Collins v. Morris

⁷⁶⁸ EYLER, Judge. The parties to this appeal seek a final determination of their rights and obligations in certain real property. Appellant contends that this case should be analyzed as a conditional bequest of real property, which bequest lapsed for failure of the condition. Appellee contends that this case should be analyzed as an oral contract to convey real property under the statutes governing land installment contracts.

Md.Code, Real Property Article (RP), §§ 10-101 et seq. The trial court found that there was an oral contract to convey real property and granted relief to the purchaser by ordering a refund of all payments made under RP § 10-102(d), but refused to grant specific performance or other relief pursuant to RP §§ 10-105 and 10-108. While we hold that the trial court did not err in finding the existence of a valid contract, the record does not support the trial court’s finding regarding the total amount paid by appellee under the contract. For this and other reasons explained below, we shall vacate the judgment of the trial court and remand for further proceedings.

Facts Not surprisingly, the parties disagree as to when the relevant facts begin. Appellant, Earl Collins, Personal Representative of the Estate of Thomas Collins, states that the beginning point is when the decedent, accompanied by appellee, Gerald Paul Morris, went to a lawyer, Charles J. Janus, on October 17, 1991, for the purpose of preparing a will for decedent. According to appellant, the decedent explained to Mr. Janus that he wanted his friend, appellee, to have decedent’s house located at 2414 Shadyside Avenue, Suitland, Maryland, provided that appellee pay for it. Mr. Janus explained that the parties should execute a contract of sale, but the decedent refused to pay the quoted fee.

The decedent requested Mr. Janus to prepare a simple will, which he did, and it was executed by the decedent. The parties never entered into a written contract of sale. The will contained the following provision: ⁷⁶⁹ ARTICLE II. To my friend, Gerald Paul Morris, of Suit-land, Maryland, I give, devise and bequeath my house and land at 2414 Shadyside Avenue, Suitland, Maryland upon the following conditions: That Gerald Paul Morris is buying the aforesaid property for a contract price of $88,000.00 at a rate of $1,000.00 per month commencing November 1, 1991 plus the payment of all outstanding and ongoing property taxes.

If I die prior to the payment of all this money, then Mr. Morris can continue to pay $1,000.00 per month plus $85.00 interest per month and all outstanding property taxes to my personal representative as and for the residuary estate. When the entire sum is paid, my personal representative shall convey a deed to Mr. Morris acknowledging that he owns the property as sole tenant in fee simple. The Will was executed on October 17, 1991, and the decedent died in March, 1992. Beginning in 1990, and prior to the execution of the Will by decedent, appellee made payments to the decedent.

Appellee continued making those payments after execution of the Will. The payments were not always made at the same time in a given month, and payments were not made in all months. The parties dispute the amount of the total payments. In any event, appellee stopped making payments after September, 1995.

In November, 1995, appellant filed a complaint for repossession of the property in the District Court for Prince George’s County, seeking possession for nonpayment of rent for the months of September, October, and November, 1995. That case was dismissed by the court. On February 7, 1996, appellant filed this suit in the Circuit Court for Prince George’s County. In an amended complaint, appellant sought (1) a declaratory judgment with respect to the rights and obligations of the parties, (2) possession of the property pursuant to RP § 14-108.1, 1 (3) damages for breach ⁷⁷⁰ of contract, (4) an injunction to prevent occupancy of the premises by appellee, and (5) to prevent unjust enrichment, damages for the months in which the property was occupied by appellee without payment.

The beginning of the relevant facts, as perceived by appellee, was in 1990, when the decedent entered into an alleged oral contract with the appellee to sell the real property to appellee for the price of $100,000, payable at a rate of $1,000 per month, plus the payment of real estate taxes. In September, 1990, appellee began making payments and took possession of the property. On October 17, 1991, the decedent and appellee went to Mr. Janus so that the decedent could execute a will. The decedent told Mr. Janus about the contract at that time, and informed Mr. Janus that the contract price was $100,000 and that appellee had paid $12,000, leaving a balance of $88,000.

