Summary
In Booth the court rejected an argument that the buyers could waive the protection afforded by the statute and thus avoid a statute of frauds argument.
Summary of this case from Janis v. CookeOpinion
(8703)
By statute ( 49-5b), a contract for the sale of real property that contains a mortgage contingency clause is enforceable under the statute of frauds ( 52-550 [a] [4]) if the principal amount of the loan, the time period allowed for obtaining the mortgage commitment and the term of the mortgage are included in the contingency clause. The plaintiff sought specific performance of a contract for the sale of certain real property that was owned by the decedent, S. The plaintiffs had entered into a contract to purchase the property with the named defendant, F, who had been appointed administrator of S's estate. Thereafter, the East Haven Probate Court revoked F's appointment and F informed the plaintiffs that he did not have the authority to sell the property. The trial court granted the defendants' motion for summary judgment, and the plaintiffs appealed to this court. Held that the trial court properly granted the motion for summary judgment; because the plaintiffs' mortgage contingency clause failed to set forth the principal amount of the loan or the term of the mortgage, their contract was not enforceable.
Argued October 1, 1990
Decision released December 11, 1990
Action for specific performance of a contract for the sale of certain real property, and for other relief, brought to the Superior Court in the judicial district of New Haven, where the court, Berdon, J., denied the defendants' motions to dismiss; thereafter, the court, Clark, J., sua sponte, rendered summary judgment in favor of the defendants, from which the plaintiffs appealed to this court, which remanded the case for further proceedings; on remand, the court, Gormley, J., granted the defendants' motion for summary judgment, and rendered judgment thereon, from which the plaintiffs appealed to this court. Affirmed.
Bruce L. Elstein, for the appellants (plaintiffs).
Roger J. Frechette, with whom was Matthew E. Frechette, for the appellee (named defendant).
Roger Sullivan, for the appellees (defendant Stephen Yardan et al.).
The plaintiffs appeal from a summary judgment rendered for the defendants in an action arising out of a contract for the sale of real estate. The case was previously before this court in Booth v. Flanagan, 19 Conn. App. 413, 562 A.2d 592 (1989). in that decision, we set aside a summary judgment that the trial court had rendered sua sponte without either a motion or any supporting documents having been filed by the parties. See Practice Book 384. While on remand to the trial court for further proceedings, the defendants filed a summary judgment motion supported by affidavits and other documentary proof. Summary judgment was again granted in favor of the defendants. We affirm the judgment of the trial court.
The pleadings and affidavits available for the trial Court's consideration disclose the following facts. On April 20, 1984, the decedent, Carol A. Schroff, died owning property in which the plaintiffs were tenants. The East Haven Probate Court, assuming that Schroff died intestate, appointed the defendant Robert Flanagan administrator of her estate on May 21, 1984. On June 7, 1984, Flanagan contracted in writing to sell the property to the plaintiffs. The contract was contingent, among other things, on the plaintiffs' ability to obtain a mortgage commitment on or before August 1, 1984.
In July, 1984, the decedent's will was found and admitted to probate. On September 17, 1984, the Probate Court revoked Flanagan's appointment as administrator by approving the defendant Stephen Yardan, who was named in the will, as executor. On October 4, 1984, Flanagan returned the plaintiffs' initial deposit and informed them that he had been removed as the fiduciary and no longer had authority to sell the property. Yardan resigned on August 27, 1985, and the defendant Gary Flesche, who was named in the will as both successor executor and residuary legatee, was approved as successor executor. The property in question would pass to Flesche as residuary legatee.
Although the Probate Court did not formally revoke Flanagan's administration, the probate decree admitting the will to probate implicitly revoked and effectively terminated Flanagan's intestate administration. Gaucher v. Estate of Camp, 167 Conn. 396, 400, 355 A.2d 303 (1974).
The dispositive issue on appeal is whether there was an enforceable contract for the sale of real estate. We look to the statute of frauds to make this determination. General Statutes 52-550 (a)(4) provides that no civil action shall be brought on any agreement for the sale of real estate unless that agreement or a memorandum thereof is in writing and signed by the party to be charged. A written agreement or memorandum thereof is an ancient requirement; Tainter v. Brockway, 1 Root 59 (1773); and whether the writing is sufficient to satisfy the statute has been the subject of infinite litigation.
To determine whether the statute of frauds is satisfied in the present case, we focus on the mortgage contingency clause. The degree of detail required when an agreement is conditioned on the purchaser's obtaining a mortgage was a source of confusion among drafters of real estate sales documents. See Montanaro v. Pandolfini, 148 Conn. 153, 157, 168 A.2d 550 (1961). This uncertainty was removed in 1976 by the enactment of Public Acts 1976, No. 76-69, now General Statutes 49-5b, which provides that a mortgage contingency clause is sufficient to satisfy the statute of frauds if it contains at least the following information: (1) the principal amount of the loan required to fulfill the contingency; (2) the time period within which the mortgage commitment must be obtained; and (3) the term of the mortgage expressed in years.
