Newman v. Huff

• Decision Date: 19 April 1994
• Docket Number: No. 12A02-9210-CV-464,12A02-9210-CV-464
• Citation: 632 N.E.2d 799
• Parties: Jesse Claude NEWMAN and Jane Newman, Appellants-Plaintiffs, v. David Harreld HUFF, Thelma June Palmer, Cleis Perry, Laura Roberts, The Estate of Alta M. Henderson, Deceased, and Donald Alfred Jefferson as Executor of The Estate of Alta Marie Henderson, Deceased, Appellees-Defendants.
• Court: Indiana Appellate Court

Page 799

632 N.E.2d 799

Jesse Claude NEWMAN and Jane Newman, Appellants-Plaintiffs, v. David Harreld HUFF, Thelma June Palmer, Cleis Perry, Laura

Roberts, The Estate of Alta M. Henderson, Deceased, and

Donald Alfred Jefferson as Executor of The Estate of Alta

Marie Henderson, Deceased, Appellees-Defendants.

No. 12A02-9210-CV-464.

Court of Appeals of Indiana,

Second District.

April 19, 1994.

Rehearing Denied May 27, 1994.

George G. Ponton, Frankfort, for appellants.

Robert Little, Brookston, for appellees.

SULLIVAN, Judge.

In the spring of 1983, Alta Marie Henderson (Marie) told Jesse and Jane Newman (Newmans) that she wished to sell rental property located at 6002 Fullerton Avenue, Buena Park, California. ¹ Marie felt she could no longer manage or maintain the units due to declining health. Prior to speaking with the Newmans, Marie had investigated selling the property and had obtained an appraisal of $260,000. Marie explained that she preferred a purchase arrangement whereby she could receive monthly income for life because she believed a cash sale would impose detrimental tax consequences upon her.

On April 6, 1983, the Newmans agreed to purchase the property for the appraised amount (less a $16,000 commission), with $19,000 down and the balance of $225,000 payable by a note at prevailing interest rates. The note specifically required that interest only, as opposed to principal and interest, be paid in monthly installments of $2,062.50. The balance of the note was due in ten or fifteen years at the Newmans' option. Marie also agreed that, so long as she received timely monthly interest payments, the unpaid balance of the note would be forgiven upon her death. At this time, Marie declined to put this portion of the agreement in writing, but promised to do so after the real estate closing.

On January 3, 1984, the real estate transaction was closed. ² At the January 3 closing, Marie conveyed title to the Newmans by a grant deed. The Newmans immediately executed a note secured by a deed of trust to the trustee, Grover Escrow Corporation. The trustee was to reconvey title to the Newmans upon payment of the note. At this time, Marie re-acknowledged her commitment to release the trust deed to the Newmans upon her death. ³ Shortly thereafter, on January 19, Marie executed a will providing that the balance of the note "shall be at once and then forgiven" upon her death and that the Newmans would take the property "free and clear of any obligation to [Marie's] estate." CV464-Record at 73. A subsequent will, executed on April 4, 1986, ⁴ reiterated that Marie intended to honor a contractual obligation that the balance of the note arising from the sale of the Buena Park property be "given" to the Newmans "in accord with a contractual agreement made when [she] sold these units to Mr. Newman but never put in writing." CV464-Record at 111. The Newmans contend that this provision memorialized the representations Marie made when the Newmans agreed to purchase the property in April and which Marie confirmed at the January, 1984 real estate closing.

The Newmans regularly forwarded monthly interest payments to Marie through her conservator. The Newmans continued paying monthly interest installments until July, 1991, when they learned of Marie's death two months earlier. The Newmans ceased direct payments, ⁵ relying upon their understanding that the remaining debt was cancelled at Marie's death.

The Newmans appeal two decisions of the Clinton Circuit Court, now consolidated for review, ⁶ which effectively denied their claim based upon the alleged contract to take the Buena Park real estate free and clear of the outstanding promissory note at Marie's death. Pursuant to the pre-appeal conference, we address the following issues of the consolidated appeal:

I. Whether the Statute of Frauds, which renders oral contracts to make a will or to devise or bequeath property unenforceable, is satisfied by the April, 1986 Will of Alta Marie Henderson, executed in California, but alleged to have been subsequently revoked by a will probated in Indiana; and

II. whether the alleged contract, as a matter of law, failed for lack of consideration?

We reverse.

