No. 80-168
IN THE SUPREME COURT OF THE STATE OF MONTANA
1981
J. LAWRENCE STODDARD,
Plaintiff and Appellant,
MARVIN H. GOOKIN and
SHARON GOOKIN I
Defendants and Respondents.
Appeal from: District Court of the Sixteenth Judicial District,
In and for the County of Fallon,
Honorable M. James Sorte, Judge presiding.
Counsel of Record:
For Appellant:
Gene Huntley argued, Baker,Montana
For Respondents:
Stephens Law Firm, Billings, Montana
Robert Stephens, Jr. argued, Billings, Montana
Submitted: January 13, 1981
Decided: March 4, 1981
Filed: MAR 4 - 1981
Mr. Justice John C. Sheehy delivered the Opinion of the
Court.
J. Lawrence Stoddard appeals from a judgment entered
against him in the Sixteenth Judicial District Court, Fallon
County, denying his claims against Marvin H. Gookin and
Sharon Gookin for cancellation of a deed, damages or in the
alternative, specific performance.
We find the issues in this appeal are:
1. Whether the escrow bank should have delivered to
the Gookins a deed terminating Stoddard's interest in the
real property.
2. Whether the District Court should have allowed
evidence of an oral contract to purchase an interest in real
estate.
3. Whether the District Court should have made findings
of fact and conclusions of law in this case.
4. Whether the evidence in the case is sufficient to
support the judgment.
In 1970, Marvin and Sharon Gookin entered into a written
five-year lease of ranch property with parties identified as
"McGhee". This lease included an option to the Gookins to
buy the real property for a sum of $100,000.
While the lease was in effect, J. Lawrence Stoddard and
the Gookins agreed orally that the Gookins would exercise
their option to purchase the McGhee property, that the
contract for the purchase of the McGhee property would show
Stoddard and his wife and the Gookins as cotenant-purchasers,
and that thereafter, Stoddard would pay $30,000 to the
Gookins in exchange for their cotenancy interest in the
contract for the McGhee property.
Stoddard and the Gookins retained a Baker attorney, R.
L. Culver, to prepare the necessary documents to carry out
their agreement. The attorney prepared a contract for deed,
warranty deeds, and an escrow receipt for deposit of the
instruments with the Bank of Baker.
On June 1, 1973, a contract for deed was executed
between the McGhees as sellers and the Stoddards and Gookins
as cotenant purchasers. Stoddard made the downpayment of
$10,000 to the McGhees. The Stoddards and the Gookins each
signed warranty deeds, that, if recorded, would respectively
convey to the other sole title to the ranch property. A
promissory note for $30,000 was executed by Stoddard, due
and payable to the Gookins on November 1, 1973. The note
and the deeds were to be held in escrow at the Bank of
Baker. An escrow receipt was prepared, which included the
following instructions for the escrow holder:
"If said $30,000.00 note is paid on or before
November 1, 1973 by J. Lawrence Stoddard [the
escrow agent shall] . .
. deliver the deed
executed by Marvin H. Gookin and wife to J.
Lawrence Stoddard, unto the said J. Lawrence
Stoddard, and destroy the remaining deed.
"If said note, plus interest, is not paid
by November 1, 1973, then deliver to Marvin
H. Gookin, the warranty deed executed by J.
Lawrence Stoddard and wife to Marvin H. Gookin
and destroy the other deed."
An additional part of the escrow receipt provided:
"This escrow is taken expressly subject to
terms, exceptions, provisions and conditions
herein stated which are acceptable and approved
by all the parties accepting this receipt or
interested in the escrow being as follows:
"5. Time is and shall be insofar as the escrow
agent is concerned of the essence of this agree-
ment and part of the consideration, and a waiver
in one instance to a time condition shall not
operate to prevent an objection for any subsequent
default in point of time."
It may be gleaned from the testimony, though with difficulty,
that on or approximately November 2, 1973, Marvin and Sharon
Gookin and J. Lawrence Stoddard entered into a different
arrangement. Stoddard agreed to pay the $30,000 in two
installments, $15,000 "in a very short time" and an additional
$15,000 on or after January 1, 1974. The new arrangement
was for the Gookins' tax advantage. The parties further
agreed that the Gookins, instead of moving from the ranch
premises immediately upon the payment of the $30,000 as
originally contemplated, would be allowed to remain on the
property for an unspecified period of time in 1974 to winter
livestock on the ranch.