General Statutes 49-5b provides: "Any mortgage contingency clause included in a bond for deed or a written agreement for sale of real estate which conditions the purchaser's performance on his obtaining a mortgage from a third party shall satisfy the provisions of section 52-550 if such mortgage contingency clause contains at least the following: (1) The principal amount in dollars of the loan the purchaser must obtain to fulfill such contingency; (2) the limit of the time period within which a commitment for such loan must be obtained, and (3) the term of the mortgage expressed in years."
In the present case, the mortgage contingency clause did not state the principal dollar amount of the loan or the term of the mortgage expressed in years that the plaintiffs had to obtain to fulfill the contingency. Accordingly, it is defective because it omits two of the three statutory requirements.
The plaintiffs argue that a mortgage contingency clause is a condition precedent to a contract, not a term thereof, and therefore the statute of frauds is not applicable to it. Whatever merit this argument may have had prior to 1976 was nullified by passage of General Statutes 49-5b. The legislative history of 49-5b discloses that it was enacted expressly in response to a decision of the Appellate Division of the Court of Common Pleas holding that the mortgage contingency clause in the case before it was not sufficient to satisfy the statute of frauds. Furthermore, our Supreme Court has interpreted 49-5b as "set[ting] forth minimum standards for satisfaction of the requirements of the statutes of frauds." See Dart Bogue v. Slosberg, 202 Conn. 566, 573, 522 A.2d 763 (1987); Maturo v. Scranton, 177 Conn. 569, 571 n. 1, 418 A.2d 928 (1979).
The case, Schubert v. Gawe, Court of Common Pleas, Appellate Division, Docket No. CV 13-7201-7355 (January 20, 1975), cert. denied, 168 Conn. 652 (1975), is not officially reported.
The urgency that the legislature attached to Public Acts 1976, No. 76-69, now General Statutes 49-5b, is demonstrated by the fact that although it passed the House of Representatives on March 23, 1976, it took effect on April 21, 1976, rather than the usual date of October 1, 1976. See General Statutes 2-3.
In addition, the plaintiffs erroneously rely on Faloutico v. Maher, 182 Conn. 448, 438 A.2d 710 (1980). That case is inapposite because, as the Supreme Court noted in that decision, it was decided in reference to a contract that was executed prior to the effective date of 49-5b. Id., 448 n. 1.
The plaintiffs also argue that the legislature erroneously thought that the statute of frauds applied to conditions precedent and therefore mistakenly enacted 49-5b. We may not elect to disregard a statute on the ground that if the legislature had a better understanding of the law, the statute would not have been passed. The legislature is presumed to know the existing state of law when it enacts a statute. Glastonbury Co. v. Gillies, 209 Conn. 175, 181-82, 550 A.2d 8 (1988). Therefore, we apply a statute as its language directs. Breen v. Department of Liquor Control, 2 Conn. App. 628, 631, 481 A.2d 755 (1984).
The plaintiffs also contend that 49-5b was enacted to protect buyers, not sellers, and thus they may waive its protection. The fallacy of this argument is that it does not recognize that the purpose of 49-5b is to define, in part, the sufficiency of a memorandum that will satisfy the statute of frauds. The statute of frauds bars actions where there is not a sufficient memorandum in writing signed by the party to be charged. "In an action to enforce a contract for the sale of real property, the party to be charged, within the meaning of the statute, is the party against whom the contract is to be enforced." Kasper v. Anderson, 5 Conn. App. 358, 362, 498 A.2d 132, cert. denied, 197 Conn. 818, 501 A.2d 388 (1985); 72 Am.Jur.2d, Statute of Frauds 364; 1 Restatement (Second), Contracts 135, comment a. The defendants are the parties to be charged, and only they could waive the statute, not the plaintiffs.
The trial court properly granted summary judgment based on its conclusion that the contract for the sale of real property was unenforceable because it failed to meet the minimum requirements of the statute of frauds.
Summary judgment "shall be rendered forthwith if the pleadings, affidavits and other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Practice Book 384. "Material fact" has frequently been defined as a fact that will make a difference in the result of the case. Hammer v. Lumberman's Mutual Casualty Co., 214 Conn. 573, 578, 573 A.2d 699 (1990); United Oil Co. v. Urban Redevelopment Commission, 158 Conn. 364, 379, 260 A.2d 596 (1969). The test for whether there is a material fact is whether a party would be entitled to a directed verdict on the same facts. State v. Goggin, 208 Conn. 606, 616, 546 A.2d 250 (1988). In this case, where the plaintiffs have failed to show that there is a contract for the sale of real estate that satisfies the statute of frauds, the defendants would be entitled to a directed verdict. The plaintiffs' case is predicated entirely on a contract to sell real estate, which is unenforceable under the statutes of frauds. Whether there exist genuine issues of material fact involving any of the other special defenses is irrelevant because, regardless of their resolution, the contract is unenforceable and the defendants remain entitled to summary judgment in their favor.
The other special defenses were (1) that the plaintiffs' specific performance claim was time barred by General Statutes 47-33a, (2) that the contract was a nonbinding obligation, the performance of which became impractical in any event upon the admission of the will, and (3) that the plaintiffs themselves breached the agreement by their failure to perform in the manner required by it.
Accordingly, we do not reach the plaintiffs other