Pierce v. Clarke

• Court: Minnesota Supreme Court
• Writing for the Court: BUCK, J.
• Citation: Pierce v. Clarke, 71 Minn. 114, 73 N.W. 522 (Minn. 1898)
• Decision Date: 07 January 1898
• Docket Number: 10,720 - (174)
• Parties: J. HOMER PIERCE v. ROSS CLARKE

73 N.W. 522

71 Minn. 114

J. HOMER PIERCE v. ROSS CLARKE

Nos. 10,720 - (174)

Supreme Court of Minnesota

January 7, 1898

Appeal by defendant from an order of the district court for Ramsey county, Brill, J., denying his motion for a new trial after findings and order for judgment in favor of plaintiff for $6,750 and interest. Reversed.

SYLLABUS

Statute of Frauds -- Contract for Sale of Land -- Assignment of Mortgage, Payment of Which Had Been Guarantied -- Foreclosure -- Agreement with Guarantor -- Principal and Agent.

The defendant had guarantied the payment of a certain note secured by a real-estate mortgage, which guaranty was made as an inducement for its sale to a third party. Subsequently this note, with the guaranty and mortgage, were transferred to a fourth party, P., who, upon default in the payment of the note, commenced to foreclose the mortgage, whereupon the defendant and P., owner of the mortgage, entered into an agreement, by the terms of which P. was to continue the foreclosure proceedings, bid off the property for the full amount of the indebtedness, and, whenever the defendant should pay the amount so bid, then P. would convey the premises to the defendant, or assign to him the certificate of mortgage sale, but that the personal obligation of the defendant on the guaranty should still continue, as though no such foreclosure sale had been had. This agreement was in writing, signed by the defendant, but not by P. personally but only by his agent, not so authorized in writing. After the mortgage was duly foreclosed and the property bidden off according to the terms of the agreement, P. sued defendant upon the same to recover a personal judgment against him upon his guaranty. Held, that the agreement was within the statute of frauds, as being one for the sale of land, or an interest therein, and not subscribed by P., or his lawful agent, thereunto authorized in writing.

Statute of Frauds -- Oral Contract Void -- Hagelin v. Wacks, 61 Minn. 214, Corrected.

An erroneous statement of the law in Hagelin v. Wacks, 61 Minn. 214, to the effect "that the statute of frauds does not declare oral contracts as to estates or interests in lands void, but merely nonenforceable by action," corrected and overruled.

Bishop H. Schriber, for appellant.

The agreement of June 17, 1893, upon which the plaintiff bases his rights in this case, is void under the statute of frauds, for the reason that it is a contract for the sale of land, and is not in writing and subscribed by the party by whom the sale was to be made, or by his lawful agent thereunto authorized in writing.

The alleged agreement attempted to provide that Samuel B. Pierce should purchase a tract of land for a certain sum of money, and that he would thereafter convey it to the defendant Ross Clarke, upon the payment by Clarke of the amount of the purchase price and interest. If Samuel B. Pierce had sold the land to a third person after the purchase at the foreclosure sale would he have had a cause of action against the defendant Clarke? If the land had been taken from Pierce on attachment or execution could he have had his action against Ross Clarke? In other words, is this action in any way different from an ordinary action of specific performance brought by vendor against vendee? At once upon the foreclosure sale the interest of Samuel B. Pierce was changed from a chose in action to an interest in the real estate which would be subject to the lien of any attachment or docketed judgment. G.S. 1894, § 6045.

The English statute of frauds, which has been adopted in every one of the United States, except Colorado, Louisiana, Michigan, Minnesota, Nebraska, New York, Pennsylvania, Tennessee and Wisconsin, provides that no action shall be brought upon any contract for the sale of lands unless the agreement is in writing and signed by the party to be charged therewith, or by some other person thereunto by him lawfully authorized. The several states named, with the exception of Louisiana, Pennsylvania and Tennessee, have adopted the New York statute, which differs from the English statute in making a contract for the sale of lands absolutely void unless the contract is in writing and subscribed by the party by whom the sale is to be made, or by his lawful agent thereunto duly authorized in writing. 2 R.S. (N.Y.) p. 1885, § 8; G.S. 1894 (Minnesota) § 4215. There are therefore three distinctions between the English statute and our own: (1) The English statute is merely a rule of evidence and does not go to the validity of the contract; (2) the English statute requires a signing by the party to be charged, while our statute requires a signing by the vendor; (3) the English statute does not require the authority of the agent to be in writing while ours does.