On November 2, 1973, upon request by the Gookins for
payment of the first $15,000, Stoddard paid $2,000, and
stated that the remaining $13,000 amount would be paid after
he sold some stock through a stock broker. Gookin made
several additional requests for this payment without result.
On November 24, 1973, Marvin Gookin found it necessary to
leave Baker for Minnesota because of the illness of his
father. He was gone from November 24 until December 6,
1973. Before he left, he talked to Attorney Culver, and
asked Culver to give Stoddard an additional four days for
the payment of the balance of the $15,000, with notice that
if the payment were not made, the Gookins would seek to get
the deeds which were then supposed to be deposited in escrow.
At that point, no deposits of the instruments for escrow had
been made. One of the reasons given was that Mrs. Stoddard
had delayed in signing the deed. On November 26, 1973,
Culver took the instruments to the Bank of Baker, and
deposited them in escrow. The instruments deposited included
the two warranty deeds and the promissory note, dated June
1, 1973, which by its terms, was payable on or before
November 1, 1973. Shortly after the instruments had been
deposited with the escrow bank, Attorney Culver made contact
with Stoddard and advised him that he must make payment
within a few days. Stoddard testified that within a few
days he brought the balance of the payment to Culverts
office, but Culver advised him to take the money to the
Bank of Baker. Stoddard did not do this. On December 6 ,
1973, after Marvin Gookin returned to Baker, and found that
the payment had not been made by Stoddard, he got in touch
with a Billings attorney. As a result, the Billings firm
wrote to Stoddard on December 7, 1973, as follows:
"You are hereby notified that any prior
agreement that you may have had to purchase
certain land from Marvin H. Gookin and Sharon
Gookin in Range 59 East, Fallon County, has
been breached by your failure to pay sums when
due. You are further notified that by reason of
this breach, the agreement is terminated and
all sums previously paid are forfeited.
"You are further advised that you have 10 days
from the date of this letter to remove all your
livestock from the Gookin property."
On the same day, the Gookins went to the Bank of Baker,
and obtained from the bank the instruments which had been
deposited in escrow. They recorded the warranty deed granting
them sole title to the property.
On or about December 10, 1973, Stoddard came to the
Gookins' residence and attempted to tender the balance of
the first $15,000 payment. Marvin Gookin refused to accept
the same, saying that the deed was recorded and the matter
was closed.
Following that time, the Gookins have continued to
possess the ranch property, and have made the annual $9,000
payments to the McGhees as required by the contract. At the
time of trial, three additional $9,000 payments remained to be
made to satisfy the McGhee contract.
Stoddard brought suit against the Gookins to cancel the
warranty deed, to quiet the title in him to the ranch property,
and to obtain specific performance of the agreement by which the
Gookins agreed to transfer their cotenancy interest to
Stoddard. The court tried the case with a jury. The
District Court, in submitting the issues to the jury, gave
this instruction:
"The plaintiff brings this action to cancel
the deed from himself to defendants
dated June 1, 1973. If the deed is canceled.
the result will be that the plaintiff and the
defendant, Marvin Gookin, will each be the
owner of an undivided one-half interest in the
land in question.
"The plaintiff has also elected to claim that
the contract between the parties as shown by
the escrow receipt and its oral extensions be
enforced. If he is successful in this claim,
he will be the owner of the entire property
on paying for it and making the other payments
mentioned in these instructions."
Interrogatories were submitted to the jurors, and they
answered as follows:
"INTERROGATORY NO. 1: Is the plaintiff, under
the court's instructions entitled to cancellation
of the deed from him dated June 1, 1973? (Answer
'Yes' or 'No') -
No
"INTERROGATORY NO. 4: Is the plaintiff, under
the court's instructions entitled to specific
performance of the purchase agreement between
plaintiff and defendant? (Answer 'Yes' or 'No')
NO"
-
Based upon the answers to the interrogatories by the
jury, the District Court entered judgment against Stoddard.
Stoddard made a motion that the court make findings of fact,
and conclusions of law which the court declined to do.
Thereafter appeal was perfected to this Court.
In his appeal, Stoddard attacks first the delivery of
the warranty deed by the escrow bank to Gookin. Stoddard
contends that on the date the escrow bank accepted the
escrow documents, November 26, 1973, the escrow contract was
already impossible to perform, because the promissory note
upon which the escrow depended was due and payable November
1, 1973. Stoddard further contends that the delivery of the
deed by the escrow holder was ineffective for any purpose
under Hart v. Barron (1949), 122 Mont. 350, 204 P.2d 797.
