Opinion
No. 59387-1-I.
October 20, 2008.
Appeal from a judgment of the Superior Court for Whatcom County, No. 05-2-00619-1, Charles R. Snyder, J., entered December 15, 2006.
Affirmed by unpublished opinion per Cox, J., concurred in by Schindler, C.J., and Leach, J.
UNPUBLISHED
The statute of frauds prohibits the use of extrinsic evidence to cure a deficient legal description in a real estate purchase and sale agreement. Here, each of the two agreements to sell real property contains a deficient legal description. The use of each agreement to attempt to cure the legal description in the other is prohibited. We affirm the summary judgment in favor of Betty Tawes, the seller under each agreement.
See Martin v. Seigel, 35 Wn.2d 223, 229, 212 P.2d 107 (1949).
Betty Tawes owns a 91.4 acre homestead, containing two homes, in Ferndale, Washington. In 2001, an appraiser valued the property with improvements at $371,000. In 2005, the same appraiser again valued the property, this time at $624,000.
Dick Bedlington ("Bedlington") is the owner, member, and manager of two corporations relevant to this case: Dick Bedlington Real Estate, L.L.C. ("DBRE") and Dick Bedlington Farms, L.L.C. ("Bedlington Farms"). Bedlington Farms is engaged in the business of potato farming.
In March 2002, Tawes entered into an agreement to lease approximately 88 acres of farmland to Bedlington Farms for four years. The lease excluded approximately three acres of land where "the houses, garages, and yard areas surrounding the houses" were located.
In late 2003, Tawes initiated discussions with Bedlington regarding the sale of the land that Bedlington Farms was leasing. On May 27, 2004, Tawes and Bedlington, in his capacity as manager of DBRE, signed a purchase and sale agreement ("First Agreement") prepared by Bedlington's attorney. Tawes agreed to sell approximately 88 acres of her homestead to DBRE for $205,000. Under the agreement, Tawes was to retain approximately three acres on which her two houses were located.
After Tawes signed the First Agreement, Bedlington asked for her permission to make certain permanent improvements to the 88 acres, namely, an underground irrigation system that would draw water from the Nooksack River. According to Bedlington, he specifically asked Tawes whether the land had water rights and she told him it did. Bedlington then installed an irrigation system at a cost of approximately $20,000. However, the Washington State Department of Ecology, Water Resources Division later determined that no water rights existed. In an August 1, 2006 letter, the Department requested that Bedlington halt all withdrawals from the Nooksack River.
On August 2, 2004, three months after the First Agreement was signed, Tawes and Bedlington signed a second purchase and sale agreement ("Second Agreement"). Tawes agreed to sell DBRE three acres of property for $135,000.
Upon learning of the agreements, Tawes's son, John Tawes, convinced her that she was not being offered adequate payment for the homestead. Betty Tawes ultimately refused to close either sale.
DBRE commenced this action against Tawes, alleging breach of contract and seeking specific performance or damages. Tawes asserted the defense that the agreements violated the statute of frauds. The trial court granted Tawes's motion for partial summary judgment based on the conclusion that both agreements violated the statute of frauds. The trial court also denied DBRE's subsequent motion for reconsideration and summary judgment in its favor.
DBRE appeals.
STATUTE OF FRAUDS
DBRE argues that the agreements satisfy the statute of frauds and the trial court, therefore, erred in granting summary judgment to Tawes. We disagree.
A motion for summary judgment may be granted when there is no genuine issue as to any material fact, and the moving party is entitled to a judgment as a matter of law. Whether an agreement violates the statute of frauds is a question of law subject to de novo review.
Dickson v. Kates, 132 Wn. App. 724, 733, 133 P.3d 498 (2006) (citing Ed Nowogroski Ins., Inc. v. Rucker, 137 Wn.2d 427, 436-37, 971 P.2d 936 (1999)).
"To comply with the statute of frauds, 'a contract or deed for the conveyance of land must contain a description of the land sufficiently definite to locate it without recourse to oral testimony, or else it must contain a reference to another instrument which does contain a sufficient description.'" Failure to include a sufficient legal description renders an agreement to convey real property void and unenforceable. The First Agreement
Berg v. Ting, 125 Wn.2d 544, 551, 886 P.2d 564 (1995) (quoting Bigelow v. Mood, 56 Wn.2d 340, 341, 353 P.2d 429 (1960)).
