Betnar v. Rose, 76--3
Decision Date | 01 June 1976 |
Docket Number | No. 76--3,76--3 |
Citation | 536 S.W.2d 719,259 Ark. 820 |
Parties | Connie BETNAR, Appellant, v. Willard L. ROSE and Wande Rose, Appellees. |
Court | Arkansas Supreme Court |
C. E. Blackburn of Reed & Blackburn, Heber Springs, for appellant.
Lightle, Tedder, Hannah & Beebe, Searcy, for appellees.
This appeal arose out of a suit by appellees to recover $2,000 held in escrow by the Cleburne County Bank in connection with an oral real estate sales agreement between appellees and appellant. The trial court granted appellees' motion for summary judgment and ordered the return of the money to appellees who were to have been the vendees of a home built by appellant. Appellant contends that the court erred in granting the motion.
Appellant is a homebuilder. He offered for sale a house which was near completion. It is admitted that appellees approached him wanting to purchase it. At their second meeting, appellant agreed to complete construction and finish out a storage room, provide insulation, and put storm doors on patio and carport entrances. There is no allegation that appellant failed to perform in any regard. The parties orally agreed upon a total price of $27,500, with earnest money of $2,000 to be applied as a down payment against the total. The agreement was not reduced to writing. Mr. Rose wrote his check payable to the order of appellant in that amount but, according to her testimony, Mrs. Rose was loathe to 'turn loose of $2,000 not knowing him (appellant).' Appellant suggested that the bank hold the check, whereupon they visited Jerome Johnson of the Cleburne County Bank and placed the $2,000 check into an escrow account. Mr. Johnson wrote the terms of the escrow agreement on the deposit ticket. They were:
This deposit is to be applied on the house and lot that Rose is buying from Betnar, provided Rose can obtain a loan. This Escrow Deposit is to be refunded back to Rose if a loan cannot be obtained.
Appellees did not get a loan and filed suit after demand for the return of the $2,000 in accordance with the condition listed on the deposit slip. In their complaint, appellees alleged that the bank held the funds relative to a purported real estate transaction, that there was no enforceable contract or agreement, that they had elected to withdraw from further negotiations relative to said purported transaction, and that they had demanded a return of the funds deposited by them. The Cleburne County Bank interpleaded the funds. Appellant answered, denying appellees' right to recovery and counterclaimed, alleging: that the sum was his, having been received pursuant to a legal contract for the sale of a home for $27,500, contingent upon appellees' obtaining a loan; that he remained ready and able to perform; that appellees were the equitable owners of the house, the subject of the contract; and that appellees had paid him the $2,000, which was then deposited with the bank. Appellees amended their complaint to allege that they had been unable to obtain a loan and denied that the Cleburne County Bank offered an acceptable loan.
The trial court granted appellees' motion for summary judgment, finding that the oral sales agreement was unenforceable as barred by the Statute of Frauds and that appellant stood ready to perform the agreement and declaring the law to be that where a person has paid money or delivered property, under a parol contract for the purchase of land, which is void by the Statute of Frauds, he cannot maintain an action to recover it back to long as the other party, to whom the money or property was paid or delivered, is willing and able to perform, quoting from Sturgis v. Meadors, 223 Ark. 359, 266 S.W.2d 81. However, the court concluded that delivery of the money to an escrow agent did not constitute delivery as contemplated under the rule of Sturgis, that the escrow agreement was itself parol and unenforceable under the Statute of Frauds, and ordered the bank to pay the $2,000 to appellees.
Thereafter, appellant amended his cross-complaint to allege physical receipt of the check of appellees and negotiation by delivery to the bank which had stamped the check 'credited ot the account of the within named payee.' He also alleged that the terms of the escrow agreement, set out on the deposit slip, contained a condition subsequent, to wit, '. . . this Escrow Deposit to be refunded back to Rose if he can't obtain a loan.'
Appellant filed a motion to set aside the summary judgment and for further hearings. The court reopened the matter to hear the testimony of the parties, again entering judgment for appellees.
For reversal, appellant argues that delivery of the check into escrow did constitute complete delivery for purposes of the Sturgis rule, that the escrow agreement was therefore enforceable, and that appellees failed to sustain the burden of proof to show the existence of the condition, to wit, that they were, after a good faith effort, actually unable to obtain a loan.
