Vendig v. Traylor, 20318

• Decision Date: 30 July 1980
• Docket Number: No. 20318,20318
• Citation: 604 S.W.2d 424
• Parties: Lee D. VENDIG, Appellant, v. Charles R. TRAYLOR, Jr., et al., Appellees.
• Court: Texas Court of Appeals

Page 424

604 S.W.2d 424

Lee D. VENDIG, Appellant, v. Charles R. TRAYLOR, Jr., et al., Appellees.

No. 20318.

Court of Civil Appeals of Texas, Dallas.

July 30, 1980.

Rehearing Denied Aug. 20, 1980.

Donald W. Davis, Collie, McSpedden, Robert & Davis, Dallas, for appellant.

Willis E. Kuhn, Moore & Peterson, Dallas, for appellees.

Before AKIN, CARVER and STOREY, JJ.

AKIN, Justice.

This is an appeal from a summary judgment granted the defendant in a suit for breach of a land sale contract. Plaintiff sued on three separate theories: contract, fraud and the Deceptive Trade Practices Act. Because plaintiff's testimony of an oral modification of the written contract is barred by the Statute of Frauds, we affirm as to the contract theory of recovery. As to the fraud and Deceptive Trade Practice Act theories, we reverse because they were not "expressly presented" to the trial court in the motion for summary judgment.

This suit concerns two lots, upon each of which exists a house, referred to as "18A" and "18B", and owned by appellee Traylor. El Centro Savings & Loan Association held mortgages on both lots to secure interim loans that financed the construction of the houses. Because of Traylor's inability to make payments on the loans to El Centro, both lots were posted for foreclosure on September 5, 1978. Traylor contracted to sell lot 18B to Vendig upon the condition that Vendig obtained financing by August 18, 1978. That date was later changed in writing to August 28, with both parties initialing the change. Appellant Vendig asserts that a subsequent oral modification extended the time for obtaining financing until September 1. Vendig alleges that he obtained the financing by September 1, but that Traylor advised him at that time that he would only sell Lot 18B if Traylor would also purchase or finance Lot 18A. Vendig refused to purchase both lots. Traylor subsequently sold both lots to a third party prior to the September 5th date set for the foreclosure sale.

Vendig then instituted this action for damages for breach of contract, fraud, and violations of the Deceptive Trade Practice Act. Traylor moved for summary judgment on the ground that Vendig's right to purchase the property terminated on August 28 because Vendig had not obtained a commitment for permanent financing on that date as required by the terms of the written contract. The trial court granted the motion on the ground that Vendig's testimony as to the oral extension was barred by the Statute of Frauds and thus the testimony did not raise a fact issue as to an extension of the time for fulfilling the financing contingency. Consequently, the trial court held that Vendig's right to purchase the property terminated on August 28, 1978, as provided by the terms of the written agreement. From this judgment, Vendig appeals.

Contract Action

Vendig admits that he had not fulfilled the financing contingency by August 28 but he argues that the oral agreement between him and Traylor that he would have until September 1 to obtain a loan commitment to finance the purchase of "lot 18B," raises a fact issue as to an oral modification of the written agreement. We cannot agree that this oral modification precludes summary judgment. We hold that the requirement that financing be obtained by August 28, was a material provision of the written land sale contract, and thus testimony of a subsequent oral modification of that provision is barred by the Statute of Frauds.

Contracts for the sale of land in Texas must be written to be enforceable. Tex.Bus. & Com.Code Ann. § 26.01 (Vernon Supp.1980). However, not all modifications of such contracts need be in writing. After reviewing the authorities on this question, we conclude that an oral modification of a written contract is enforceable under the Statute of Frauds only if the modification does not materially alter the obligations imposed by the underlying agreement.

