Opinion
11,1745.
06-05-2015
In the Matter of the ESTATE OF Robert L. BRECHEISEN, Deceased.
Keith A. Brock, of Anderson & Byrd, LLP, of Ottawa, for appellant. John J. Gillett, of Chanute, for appellee.
Keith A. Brock, of Anderson & Byrd, LLP, of Ottawa, for appellant.
John J. Gillett, of Chanute, for appellee.
Before LEBEN, P.J., HILL and ATCHESON, JJ.
MEMORANDUM OPINION
LEBEN, J.
Lee Martin claims that he leased a cargo trailer to Robert Brecheisen. After Brecheisen died, his estate refused to return the trailer to Martin, contending that Martin had sold it, not leased it. The district court agreed, refused to return the trailer to Martin, and Martin appealed.
Martin claims that even if he had agreed to sell the trailer to Brecheisen, the sale can't be enforced because there was no written agreement, and the sale of a vehicle (which includes trailers) must be in writing. But the rule requiring a written agreement has exceptions, including where the goods have been delivered and accepted. The district court found that Martin had agreed to sell Brecheisen the trailer, that Brecheisen had received and accepted it, and that Brecheisen had made partial payment before he died. In these circumstances, the district court could find, as it did, that it would be most equitable to enforce the sale. We therefore affirm the district court's judgment, which did so.
Factual and Procedural Background
Our story begins in July or August 2010, when Martin either leased or sold a cargo trailer to Brecheisen. Brecheisen died in October 2012 while still in possession of the trailer.
After Brecheisen's death, his estate claimed ownership of the trailer, listing it in an inventory of the estate's assets. Martin then filed a petition in the estate proceeding for replevin, or return, of the trailer and for a reasonable rental value for the time period it had been in the possession of Brecheisen or his estate.
The district court held that Martin's claim for rental values had been filed too late, but the court held an evidentiary hearing on the ownership issue. Brecheisen had the physical title to the trailer in his possession at the time of his death, but Martin had not signed the title to transfer it to Brecheisen. The assignment portion of the title had been dated July 31, 2010, but no signatures or names were placed there.
Regina Miller, the estate's administrator, testified that after Brecheisen's death, Martin had told her that he had sold the trailer to Brecheisen and that Brecheisen had been paying $5 a week toward the purchase price. Miller's father, Ronald Romig, who said that he had been present during Martin's conversation with Miller, confirmed Miller's recollection of the conversation.
Martin testified that he had lent the trailer to Brechheisen for property-storage purposes in August 2010. Martin said that he had spoken with Brecheisen about sale of the trailer, but Martin said this took place only shortly before Brecheisen's death and that no agreement was ever reached on a purchase price or a payment plan. Martin said that Brecheisen had paid $200 to Martin (which Martin called rent).
In the months following Brecheisen's death, Martin made no attempt to get the trailer back. He also testified that if he got it back, he would sell it to someone else for $3,000.
The district court concluded that Martin had agreed to sell the trailer to Brecheisen. In support of this factual finding, the court noted that Brecheisen had the title to the trailer in his possession and that Martin admitted he would simply sell the trailer to someone else for $3,000 if he got it back. The court also addressed Martin's claim that any sales agreement would be void because it wasn't in writing. On that, the court said that the writing requirement can be overridden by equitable considerations. Here, the court said that equitable considerations would justify doing so, even if the contract could otherwise be voided, because Brecheisen paid money for the trailer before he died and Martin didn't try to recover the trailer for several months after Brecheisen's death. The court concluded that the estate owned the trailer (though it would still owe the balance due on the purchase price).
Martin appealed to this court. We have jurisdiction to hear the appeal under K.S.A.2014 Supp. 59–2401(a)(6).
After the district court ruled, the estate tendered a check to Martin for the balance due, and the amount due is not an issue on this appeal. We must decide, however, whether Brecheisen and Martin agreed to a sale of the trailer and, if so, whether that sale can be enforced even though there was no written sales agreement.
Analysis
We proceed first to determine whether the district court correctly held that Brecheisen and Martin had an oral contract for sale of the trailer. This was a factual determination, and we must accept the district court's factual determinations if they are supported by substantial evidence. Substantial evidence is evidence that a reasonable person might accept as sufficient to support a conclusion. Gannon v. State, 298 Kan. 1107, 1175, 319 P.3d 1196 (2014).
Here, there is evidence that supports the district court's conclusion, and a reasonable person could accept it as sufficient to prove that Martin and Brecheisen orally agreed to the trailer's sale:
• Two witnesses, Miller and Romig, testified that Martin had said he had sold the trailer to Brecheisen.