We agree that the payment of the check into escrow constituted delivery as is required for the application of the rule in Sturgis. The rationale underlying the rule applied by this court in Sturgis is that the purpose of the Statute of Frauds, so far as it relates to the sale of land, is to protect the vendor only, and the vendee seeking to recover the purchase price or a portion thereof cannot set up the statute against a vendor who is ready and willing to perform. Thus, the oral contract cannot be considered void so long as he, for the protection of whose rights the statute exists, is willing to treat and consider the contract good. 73 Am.Jur.2d 178, Statute of Frauds, § 542. According to the great weight of authority, the vendee, under an agreement for the sale and purchase of land which does not satisfy the statute of frauds, cannot recover back payments upon the purchase price if the vendor has not repudiated the contract but is ready, willing and able to perform in accordance therewith, even though the contract is not enforceable against the vendor either at law or in equity. See Venable v. Brown, 31 Ark. 564; Annot., 169 A.L.R. 188 (1947). This is but a specific variation of the general rule recognized and applied by the court in Baker v. Taylor & Co., 218 Ark. 538, 237 S.W.2d 471. Under this rule, one who has paid money in consideration of an oral contract cannot rescind such contract and recover the money paid unless the other party insists upon the statute and refuses to perform it on his part. Grauel v. Rohe, 185 Md. 121, 43 A.2d 201 (1945); 37 C.J.S. Statute of Frauds § 256, p. 779; 73 Am.Jur.2d 177, §§ 541, 542.
This rule is generally applied, except in a few of the jurisdictions in which the State of Frauds makes a contract in violation of its terms void, rather than merely unenforceable. Our statute provides that no action may be brought on a contract which is not in compliance with the stated requirements. Ark.Stat.Ann. § 38--101 (Repl.1962). The plain words of the statute indicate that contracts in violation of it are merely unenforceable, but not void. In spite of the fact that we once said that a contract was void because of the lack of a written memorandum (see Robbins v. Horn, 145 Ark. 475, 224 S.W. 748) and, on another occasion, referred to such a contract as invalid and unenforceable (see Lee Wilson & Co. v. Springfield, 230 Ark. 257, 321 S.W.2d 775), we have also referred to a parol contract which did not comply with the statute as being unenforceable. Wyatt v. Yingling, 213 Ark. 160, 210 S.W.2d 122. The statute is designed to prevent fraud, not shield or effectuate it. Bolin v. Drainage District No. 17, 206 Ark. 459, 176 S.W.2d 143; Lesser-Goldman Cotton Co. v. Merchants & Planters Bank, 182 Ark. 150, 30 S.W.2d 215. It has been said that it should not be considered the grant of a license to welch on a deal. Hyder v. Newcomb, 236 Ark. 231, 365 S.W.2d 271. Our application of the statute has been much more consistent with a construction that the statute only renders the contract unenforceable, not void. This construction is not contrary to the result reached in either Robbins v. Horn, supra, or Lee Wilson & Co. v. Springfield, supra. Although the words 'void' and 'voidable' have entirely different meanings, they are used interchangeably all too often, and we have on other occasions construed 'voidable' to mean 'void' and 'void' to mean 'voidable.' Simmons v. A. C. Carter & Co., 125 Ark. 547, 189 S.W. 176; Ragan v. Cox, 210 Ark. 152, 194 S.W.2d 681; Ragan v. Cox, 208 Ark. 809, 187 S.W.2d 874.
In statutory construction, we have said that their meaning is an open question to be decided by the connection and context in which they are used to carry out legislative intent. Mobbs v. Millard, 106 Ark. 563, 153 S.W. 821. We take the use of the words 'void' and 'invalid' in our opinions to be subject to the same treatment as we have given the words in such statutes. The real intent and effect of our opinions, in spite of occasional poor word choice, is consistent with the statutory language, i.e., that a contract in violation of the statute is merely unenforceable. This is best illustrated by language in Skinner v. Fisher, 120 Ark. 91, 178 S.W. 922. We said:
Even though the statute of frauds might have been interposed if an effort had been made on the part of the appellee to enforce the verbal agreement for the sale of the plant to him by the appellant, still in such case it would not be obligatory upon the appellant to plead the statute of frauds in defense. It would at least be optional with him whether he did so or not, and his verbal contract to sell the property would at least impose upon him a moral obligation, and the appellee would at...
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