Hewitt v. Hutter, Civ. A. No. 74-35(H).

• Decision Date: 17 November 1975
• Docket Number: Civ. A. No. 74-35(H).
• Citation: 406 F. Supp. 976
• Parties: Dorothy F. HEWITT and Abram S. Hewitt, Plaintiffs, v. Charles G. HUTTER and Luigi Gentile, Defendants.
• Court: U.S. District Court — Western District of Virginia

406 F. Supp. 976

Dorothy F. HEWITT and Abram S. Hewitt, Plaintiffs, v. Charles G. HUTTER and Luigi Gentile, Defendants.

Civ. A. No. 74-35(H).

United States District Court, W. D. Virginia, Harrisonburg Division.

November 17, 1975.

J. Sloan Kuykendall, Kuykendall, Whiting & Costello, Winchester, Va., and Gilbert McKown, Berryville, Va., for plaintiffs.

James E. Farnham, Hunton, Williams, Gay & Gibson, Richmond, Va., for defendants.

OPINION and ORDER

DALTON, District Judge.

This is a diversity action concerning a Virginia real estate contract, thus Virginia law controls. Sterling v. Blackwelder, 302 F.Supp. 1125 (E.D.Va.1968), aff'd 414 F.2d 1362 (4th Cir. 1969). The case is before this court on Defendants' Motion for Summary Judgment, which the court is of the opinion, should be and hereby is denied for reasons to be set forth below.

In early 1974 Charles Tijerina, acting in a representative capacity for defendants, began negotiations with Mrs. Dorothy Hewitt over the purchase of her farm, "Long Branch." After some preliminary sparring over the purchase price, serious negotiations resulting in an oral agreement occurred on February 20, 1974, during a meeting at the Red Fox Inn in Middleburg, Virginia. During these negotiations Mrs. Hewitt became aware of the documentation authorizing Tijerina to enter into the negotiations at hand. These documents included 1) a letter from defendants addressed to "To Whom It May Concern" introducing Mr. Tijerina as "our Agent-in-Fact, to represent us with full powers, and complete and absolute discretion. . . . He can negotiate in our behalf, enter into agreements, and take options." (Plaintiffs' Exhibit 1); 2) a letter from defendants to Tijerina containing the statement: "Enter into contract, and advise us as soon as you reach an agreement." (Plaintiffs' Exhibit 2); 3) a letter from defendants to Tijerina authorizing him to select an attorney to consummate any transaction being negotiated (Plaintiffs' Exhibit 3); 4) a general and special Power of Attorney, which together authorized Tijerina to negotiate and agree on a purchase of "Long Branch" farm (Plaintiffs' Exhibits 4 and 5); and 5) a letter from defendants to Tijerina authorizing him to offer as much as $950,000.00 for the purchase of "Long Branch" farm (Plaintiffs' Exhibit 6). Agreement was reached by Tijerina and Mrs. Hewitt during the negotiations at the Red Fox Inn and the next day (February 21, 1974) during telephonic conversations. The agreement included the purchase price of "Long Branch" farm and the personal property which was to go with the farm.¹ Tijerina and Mrs. Hewitt then turned to their lawyers to put the agreement into contract form. After several drafts a Contract for Sale was approved and executed by plaintiffs. (Plaintiffs' Exhibit 8). Tijerina then wrote a letter dated March 1, 1974, which was intended as a cover (or transferral) letter for the Contract for Sale. The letter was addressed to plaintiffs' real estate broker and stated in material part:

After so many tried to put the contract in a form that is mutually agreeable to all, we have finally accomplished today, a contract that has all the requisites that I required.

. . . . .

I realize that having them sign first is unusual, but it is my desire that my principles sic sign for themselves as a courtesy to them . . .

. . . . .

Since I approve the contract as to form, terms and conditions, on behalf of my principles, by virtue of the authority vested in me, it is acceptable to me . . . and you may inform Mr. and Mrs. Hewitt that we have a deal, and that the loan commitment has verbally been approved.

. . . . .

Plaintiffs' Exhibit 7.

Tijerina then carried the Contract for Sale to California for defendants to sign, which they failed to do. Defendants' Motion for Summary Judgment rests upon the basis that paragraph 20 of the Contract for Sale causes the document to actually be an offer. For acceptance, defendants' signatures and a return of the Contract for Sale to sellers with a certified or cashier's check for $95,000.00 to sellers is required. Since there has been no such acceptance, there is no contract.

Charles Tijerina's authority underlies any discussion as to whether a valid contract exists. Thus, an examination of defendants' fifth defense — that "Charles Tijerina did not have authority to bind defendants to the contract alleged by plaintiffs to exist . . . and . . plaintiffs knew that Charles Tijerina did not have the authority to bind defendants . . .." (Defendants' Answer at 6) — is warranted. The court holds defendants' allegation wholly without merit. A stronger case of authorized action by an agent could not be imagined. The pertinent documentation of Tijerina's authority is found in the statement of facts. Supra, at 977-978.