The alteration of the underlying obligation as affecting enforceability of an oral modification under the Statute of Frauds is analyzed in detail in Dracopoulas v. Rachal, 411 S.W.2d 719 (Tex.1967). There the court considered the Statute of Frauds provision of the Real Estate License Act, which requires that agreements for a commission for the sale of land be written. Tex.Rev.Civ.Stat.Ann. art. 6573a, § 28 (Vernon 1969). The court noted the general rule that the time for performance can be extended by an oral agreement, but held that an agreement, providing for a realtor's commission if a home is sold within a ninety day period, may not be orally extended for an indefinite time. The court reasoned that the rights and obligations created by the written contract required the broker to find a buyer within 90 days in order to earn his commission and allowed the home owner to find his own buyer after the 90 day period, without incurring liability for the commission. Thus an indefinite extension of the 90 day contract period materially affected the broker's right to a commission and was unenforceable because it was not written. Id. at 722. This rule is consistent with a very early decision holding that the time for performance of a written agreement may be modified orally but where the terms of the extension differ so much as to make the modification an entirely new contract, the oral modification is unenforceable under the Statute of Frauds. Bullis v. Noyes, 75 Tex. 540, 12 S.W. 397 (1889). Thus we conclude that where a contract is required to be written under the Statute of Frauds, an oral modification is enforceable only where there is no material alteration of the obligation underlying the contract. Smith v. Hues, 540 S.W.2d 485, 490 (Tex.Civ.App.-Houston (14th Dist.) 1976, writ ref'd n. r. e.); Grayson Enterprises, Inc. v. Texas Key Broadcasters, Inc., 390 S.W.2d 346, 352 (Tex.Civ.App.-Eastland 1965, writ dism'd).

In order to determine whether the modification is a material alteration of the written obligation, we must examine the contract as in Dracopoulas. In construing a contract we examine it in light of the meaning that would be attached to the integration by a reasonably intelligent person acquainted with all operative usages and knowing all the circumstances prior to, and contemporaneous with, the making of the integration, excluding oral statements of the parties as to what they intended it to mean. City of Pinehurst v. Spooner Addition Water Co., 432 S.W.2d 515, 518 (Tex.Civ.App.-1968). The written agreement in this case was signed by the parties on August 13, 1978, and provided for closing on September 1, 1978. The contract, a printed form, was subject to the purchaser obtaining financing on terms acceptable to the purchaser and gave seller the right to terminate the contract if purchaser did not secure a loan approval within 15 days. Loan approval was to be evidenced by a commitment letter to the purchaser from a lending institution delivered, on or before noon, August 18, 1978. A typed provision at the end of the printed terms provided that, "Purchaser to deliver commitment (leter) or release of financing contingency to title company on or before NOON 8-18- 78 or this contract shall be null and void." The parties later agreed in writing to extend Vendig's time to obtain financing until August 28. The date on the written contract was crossed through and changed to 8-28-78. The change waS initialed by both parties.

The facts we consider controlling are: (1) the property was posted for a foreclosure sale on September 5; and (2) beneath the printed terms of the form contract a provision was inserted which stated that the contract would be null and void if the financing contingency was not fulfilled by August 28. The August 28 date was an integral and material part of the contract because Traylor had only until September 5 to consummate the sale. If the financing contingency was not fulfilled by August 28, the written agreement gave appellee the right to do exactly what he in fact did: find another purchaser before the September 5 date set for the foreclosure sale. In our view, fulfillment of the financing contingency by August 28 was an essential part of the underlying obligation of the contract. Because Traylor was faced with a foreclosure sale on September 5, the essence of the contract was not merely a sale, but a sale before foreclosure. Thus, it was a crucial part of the contract that it become binding, if at all, by August 28. If the financing contingency was not fulfilled, Traylor would have time to find another buyer prior to the September 5 date for the foreclosure sale. Consequently, that requirement could not be modified by an oral agreement permitted by the Statute of Frauds and the contract terminated by its express terms on August 28.

Vendig contends, nevertheless, that the financing contingency merely creates a right of termination in Traylor and in the absence of an exercise of that right, the contract creates a binding obligation on both parties. In this respect he points to the following language in the contract:

1. The Purchase price for the property is $225,000.00, Payable as follows:

a. $225,000.00 in cash, of which $10,000.00 is deposited herewith by Purchaser with Seller, receipt of...