I. 1986 Will

The Newmans contend that the trial court erred in determining, as a matter of law, ⁷ that the 1986 Will fails to meet the requirements of the Statute of Frauds. The Estate argues that the 1986 Will lacks the specificity necessary to identify the terms, identities or obligations of the parties to the alleged contract. ⁸ The dispute centers upon the following provision in the 1986 Will "Further any note still owing to me or my estate by Jesse Claude NEwman [sic] and Jane Newman shall be given to Jesse Claude and Jane Newman as part of their bequest from my estate. It is my intention to collect this note which arises from the sale of 6002 Fullerton Ave[.] in the city of Buena Park. My executor shall be directed to reconvey the title to the trustor Jesse Claude Newman and Jane Newman. This gift is in accord with a contractual agreement made when I sold these units to Mr[.] Newman but never put in writing. I intend that this contractual obligation shall be honored." CV464-Record at 111.

The Statute of Frauds requires certain contracts to be in writing and to be signed by the party to be charged. I.C. 32-2-1-1 (Burns Code Ed.1980). A writing that sets forth the subject matter and terms of a contract with sufficient certainty, without recourse to parol evidence, satisfies the Statute of Frauds. National By-Products, Inc. v. Ladd (1990) 4th Dist. Ind.App., 555 N.E.2d 518. See also Smith v. Hunt (1912) 50 Ind.App. 592, 599, 98 N.E. 841 (in a contract action governed by the Statute of Frauds, a writing containing the terms of such contract sufficiently establishes the contract even if written after the contract was performed). Several writings may constitute a " 'written memorandum' " if each writing is signed by the party to be charged and if each writing indicates that it is related to the same transaction. Block v. Sherman (1941) 109 Ind.App. 330, 339, 34 N.E.2d 951 (applying Restatement of Contracts § 207, p 278 (1932) rule that a memorandum "may be any document or writing, formal or informal, signed by the party to be charged ..."). Further, it is well established that the "description of the subject-matter may be wholly or partially contained in an auxiliary writing, which, if referred to in such a manner as to establish the connection, becomes a constituent part of the memorandum...." Block, supra, at 335-36, 34 N.E.2d at 953 (quoting Pomeroy's Specific Performance of Contracts, 3 ed., § 90, p. 217).

The 1986 Will evinces the existence of an agreement between Marie and the Newmans without recourse to parol evidence. The 1986 Will references the sale of property located at 6002 Fullerton Avenue. The sale involved payment by promissory note. The identification of the Newmans as "trustor" suggests that title to the real estate was made subject to a deed of trust at the time of the sale. Ultimately, title to the property was to be reconveyed to the Newmans upon Marie's death as a means of carrying out a "contractual obligation" which Marie intended to honor. We accept, and the Estate does not seem to question, that the aforementioned documents related to the real estate transaction satisfy the Statute of Frauds. Similarly, there is no dispute that the real estate sale, promissory note, and trust arrangement had been consummated before the execution of the 1986 Will. ⁹

From our present vantage, however, it appears that all of the terms of the real estate contract were not reduced to a writing until, at the very earliest, Marie executed a will on January 19, 1984 ¹⁰ directing that the Newmans take the property free and clear of her estate. Prior to January 19, the contract was merely a "parol contract" and was unenforceable under the Statute of Frauds. National By-Products, supra, 555 N.E.2d at 520 (citing Sheldmyer v. Bias (1942) 112 Ind.App. 522, 45 N.E.2d 347, for the proposition that a contract leaving an essential term thereof to be shown by parol evidence is a parol contract).

However, by executing the will according to her promise, Marie memorialized that portion of her agreement ensuring that the Newmans would take title to the property free and clear upon her death. Marie had done all that was required of her to perform her agreement with the Newmans. Cf. In re Estate of Von Wendesse (1993) 1st Dist. Ind.App., 618 N.E.2d 1332, trans. denied. ¹¹ Although Marie made subsequent changes ¹² to her January 19, 1984 Will, up to and including the 1986 Will, the provision relating to the note forgiveness and the title reconveyance of the Fullerton Avenue property to the Newmans remained intact. Even if the 1984 Will were to be disregarded and even if the 1986 Will was revoked by a subsequent will, as the Estate now contends, the 1986 Will survives as a written memorandum of the contract between Marie and the Newmans, thus satisfying the Statute of Frauds. Cf. 72 Am.Jur.2d, Statute of Frauds, 303, p. 821 ("A will may serve as a memorandum of ... [a contract to devise] ... notwithstanding that it is not a valid will or is inoperative as a will in favor of the claimant or has been revoked." (citations omitted)).

Furthermore, it is apparent from the face of the 1986 Will that Marie's obligation to give free and clear title to the Newmans arose at the time of, and in conjunction with, the sale of the property to the Newmans. Contrary to the Estate's position, the terms, identities, and obligations of the parties to the parties' contract are fully disclosed. When read in combination, the real estate transaction documents and the provision in the 1986 Will sufficiently establish a "written memorandum" of the contract satisfying the Statute of Frauds.

II. Consideration

We must now consider whether the contract was supported by consideration. The Newmans agreed to...