Thomas J. Baird Inv. Co. v. Harris

VAN VALKENBURGH, District Judge (after stating the facts as above). [1] As this is a contract for the sale of and affecting the title to real estate, its validity must be determined by the law of the state in which the land is situated. Clark v. Graham, 6 Wheat. 577, 5 L. Ed. 334; Caldwell v. Carrington, 9 Pet. 86, 9 L. Ed. 60. Particularly is this true, since, as we shall see, the statute relied on affects the validity of the contract and not the remedy New York Third National Bank v. Steel, 129 Mich. 434, 88 N. W. 1050, 64 L. R. A. 119. The statutes of North Dakota and Oklahoma are identical. The suit was brought in Oklahoma, but the land involved is located in the former state; consequently, the interpretation placed upon the statute by the Oklahoma courts, while persuasive ¿nd entitled to great respect, cannot be viewed as decisive and controlling in the case before us. The terms of the statute are these: “The following contracts are invalid unless the same or some note or memorandum thereof be in writing and subscribed by the party to be charged or by his agent: * * * An agreement for the leasing for a longer period than one year or for the sale of real property or of an interest therein; and suc-h agreement, if made by an agent of the party sought to be charged, is invalid unless the authority of the agent be in writing, subscribed by the party sought to be charged.” In the absence of express decision to the contrary by the Supreme Court of North Dakota, we think the following generally accepted rules to be applicable: [2] An agreement within the statute will not be enforced in équity nor at law if it appears from the face of the agreement that any of the terms, no matter how unimportant they may seem to be, are left open to be settled by future conferences between the parties thereto. In such cases there is no complete agreement. Scholtz v. Northwestern Mutual Rife Ins. Co., 100 Fed. 573-574, 40 C. C. A. 556. Such agreement or contract may be authenticated and established through the medium of letters and separate writings and documents, provided they refer to each other and to the same persons and things, and manifestly relate to the same contract and transaction. Wood on Statute of Frauds, § 345, p. 655; Atwood v. Rose, et al., 32 Okl. 355, 122 Pac. 929; Swallow et al. v. Strong et al., 83 Minn. 87, 85 N. W. 942. It is sufficient if in the course of the transaction the party to be charged in some writing signed by him, or his duly authorized agent, recognizes or ratifies an agreement sufficiently explicit in terms and disclosed in writings which show unmistakably that they relate to the same transaction. Beckwith v. Talbot, 95 U. S. 289, 24 L. Ed. 496; — 296 — Townsend v. Kennedy, 6 S. D. 47, 60 N. W. 164. The rule has been thus well stated: “It is immaterial in what form the memorandum is made, or whether it was ever delivered to the other or not, provided that, in itself, or by reference to other writings, it embraces all the essential elements of the contract. Nor is it material in what form the writing admitting the existence of a contract, a memorandum of which is signed by one party, is made by the other party. If it admits the contract, and refers to the memorandum in such a manner that the court can connect it therewith, and ascertain the terms of the contract without the aid of parol evidence, it is sufficient to bind him, although he did not intend thereby to ratify the contract. The moment written evidence of the contract, under his hand, in whatever form, exists, the contract is taken out of the statute, even though such admission is in the form of a letter repudiating the contract.” Wood on Statute of Frauds, § 345, p. 651. The original earnest money contract of sale, signed by both parties, was, in itself, a memorandum sufficiently explicit to satisfy the statute under ordinary circumstances. In the absence of special provision respecting the payment of the balance of the purchase price, the law would presume that it was to be paid in cash at the close of the transaction. However, the plaintiff, in its petition, has stated that other material terms were explicitly agreed upon, viz., the assumption of a mortgage of $13,500 by the defendant, and also the giving of a mortgage to secure the deferred payments aggregating $10,700. Having so stated the contract, it must be held to establish it as declared. [3] The plaintiff contends that the defendant has not sufficiently pleaded the defense of the statute. This contention is untenable. It may now be accepted as settled by weight of authority that a party may admit an agreement not in conformity with the statute of frauds and yet avail himself of the defense by coupling with the admission a claim to the protection of the statute; and this is particularly true in those states where the statute makes the contract void and not merely voidable. American & English Enc. of Pleading & Practice, vol. 9, pp. 711, 712. The defendant has interposed a general denial. This operates to deny that any such agreement was made and puts the plaintiff to proof. Such a denial is as effective for letting in the defense as if the statute of frauds had been specially pleaded. May v. Sloan, 101 U. S. 231-237, 25 L. Ed. 797. [4] The main insistence of the defendant is that the memorandum is defective, in that it does not provide: (1) A warranty deed from Pitts instead of from plaintiff; (2) that the defendant should execute a mortgage to secure the deferred payments, aggregating $10,700; (3) that the $13,500 mortgage should be assumed