Martin, 35 Wn.2d at 229.
In the First Agreement, Tawes agreed to sell approximately 88 acres of her homestead to DBRE while retaining approximately three acres of property where two homes stood. The agreement states in relevant part:
On the terms and conditions set forth herein, Seller shall sell to Purchaser and Purchaser shall purchase from Seller the Property described in Exhibit "A", subject to the terms and conditions contained herein.
Clerk's Papers at 692.
Exhibit A
EGAL DESCRIPTION
Northwest quarter of the Northeast quarter west of the Nooksack River plus the Northeast quarter of the Northwest quarter (aka. Tax Lot 254-480) in Section 05, Township 38 North, Range 2 East of the Willamete Meridian.
ALSO the Southerly 25.72 acres (aka. As Tax lot 210015) in the Southwest quarter of Section 32, Township 39 North, Range 2 East of the Willamete Meridian.
EXHIBIT B
EGAL DESCRIPTION
Description for three acres retained
Three acres of the property described in Exhibit A approximately 200 feet north to south and 650 feet east to west containing the two houses. The exact configuration shall be approved by the parties prior to closing.
Clerk's Papers at 700 (emphasis added).
The First Agreement does not satisfy the statute of frauds because it fails to adequately describe the portion of the parcel to be retained by Tawes. "It is . . . well settled that a description which designates the land conveyed as a portion of a larger tract without identifying the particular part conveyed does not meet the requirements of [the statute of frauds]." Correspondingly, description of a larger tract to be conveyed where an undefined smaller tract is part of the legal description fails to satisfy the statute.
Ecolite Mfg. Co. v. R.A. Hanson Co., 43 Wn. App. 267, 270, 716 P.2d 937 (1986) (quoting Howell v. Inland Empire Paper Co., 28 Wn. App. 494, 495-96, 624 P.2d 739, review denied, 95 Wn.2d 1021 (1981) (quoting Bigelow v. Mood, 56 Wn.2d 340, 341, 353 P.2d 429 (1960)) (citations omitted).
In Ecolite Mfg. Co. v. R.A. Hanson Co., this court held that a portion of a parcel to be conveyed was inadequately described in an earnest money agreement, violating the statute of frauds. The court noted that the "dimensions are listed as approximate?" and that "[t]heir location is also approximate. . . ."
43 Wn. App. 267, 271, 716 P.2d 937 (1986).
Id. at 270-71 (emphasis added).
It held that the descriptions were therefore "patently insufficient to definitely locate the property without recourse to parol evidence."
Id. at 271.
Similarly, in Howell v. Inland Empire Paper Co., a portion of a larger parcel to be conveyed was described as "[p]ortions of Tracts 59, 58, 57. . . ." Despite the fact that the description gave the legal description of the parcel on which the tracts were located, this court found that the property to be conveyed could not be located without resorting to oral testimony. It held that the agreement violated the statute of frauds.
Id. at 495-96.
Id. at 496.
Although our case is factually different from Ecolite and Howell because here the smaller parcel was to be retained, and the larger conveyed, the rationale from those cases controls. The description of a larger parcel necessarily requires that any retained property encompassed within it be legally described. Put simply, without knowing the bounds of the enclosed parcel of land, it is impossible to determine, without recourse to oral testimony, where DBRE's parcel would end and Tawes's would begin.
As in Ecolite, the description of the parcel to be retained is indefinite. The distances are only approximate. While the description of the retained parcel provides that two houses are located on it, there is no indication as to where they sit. Furthermore, the description leaves the exact configuration of the boundaries to be approved, a matter the parties now dispute.
Bedlington claims to have met with the boyfriend of Tawes's granddaughter, at Tawes's instruction, to stake out the boundaries of the property to be retained in the First Agreement. Tawes claims that she made no agreements with Bedlington regarding said boundaries and never authorized anyone to negotiate boundaries on her behalf.