Gookin argues that it is clear that an extension of time had
been agreed to at the time of the deposit, that the escrow
contract does not constitute the entire agreement between
the parties, and that the "time is of the essence" clause in
the escrow receipt applies.
We first determine that the Stoddard warranty deed was
improperly delivered to the Gookins by the escrow bank. At
the time of the escrow deposit, November 26, 1973, the
escrow instruments no longer reflected the true agreement
between the parties at that time and the "time is of the
essence" clause in the escrow receipt applied only to the
escrow agent.
The object of an escrow, as with any other contract,
"must be lawful when the contract is made and possible and
ascertainable by the time the contract is to be performed."
Section 28-2-602, MCA. To constitute an instrument in
escrow, it must be deposited with the intention that it
shall take effect upon the performance of an express condition
or the happening of a certain event. Conner v. Helvik
(1937), 105 Mont. 437, 73 P.2d 541. When the instruments
here were deposited, upon the condition that a $30,000
promissory note payable November 1, 1973 be paid, it was
foreordained that the warranty deed be delivered to Gookin.
This was not the arrangement that the parties mutually
testified was their true agreement at the time of the escrow
deposit. This determination regarding the delivery of the
deeds by the escrow holder does not end this case, however.
-7-
We come now to the second issue presented for our
review, whether the District Court should have allowed
evidence of an oral contract between the parties which
modified the written documents prepared to carry out the
agreement.
The generally applicable rules are familiar. Written
contracts supersede all oral negotiations (section 28-2-904,
MCA) which precede or accompany the execution of the written
contracts. Davison v. Casebolt (1969), 154 Mont. 125, 461
P.2d 2.
A written contract may be modified by a subsequent
agreement of the parties, but only by a contract in writing
or by an executed oral agreement (section 28-2-1602, MCA).
This is a rule of substantive law and not of evidence.
Higby v. Hooper (1950), 124 Mont. 331, 221 P.2d 1043.
An oral agreement altering a written agreement is not
an "executed oral agreement" within the statute authorizing
modification of written contracts by an executed oral agree-
ment unless its terms have been fully performed, and performance
on one side is not sufficient. Ikovich v. Silver Bow Motor
Car Co. (1945), 117 Mont. 268, 157 P.2d 785.
Anoral contract to procure a conveyance of certain
land, and to transfer an undivided interest to another is a
"contract for the sale of lands" within the statute of
frauds, and an action does not lie to enforce it. Dunphy v.
Ryan (1886), 116 U.S. 491, 6 S.Ct. 486, 29 L.Ed. 703.
A note given in connection with the sale of lands which
contains no reference to the terms of the contract of sale
is not a sufficient memorandum under the requirements of the
statute of frauds. Eccles v. Kendrick (1927), 80 Mont. 120,
259 P. 6 0 9 ,
- 8-
Part performance, sufficient to take an oral contract
out of the statute of frauds, is an act or performance which
puts the party performing it in such position that non-
performance would be a fraud upon him. Payment alone is not
sufficient part performance. Ducie v. Ford (1888), 8 Mont.
233, 19 P. 414, aff'd. 138 U.S. 587, 11 S.Ct. 417, 34 L.Ed.
Payment of the price of the land alone is not a suf-
ficient part performance to take the transaction out of the
statute. Ducie v. Ford, supra; nor is part payment of the
purchase price, Boulder Valley Ditch Mining & Milling Co.
v. Farnham (1892), 12 Mont. 1, 29 P. 277. There must be
some additional consideration such as taking possession,
making improvements or other elements showing consideration
beyond the payment of the price. Shaw v. McNamara & Marlow
(1929), 85 Mont. 389, 278 P. 836; Kettlekamp v Watkins
.
(1924), 70 Mont. 391, 225 P. 1003.
The fact that an attorney represented one or both of
the parties does not bind either of the parties to the
actions of the attorney where there is not in existence a
writing signed by the party to be bound indicating that the
attorney had authority to act on that party's behalf.
Schwedes v. Romain (1978), - Mont . , 587 P.2d 388, 35
St.Rep. 1784.
However, a party may be estopped from relying on the
statute of frauds. Fiers v. Jacobson (1949), 123 Mont. 242,
211 P.2d 968. Where one party to an oral contract of purchase
of land has relied on the other party so that the effect of
the statute of frauds would be to perpetrate a fraud on the
other party, equity will regard the case as having been
removed from the operation of the statute and will enforce
the contract if necessary or grant other appropriate relief.
