Shaughnessy v. Eidsmo

Brief Fact Summary. The Plaintiffs entered into an oral lease agreement with the Defendant for one year. The Plaintiffs contended that Defendant gave them an option to purchase at the end of the term and stated that he would give them a deed, which he refused to do.

Synopsis of Rule of Law. “Where, acting under an oral contract for the transfer of an interest in land, the purchaser with the assent of the vendor takes possession thereof or retains possession thereof existing at the time of the bargain, and also pays a portion or all of the purchase price, the purchaser or vendor may specifically enforce the contract.” Restatement Contracts Section: 197.

Facts. Plaintiffs, on April 5, 1943, by oral agreement, leased from Eidsmo (Defendant) a dwelling house and lot for a term of one year from May 1, 1943, at a rate of $47.50 per month with an option to purchase the property at the end of the term for a price between $4,750.00 and $5,000.00, minus a credit for the total rent paid for the lease term. The balance of the purchase price was to be paid in monthly installments of $32.50, inclusive of unpaid taxes and five percent interest per annum on the unpaid balance. The Defendant also orally agreed to sell Plaintiffs a stove for $119.50, payable in installments of $4.00 per month without interest. Plaintiffs took possession on May 1, 1943 and continued therein until April 30, 1944, paying a total of $570.00 during the term as rent and a total of $48.00 toward the purchase of the stove. Before the lease term was up, the Plaintiffs notified Defendant of their intention to exercise the option to purchase according to the terms, and several
times demanded of Defendant a contract for deed. The Defendant offered verbal reassurances. Plaintiffs were and are ready, willing and able to conform to the requirements of the option to purchase. The Plaintiffs continued in possession and from May 1, 1944 to May 1, 1945 they paid an additional $570.00 toward the purchase. When the lease was originally entered into there was a mortgage of $4,200.00 on the premises, which was not communicated to the Plaintiffs.
The Defendant contended that he gave no option, but that he assured Plaintiffs that at the end of the lease term they would have the opportunity to purchase the premises for a price in excess of $5,200.00, subject to a mortgage, on which the monthly payments were $32.00, and that Defendant would give Plaintiffs credit for the rent paid after making deductions for interest, taxes and insurance. The trial court found for the Plaintiffs and specified that Plaintiffs were entitled to a contract for deed on purchase price of $5,000.00, subject to a credit on said price for the gross sum of all rents and purchase money paid, with a provision that the balance of the purchase price should be paid in monthly installments of $32.50 each, inclusive of taxes and interest of five percent per annum.

Issue. The Court stated two issues:
Were the findings of the trial court supported by the evidence?
Were the oral agreements involved within the statute of frauds?

Held. Yes to “a”, No to “b”. The trial court’s findings were correct, but the doctrine of part performance took the oral agreement outside the statute of frauds. Affirmed.
According to Restatement, Contracts, Section: 197, “Where, acting under an oral contract for the transfer of an interest in land, the purchaser with the assent of the vendor [ (a) makes valuable improvements on the land or] (b) takes possession thereof or retains possession thereof existing at the time of the bargain, and also pays a portion or all of the purchase price, the purchaser or vendor may specifically enforce the contract.”
In cases of part performance, no specific proof of irreparable injury through fraud is required.
The inadequacy of damages in presumed in cases involving breach of a contract for sale and purchase of any interest for land. There is no adequate substitute for specific performance.
The question of whether the facts of a case meet the elements of part performance is a question for the trier of fact. In this case, the trial court, concluded that the Plaintiffs had met the elements of part performance, and unless clearly erroneous, the trial court’s findings must stand.

Discussion. This case follows the restatement version of part performance. The oral agreement was within the statute of frauds, unless taken out by the doctrine of part performance. These cases are very fact-specific and the trial court’s findings are given deference by appellate courts.