Summary
In Tucson, the trial court "judicially imposed terms from the parties' offers and counteroffers made during the course of negotiations subsequent to that writing.
Summary of this case from Opdyke Investment v. Norris GrainOpinion
Docket No. 56276.
Argued November 6, 1975 (Calendar No. 10).
Decided April 1, 1976. Rehearing denied 396 Mich. 992.
Charles Rubiner and Arthur James Rubiner for plaintiffs.
Bush, Luce, Henderson, Black Bankson (Eugene F. Black, of counsel) for defendants.
Plaintiffs Tucson sued defendants Farrington for specific performance. Based on plaintiffs' exhibit 1, the trial court found that an enforceable agreement for the sale of defendants' farm existed and entered a judgment for the equitable relief requested. The Court of Appeals, at 53 Mich. App. 149; 218 N.W.2d 816 (1974), agreed that the remedy was appropriate, but modified certain terms of the trial court's judgment. We reverse, having determined that exhibit 1 is not sufficiently complete under the statute of frauds to justify specific performance.
13 "June11, 1970"
"TO WHOM IT MAY CONCERN:
"MORRIS S. FARRINGTON AND WIFE HAZEL AGREE TO SELL PROPERTY AT 2276 WADHAMS ROAD TO CHARLES TUCSON AND WIFE DESCRIBED AS FOLLOWS:
"S 1/2 of NW 1/4 EX N 900' of W 1/2 THEREOF ALSO THAT PART OF N 1/2 of SW 1/2 LYING N OF G.T.R.R. R-W CONT. 81.56 A SEC 11 T6N R16E 81.56 A for the sum of fifty thousand dollars ($50,000). Approximately one third down, the balance to be paid over a period of 10 years at 7% interest. THIS OPTION TO EXPIRE IN 30 DAYS. One hundred dollars (100.00) to be paid at time of agreement with said amount to be applied on purchase price.
"Morris S. Farrington
"Hazel Farrington — 9823336"
The amount of down payment, the amounts and terms of deferred payments, and the date of possession.
MCLA 566.108; MSA 26.908 reads in pertinent part as follows: "Every contract for the leasing for a longer period than 1 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 be in writing, and signed by the party by whom the lease or sale is to be made, or by some person thereunto by him lawfully authorized in writing".
Exhibit 1 was drafted and signed by the Farringtons on June 13, 1970, at which time Mr. Tucson delivered to them his check for $100. An additional $400 was paid to the Farringtons on July 11, 1970. These are the operative facts. If they do not evidence a specifically enforceable agreement for the sale of realty, the other facts of record set forth below evidence little more than five months of negotiations subsequent to the signing of exhibit 1 — attempts by the parties either to settle terms left undetermined in the writing, or to modify those which had been put in written form.
On June 23, 1970, in contemplation of the closing of this sale to the Tucsons, the Farringtons completed purchase of a new residence in Port Huron. On July 11, Mr. Tucson informed the Farringtons that he was having trouble financing the "[a]pproximately one-third down", and they agreed orally to reduce the down payment to $10,000.
The Tucsons claimed that on July 22 and again on July 25, Mr. Tucson showed defendants a $10,000 money order payable to the Tucsons, and offered to negotiate this instrument to defendants upon execution of a land contract. The Farringtons deny ever having been shown any negotiable instrument. They testified that Mr. Tucson did exhibit a savings account pass book on several occasions until negotiations ultimately broke down, and that he told them that they would get their money when they moved out. The parties agreed orally on August 22 as a date for transfer of possession.
On or about August 17, Messrs. Tucson and Farrington met at the office of the Farringtons' attorney. A draft of a land contract was presented to Mr. Tucson who wished to consult his attorney prior to execution. On August 20, the Tucsons' attorney wrote to defendants' attorney suggesting various modifications to the contract and requesting certain information.
The Farringtons testified that they vacated the farm premises on August 21, and moved to the residence in Port Huron which they had purchased. They further testified that they moved back to the farm sometime later when they discovered that the Tucsons had not occupied the premises on August 22.
On August 24, defendants' attorney wrote plaintiffs' attorney, agreeing to one of the modifications suggested in the correspondence of August 20, but expressing reservations regarding language permitting assignment of the contract without the seller's consent. No further correspondence was had between the attorneys until October 7.
In the meanwhile, sometime during the month of September, the Tucsons went to the defendants' farm and presented to them a land contract signed by the Tucsons which modified various terms of the Farringtons' originally-proposed contract. In particular, the contract offered by the Tucsons would have permitted assignment without the consent of the seller.