A recent case on this point is Lacey v. Cardwell, 216 Va. 212, 217 S.E.2d 835 (1975). There a real estate agent was authorized to dispose of sellers' land at a public auction subject to confirmation by sellers. But the agreement also expressly authorized the agent to sell the property by private sale prior to the auction if a certain price could be attained. No right of confirmation was reserved over the private sale. The Virginia Supreme Court upheld the agent's authority to enter into a binding agreement with a purchaser at the agreed price without confirmation from sellers. Virginia statutory and case law expressly allows an agent, by his own signature, to bind his principal to a contract covered by the statute of frauds. Va.Code Ann. § 11-2 (Repl.Vol., 1973); Yerby v. Grigsby, 36 Va. (9 Leigh) 387 (1838).

From the foregoing the court holds as a matter of law that Charles Tijerina had extensive authority in that he could enter into negotiations, reach agreement, prepare a contract, and through use of the Powers of Attorney, sign that contract regarding purchase of "Long Branch" farm. The court further holds that Mrs. Hewitt was aware of this extensive authority from February 20, 1974, at which time she examined the documentation of such authority. The court concludes that Tijerina and Mrs. Hewitt did negotiate, reach agreement and prepare a contract which was signed by Mrs. Hewitt and accepted in full by Tijerina in his cover letter of March 1, 1974.

Defendants make two basic contentions in support of their Motion for Summary Judgment. One denies the existence of a valid contract between plaintiffs and defendants. The second contention assumes the existence of a contract but finds that it fails to satisfy the requirements of the statute of frauds. The court finds there exists a valid contract between plaintiffs and defendants which satisfies the requirements of the Virginia Statute of Frauds. Va.Code Ann. § 11-2 (Repl.Vol.1973).

The court bases its findings upon two theories. The first of these theories rests upon a finding of a valid oral contract entered into on February 20-21, 1974, by Charles Tijerina, agent for defendants, and Mrs. Dorothy Hewitt, co-plaintiff in this action. Tijerina's March 1, 1974, cover letter hereinafter cover letter and the Contract for Sale constitute the written memorandum which embodies the earlier oral agreement. The second theory, in the alternative, finds a valid contract composed of the same two documents — the cover letter expressly incorporating the Contract for Sale. Under the second theory Tijerina's signature on the cover letter constitutes the valid execution required by paragraph 20 of the Contract for Sale.

The depositions of Mrs. Hewitt and Tijerina satisfy this court that, as a matter of law, a meeting of the minds occurred during the two conversations between Mrs. Hewitt and Tijerina on February 20-21, 1974.² At this point only an oral contract for the purchase of real estate existed. A contract for the purchase of real property is covered by the Virginia Statute of Frauds. Va. Code Ann. § 11-2 (Repl.Vol.1973). The Virginia Statute of Frauds only prohibits judicial enforcement of certain contracts, Id.; it does not render them void at their inception, except in certain situations.³Va.Code Ann. § 11-1 (Repl.Vol. 1973). Thus, a valid oral contract may exist until avoided by the statute of frauds properly pleaded. That oral contract may be enforced if there is a sufficient memorandum in writing to satisfy the statute of frauds. Browder v. Mitchell, 187 Va. 781, 48 S.E.2d 221 (1948); accord, American Surety Co. of New York v. Commonwealth, 180 Va. 97, 21 S.E.2d 748, 752-3 (1942) (oral insurance contract upheld by receipted bills for paid premiums, signed by authorized agent of surety company); Fanney v. Virginia Investment and Mortgage Corp., 200 Va. 642, 107 S.E.2d 414, 420 (1959) (oral employment contract upheld by stockholder's resolution signed by duly elected secretary of corporation). Browder sets out the elements, purpose and operation of the written memorandum:

It is, of course, well settled that the whole contract need not be embodied in the memorandum relied upon. Reynolds v. Dixon, 187 Va. 101, 106, 46 S.E.2d 6, 8. But there must be an underlying complete oral agreement for the sale and purchase of the land.

As is said in Williston on Contracts, Rev.Ed., Vol. 2, § 567, pp. 1618-19, "The memorandum need not itself constitute a contract, and apart from its effect as a memorandum, it need have no legal operation. There must be a valid oral contract, however, of which the memorandum is an accurate statement, though not necessarily made with that intent."

In other words, "It is the oral contract which is enforced, but it can be enforced only when the statute has been satisfied." Williston on Contracts, Rev.Ed., Vol. 2, § 590, p. 1701.

In Donald Friedman & Co. v. Newman, 255 N.Y. 340, 174 N.E. 703, 704, 73 A.L.R. 95, 97, the principle is thus stated: ". . . Except as evidence of the oral contract, the memorandum has no force or effect, unless and until the oral contract has been established by a preponderance of evidence. Then, if accurate and

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