Blue Valley Turf Farms, Inc. v. Realestate Marketing and Development, Inc.
| Decision Date | 27 August 1981 |
| Docket Number | No. 3-1280A393,3-1280A393 |
| Parties | BLUE VALLEY TURF FARMS, INC., Appellant (Defendant Below) v. REALESTATE MARKETING AND DEVELOPMENT, INC., Appellee (Plaintiff Below) v. Virgil C. BROCKMANN, Appellee (Third-Party Defendant Below). |
| Court | Indiana Appellate Court |
Mark A. Warsco, Clifford A. Holleran, Fleck, Holleran & Trexler, Fort Wayne, for appellant.
Jeanne S. Miller, New Haven, for appellees.
Blue Valley Turf Farms, Inc. (Blue Valley) entered into a written real estate listing contract on July 22, 1974 with Realestate Marketing and Development, Inc. (Realestate), which provided that Blue Valley would pay Realestate a commission in the event Realestate found a buyer for certain equipment and real estate. On September 2, 1974 Blue Valley executed an agreement to purchase real estate with a buyer, John Hilger, and agreed to pay Realestate a commission of $9,000. On December 10, 1974, Blue Valley notified Hilger that the agreement was terminated because Hilger had not obtained a new mortgage loan prior to October 2, 1974. In 1975 Hilger brought suit against Blue Valley to specifically enforce the sale. The lawsuit was settled and dismissed. Realestate then filed suit against Blue Valley to recover the $9,000 real estate commission and received a favorable judgment. The trial court found that Blue Valley had failed to perform all the matters it had agreed to perform pursuant to the purchase agreement and that Hilger was a ready, willing and able buyer.
Blue Valley now appeals the judgment alleging that because the purchase agreement was conditioned upon Hilger obtaining a new mortgage loan within thirty days and Hilger had only an oral commitment from a lender to loan the necessary funds in exchange for a mortgage securing the loan, Hilger had not met the conditions of the agreement. Blue Valley argues that an agreement to lend funds in exchange for a mortgage interest in real estate must be in writing to be enforceable and since Hilger had only an oral commitment that could not be enforced, the conditions of the contract were not met and the contract was unenforceable against Hilger. Since the contract was unenforceable against Hilger, the contract was unenforceable against Blue Valley for want of mutuality of obligation.
Realestate filed a cross-appeal raising the issue of whether the trial court erred by failing to allow prejudgment interest from the date of settlement on money due on a written listing contract which did not specify a rate of interest. However, before reaching this question, the issues raised by Blue Valley must be disposed of.
The Indiana Statute of Frauds which appears at IC 1971, 32-2-1-1 (Burns 1980 Repl.) provides as follows:
Fifth. Upon any agreement that is not to be performed within one (1) year from the making thereof; or
Sixth. Upon an agreement, promise, contract or warranty of cure relating to medical care or treatment; Provided, however, That nothing in this subsection affects the right to sue for malpractice or negligence.
"Unless the promise, contract or agreement upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party to be charged therewith, or by some person thereunto by him lawfully authorized, excepting however, leases not exceeding the term of three (3) years."
Blue Valley contends that Hilger's contract with his lender falls within the statute under the provision for sale of lands.
It is clear that the statute does not explicitly cover an agreement to lend funds in exchange for a mortgage interest. Blue Valley has not cited any Indiana authority on point for its proposition. While Indiana case law has held that a promise to execute a mortgage is within the statute of frauds, the same is not true for a promise to lend money.
Furthermore, the agreement Blue Valley is questioning is the agreement between Hilger and his lender. The parties to the agreement are not asserting the defense and Blue Valley cannot assert it for them or in their stead. Only parties and privies have the right to plead the statute of frauds defense. Pioneer Lmbr. & Supply v. First-Merchants Nat'l Bk. (1976), 169...
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