On October 7, the Farringtons' attorney, not having had a response to his letter of August 24, wrote to plaintiffs' attorney requesting to be brought up to date on the status of negotiations. On November 2, plaintiffs' attorney responded by writing directly to the defendants threatening suit unless the sale were closed within one week. On November 4, defendants' attorney responded by writing to the Tucsons' attorney, stating that the parties had never reached agreement, that his clients were willing to return plaintiffs' deposit and to continue negotiations, but that his clients had been inconvenienced by an unnecessary change in residence and didn't want to be put needlessly through that procedure again. Substantial changes in the originally-offered contract were proposed. These modifications were rejected by plaintiffs through their attorney on November 9. Plaintiffs filed their complaint on December 14, 1970.
On its face, exhibit 1 reveals that the parties orally agreed to deferred payments, but it lacks the precise down payment, the schedule and interval of deferred payments, and the fixed amount of those payments. As a general rule, a term of credit is an essential term of the contract for the sale of land, and it must be stated with substantial certainty in the written memorandum of such a contract. Early Michigan case law required that payment terms be specified even in a case where it was conceded by all concerned that payment of the balance of the purchase price was to be made upon delivery of the deed. The rigors of the statute were gradually relaxed, so that in Michigan, like most jurisdictions, the writing did not need to state the time or terms of payment when the transaction appeared to be a cash sale.
The writing fails to fix the time of possession, although we agree with the Court of Appeals that in this day and age parties entering into a land contract intend, in the absence of contrary evidence, a transfer of possession within a reasonable time after execution of the contract.
4 Williston, Contracts (3d ed), § 575, pp 74 et seq.
Gault v Stormont, 51 Mich. 636; 17 N.W. 214 (1883).
Annotation: Necessity and sufficiency of statement of consideration in contract or memorandum of sale of land, under statute of frauds, 23 ALR2d 164, 189-203. See, also, 72 Am Jur 2d, Statute of Frauds, § 353, pp 875 et seq.
See Mull v Smith, 132 Mich. 618, 621; 94 N.W. 183 (1903). Where, however, it was conceded that a cash sale was not intended, omission of the disputed payment terms was fatal. McCrea v Jerkatis, 320 Mich. 309; 31 N.W.2d 63 (1948).
Today, it may be safely said that a writing is not insufficient under the statute for failure to state the time and terms of payment unless, from the writing itself, it appears that deferred payments were agreed upon. See Duke v Miller, 355 Mich. 540, 543; 94 N.W.2d 819 (1959), where this Court unanimously adopted as controlling the opinion of Mr. Justice BUTZEL in Goldberg v Mitchell, 318 Mich. 281, 285-290; 28 N.W.2d 118 (1947). However, even per Goldberg and Duke, when the writing on its face evidences deferred payments, it must state with reasonable certainty the substance of the payment terms.
Plaintiffs maintain that the deferred payment rule has been eroded by Goslin v Goslin, 369 Mich. 372; 120 N.W.2d 242 (1963). We note, however, that there was no indication on the face of the Goslin receipts that deferred payments were intended. Furthermore, on its facts, Goslin appears to have been a convincing case of part-performance sufficient to remove the agreement from the strictures of the statute.
The Court of Appeals, relying on Wozniak v Kuszinski, 352 Mich. 431; 90 N.W.2d 456 (1958), resorted to the principle of evidentiary supplementation to fill in the details which we find fatally absent from exhibit 1. In Wozniak, evidence of circumstances existing at the time that the writing was made was admitted for the purpose of supplementing a description of the premises. In the case at bar, there is no evidence of circumstances existing at the time that exhibit 1 was made by which the unsettled deferred payment terms might be filled in. Indeed, plaintiffs Tucson testified that the terms of the parties' oral understanding were no more specific than as written in exhibit 1. The courts below gathered and judicially imposed terms from the parties' offers and counteroffers made during the course of negotiations subsequent to that writing. This was error. If the parties had a contract as of the date of exhibit 1, that writing is insufficient under the statute to compel its performance.
In this respect, the holding was not novel. See Garvey v Parkhurst, 127 Mich. 368; 86 N.W. 802 (1901), and Cramer v Ballard, 315 Mich. 496; 24 N.W.2d 80 (1946).
The Court of Appeals is reversed. The cause is remanded to the trial court for entry of a judgment dismissing the complaint upon payment by defendants of the $500 received in deposit, plus interest on that amount at the rate applicable to judgments. Defendants may tax costs.
WILLIAMS, COLEMAN, and LINDEMER, JJ., concurred with FITZGERALD, J.
RYAN, J., took no part in the decision of this case.
I would affirm the decision of the Court of Appeals for the reasons stated in the opinion of that Court. Tucson v Farrington, 53 Mich. App. 149; 218 N.W.2d 816 (1974).
KAVANAGH, C.J., concurred with LEVIN, J.