Bedlington's claim is contrary to the statute of frauds and does not create a genuine issue of material fact. Oral testimony describing what boundaries were allegedly the subject of agreement violates the statute. And such testimony, because it violates the statute, does not create a genuine issue of material fact.
The First Agreement violates the statute of frauds in that the legal description is insufficient. Accordingly, this agreement is unenforceable.
The Second Agreement
In the Second Agreement, Tawes agreed to sell three acres of land. That property is described as follows:
EXHIBIT A
3 acres of the following described property:
The Northwest quarter of the Northwest quarter West of the Nooksack River plus the Northeast quarter of the Northwest quarter (aka tax lot 254-480) in Section 5, Township 38 North, Range 2 East of W.M.
Also, the Southerly 25.72 acres (aka tax lot 210015) in the Southwest quarter of Section 32, Township 39 North, Range 2 East of W.M.
Clerk's Papers at 714.
This description is patently insufficient to satisfy the statute of frauds. As in Howell, the description merely references a three-acre portion of a larger parcel. No mention is made of which three acres of the larger parcel are to be conveyed. To this day, neither party can state with certainty what property DBRE was to acquire in the First Agreement or what property it was to acquire in the Second Agreement.
The Second Agreement also violates the statute of frauds in that the legal description is insufficient. It is not enforceable.
Tawes makes an alternative argument that both agreements are invalid because they fail to state other critical material terms. Because we have resolved the dispute on the basis of the statute of frauds, we need not reach this argument.
Part Performance
DBRE argues that its payment of earnest money for, possession of, and substantial improvements to the land obviate the application of the statute of frauds under the doctrine of part performance. We disagree.
The doctrine of part performance can serve to remove insufficient written agreements from the requirements of the statute of frauds. Where the doctrine is asserted, "the court's overriding concern is precisely directed toward and concerned with a quantum of proof certain enough to remove doubts as to the parties' . . . agreement." Thus, the doctrine has typically been construed to require at least two of the following elements: "(1) delivery and assumption of actual and exclusive possession; (2) payment or tender of consideration; and (3) the making of permanent, substantial and valuable improvements, referable to the contract." "The power of equity to disregard the statute should be exercised only where it is necessary to do so in order to prevent a gross fraud from being practiced."
Kruse v. Hemp, 121 Wn.2d 715, 724-25, 853 P.2d 1373 (1993) (citing 2 A. Corbin, Contracts § 420, at 452-53 (1950)).
Miller v. McCamish, 78 Wn.2d 821, 828-29, 479 P.2d 919 (1971).
The Washington Supreme Court has noted that the "at-least-two" requirement stated in Kruse v. Hemp was dicta but that the observation was generally correct given the majority of case law where part performance was found. Ting, 125 Wn.2d at 558.
Kruse, 121 Wn.2d at 724-25, (citing Powers v. Hastings, 93 Wn.2d 709, 717, 612 P.2d 371 (1980)).
Beckendorf v. Beckendorf, 76 Wn.2d 457, 465, 457 P.2d 603 (1969).
Here, DBRE's arguments ignore the fact that part performance cannot excuse the failure to prove that the parties agreed on material and essential terms. In Kruse v. Hemp, the court denied relief based on part performance because the parties "never agreed upon the material and essential terms." The court stated that the plaintiff "simply cannot use the part performance doctrine to establish terms upon which the parties never — at least verbally — agreed."
Id.
Similarly, in Williams v. Fulton, Division Two noted the longstanding rule that for the doctrine of part performance to apply, "the following threshold requirement must be satisfied: 'the contract [must] be proven by evidence that is clear and unequivocal and which leaves no doubt as to the terms, character, and existence of the contract.'"
30 Wn. App. 173, 178, 632 P.2d 920 (1981).
Id. (quoting McCamish, 78 Wn.2d at 829).
Both written agreements here leave doubt as to precisely what property was to be sold, one of the most material terms there is to a contract to sell real property. Nothing about Bedlington's tendering of earnest money, possession of the land, or installation of an irrigation system can establish the boundaries of the smaller parcel purported to be retained in the First Agreement and sold in the Second Agreement. DBRE fails to show that the parties agreed on the "material and essential terms" as required by Kruse.