• Martin made no effort to retrieve the trailer for several months after Brecheisen died.
• Title to the trailer was in Brecheisen's possession.
• Martin agreed that if he got the trailer back, he would simply sell it to someone else for $3,000, the same price the estate said he had agreed to in the sale to Brecheisen.
Giving Brecheisen the title—but not filling it in fully so that the transfer could be recorded—is consistent with an installment-sale agreement, under which Brecheisen was making continuing payments on the total purchase price. Giving Brecheisen the title is not consistent with a mere lease. In addition, of course, two witnesses testified that Martin had directly admitted selling the trailer to Brecheisen. The evidence was sufficient to support the district court's conclusion that an oral sales agreement was reached.
We turn next to Martin's claim that he would have needed more than an oral agreement to sell the trailer for the court to enforce it against him. To the extent that the question is a legal one, such as one that rests on the interpretation of a statute, we review the question independently, without any required deference to the district court. See Nelson v. Nelson, 288 Kan. 570, 578, 205 P.3d 715 (2009). To the extent that the question is one of equity, we review the district court's decision for abuse of discretion. See Fleetwood Enterprises v. Coleman Co., 37 Kan.App.2d 850, 864, 161 P.3d 765 (2007). The district court abuses its discretion when it bases its decision on an error of fact or law or when its discretionary decision is so unreasonable that no reasonable person would agree with it. In re F., 51 Kan.App.2d 126, 128, 341 P.3d 1290 (2015).
What we must do, then, is first determine whether the district court may resort to equitable principles to enforce the sale of a trailer in the absence of a written agreement. This is a legal question that we review independently. If the district court has the authority to resort to equitable considerations, we then will determine whether it had a sufficient equitable basis in this case to do so.
Martin cites what most lawyers refer to as “the statute of frauds,” a requirement that some contracts be in writing to be enforceable. The statute of frauds is, as its name suggests, generally aimed at preventing fraud, Ayalla v. Southridge Presbyterian Church, 37 Kan.App.2d 312, 316, 152 P.3d 670 (2007), focusing on the unreliability of oral evidence regarding particularly important transactions. General Dynamics Corp. v. United States, 563 U.S. ––––, 131 S.Ct. 1900, 1908, 179 L.Ed.2d 957 (2011). Such restrictions are adopted by statute, but sometimes, as here, more than one statute preventing the enforcement of an oral agreement may apply. Martin cites two statutes—the general Kansas statute of frauds, K.S.A. 33–106, and the Kansas certificate-of-title statute, K.S.A. 8–135.
Martin argues that this agreement is unenforceable under K.S.A. 33–106, which makes unenforceable an oral contract “that is not to be performed within the space of one year from the making thereof.” Martin argues that the payment of $5 per week was going to take well more than 1 year.
Even if we assume for the moment that K.S.A. 33–106 applies, Martin's argument is not well taken. This provision of the statute of frauds—concerning agreements not to be performed within 1 year—has consistently been understood to apply only when it is impossible to perform the contract within 1 year. See Nutt v. Knutson, 245 Kan. 162, 164, 795 P.2d 30 (1989) ; Murray on Contracts § 72 (4th ed.2001). No testimony in this case suggested that Brecheisen was precluded from paying off the balance owed at any time. Thus, the contract could have been performed within 1 year, and K.S.A. 33–106 would not bar its enforcement.
In fact, though, K.S.A. 33–106 would not apply here. That's because sale of the trailer was covered by the Uniform Commercial Code (UCC), which has its own statute of frauds. The UCC covers the sale of goods, K.S.A. 84–2–102 ; a “good” is anything that is movable, K.S.A. 84–2–105(1), and the trailer was movable. So the UCC applied.
The UCC's statute-of-frauds provision is found in K.S.A. 84–2–201 and includes an exception that allows enforcement of an oral agreement “with respect to goods ... which have been received and accepted.” K.S.A. 84–2–201(3)(c). The trailer here was delivered to Brecheisen, and he accepted it—he retained it from sometime in 2010 until his death in 2012. See K.S.A. 84–2–606. Accordingly, the UCC's statute of frauds does not prevent enforcement of the sales agreement.
Martin also argued that the certificate-of-title statute, K.S.A. 8–135, precludes enforcement. Martin correctly notes that this statute provides that a vehicle sale is voided where there is no signed title. K.S.A. 8–135(c)(7). But Kansas has long recognized an equitable exception to this rule where, as is the case here, a seller who failed to provide valid title to the buyer later seeks to recover the vehicle in a replevin action.
