Opinion
No. 5-329 / 04-1311
Filed May 25, 2005
Appeal from the Iowa District Court for Polk County, Joel D. Novak, Judge.
Darwin Stinson appeals from the district court's order of specific performance of an alleged oral real estate contract. REVERSED AND DISMISSED.
John Roehrick of Roehrick, Krull Blumberg, P.C., Des Moines, for appellant.
Frank Smith and Tyler Smith, Des Moines, for appellee.
Heard by Sackett, C.J., and Huitink and Vaitheswaran, JJ.
The question here is whether the district court was correct in decreeing specific performance of an alleged oral contract wherein defendant-appellant Darwin Stinson was to have agreed to sell to his brother, decedent Louis D. Stinson, residential property located in Des Moines, Polk County, Iowa. Appellee estate of Louis D. Stinson by Gail L. Stinson, executor, sought specific performance. Darwin contends the district court erred in (1) ordering specific performance, (2) finding specific performance was appropriate, and (3) considering oral evidence of a contract to sell real estate. On de novo review, we reverse and dismiss.
We review requests for specific performance de novo. Dergo v. Kollias, 567 N.W.2d 443, 445 (Iowa Ct.App. 1997); see Breitbach v. Christenson, 541 N.W.2d 840, 843 (Iowa 1995); see also Beckman v. Kitchen, 599 N.W.2d 699, 701 (Iowa 1999). The proponents of specific performance of a real estate contract must establish their claim through clear, satisfactory, and convincing evidence. James v. James, 252 Iowa 326, 329, 105 N.W.2d 498, 499 (Iowa 1960). Specific performance is not granted as a matter of right, but is within our discretion. Id. It is to be granted only in extraordinary cases, in which irreparable harm will result. Id. It should be denied when it would produce injustice. Id. Specific performance is not granted unless it is based upon equity and good conscience, and unless the agreement was entered into without misapprehension or misrepresentation. Vermeulen v. Meyer, 238 Iowa 1033, 1042-43, 29 N.W.2d 232, 237 (1947); Dergo, 567 N.W.2d at 445.
The following relevant facts appear to be without dispute. In 1987 Darwin, who is decedent's brother, purchased the property located at 3114 Fourth Street in Des Moines that is the subject of this action. Decedent moved into the home on the property in 1995 and lived there until his death in January of 2002. Darwin remained the record owner of the real estate at the time of trial. The real estate tax statements and utility bills were in Darwin's name but decedent paid them. Decedent did not apply for homestead or veteran's tax credits. Decedent insured the property, representing that he was the owner, and paid the premiums from late 1995 until the time of his death. The estate was not able to produce a contract, deed, check, money orders, or other written evidence showing decedent contracted with Darwin or had paid Darwin the $35,000 the estate claims Darwin was paid for the property.
The executor, who was decedent's wife at the time of his death, testified at trial that decedent made the deal to purchase the property in October of 1994 but did not pay for it until after he sold other property in early 1995. She also testified he received a deed she never saw that came up missing.
The executor sought to prove the contract through the oral testimony of several witnesses. The district court considered the oral testimony in finding there was a contract for sale, that had been performed in part and in ordering specific performance.
Darwin contends under the statute of frauds, Iowa Code section 622.32(3) (2003), the oral evidence of the contract should not have been considered because there was no part performance of the alleged contract.
Statute of Frauds.
We review a decision by the district court to admit oral evidence of a contract under an exception to the statute of frauds for corrections of errors at law. Kolkman v. Roth, 656 N.W.2d 148, 151 (Iowa 2003); Pollmann v. Belle Plaine Livestock Auction, Inc., 567 N.W.2d 405, 407 (Iowa 1997). Under section 622.32 (2003), the statute of frauds, evidence of certain types of contracts is inadmissible, unless it is "in writing and signed by the party" sought to be charged. One type of contract included within the statute is a contract creating or transferring an interest in real estate other than leases for a term less than one year. Iowa Code § 622.32(3). The statute "does not void such oral contracts," but "makes oral proof of them incompetent." Kolkman, 656 N.W.2d at 151; Pollmann, 567 N.W.2d at 407.