Moreover, if the acts relied upon "point to some other relationship, such as that of landlord and tenant, or may be accounted for on some other hypothesis, they are not sufficient." Bedlington's actual and exclusive possession of the larger parcel must be viewed in the context of Bedlington Farms' pre-existing lease. Possession of the larger parcel can be attributed to either the lease or the First Agreement. Thus, the court draws no inference that possession suggests agreement.
McCamish, 78 Wn.2d at 829 (citations omitted) (citing Granquist v. McKean, 29 Wn.2d 440, 445, 187 P.2d 623 (1947)).
Likewise, the court can infer nothing from the installation of the irrigation system. Bedlington Farms had used the larger parcel for agricultural purposes under the lease agreement for two years. It is a plausible hypothesis that a farmer would install an irrigation system on leased property where nearly two years remained on the lease. Moreover, the value of the irrigation system as an improvement is debatable. Absent water rights, the irrigation system has little or no value and may fail the "valuable improvements" element of the part performance test highlighted in Kruse.
Regarding payment, "consideration alone is insufficient evidence of part performance to take [a] grant of [property] out of the statute of frauds." Here, Bedlington's tendering of $1,500 in earnest money, without more, does not provide the quantum of proof certain enough to remove doubts as to the parties' agreements.
Ting, 125 Wn.2d at 558.
Finally, no evidence of any fraud, let alone gross fraud, has been levied against Tawes. While DBRE's reply brief hints that Tawes acted fraudulently, no argument or factual support is offered to satisfy the legal requirements of fraud.
The cases relied upon by DBRE are inapposite. In Stephens v. Nelson, the court held that part performance precluded a statute of frauds defense where the evidence showed that a purchaser cleared brush from an easement he had purchased. Unlike the present case, that purchaser's improvements delineated the boundaries of the easement he had purchased.
37 Wn.2d 28, 221 P.2d 520 (1950).
Id. at 36 ("it appears that he cleared the brush from the strip and the portion of [the lot] in connection with which he was to have an easement. . . .").
In Dunbabin v. Allen Realty Co., Division Two held that strict compliance with the statute of frauds was not required where all three factors discussed above were satisfied. The court expressly distinguished its decision from cases in which earnest money contracts were unenforceable for failure to include a legal description, noting that "the parties in the present action clearly understood the boundaries of the property subject to sale." No such clarity exists here.
26 Wn. App. 660, 613 P.2d 570 (1980).
Id. at 665.
We conclude that the doctrine of part performance does not apply here. DBRE has failed to show that agreement was reached on material terms — to wit, the boundaries of property conveyed in either agreement. Furthermore, none of Bedlington's actions satisfy any of the three tests for part performance. Finally, absent an allegation of gross fraud, this court can not exercise the equitable doctrine. The agreements are unenforceable.
Good Faith
DBRE next argues that Tawes's failure to "obtain county approval of a 'legal lot of record' for the three acres" constituted bad faith, apparently relieving DBRE of the requirements of the statute of frauds. Though not expressly argued, DBRE seems to contend that had Tawes obtained the lot approval, that lot description would have satisfied the statute of frauds. We disagree.
DBRE cites no authority to support its argument that a failure to act in good faith renders a contract, which is void under the statute of frauds, valid and enforceable. The cases it does cite fail to support its position because none contemplate the statute of frauds or involve a covenant or condition requiring a party to obtain a legally adequate description of property.
See CHG Int'l, Inc. v. Robin Lee, Inc., 35 Wn. App. 512, 667 P.2d 1127 (1983); Salvo v. Thatcher, 128 Wn. App. 579, 116 P.3d 1019 (2005); Egbert v. Way, 15 Wn. App. 76, 546 P.2d 1246 (1976); Langston v. Huffacker, 36 Wn. App. 779, 678 P.2d 1265 (1984).
Moreover, the cases that DBRE relies upon for its assertion that "[t]he statute of frauds permits parties to agree to subsequently insert the legal description" are inapplicable here. In each of the three cases cited, the purchase and sale agreement at issue explicitly authorized an agent to insert or attach the legal description. No such express provision exists here.
Appellant's Brief at 16.
