Citation. 1997 ND 179; 568 N.W.2d 920, 1997 N.D. 197
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Plaintiff Johnson Farms and Defendants George and Donna McEnroe entered into an agreement whereby Defendants would convey almost 60 acres of land to Plaintiff in exchange for like-kind property. After about half of the land had been conveyed, Defendants reneged on the agreement.
Synopsis of Rule of Law.
Where part performance of an oral agreement has occurred, the statute of frauds does not apply, and a court can therefore order specific performance of the agreement.
Facts.
Plaintiff and Defendants agreed that Defendants would convey approximately 60 acres of farmland to Plaintiff for $9,000 per acre. Defendants, wishing to avoid capital gains taxes, did not want money, but rather, they insisted on taking other “like-kind” property in exchange for their farmland. Plaintiff was able to locate one parcel, which it conveyed to Defendants for about half of their land. The parties then decided to convert their sale contract into an option contract to be exercised by Plaintiff on or before April 1, 1995. This allowed Plaintiff more than a year to locate more like-kind property. However, the search turned up no other properties. Near the deadline to exercise the option, Bert Johnson of Johnson Farms met with Tom McEnroe, the son of Defendants. Bert Johnson told Tom McEnroe that Plaintiff was prepared to pay the money for the remainder of the property and asked if Defendants wanted the money or would extend the option. Tom McEnroe consulted his father an
d reported that he did not want the money. Instead, the option would be extended. After April 1, 1995, when the option should have expired, the parties continued to search for suitable land. At that time, assuming that the sale would be completed, Plaintiff expended about $6,500 to have the remaining property platted. Eventually, the relationship between the parties deteriorated when Defendants learned that a new event center would be constructed on land directly to the west of their property. Defendants asked Plaintiff to release some of the remaining land from the agreement so that Defendants could sell it as commercial property, and Plaintiff refused. Defendants then informed Plaintiff that they were no longer interested in completing the transaction. Defendants claim that Plaintiff’s rights expired on April 1, 1995, under the terms of the option.
Issue.
Has Plaintiff raised genuine issues of material fact in support of its allegation of an oral contract and partial performance of that contract to remove it from the statute of frauds?
Held.
Yes. Acts constituting part performance of an oral contract making it enforceable include: paying the contract price, taking possession of the property, and making improvements. The existence of an oral contract is a question of fact, and Plaintiff has alleged it made a partial payment through the transfer of the Rychart property, improved the property by having part of the remaining property platted, and was lulled into not placing money into escrow by the actions of the defendants. These are facts making the granting of summary judgment inappropriate.
Discussion.
The statute of frauds cannot be used to defraud, meaning that the defendants cannot hide behind the statute of frauds in order to back out of one deal in order to enter into a better one.