Iowa Code section 622.33 provides that the provisions of section 622.32 do not apply where the vendor has received "the purchase money, or any portion thereof . . . or when the vendee, with the actual or implied consent of the vendor, has taken and held possession of the premises under and by virtue of the contract." The rationale for the part performance exception actually lies in the principles of estoppel and fraud, and exists to prevent the type of fraud that would occur if a defendant were permitted to escape performance of his or her part of the oral agreement after permitting the plaintiff to perform in reliance upon the agreement. Kolkman, 656 N.W.2d at 152 (quoting 73 Am.Jur. 2d Statute of Frauds § 313, at 13 (2001)); see Miller v. Lawlor, 245 Iowa 1144, 1152, 66 N.W.2d 267, 272 (1954). Part performance is not a substitute for evidence of a written contract, but is grounded in the theory that the defendant is estopped from asserting the statute of frauds as a defense. Kolkman, 656 N.W.2d at 152.
The estate contends decedent's move into the house and payment of taxes and insurance were sufficient to show partial performance. Appellant contends this was not partial performance because he allowed decedent to live there for decedent's life, and a life tenant would pay the real estate taxes. Defendant supports his argument with the testimony that he was visiting with the decedent one day and he had the house almost fixed up and his son, who had lived there previously, couldn't live there. Defendant did not want to rent it, so he said to Louis, "I will just give you a life estate. You just pay all the bills and do all the upkeep and live there."
Because we find the oral testimony and other factors insufficient to prove a contract by clear and convincing evidence, we find it unnecessary to determine and do not determine if there was partial performance so as to take it out of the statute of frauds.
Gail L. Stinson, the executor, was married to decedent on August 20, 1993, and their marriage was dissolved on April 19, 1995. The property in question here was not included in their dissolution. Following the dissolution, Gail and decedent continued to maintain a relationship which included on and off cohabitation. They remarried in June of 2001. It appears that decedent, who the testimony showed bought and sold property and was a good businessman, was slipping mentally at or near the time of the June 2001 remarriage.
Gail as the executor claimed in initial pleadings that decedent and Darwin contracted for decedent to buy and Darwin to sell the house in 1995, decedent paid $50,000, and Darwin failed to execute the required conveyances. Her petition later was amended to contend that the price decedent was to pay and paid was $35,000. Gail's testimony is confusing, contradicted in part, and her testimony was not consistent with her original pleadings. She ultimately testified decedent made the deal to purchase in 1994 but did not pay for this property until he sold the other property. She had no personal knowledge of the actual transaction but testified as to what decedent allegedly told her. She testified also to payments of real estate taxes and improvements made by decedent, for some of which she wrote checks.
Marls Watson, a realtor who sold two properties for decedent, testified for the estate and said decedent told him in 1994 or 1995 that he was going to buy the property.
Plaintiff also called as a witness Des Moines Police Officer Timothy Lynch. Lynch was called by decedent in 2002. Decedent claimed Darwin had stolen from him. Lynch testified the decedent told him Darwin sold the property in question but there was no paperwork. This is contradicted somewhat by testimony about a stolen or missing deed. There was testimony that decedent had both a deed and an abstract. Lynch contended Darwin told him he sold the property to decedent but no money exchanged hands. This was contrary to Darwin's testimony at trial that decedent had a sort of life estate.
Other evidence included the following. Darwin and his brother had a close relationship throughout their life that apparently deteriorated about the time Gail remarried decedent. About this time decedent listed the property for sale. Darwin said he did nothing because he knew that decedent could not sell it.
In the process of listing the property decedent consulted a lawyer and took the abstract for the property to him. The abstract was in decedent possession. The executor contended this was the first time decedent learned the property was not his. The lawyer prepared a quiet title action which decedent signed, but which was never filed. In the first paragraph of his petition decedent stated he, "is the current contract purchaser and occupier of the following described real estate in Polk County, Iowa, to wit: 3114-4th St., Des Moines, IA 50313 by virtue of a certain" with nothing following. He goes on in a subsequent paragraph to claim adverse possession for more than ten years.
The property was appraised at $33,000 in 1995. There was evidence decedent had about $12,000 from the sale of another house in 1995 as well as other income.
