Hoffman v. S V Co., Inc., 13285

CourtUnited States State Supreme Court of Idaho
Citation628 P.2d 218,102 Idaho 187
Docket NumberNo. 13285,13285
PartiesFritz HOFFMAN and Fritz Frey, Plaintiffs-Appellants, v. S V COMPANY, INC., formerly known as Sun Valley Company, Inc., Sun Valley Company, formerly known as Sun Valley Resorts, Inc., James P. Conger and Does I through X, Defendants-Respondents.
Decision Date04 May 1981

Bruce J. Collier of Kneeland, Laggis, Korb, Collier & Benjamin, Ketchum, for plaintiffs-appellants.

Carl P. Burke of Elam, Burke, Jeppesen, Evans & Boyd, Boise, for defendants-respondents.

SHEPARD, Justice.

This is an appeal from a judgment in favor of defendant-respondent Sun Valley Company, Inc. in an action brought by plaintiffs-appellants Hoffman and Frey seeking specific performance or damages based on respondent's refusal to convey real property pursuant to an alleged oral contract. We affirm.

The case concerns the negotiations and alleged contractual relationship between Hoffman-Frey and the Sun Valley Company involving the purchase and sale of a 1.64 acre undeveloped lot then owned by Sun Valley and commonly known as the "Ruud Mountain Property." Frey and Hoffman brought suit in contract to compel specific performance of the alleged agreement and in the alternative sought damages upon various other theories. Following trial, the district court concluded that while an oral understanding for the sale of the property existed, there was nevertheless failure to adequately comply with the statute of frauds and thus the agreement was unenforceable. The court also concluded that the equitable doctrines of part performance and estoppel were inapplicable. The trial court made specific findings and conclusions relating to whether an oral contract existed between the parties and concluded that it was firmly convinced that an oral understanding was reached for the sale of the lot. Sun Valley contends on appeal that the parties had not reached a mutual agreement as to the terms of the transaction and, therefore, no contract existed. We disagree.

A distinct understanding common to both parties is necessary in order for a contract to exist. Mitchell v. Siqueiros, 99 Idaho 396, 582 P.2d 1074 (1978). See Turner v. Mendenhall, 95 Idaho 426, 570 P.2d 490 (1973). Here the sequence of events as reflected in the record and the findings of the trial court indicate the existence of an oral contract. Negotiations for the purchase of the property commenced during the fall of 1976 between Hoffman-Frey and one Conger, a representative of Sun Valley, who was authorized to sell the property but only after approval by an executive committee. Frey and Conger reached an understanding that $90,000 was an acceptable price whether paid in cash or paid 30% down, with the remainder to be paid pursuant to a five year installment note at 93/4% interest. That price had been approved by the executive committee. On January 22, 1977, Hoffman sent Conger a letter confirming their January 21 telephone conversation and stating, " * * * The agreement is as follows: Purchase price of $90,000 payable at 30% down with the balance to be payable quarterly at an annual interest rate of 93/4%." The letter specified as a condition precedent the City of Sun Valley's approval of a three lot subdivision of the property. The letter also contained additional terms, i. e., subordination by Sun Valley of its note to a construction loan and a release of any one of the three lots upon full payment therefor. Enclosed was a check in the amount of $5,000, " * * * as a deposit which in the event we are turned down by the City of Sun Valley (for subdivision approval) shall be returned to us." The check carried the notation, "Escrow Ruud Mtn. Lots" and was made payable to the Sun Valley trust account. That check was deposited in the Sun Valley trust account.

Further discussions continued between the parties and Frey and Hoffman employed an engineer to perform the survey work necessary for the subdivision and paid therefor $436. That proposed subdivision was approved by the City of Sun Valley on March 21, 1977. Sun Valley Realty prepared a deed of trust, a deed of trust note, a seller's closing statement, and other loan documents which were delivered to Hoffman. Sun Valley attorneys prepared a lot sale agreement containing both subordination and deed release language and gave that document to Frey. None of the documents were executed by Sun Valley.

As aforesaid, the trial court found the above facts and concluded that a mutual understanding was reached. The findings are supported by substantial, albeit conflicting, evidence, and will not be disturbed on appeal Cougar Bay Co., Inc v. Bristol, 100 Idaho 380, 597 P.2d 1070 (1979). We agree with the lower court that those findings indicate the existence of an oral agreement between the parties. The district court further concluded that while there was an oral understanding for the sale of the property, there was failure to adequately comply with the statute of frauds and hence the oral agreement was unenforceable.

