there sparse evidence to establish authority in Ivar Holand from his siblings, but there is even less in the record to indicate that the wives of Ivar Holand and Harold Holand designated Ivar Holand as their agent to contract away their dower rights. We recognize that specific performance will not necessarily be denied when dower rights remain outstanding. O'Malley v. Miller (1912), 148 Wis. 393, 134 N.W. 840. Nevertheless, the absence of clear authorization on the part of the wives of two owners detracts from the persuasiveness of the plaintiff's demand for equitable relief.
In our opinion, the record does not warrant the finding that Ivar Holand had either written or parol authority to bind the other interested sellers to the contract which the plaintiff seeks to enforce. This is true notwithstanding the fact that the other three heirs subsequently signed deeds and engaged in correspondence alleged to show an agency (none of which material is now available).
There is also a doubt relating to the description of the land to be sold. Mrs. Krause testified that the words "Down payment on H.R. Holand Estate. About 15 acres" were placed on the receipt at the time it was executed and delivered. Ivar Holand, however, testified that the first time he saw these words was at the adverse examination of Mr. Krause. The trial court acknowledged this dispute but did not resolve it, and this court is left with uncertainty as to whether the property to be sold was adequately described. If Ivar Holand's testimony on this point were accepted as true, there was. no identification of the property to be sold and the agreement would not be enforceable.
On the other hand, if the notation was on the receipt at the time of delivery, it would have been a sufficient description to comply with sec. 240.08, Stats. Wiegand v. Gissal (1965), 28 Wis.2d 488, 492, 137 N.W.2d 412, 138 N.W.2d 740. The evidence shows that this was the approximate acreage of the only land in the H.R. Holand Estate. Kuester v. Rowlands (1947), 250 Wis. 277, 26 N.W.2d 639; Spence v. Frantz (1928), 195 Wis. 69, 217 N.W. 700.
The carbon copy of the receipt contained the words "Subject to securing a loan by 8/31/64. Otherwise down payment will be refunded." In our opinion, this clause rendered the contract illusory, as we held in Gerruth Realty Co. v. Pire (1962), 17 Wis.2d 89, 115 N.W.2d 557. The record does not show with any clarity what the parties had in mind concerning the details of the financing provision at the time the receipt for the $200 was executed. Although there was no apparent understanding on the point between the buyer and the seller, plaintiff's Exhibit 14 suggests that 100 percent financing was sought by Mr. Krause.
Defendant's Exhibit 8-H strikingly demonstrates that there was no finality to the question of financing even after the deadline of August 31, 1964. Ivar Holand testified that Mr. Krause advised him on October 3, 1964, that the deal was off because he could not raise the money; until such date, it would seem that both parties treated the contract as uncertain because of the financing condition.
In his article entitled Problems and Practices with Financing Conditions in Real Estate Purchase Contracts, 1963 Wisconsin Law Review, 566, Professor Raushenbush discusses the Gerruth Case and its effect upon releasing a seller from an agreement even though a financing clause is ordinarily inserted for the buyer's benefit. At page 613 the author states:
"If Gerruth means what it says, a financing condition containing no detail at all is void for indefiniteness. Therefore, it should follow that a seller who wants to do so (because of a better offer, for example) can avoid the deal even if the buyer protests that the condition was put in for his benefit and that he waives it and will pay cash."
The subsequent sale which was arranged with Mr. Jungwirth was for the same sales price that had been previously negotiated with Mr. Krause.
Since we are persuaded that equity cannot and should not enforce this contract, it is unnecessary to consider whether Mr. Jungwirth qualified as a bona fide purchaser.
By the Court. — Judgment affirmed.