Hackney v. Morelite Const.
| Decision Date | 19 August 1980 |
| Docket Number | No. 79-904.,79-904. |
| Citation | 418 A.2d 1062 |
| Parties | Arthur G. HACKNEY et al., Appellants, v. MORELITE CONSTRUCTION, D. C. Corp., Appellee. |
| Court | D.C. Court of Appeals |
Jacob Sheeskin, Rockville, Md., for appellants.
Before NEWMAN, Chief Judge, and KELLY and MACK, Associate Judges.
After a bench trial on stipulated facts, the trial court ruled that a letter of intent regarding certain realty owned by appellee Morelite Construction was not an enforceable option contract. Arthur G. Hackney and Sandra A. Conley, the would-be purchasers, appeal that ruling. Concluding that the statute of frauds and parol evidence objections were waived by appellee's stipulations at trial, we hold that the trial court's limited inquiry-into the enforceability of the written document only-was erroneous and that there was a valid option contract here; consequently, we reverse its ruling.
We set forth the pertinent facts, as stipulated to at trial by both parties:
[COUNSEL FOR APPELLANTS]:
The defendant Morelite Construction, a D. C. Corporation, . . . with its main headquarters in New York . . . purchased certain real property in the District of Columbia under a contract with the District of Columbia Government, under the condition that the property was to be renovated and sold for a base price approved by the Housing and Urban Development, plus additional extras to be approved by RLA, Redevelopment Land Agency of the District of Columbia.
* * * * * *
The piece of property involved in this case is at 402 Tennessee Avenue, Northeast. The price on that property was set in June, 1978, at $60,000. Certain extras were approved and an original contract signed between the defendants and the Redevelopment Land Agency of the District of Columbia.
I have a letter from the District of Columbia, sent to the defendant corporation, which approves all the prices for the extras.
* * * * * *
The letter speaks for itself.
The plaintiffs first saw this property . . . through a real estate agency known as Metro Properties, who put them in touch with a Mr. Phipps of the defendant corporation.
* * * * * * At the time the plaintiffs met Mr. Phipps, he identified himself as a vice-president of Morelite Construction . . . .
The president of that corporation later testified at a deposition that Mr. Phipps was vice-president of that corporation from the time of its organization until his death on August 3, 1977.
The plaintiffs actually met with Mr. Phipps in the office of the defendant corporation on June 21, 1977. They told him that they were interested in the property . . . and . . . asked him what must we do to get that house? Mr. Phipps replied, give me a letter of intent with a deposit. This will guarantee that you will get the first option to buy this house when it was ready.
A letter of intent was prepared on that date, June 21, 1977, in the office of the Metro Properties, the real estate agent. It was signed by the plaintiffs and by Allen Phipps as vice-president. Now, it is signed, Allen Phipps, vice-president, but it does not say Morelite Construction, D. C. corporation.
Mr. Hackney, one of the plaintiffs, gave . . . the real estate agent, a check for $1,000 as suggested by Phipps. The check was deposited into Metro Properties' escrow account, and it is still being held in that account by the realtor.
Mr. Weintraub [phonetic], the president of the defendant corporation learned about the letter of intent from Mr. Phipps approximately one month after it was signed. Weintraub, somewhere along about May or June of 1978 spoke to one of the plaintiffs, Mr. Hackney.
* * * * * *
He . . . told Mr. Hackney that as far as he was concerned Hackney had nothing on the property in question and that Weintraub had employed no real estate firm to sell the property. He also told Hackney Metro Properties had no right to take Hackney's money. He suggested to Mr. Hackney to get his money back form Metro Properties.
Prior to signing this letter of intent, Mr. Hackney had had a conversation with Mr. Phipps, the vice-president, who told him that the house was being purchased from the District of Columbia Government and that the defendant corporation was restricted in profits, and that the house could only be sold for a price approved by Governmental agencies.
Phipps also stated that the price would probably be . . . in the $60,000 range.
Mr. Hackney told Phipps he would be willing to pay the price approved by the Government. And on this understanding, he signed a letter of intent.
On January 30, 1978, Metro Properties . . . addressed a letter to Mr. Weintraub, referring to the letter of intent and asking Mr. Weintraub to contact Metro Properties for the purpose of completing their transaction.