See Edwards v. Meader, 34 Wn.2d 921, 922-23, 210 P.2d 1019 (1949) ("earnest money agreement contained the words '1136 Vandalia Legal Des. to be entered by agent.'"); Noah v. Montford, 77 Wn.2d 459, 463, 463 P.2d 129 (1969) ("plaintiff was expressly authorized by the parties to the earnest money agreements to insert the legal description of the properties over their signatures."); McKoin v. Kunes, 5 Wn. App. 731, 732, 490 P.2d 735 (1971) (contract provided: "In the event that the legal description is omitted, incomplete or inaccurate, agent is authorized to write in or attach hereto the correct legal description on this listing agreement.").
What DBRE asks this court to do is determine, without any authority, that a contract voided by law requires parties to continue to act in good faith. The law imposes no such requirement.
Intent of the Parties
DBRE argues that this court should read the agreements together, study the extrinsic evidence, and determine the intent of the parties. The apparent contention is that both agreements, their associated draft notes and deeds, and deposition testimony, considered as a whole imply Tawes's intent to convey her entire 91.4 acre parcel to DBRE. This court declines to read the agreements together.
"Washington continues to follow the objective manifestation theory of contracts. Under this approach, we attempt to determine the parties' intent by focusing on the objective manifestations of the agreement, rather than on the unexpressed, subjective intent of the parties." The "context rule," recognizes "that intent of the contracting parties cannot be interpreted without examining the context surrounding an instrument's execution." Contextual evidence is to be used "to determine the meaning of specific words and terms used" and not to "show an intention independent of the instrument" or to "vary, contradict, or modify the written word."
Hearst Commc'ns, Inc. v. Seattle Times, 154 Wn.2d 493, 503, 115 P.3d 262 (2005).
Id. at 502 (discussing Berg v. Hudesman, 115 Wn.2d 657, 801 P.2d 222 (1990) and its progeny).
Id. at 503 (quoting Hollis v. Garwall, Inc., 137 Wn.2d 683, 695-96, 974 P.2d 836 (1999)) (italics added in Hearst) (internal quotations omitted).
The context rule simply does not apply here. There is no specific word or term within either agreement that is in dispute. The shortcoming in both agreements is the lack of an adequate description of property to be conveyed. DBRE cites no authority holding that extrinsic evidence of the description of property may be used to overcome the statute of frauds.
Indeed, such a notion would run afoul of cases such as Key Design v. Moser. There, the court rejected a proposed "judicial admissions" exception to the statute of frauds and refused to enforce an earnest money agreement despite agreement by all parties as to the identity of the property to be purchased. In short, the court declined to look to extrinsic evidence to excuse the absence of an inadequate legal description.
138 Wn.2d 875, 983 P.2d 653 (1999).
Id. at 880, 889.
The authorities that DBRE relies on are inapplicable. Green River Valley Foundation v. Foster does not support the proposition that the documents here should be read together. In that case, the court considered an earnest money agreement and a promissory note, each of which explicitly referred to the other.
78 Wn.2d 245, 473 P.2d 844 (1970).
Id. at 247.
Here, none of the documents in question refer to each other. Ironically, the Foster Court noted that the dispute there, unlike the present case, could be "resolved without resort to extrinsic evidence." The balance of cases cited by DBRE do not interpret real estate contracts and are therefore not instructive on the legal sufficiency of a property description.
Id. at 250.
Tanner Elec. Co-op v. Puget Sound Power Light Co., 128 Wn.2d 656, 911 P.2d 1301 (1996) (service area agreement between public utility and co-op); Eurick v. Pemco Ins. Co., 108 Wn.2d 338, 738 P.2d 251 (1987) (insurance contract); Safeco Ins. Co. v. Auto. Club Ins. Co., 108 Wn. App. 468, 31 P.3d 52 (2001) (same).
For this, or any court to look to extrinsic evidence to modify an insufficient written description of property is to violate the very spirit and purpose of the statute of frauds. DBRE's argument is therefore without merit.
We conclude that none of the equitable doctrines argued by DBRE apply to except the agreements here from the statute of frauds.
Because we have determined that the agreements are unenforceable, we need not reach DBRE's other arguments.
We affirm the summary judgment orders.