and should not fall due within a period of five years, or at least until after the maturity of the mortgage for $10,700 last mentioned. He also insists that plaintiff has not shown ability to perform the contract on its part, in that it depended upon payments from the defendant to enable it to discharge certain existing incumbrances* upon the property. We are of opinion that the objection to the deed is not well taken. The contract provides that a warranty deed conveying a good title to said land must be tendered. It is not objected that the deed from Pitts did not carry such. title. It is not necessary that the vendor should be the actual owner, — 297 — but only that he havé an enforceable contract for the purchase, or that he stand in such relation to it that he can carry his contract into effect at the time specified. Gray v. Smith et al. (C. C.) 76 Fed. 525. Nor do we think it material that the plaintiff relied upon certain payments from defendant to enable it to remove certain incumbrances. If the ability of the plaintiff to make title were involved, if plaintiff could not secure the deed nor make conveyance without first obtaining money from the defendant, this criticism might have weight; but here the conveyance has been tendered. The rule invoked does not extend to the mere satisfaction of prior incumbrances by employing a part of the purchase money. These are mutual and contemporaneous steps in the performance of the contract. Such conditions are met with in the great majority of real estate transactions, and are not regarded as impairing the validity of contracts in which they inhere. Moreover, the correspondence recognizes this feature of the contract. It remains to be seen then whether, within the requirements of the statute, there was a sufficient memorandum embodying the entire contract, and a sufficient subscription by the defendant or his agent; because the defendant in this action is, of course, the party to be charged. Even though it were to be conceded that the subscription of both buyer and seller is necessary, it cannot well be claimed that that of the seller is wanting. [5] The trial court was of opinion that the letters written by Breed-en, defendant’s agent, were inadmissible, as tending to disclose a written contract, because plaintiff had failed affirmatively to prove the agent’s authority to be in writing subscribed by the defendant. The laws of Oklahoma (Rev. Laws 1910, § 4759) provide: “In all actions, allegations of tlie execution of written instruments and indorsements thereon of the existence of a corporation or partnership or of any appointment or authority, etc., shall be taken as true unless tile denial of the same is verified by the affidavit of the party, his agent or attorney.” In the petition Breeden is described as the duly authorized agent and attorney of defendant and as duly authorized by Harris to represent him in said transaction. These allegations are not denied under oath. The general allegation of an authorized agency will be presumed to be an agency with full powers legally conferred. The failure to deny under oath is equivalent to an admission in the answer. The law of the forum regulating the procedure is controlling. No further proof of the agent’s authority was required. Mitchell v. Knudtson Land Company, 19 N. D. 736, 124 N. W. 946. All other essential terms of the agreement being contained in the original memorandum (Exhibit A) which was subscribed by both parties, and- the additional provisions respecting the assumption of the mortgage of $13,500, and the making of the mortgage securing deferred payments aggregating $10,700 by defendant, being disclosed in writings subscribed by plaintiff, it remains to be seen whether in the letters or other documents received or offered in evidence recognition or ratification of these terms by the defendant appears in writings subscribed by him; and in determining this we must look at all the correspondence and writings relating to this transaction which are — 298 — presented in the record, whether attached to the petition as exhibits or subsequently offered in evidence. Williams v. Smith, 161 Mass. 248-252, 37 N. E. 455. Exhibit C, the letter of November 16, 1908, from the plaintiff to the First National Bank of Medford, Old., in connection with the deed from Pitts, sets out the disputed terms of the contract with sufficient particularity. This letter, with its inclosures, was forwarded to the bank for defendant’s inspection, and as an important step in the closing of the contract. On the same day plaintiff wrote defendant saying: “We have this day sent to the First National Bank of Medford, Oklahoma, your notes, deed and a mortgage. Please call and execute mortgage and notes at your earliest convenience. Not knowing Mrs. Harris’ name, we left that blank and instructed the bank to fill it in. We also left the county in which you live blank for them to fill in. All of these papers are drawn in accordance with our understanding. We have just received your letter and note what you say about the payments.” Four days before, November 12, 1908 (Exhibit E) Baird had written Harris inclosing to him nine abstracts covering the land in question. In this letter he referred to their agreement that the incumbrance of $13,500 should be left against the property. November 18, 1908 (Exhibit F), Harris wrote Baird as> follows: “I received the abstracts all O. K. Was glad to hear from you. I will send you my abstract in a few days.” This letter, written in response to plaintiff’s letter of November 12th, gives implied assent to the mortgage