Lewis v. Starlin

• Decision Date: 25 February 1954
• Docket Number: No. 9228,9228
• Citation: 127 Mont. 474,267 P.2d 127
• Parties: LEWIS et al. v. STARLIN et al.
• Court: Montana Supreme Court

Page 127

267 P.2d 127

127 Mont. 474

LEWIS et al. v. STARLIN et al.

No. 9228.

Supreme Court of Montana.

Submitted Jan. 5, 1953.

Decided Feb. 25, 1954.

Raymond F. Gray, Ronan, argued the case orally for appellants.

F. N. Hamman, Polson, argued the case orally for respondents.

FREEBOURN, Justice.

This action was tried by the district judge sitting without a jury, the same being waived by the parties, as between Russell Starlin, appellant, and R. C. Peterson, respondent. The issues were made and framed by an amended cross-complaint of appellant, the answer thereto of respondent, and appellant's reply to such answer. Judgment was rendered in favor of Starlin and against Peterson for $207. Dissatisfied with the amount allowed him, Starlin appealed.

It is alleged in Starlin's amended cross-complaint that Starlin was declared by the district court to be incompetent on April 25, 1950, and restored to competency on October 17, 1950, and that on September 8, 1949, Peterson secured a check from Starlin for $1,000 for which Peterson did not give any consideration to Starlin. Further that Peterson 'took and carried away' three hundred bushels of grain belonging to Starlin of the value of $207 and that Starlin's demands that the check be returned and the grain paid for have been refused by Peterson.

Peterson's answer to the amended cross-complaint admits he received the $1,000 check and asserts it was the down payment on a purchase of land under an oral agreement which Starlin 'failed and refused' to carry out. Peterson also admits receiving 6,670 pounds of grain (oats) allegedly at a price of $2.35 per hundred pounds (total value $156.74) and he deposited the sum of $156.74 in court as and for the price of such oats.

It seems clear from the testimony of Peterson and a real estate man, Higgenbotham, who handled the deal, although Starlin contends he remembers nothing about it, that on September 8, 1949, by oral agreement, Starlin and Peterson entered into a deal whereby Peterson sold Starlin certain land for the price of $4,500, of which price $1,000, evidenced by the check in question, signed by Starlin, and dated September 8, 1949, was paid down and the balance of $3,500 was to be paid at the rate of $500 a year. A written contract was to have been entered into the following week covering the transaction. Such contract was never entered into and there was evidence to the effect that failure to do so was because of Starlin's refusal so to do.

Starlin contends that he is entitled to the return of the $1,000, evidenced by the check dated September 8, 1949, and paid under such oral agreement to sell and buy said lands, because such agreement was not in writing and therefore invalid. For the same reason he contends it was error not to sustain his demurrer to Peterson's answer and to permit, over his objection, evidence of such oral agreement to go into the record and be considered by the trial court.

It is Starlin's position that the oral agreement under which the $1,000 was paid is invalid because no note or memorandum in writing was signed by him, as required by R.C.M.1947, §§ 13-606, 74-203 and 93-1401-7. These sections provide that agreements for the sale of real property are invalid unless some note or memorandum thereof be in writing, and subscribed by the party charged or by his agent.

The $1,000 check is an ordinary filled in, signed and endorsed bank check with the additional words 'payment land' written upon it. It is insufficient to constitute the written 'note or memorandum' required by the sections of the statutes cited above for it does not contain all the essentials of the agreement between Starlin and Peterson, thereby necessitating resort to oral evidence to prove such essentials, and the oral agreement made between Starlin and Peterson is, therefore, unenforceable. Dineen v. Sullivan, 123 Mont. 195, 213 P.2d 241.

This action, however, is not one which seeks to enforce such oral agreement. It is an action to recover an advance, down, or partial payment of money made upon the total purchase price of the land under an oral or parol agreement, after failure on the part of the purchaser to follow out the terms of such oral agreement. Peterson, therefore, had the right to set up and disclose what the facts surrounding such payment actually were, as a defense to Starlin's claim, and the trial court properly overruled the demurrer to his answer alleging such facts and the objections to evidence showing such facts. Perkins v. Allnut, 47 Mont. 13, 130 P. 1; Arnold v. Genzberger, 96 Mont. 358, 31 P.2d 296.

Then too, R.C.M.1947, § 13-713, provides: 'A contract may be explained by reference to the circumstances under which it was made and the matter to which it relates.'

The policy of the law is to compel parties to live up to their agreements and not to encourage them in their violation, and one who makes an advance or down payment, under an oral or parol agreement, upon the purchase price of real property, and then fails to live up to such agreement, unless he can show facts and circumstances upon which, in equity and good conscience, he should have relief from consequences of his own default, cannot recover back such advance or down payment. Cook-Reynolds Co. v. Chipman, 47 Mont. 289, 133 P. 694; Clifton v. Willson, 47 Mont. 305, 132 P. 424; Fratt v. Daniels-Jones Co., 47 Mont. 487, 133 P. 700; Suburban Homes Co. v. North, 50 Mont. 108, 145 P. 2.

The law as set forth in the cases cited applies with the same vigor to contracts involving the sale of personal property and the sale of real property. Ellinghouse v. Hansen Packing Co., 66 Mont. 444, 213 P. 1087, 1088, where this court said: 'The rule applies to contracts generally and the obvious reason for its existence is that it is the policy of the law to foster the observance of contracts, and not to offer a premium for their violation.'

All of which leads up to the question: Can it be said from the evidence that Starlin has brought himself under the exception to the general rule that one, who has been guilty of a breach of his contract by stopping short of full performance, cannot ordinarily recover payments made prior to the breach?

This exception exists when from the evidence such a showing is made as would appeal to the conscience of a court of equity, and which in equity and good conscience entitles the defaulting purchaser to the return of payments made or some part thereof.

R.C.M.1947, § 17-102, provides: 'Relief in case of forfeiture. Whenever, by the terms of an obligation, a party thereto incurs a forfeiture, or a loss in the nature of a forfeiture, by reason of his failure to comply with its provisions, he may be revieved therefrom, upon making full compensation to the other party, except in case of a grossly negligent, wilful, or fraudulent breach of duty.'

In construing the words of the above statute, this court in Estabrook v. Sonstelie, 86 Mont. 435, 284 P. 147, 149, said: '* * * this court in the above-cited cases has placed a more liberal interpretation upon the statute and has announced the rule that a person may obtain relief under it in any case where he sets forth facts which appeal to the conscience of a court of equity.'

The evidence here, shows that the oral agreement and check for $1,000 were made on September 8, 1949. It was admitted by counsel for Peterson, and alleged in the amended cross-complaint, that Russell...