During the above recited events, Sun Valley had begun negotiations with another party for the sale of the entire resort assets, including the Ruud Mountain property and by mid-March, was actively involved in negotiations for such sale. On March 23, Conger telephoned Hoffman and urged completion of the deal as soon as possible. On April 8, Sun Valley sold all of its assets, including the Ruud Mountain lot. At that time neither the lot sale agreement nor any of the other closing documents had been signed by Frey or Hoffman. On April 10, Conger notified Hoffman that the property was no longer available and the $5,000 deposit was returned. On April 12, Frey and Hoffman signed the various documents, tendered the remainder of the down payment, and demanded that Sun Valley honor the alleged contract. That tender was refused.

An agreement for the sale of real property is invalid unless the agreement or some note or memorandum thereof be in writing and subscribed by the party charged or his agent. I.C. § 9-505(5). Failure to comply with the statute of frauds renders an oral agreement unenforceable both in an action at law for damages and in a suit in equity for specific performance. 72 Am.Jur.2d Statute of Frauds § 285 (1974); 73 Am.Jur.2d Statute of Frauds § 513 (1974). See DeLuca v. C. W. Blakeslee & Sons, Inc., 174 Conn. 535, 391 A.2d 170 (1978).

The lot sale agreement was never signed by Sun Valley. Thus, for the oral agreement to be enforceable, there must exist a sufficient memorandum signed by the parties evidencing that agreement. The only document signed by both parties is the $5,000 deposit check (signed by payor Hoffman and endorsed by payee Sun Valley). 1 Although the majority of jurisdictions require that the memorandum be signed only by the party against whom enforcement is sought, this Court in Houser v. Hobart, 22 Idaho 735, 127 P. 997 (1912), has construed the Idaho statute to require both parties to a bilateral contract to sign the memorandum. Houser has consistently been reaffirmed by this Court. Rouker v. Richardson, 49 Idaho 337, 288 P. 167 (1930); Kerr v. Finch, 25 Idaho 32, 135 P. 1165 (1913). Accord, C. Forsman Real Estate Co. v. Hatch, 97 Idaho 511, 547 P.2d 1116 (1976).

Although no particular form of language or instrument is necessary to constitute a note or memorandum required by the statute, 72 Am.Jur.2d Statute of Frauds § 295 (1974), the essentials of the oral agreement must be contained in the writing(s). Remlinger v. Dravo Corporation, 94 Idaho 292, 486 P.2d 1005 (1971); Blumauer-Frank Drug Co. v. Young, 30 Idaho 501, 167 P. 21 (1917); Houser v. Hobart, supra. The memorandum must plainly set forth the parties to the contract, the subject matter thereof, the price or consideration, a description of the property and all the essential terms and conditions of the agreement. Pettigrew v. Denwalt, 431 P.2d 333 (Okl.1967). See, Gaskill v. Jacobs, 38 Idaho 795, 225 P. 499 (1924).

We note first that the $5,000 check, standing alone, is clearly insufficient since the only notation carried on that check is the phrase "Escrow Ruud Mtn. Lots." Frey-Hoffman contend, however, that a sufficient memorandum may be pieced together from that check, the Hoffman letter transmitted in the same envelope as the check and the lot sale agreement prepared by Sun Valley.

There appear to be three doctrines under which various jurisdictions allow unsigned writings to be read together with a signed writing: express reference in a signed writing to an unsigned writing, implied reference between a signed and unsigned writing and the physical connection of an unsigned writing to a signed one. 72 Am.Jur.2d Statute of Frauds §§ 371-374 (1974); 4 Williston on Contracts §§ 580-583 (3d ed. 1961).

As well noted by the trial court, Idaho follows the doctrine that an unsigned writing may be considered as part of the memorandum only where express reference to it is made in a signed writing.

"In order to render an oral contract falling within the scope of the statute of frauds enforceable by action, the memorandum thereof must state the contract with such certainty that its essentials can be known from the memorandum itself, or by a reference contained in it to some other writing, without recourse to parol proof to supply them." Blumauer-Frank Drug Co. v. Young, 30 Idaho at 505, 167 P. at 21.

Here the $5,000 deposit check makes no express reference to either the Hoffman letter or the lot sale agreement.

Further, even if we allowed the Hoffman letter to be considered as part of a signed memorandum because of the physical association between the endorsed check and the letter, those writings would not satisfy the statute of frauds. The letter does not sufficiently set forth the credit terms of the oral agreement between the parties. This does not mean that the oral agreement is incomplete, but only that the written evidence of that agreement is insufficient to satisfy the statute of frauds....

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