Schweiter v. Halsey
| Decision Date | 16 February 1961 |
| Docket Number | No. 35272,35272 |
| Court | Washington Supreme Court |
| Parties | Hans SCHWEITER and J. E. Scheweiter, Respondents, v. Wallace HALSEY and Marie Halsey, his wife, Appellants. |
S. Dean Arnold, Clarkston, for appellants.
Donald W. Moore, Clarkston, for respondents.
Halsey and wife (appellants) owned a large farm in Asotin county (partly tillable land and partly pasture land) subject to a mortgage. They listed this land for sale with Mason & Teague (brokers) of Lewiston, Idaho.
These brokers showed the property to Schweiter brothers (respondents), who were desirous of purchasing the tillable land only. Appellants were agreeable to selling that portion of the land but had no legal description thereof.
Respondents needed not less than fifty thousand dollars to finance the deal. The mortgagee was willing to increase the amount of the mortgage to fifty thousand dollars at six per cent interest. Respondents were so advised by the brokers, who also suggested that a loan might be obtained from a life insurance company at a lower rate.
On October 23, 1956, the parties executed an earnest-money receipt. Although the earnest-money receipt indicated that the legal description of the property to be sold was attached, there was, in fact, no legal description attached at the time the receipt was executed. The brokers had a legal description of the entire property, and respondents instructed them to retain respondents' copy of the receipt. Several weeks later, upon completion of a survey, the legal description of the tillable land was attached thereto by the brokers, and respondents were notified of this fact.
An agent of an insurance company viewed the land and requested additional security for a fifty-thousand-dollar loan. Respondents were willing to include in the mortgage certain other property owned by them.
On December 1, 1956, respondents, together with one of the brokers, went to Spokane with a legal description of all the land to be covered by the mortgage and made a formal application for a loan. Ten days later, the brokers were notified by the insurance company that the loan had been approved. They promptly notified respondents of this fact. Respondents asked that the closing of the transaction be delayed until after January first for tax reasons.
Meanwhile, the insurance company asked for a preliminary title report and a copy of the proposed deed from appellants to respondents. These were furnished, and later a proposed note and mortgage to be signed by respondents were furnished by the insurance company.
The parties had had discussions concerning construction of a fence between the tillable land and the pasture land. Appellants had orally agreed to construct such a fence but the work had been delayed by the weather. It was agreed through the brokers that part of the proceeds of the sale would be held by the brokers until the fence had been completed.
Appellants executed the deed and the brokers requested respondents to execute the note and mortgage. Respondent J. E. Schweiter went to the brokers' office and stated that his wife had refused to sign the papers. On January 11, 1957, respondents gave notice of rescission of the transaction and appellants promptly tendered performance, which was refused by respondents.
On April 26, 1957, respondents instituted this action for the purpose of obtaining a declaration of the rights and duties of the parties under the earnest-money agreement. Shortly thereafter, appellants sold the tillable land to a third party for seven thousand dollars less than respondents had agreed to pay for it.
Appellants filed an answer containing a cross-complaint in which they sought to recover the seven-thousand-dollar loss on the sale, plus other special damages.
The trial court rendered a memorandum decision holding that the earnest-money agreement was void because it contained no legal description of the real estate involved in the transaction.
Appellants challenge the following italicized portion of finding of fact No. 3:
"That said earnest money receipt, executed by plaintiffs on October 23, 1956, and prepared by Clark Mason, agent for defendants, does not contain a description of lands involved in this transaction, and at the time of its execution there was not attached to said earnest money agreement any legal description sufficiently definite to locate said real property without recourse to oral testimony.' (Emphasis ours.)'
Appellants also assign error to the entry of conclusions of law No. 1 and 2, reading as follows:
complaint and introduced as Plaintiffs' Exhibit No. 1, is void as being in violation of the Statute of Frauds;
Finally, appellants allege that the trial court erred in dismissing their cross-complaint with prejudice.
We shall dispose of the assignments in the order in which they are raised.
Finding of fact No. 3 is wholly supported by the evidence. It is undisputed that, at the time the earnest-money agreement was executed by the parties hereto, it neither contained nor had attached to it an adequate legal description of the lands involved in this transaction. The legal effect of attaching the description at a subsequent date will be discussed later in this opinion.
Conclusion of Law No. 1 is in accord with the law of this state. We have consistently held that an earnest-money agreement containing an inadequate legal description of the property to be conveyed is void as being in violation of the statute of frauds. Martin v. Seigel, 1949, 35 Wash.2d 223, 212 P.2d 107, 23 A.L.R.2d 1; Leo v. Casselman, 1947, 29 Wash.2d 47, 185 P.2d 107; Fosburgh v. Sando, 1946, 24 Wash.2d 586, 166 P.2d 850; Martinson v. Cruikshank, 1940, 3 Wash.2d 565, 101 P.2d 604
Conclusion of law No. 2 does not follow from conclusion of law No. 1 and is, therefore, erroneous. Although the earnest-money agreement was unenforcible and could not be made the subject of reformation, this does not entitle respondents to a return of their earnest money. At no time did appellants repudiate the contract. On the contrary, they tendered performance and did not otherwise dispose of the property until after respondents commenced this action. Under these facts, the case falls directly within the rule of Dubke v. Kassa, 1947, 29 Wash.2d 486, 187 P.2d 611, wherein we said:
Further in the opinion we also said:
'It does not seem to be, nor can it be, seriously urged that appellants sacrificed their right to retain the payment received, because they sold the property to a third person after the respondent had commenced this action.'
Unfortunately, neither party called the trial court's attention to the Dubke case, supra.
Browne v. Anderson, 1950, 36 Wash.2d 321, 217 P.2d 787, 789, involved a refusal by the prospective lessee to execute a lease after he had paid the prospective lessor five hundred dollars earnest money pursuant to a certain written memorandum signed by the lessor's authorized agent on her behalf. The action was brought by the prospective lessee to recover this earnest money. The trial court denied recovery and this court affirmed, quoting with approval from Johnson v. Puget Mill Co., 1902, 28 Wash. 515, 68 P. 867, the following:
In the Browne case, we also cited the Dubke case, supra, and reaffirmed its rationale.
Thus it appears that this court, in accord with the great weight of authority (169 A.L.R. 187), has consistently denied recovery of earnest money paid under a void or unenforcible agreement to convey real estate where the buyer has defaulted and the seller was at all times ready, able and willing to consummate the transaction.
Conclusion of law No. 3, to the effect that appellants' cross-complaint should be dismissed with prejudice, was not erroneous.
Appellants cite Hedges v. Hurd, 1955, 47 Wash.2d 683, 289 P.2d 706, 708, in support of the proposition that even though an earnest-money agreement may be insufficient to meet the legal test for specific performance, it...
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