Key Design Inc. v. Moser
| Decision Date | 09 September 1999 |
| Docket Number | No. 66916-3.,66916-3. |
| Citation | 983 P.2d 653,138 Wash.2d 875 |
| Court | Washington Supreme Court |
| Parties | KEY DESIGN INC., a Washington Corporation, Appellant, v. Vince L. MOSER and Joni Moser, husband and wife, and the marital community composed thereof; and Creighton Kolbeck and Jane Doe Kolbeck, husband and wife, and the marital community composed thereof, Respondents. |
Millikan & Swanson, Ronald L. Weiss, Marysville, for Appellant.
Barney Bozeman, Seattle, for Respondents.
This is an action to enforce a real estate purchase and sale agreement. We are asked to overrule our rule that a contract for the sale of real property which does not contain a correct legal description of the property violates the statute of frauds. Additionally, we consider whether we should recognize an exception to the above rule where the parties admit in court documents to a legal description of the property inadequately described in the contract. Finally, we are asked to allow the reformation of the contract in this case due to mutual mistake.
We reaffirm the rule requiring that an agreement involving a sale or conveyance of platted real property must contain a correct legal description. We do not recognize a judicial admissions exception to that rule. We hold that the record does not support reformation of the contract due to mutual mistake. We affirm the trial court's rulings.
Vince and Joni Moser purchased the property that is the subject of this action, Vince's Fitness Center in downtown Everett, in August 1990. By mid-1996 the Mosers wanted to sell the fitness center. Mr. Moser approached Michael Miller, a patron of the center, about purchasing the gym's real and personal property. Mr. Miller was part owner and secretary of Key Design, Inc., a corporation which invested in real property. Mr. Moser and Mr. Miller negotiated the terms of the purchase of the fitness center during the last six months of 1996 and, in December 1996, Key Design presented Mr. Moser with an earnest money agreement on the real property and a purchase agreement for the gym's equipment.1 The earnest money agreement is titled "Real Estate Purchase and Sale Agreement" and is on a pre-printed form.
The agreement is signed by Mr. Miller, on behalf of Key Design, by Joni Moser, and by Vince Moser and states in pertinent part:2 REAL ESTATE PURCHASE AND SALE AGREEMENT (Commercial and/or Investment)
(WITH EARNEST MONEY PROVISION)
THIS IS A LEGALLY BINDING CONTRACT. READ BOTH FRONT AND BACK CAREFULLY BEFORE SIGNING.
[Left Blank]
1. PURCHASE PRICE. The total purchase price is ONE HUNDRED FORTY THOUSAND AND NO/100 dollars ($ 140,000.00) payable as follows:
[Left Blank]
2. FINANCING. The offer [X] is [ ] is not conditioned upon Purchaser obtaining financing....
3. CONTINGENCIES. This agreement is conditioned upon A SATISFACTORY BUILDING INSPECTION (NO STRUCTURAL DEFECTS, HAZARDOUS MATERIALS, ETC), OBTAINING A PURCHASE LOAN, AND SATISFACTORY REPORTS FROM FIRE AND BUILDING DEPT.
. . . .
5. CLOSING OF SALE. This sale shall be closed on or before MARCH 14, 1997. ...
. . . .
7. POSSESSION. Purchaser shall be entitled to possession ON OR BEFORE CLOSING. ...
. . . .
The agreement was signed by the Mosers on December 31, 1996. On the same day Key Design signed a separate agreement of purchase to buy the equipment at Vince's Fitness Center for $15,000 and put down $10,000 toward payment.
Mr. Moser testified by deposition that he considered the agreement just part of a negotiation process, not a legally binding agreement. He also was anxious to receive cash for the property and complained to Mr. Miller that he wanted to close the deal as soon as possible.
On or around February 1, 1997, Mr. Moser was approached by a second potential buyer of the property. On February 2, Mr. Moser signed an earnest money agreement, agreeing to sell the Fitness Center to Creighton Kolbeck for $185,000.
On February 3, 1997, Key Design paid the $500 earnest money due under the December 31, 1996 agreement.
In their answer, the Mosers and Kolbecks admit to the legal description of the property as stated in the complaint.
The Mosers and the Kolbecks moved for summary judgment on all of Key Design's claims and argued that the earnest money agreement between the Mosers and Key Design was unenforceable because it violated the statute of frauds in that it failed to set forth a legal description of the property. Key Design filed a cross motion for judgment on the pleadings, arguing the judicial admissions exception to the statute of frauds should be applied in this case.
The trial court found that the earnest money agreement between the Mosers and Key Design did not satisfy the requirements of the statute of frauds and did not contain all essential terms necessary for the formation of an enforceable agreement for the purchase and sale of real property. The trial court granted the defendants' motion, dismissing all of Key Design's claims and quieting title to the property in Creighton Kolbeck. Key Design appealed directly to this court, and we accepted review.
1. Should this court overrule Martin v. Seigel, 35 Wash.2d 223, 212 P.2d 107, 23 A.L.R.2d 1 (1949), and hold that the statute of frauds is satisfied if an agreement for the sale of property includes a description of the property by business name, street address, city or town, county, and state?
2. Should the court recognize a "judicial admissions" exception to the Martin v. Seigel rule and hold that a description of the property by business name, street address, city or town, county, and state is sufficient to satisfy the statute of frauds if the seller admits, in court documents, that the property, as legally defined, is the same as that described in the agreement?
3. Is the agreement subject to reformation, so as to add the legal description of the property, based on mutual mistake of the parties?
Appellant Key Design asks this court to overrule Martin v. Seigel. The trial court granted summary judgment to respondents Mosers and Kolbecks because it ruled unenforceable an earnest money agreement which violated the statute of frauds by failing to include an adequate legal description of the property at issue. Key Design asserts that the rule in Martin, which requires legal descriptions in agreements involving the conveyance of real property, is harsh and outdated and produces inconsistency and uncertainty. Consequently, in Key Design's view, the rule should be limited or changed.
The statute of frauds which governs real property states: "Every conveyance of real estate, or any interest therein, and every contract creating or evidencing any encumbrance upon real estate, shall be by deed." RCW 64.04.010. Prior to Martin, a line of cases elaborated on what this and other provisions of the statute of frauds require: "In a long line of decisions, we have held that, in order to comply with the statute of frauds, a contract or deed for the conveyance of land must contain a description of the land sufficiently definite to locate it without recourse to oral testimony." Martinson v. Cruikshank, 3 Wash.2d 565, 567, 101 P.2d 604, (1940) (). The Martin court applied this provision to earnest money agreements and further clarified the requirements of the statute:
In the interests of continuity and clarity of the law of this state with respect to legal descriptions, we hereby hold that every contract or agreement involving a sale or conveyance of platted real property must contain, in addition to the other requirements of the statute of frauds, the description of such property by the correct lot number(s), block number, addition, city, county, and state.
Martin, 35 Wash.2d at 229, 212 P.2d 107.
The rule in Martin v. Seigel has remained the law for fifty years. See also Schweiter v. Halsey, 57 Wash.2d 707, 359 P.2d 821 (1961)
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