In those states having statutes similar to our own it has been uniformly held that, unless subscribed by the vendor, the agreement is absolutely void. Brandeis v. Neustadtl, 13 Wis. 142. In such states it has also been held that the contract must be signed by the vendor. Scott v. Bush, 26 Mich. 418, 29 Mich. 523; Colgrove v. Solomon, 34 Mich. 494; Liddle v. Needham, 39 Mich. 147; Maynard v. Brown, 41 Mich. 298; McWhorter v. McMahan, 10 Paige, 386; Townsend v. Hubbard, 4 Hill, 351; Champlin v. Parish, 11 Paige, 405; Frazer v. Ford, 39 Tenn. 464; Brandeis v. Neustadtl, supra.

In the present case the party making the sale was Samuel B. Pierce. He never subscribed his name to the agreement personally. It was subscribed by Charles H. Clark, who had no authority in writing from Samuel B. Pierce to do so. In effect therefore the instrument is to all intents and purposes the same as if the name of Samuel B. Pierce did not appear thereon, and it is therefore absolutely void.

The case of Veazie v. Morse, 67 Minn. 100, is an authority exactly in point in favor of appellant and is conclusive of the present case. In it every essential point in the present case was passed upon by this court. The only difference in the facts is that in Veazie v. Morse the agreement was oral, while in the present case there was a written agreement, but it is void because not signed by the vendor nor his agent thereunto authorized in writing.

Stringer & Seymour, for respondent.

The agreement between Samuel B. Pierce and Ross Clarke is in no sense a contract for the sale of lands, but is in the nature of a mortgage. Heaton v. Darling, 66 Minn. 262. Before the foreclosure sale Munch held the title in fee and Pierce had a lien on the premises. Appellant Clarke, as guarantor, upon the payment of the debt would have been entitled to all of the securities held by Pierce. After the foreclosure sale Mr. Pierce still had only a lien on the premises to secure his debt. Munch's interest was eliminated by the foreclosure, and Clarke took his place. As against Clarke, Samuel B. Pierce acquired no ownership of the lands at the foreclosure sale (except mere record title) other than he had before such sale. The contract was to pay a debt if Pierce would adopt a certain line of conduct, which he did, in reliance upon appellant's promise. The relation of vendor and vendee did not, and could not, exist between appellant Clarke and Pierce; the very object of the contract was that Pierce should not, as against Clarke, acquire title to the property.

But, if the court should be of the opinion that the contract was one for the sale of land, the contract would still be enforceable against appellant Clarke, because it has been wholly performed on the part of Pierce, and there is no way by which Pierce or his successor in interest could be put in the same position in which he was before the sale.

The case of Veazie v. Morse, 67 Minn. 100, is not in point because: (1) In that case the defendant guarantied only the collection of the notes, and hence it was necessary to exhaust the security before attempting to enforce the guaranty; in this case the guaranty was of absolute payment. (2) In Veazie v. Morse the promise was oral, whereas in this case it was written. (3) In Veazie v. Morse the oral agreement was that, if the plaintiff would foreclose the mortgage and bid in the property for the full amount due, the defendant would pay the plaintiff the amount due on the notes and the costs of foreclosure, in case of no redemption, and the property was to be deeded to the defendant; in the present case the contract provides that the obligation between the parties shall remain precisely the same as if no sale or foreclosure had been had, and the terms and conditions of the note guarantied by appellant should remain in full force and the purchase of the premises should operate as payment only as far as it might concern the maker of the note, but not in so far as it might affect defendant Clarke. The assignment of the note from Samuel B. Pierce to the plaintiff carried with it the contract in question. Longfellow v. McGregor, 61 Minn. 494; Lahmers v. Schmidt, 35 Minn. 434; Harbord v. Cooper, 43 Minn. 466.

OPINION

BUCK, J.

On February 23, 1892, one Herman Munch executed and delivered to E. A. Christian a promissory note, with interest coupons attached, whereby Munch promised to pay to the order of said Christian on ...