Weintraub replied on February 8, 1978, and stated that the letter of intent signed by the deceased, Allen Phipps, was not binding, since there was no way to know on June 21, 1977, the selling price of the property. Weintraub also stated that he did not know the selling price.
In the early part of June, 1978, the plaintiffs found out that the price of the property had been set by the Governmental agencies at $60,000. At that time they prepared and presented a paper to purchase the property at $60,000. They presented it to the defendant. The defendant did not accept the paper, did not sign it, wouldn't take the physical possession of the paper.
After signing the letter of intent and depositing the $1,000 in June of '77, the other plaintiff, Sandara Conley, went through the house on two different occasions with Mr. Phipps. After going through the house, the second time, she drew up some rough plans, showing Mr. Phipps the way she would like to have the house remodeled and gave the plans to Mr. Phipps.
The disputed letter, written under the real estate agent's letterhead, states:
June 21, 1977
This letter of intent and good faith deposit of One thousand dollars ($1,000.00) is submitted to show our serious intent to purchase the property at 402 Tennessee Ave N.E., Washington, D.C. We wish to assist in the design for the renovation of the property and participate in the selection of finishing cosmetic items.
The deposit is to be held by Metro Properties. In the event that a contract agreement for the sale of 402 Tennessee Ave NE between the purchasers and seller has not been written within forty-five (45) days, the purchasers reserve the right to withdraw this letter of intent and have their deposit refunded in full.
Agent /s/ Thomas R. Feathering
Purchaser /s/ Arthur G. Hackney
Purchaser /s/ Sandra A. Conley
Seller /s/ Allen Phipps, vice pres
There are only two issues here: (1) whether appellee made an oral promise to appellants, in exchange for valuable consideration, to keep a realty sales offer open for a fixed or reasonable period of time (that is, whether the parties made a valid oral option agreement) and (2) if so, whether enforcement of that oral agreement is barred by the District of Columbia Statute of Frauds, D.C. Code 1973, § 28-3502. We answer the first question affirmatively and conclude that appellee's stipulations at trial estop it from asserting either a Statute of Frauds bar or a parol evidence objection1 to the enforcement of the oral agreement.
We address the statute of frauds issue first.2
The statute of frauds, first enacted in England in 1677, 29 Car. II, Cap. 3, was "intended to guard against the perils of perjury and error in the spoken word, and to protect defendants against unfounded and fraudulent claims." 3 Williston on Contracts § 448 at 344 (3d ed. 1960). The statute's intent was not to invalidate any oral agreement in one of the enumerated classes, but merely to suspend its enforcement "until the statute is satisfied by the reduction of it to writing." Id. at 342.
The statute was devised, not as a mandatory directive to reduce to writing any oral contract which comes under the statute on pain of forever foregoing the right to enforce it, but, rather, as an optional defense that the party being charged may invoke to prevent the enforcement of unfounded claims against him. Consequently, the defense may be lost if it is not affirmatively pleaded. Cavalier v. Weinstein, D.C.Mun.App., 80 A.2d 918 (1951); Saunders System Washington Co. v. Kuffner, D.C.Mun.App., 75 A.2d 136 (1950); Super.Ct.Civ.R. 8(c).
There are several situations where courts may refuse to allow the defendant to interpose a statute of frauds defense even if it is properly raised: "[I]n the early history of the statute a defendant was denied the privilege of pleading [it] in three main instances: (a) where his own fraud was responsible for the non-existence of the required signed memorandum [equitable estoppel]; (b) where the equitable doctrine of part performance was applicable [promissory estoppel], and (c) where the defendant has admitted the contract [waiver]." Wolf v. Crosby, 377 A.2d 22, 26 (Del.Ch.1977).
The courts in this jurisdiction have had numerous occasions to deny defendants a statute of frauds defense under the first two of these three circumstances (equitable and promissory estoppel). See, e. g., Ammerman v. City Stores Co., 129 U.S.App. D.C. 325, 394 F.2d 950 (1968) (); Amberger & Wohifarth, Inc. v. District of Columbia, D.C. App., 300 A.2d 460 (1973) (); Easter v. Kass-Berger, Inc., D.C.Mun.App., 121 A.2d 868 (1956) (); Kresge v. Crowley, 47 App.D.C. 13 (1917) ()....
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