A court cannot enforce a contract unless it can determine what it is. Davis v. Davis, 261 Iowa 992, 992, 156 N.W.2d 870, 876 (Iowa 1968). In order to be binding, an agreement must be definite and certain as to its terms to enable the court to give it an exact meaning. Although vagueness, indefiniteness, and uncertainty are matters of degree, their existence as to any of the essential terms of an agreement is adequate reason for refusal to direct specific performance. Id.
The executor has failed to prove by clear and convincing evidence there was a definite and certain agreement. The only two parties to the contract, if there was one, were Darwin and decedent. The evidence is that at the time the alleged agreement was made, they were both competent and had prior experience buying and selling real estate. Darwin contends he remains the owner of the property.
The executor has shown there was some agreement between the two men because decedent took possession of the property, insured it, and paid the taxes and utilities on it. Darwin contends he gave Louis only a life estate; he denies he sold Louis the property. The credibility of Darwin's position is challenged by testimony from the officer who investigated decedent's theft claim. Darwin told the officer he sold the property to decedent but was not paid for it. Darwin disputes the officer's statement in this regard. The officer's statement does nothing to bolster the executor's claim for an element she needs to prove, that is that decedent actually agreed to pay $35,000 and did pay $35,000 for the property. While there is evidence decedent probably had the ability to pay the alleged purchase price, there was no actual proof he did.
Decedent insured the property in his own name and told the agent it was his property. While this may be evidence of alleged ownership, it in no way establishes the terms of the alleged oral contract. Furthermore, Darwin testified that at the time decedent first insured the property, he was unable to obtain insurance on the premises and this was the reason decedent got the insurance.
Decedent paid the utilities on the property. This does not support a finding of a contract as it is reasonable to assume he was paying the utilities because he was living there. Decedent also paid the real estate taxes. Yet Darwin's names on the tax statements alerted decedent that the property was not in his name. Decedent made no effort to claim homestead or veteran's exemptions on the property. This contradicts the executor's position that decedent was unaware the property was in Darwin's name until such time as she and decedent remarried.
The executor's position on the price of the home and how it was to be paid or was paid, as the district court pointed out, did change from time to time.
While there was testimony that decedent told others he was buying the property or caused them to assume it was his, they provide no evidence of the terms and conditions of any contract.
The quiet title action signed by decedent while claiming a contract interest in the property did not recite any contract terms though the first paragraph appeared to be structured to include terms, which decedent apparently could not provide.
Specific performance is an equitable remedy requiring exact fulfillment of a contract in the specific form it was made or according to the precise terms agreed upon. Black's Law Dictionary 1138 (6th ed. 1990). The executor had the burden to prove by clear and satisfactory evidence the terms of the contract declared upon in the pleadings. Davis, 261 Iowa at 992, 156 N.W.2d at 874; see also Sawyer v. Sawyer, 262 Iowa 112, 118, 152 N.W.2d 605, 609 (Iowa 1967); James v. James, 252 Iowa 326, 329, 105 N.W.2d 498, 500 (1960); In re Lenders' Estate, 247 Iowa 1205, 1213, 78 N.W.2d 536, 541 (1956). Such is the requisite quality of proof. This requirement of a more exacting measure of persuasion in Iowa is limited to cases in equity and generally does not apply where there is a question of fact in a law action. Lungren v. Lamoni Provision Co., Inc., 248 Iowa 887, 898, 82 N.W.2d 749, 755 (1957); Crandall v. Bankers Life Co., 245 Iowa 540, 549-50, 62 N.W.2d 169, 174 (1954); Carlson v. Bankers Trust Co., 242 Iowa 1207, 1214, 50 N.W.2d 1, 6 (1951); Roth v. Headlee, 238 Iowa 1340, 1343, 29 N.W.2d 923, 924 (1947); see also Provident Mut. Life Ins. Co. v. Bennett, 58 F. Supp. 72, 78 (N.D. Iowa 1944).
All of the evidence if it is admissible falls short of proving the terms and conditions of the contract the executor claims should be performed. The most the evidence shows is that decedent took possession of the premises under some agreement. The evidence leaves too much to speculation, particularly as to what decedent's obligations were under the terms of the alleged agreement, to hold he had established an enforceable contract by the required quality of evidence. We reverse and dismiss.