Epletveit v. Solberg (1946), 119 Mont. 45, 169 P.2d 722.
Under these rules, where as here, both parties agree
that there was an oral modification of their written agree-
ments, evidence of the oral modification is admissible. See,
Corbin on Contracts, 5 574.
Applying the foregoing rules to the fact situation
before us, it is clear that the oral agreement of Stoddard
to "cash out" the Gookins' rights under the option, was
superseded by the written instruments that followed. Thus,
the contract for deed between the McGhees on the one hand
and Stoddard and the Gookins as cotenants on the other, plus
the promissory note of $30,000 due November 1, 1973, and the
execution of the escrow receipt on June 1, 1973, constitute
written evidence of the contract between the parties at that
time. As of that date, Stoddard's right to purchase the
one-half undivided interest of the Gookins may be determined
from those instruments. However, on or about November 1,
1973, the parties entered into an oral modification of their
written agreement relating to the method of payment by
Stoddard. For the Gookins' tax benefit, and for allowing the
Gookins to remain on the ranch through the winter to take
care of their stock, the $30,000 was to be divided into two
payments, one payable in November and the other after January
1, 1974.
As further consideration, Stoddard paid $2,000 on
November 2, 1973. He had earlier paid the full $10,000 for
the downpayment on the McGhee contract. While it appears
clear from the evidence that if Stoddard did not make the
$15,000 payment, he would forfeit his right to his one-half
interest in the property, it is unclear that he would also
forfeit the earlier monies that he had paid. It is also
unclear whether there was a specific time agreed upon for
payment of the full first installment of $15,000. There
does not appear to be any agreement that time was of the
essence of their modified arrangement and it is a fact
question to be determined by a trier of fact whether the
tender by Stoddard was timely. The statement by Gookin to
Attorney Culver on November 24, 1973, that he would grant
Stoddard four additional days to make payment, is not in
itself a contract, but the utilateral act of one party which
does not appear to have been assented to by the other party.
Attorney Culver, of course, had no authority to bind Stoddard.
We are mindful of the fact that in order for time to be
of the essence of a contract, it is sufficient if such
intent is clearly expressed between the parties and the
words "time is of the essence" need not be used. Johnson v.
Metropolitan Life Ins. Co. (1938), 107 Mont. 133, 83 P.2d
922. Of course, if time were not of the essence here, the
law implies that the payment by Stoddard could be made
within a reasonable time. Sections 28-3-601, -602, MCA.
The time for the payment of money only as performance is
"immediately upon the thing to be done being exactly ascer-
tained". Section 28-3-601, MCA.
This cause must be remanded to the District Court for a
determination by a trier of fact of the following fact
issues:
1. Under the modified agreement, when was payment to be
made by Stoddard?
2. Did Stoddard make or tender timely payment under
the modified agreement?
3. If the answer to the second issue is "no", did
the modified agreement include a forfeiture of Stoddardfs
earlier payments if he did not perform the modified agreement?
-11-
On retrial, it is not relevant evidence that the
Gookins lost a downpayment on a trailer house in Billings.
The purposes for which they would have used the monies had
Stoddard made payment are also not relevant.
Since this was a case in equity, the District Court
should have entered findings of fact and conclusions of law
even though the cause here was tried to a jury. The inter-
rosatories answered by the jury do not set forth the facts
upon which the jury made its determination. Unless both
~artiesaqreed to be bound by a jury decision without
further findinss bv the court, the findinqs of the jury were
advisory onlv and the District Court was required to make
findinqs under Rule 52, M.R.Civ.P.
The purpose of requiring findings of fact is three-
fold: (1) as an aid in the trial judge's powers of adjudica-
tion; (2) for purposes of res judicata and estoppel by
judgment; and (3) as an aid to the appellate court on review.
Marriage of Barron (1978), 177 Mont. 161, 580 P.2d 936.
We reverse this cause and remand to the District Court
for further proceedings. An appropriate judgment shall be
entered by the District Court after the factual determinations
herein indicated are made. The court will determine, by
itself or with an advisory jury, Stoddard's damages if he be
found entitled to an undivided interest in, or to all of the
real estate. The District Court will make such further
orders for both parties as may be appropriate under the
findings of the trier of fact. Each party shall bear his or
their own costs in this appeal.
?%-&&?- Justice
W e Concur:
C#ef Justice