of $13,500 as one of the terms of payment of the purchase price. Townsend v. Kennedy, 6 S. D. 47, 60 N. W. 164. But it may be said that the letters of November 16th to the First National Bank of Medford and to Harris, with their fuller recitals, had not yet been brought home to defendant because no reference is made to them. However, on November 24, 1908, the agent Breeden, having been employed by defendant to assist him in the transaction, wrote to plaintiff a letter in defendant’s behalf. In the course of this letter he says: “The abstracts show in addition to the $13,000 which grantee is to assume in Mortgages that there are three other mortgages aggregating $9,043.24 on the land. Mr. Harris understands that you are to use the amount he is to pay on the notes executed at this time to remove or release this indebtedness, and I wish to know if that is correct.” Some additional details are then requested respecting the payment of 'taxes on the land and interest on the mortgage. That Harris was to execute a mortgage back for $10,700 is recognized as a part of the agreement; but some question is raised as to an insurance clause contained in it, and also respecting some embarrassment to Harris that might arise from the fact that the $13,500 mortgage would mature before that securing the deferred payments aggregating $10,700. This letter is a sufficient written recognition both of the $13,500 mortgage and the $10,700 mortgage as parts of the original agreement between the parties. Still further recognition is cofitained in Breeden’s letters to Baird of December 4 and 5, 1908, in which the former seeks — 299 — to repudiate thé contract. That of December 5th was admitted without objection. [6] Plaintiff offered in evidence, as further tending to sustain the contract sued on, a bill in equity filed in the circuit court for the district of Oklahoma, in which Harris was complainant and the plaintiff in this case was defendant. This bill sought to set aside the contract here under consideration and to recover back the cash payment of $500 made thereunder. The bill is subscribed and sworn to by 'Harris. This offer was rejected by the trial court on the stated ground that the pleading was not signed in connection with the making of the contract. In this, we think the court erred. This was a pleading in a former case between the same parties; it was subscribed and verified by the party here charged; it did not set up the statute of frauds. The writings claimed to embody the contract were then in existence and were sufficiently referred to, and the pleading manifestly related to the same contract and transaction. In the bill it was stated that the contract was made as charged, including the agreement to assume the mortgage for $13,500 as a part of the purchase price, and to giVe back a mortgage to secure the deferred payments aggregating $10,700. This contract is sought to be avoided because of certain alleged fraudulent representations made by plaintiff herein respecting the time of maturity of the $13,500 mortgage, which Harris claims induced him to enter into the contract and agreement which was, in fact, made. Such a solemn and formal recognition and admission of a prior oral agreement is competent and admissible on both reason and authority. Brown on the Statute of Frauds (5th Ed.) § 354a; 20 Cyc. 254; Jones v. Lloyd, 117 Ill. 597, 7 N. E. 119. It is true that in the former pleading, as in the present, the defendant Harris coupled his admissions respecting the contract with the Haim that the plaintiff, through its president, Baird, induced him to enter into that contract through fraud and misrepresentation as to the time when the incumbrance which he was to assume would fall due; but this is a defense which has no relation to the statute of frauds. By implication it recognizes and presupposes the existence of the contract which is thus assailed as induced and tainted by fraud. The defendant contracted to assume a certain incumbrance. Let it be conceded that through fraud or inadvertence he failed to provide against some details of .the assumption which worked to his disadvantage. He cannot invoke the statute of frauds for his relief. That statute thus interpreted would be made to work a revolution in the law of contracts apart from the evidentiary phase to which it is confined. It would become the vehicle by which the terms of written contracts might be varied upon the sole ground that they did not contain all the matters of detail which one. of the parties afterwards desired them to contain. This is not the "function of the statute. Defendant’s remedy, if his cause is just, lies in other forms of procedure of the nature disclosed in his former bill and affirmatively stated in his answer filed herein. ' “The statute does not say that if a written agreement is signed the same exception shall not hold to it that did 'before the statute. * * * It does not say that a written agreement shall bind, but that an unwritten agreement — 300 — shall not bind.” .Brown on the Statute of Frauds (5th Ed.) § 409; Glass v. Hulbert, 102 Mass. 24-35, 3 Am. Rep. 418. With the question of ultimate recovery based upon other considerations it has nothing to do. Townsend v. Hargraves, 118 Mass. 325. [7] We conclude then that under the pleadings and upon the evidence introduced, as well as that offered and rejected, as herein stated, the demurrer to the evidence should have been overruled. It follows that-the judgment below must bé reversed, and the cause remanded, with directions to grant a new trial. HOOK, Circuit Judge, concurs in result.