The Kansas Supreme Court recognized this exception in Felts v. Sugg, 167 Kan. 488, 207 P.2d 460 (1949). In that case, a gentleman named Felts sold a Ford auto to Sugg, who gave a bad check. The car title was sent with the check to the bank, to be given to Sugg after the check was paid. But since the check wasn't paid, the title was returned to Felts, while Sugg still had the car.
Sugg then sold the car to a man named Williams, who paid Sugg. But Williams didn't get a title. And, it turned out, the title Felts had gotten for the car when he bought it was itself defective—the notary had failed to sign it.
Felts sued Williams for possession of the car, and the trial court awarded possession to Felts even though Williams argued that Felts could not bring a replevin action because he didn't have valid title under the certificate-of-title statute. The court concluded that one who, like Felts, obtained a car with a certificate of title—but a defective one—could still claim possession of the vehicle in a replevin action, notwithstanding the certificate-of-title statute:
“Where a buyer for value purchases a motor vehicle from a seller and the vehicle is delivered to him with a certificate of title and an assignment thereof, even though the certificate of title and the assignment thereof are incomplete and defective, he does acquire an interest in the vehicle, which, under proper circumstances, he can protect. For instance, in such case he may compel the seller to furnish and deliver to him a certificate of title and an assignment thereof that fully complies with statutory requirements. The motor vehicle having been delivered to him, he would have such an interest that he could resist any action by his seller to recover possession if the seller relied solely on the ground that no sufficient certificate of title and assignment had been delivered to the buyer. The buyer would also have such an interest that he could maintain his right of possession against anyone not having a better title, otherwise he could not recover possession from one who borrowed the motor vehicle, or from a trespasser or from a thief.” Felts, 167 Kan. at 492, 207 P.2d 460.
The court noted that after Felts had purchased the car and gotten a defective title, he had lost possession “through the fraudulent acts of Sugg” but had never surrendered title to Sugg and that “certainly as against Sugg he could have maintained an action to recover possession.” 167 Kan. at 492, 207 P.2d 460. The court then said that Williams, who had gotten the car from Sugg, had no greater rights than Sugg had. 167 Kan. at 492, 207 P.2d 460. The court also noted that, when considering the equities of this case, Felts had received a title, albeit defective, while Williams never got a title at all. 167 Kan. at 493, 207 P.2d 460.
Martin cites other appellate decisions saying that the certificate-of-title statute is to be literally interpreted and strictly enforced, including Maryland Cas. Co. v. American Family Insurance Group, 199 Kan. 373, 429 P.2d 931 (1967). But the Kansas Supreme Court in Maryland Casualty recognized that there was tension between cases strictly enforcing the certificate-of-title statute and other cases, including Felts. The court in Maryland Casualty distinguished—but did not overrule—Felts because it was a replevin action. 199 Kan. at 378–79, 429 P.2d 931. And so is the case now before us.
In the context of a replevin case, the Felts court said that strict compliance with the certificate-of-title statute may not always be required because “equitable considerations may enter into any controversy which may arise out of any such transaction, and [are to] be considered, if necessary to a complete determination of the rights of various claimants.” Felts, 167 Kan. at 491, 207 P.2d 460.
In sum, then, in a replevin action, equitable considerations may provide an exception to strict compliance with the certificate-of-title statute. Here, like Felts, Brecheisen received the vehicle title when he purchased the vehicle, though the title was defective because it lacked signatures. We conclude that the district court in our case was authorized to assess equitable considerations in determining who was entitled to possession and ownership of the trailer.
We turn next to whether the district court abused its discretion by applying those equitable considerations in Brecheisen's favor. We find that it did not. Several factors support the district court's conclusion that the equities here weigh in favor of Brecheisen:
• Brecheisen paid some money toward the trailer.
• Martin didn't attempt to retrieve the trailer for months after Brecheisen's death.
• Martin gave Brecheisen the physical title to the trailer.
• Martin's overall position here suggests bad faith. Martin denies the Brecheisen estate's claim that Brecheisen bought the trailer for $3,000, but Martin says he would sell the trailer to someone else for $3,000 if he gets it back. The catch is that he also seeks to pocket a tidy sum in claimed rent from the Brecheisen estate—$80 per day from October 2012 to the present, an amount in excess of $75,000 on a trailer he admits is worth only $3,000.
In addition, the seller has the primary obligation for providing a valid title to the buyer. Martin failed to do so, and equity would not be served by letting him benefit from his own failure.
Based on these equitable considerations, a reasonable person could agree with the district court that Martin sold the trailer to Brecheisen for $3,000, that Brecheisen had accepted the trailer and made partial payment for it, and that the equities were such that Martin's claim for replevin, which if granted would restore the trailer to his possession, should be denied. We therefore affirm the district court's judgment.