Mr. Janus suggested that the contract be put in writing, but the decedent did not want to pay the costs for preparation of a contract. A will was prepared, as stated previously. Appellee filed a counterclaim in the proceedings below, contending that there was an oral contract which was binding under the statutes governing land installment contracts. Appellee sought specific performance of the contract pursuant to RP §§ 10-105 and 10-108 2 or, in the alternative, rescission ⁷⁷¹ pursuant to RP § 10-102(f). 3 Appellee also included a count asserting malicious use of process based on the filing of the prior district court action.

The case was tried non-jury on November 22, 1996. The trial court, by memorandum opinion and order filed on July 22, 1997, and order filed August 14, 1997, ruled as follows. The court agreed with appellee and found that appellee and the decedent had entered into a contract for the sale and purchase of the subject property for a purchase price of $100,000 payable in $1,000 monthly installments. The court found that appellee should receive from appellant the sum of $42,345 in payments made, less the sum of $18,400 in fair rental value payments he should have made from October, 1995 through August 31, 1997, leaving a balance due to appellee in the amount of $23,945 as of August 31, 1997.

The court ordered that a lien be entered in favor of appellee against the real property in question. The court denied all other claims by both parties. Questions Presented The appellant presents a number of issues on appeal that we have rephrased as follows: 1. Was the trial court’s finding, that Gerald Morris and Thomas Collins had entered into a valid land installment contract, correct? ⁷⁷² a) Does the contract violate the statute of frauds? b) Are material terms of the contract so vague and uncertain as to render the contract unenforceable? c) Does the contract violate the rule against perpetuities?

In addition, appellee presents certain additional questions that we have rephrased as follows: 1. Did the trial court err in failing to grant appellee his attorney’s fees? 2. Was the trial court’s finding, that appellee had paid $42,345, clearly erroneous? 3. Did the trial court err in determining that appellant was entitled to an offset for the fair rental value of the property for a portion of appellee’s occupancy?

Discussion A. Appellee informs us that, while this appeal was pending, appellant filed a forcible entry and detainer action in the District Court for Prince George’s County and obtained judgment against appellee. Accordingly, appellee has vacated the premises and has abandoned his claim for specific enforcement under RP §§ 10-105 and 10-108. Thus, the remaining issues between the parties are the amount of refund, if any, owed to appellee, and whether the trial court should have awarded appellee his attorney’s fees. The parties agree that the former issue, and the one we address in this section, turns upon whether appellee and the decedent entered into a valid land installment contract within the meaning of RP § 10-101(b).

Specifically, if a valid land installment contract does exist, appellee is entitled to a refund of all payments made to appellant and the decedent without an offset for the fair rental value of the property during appellee’s occupancy. Spruell v. Blythe, 215 Md. 117 , 137 A.2d 183 (1957). If, by contrast, there is no valid land installment contract, any refund to appellee must be offset by the fair rental value of the property ⁷⁷³ for appellee’s entire period of occupancy. Szaleski v. Goodman, 260 Md. 24 , 271 A.2d 524 (1970); Maryland State Housing Co. v. Fish, 208 Md. 331 , 118 A.2d 491 (1955).

RP § 10-101(b) provides as follows: Land installment contract. — “Land installment contract” means a legally binding executory agreement under which (1) the vendor agrees to sell an interest in property to the purchaser and the purchaser agrees to pay the purchase price in five or more subsequent payments exclusive of the down payment, if any, and (2) the vendor retains title as security for the purchaser’s obligation. Appellant contends that the arrangement in question is not a “legally binding executory agreement” within the meaning of this subsection. In support of his position, appellant first argues that there was no written agreement of sale sufficient to satisfy the statute of frauds. See RP § 5-104. 4 Appellant explains that the attempt to convey the property by conditional bequest could not satisfy the requirement of a writing, and the statute was not satisfied by part performance because the payments were made pursuant to the bequest and not pursuant to a contract.

Second, appellant argues that the agreement was too vague and uncertain to be enforceable, and third, that the agreement, as found to exist by the trial court, violated the rule against perpetuities. 1. Preliminarily, we note that the purpose of the statute of frauds is the prevention of successful fraud by inducing the enforcement of contracts that were never in fact made. It is not to prevent the performance or the enforcement of oral ⁷⁷⁴ contracts that have in fact been made; it is not to create a loophole of escape for dishonest repudiators. Therefore, we should always be satisfied with “some note or memorandum” that is adequate, when considered with the admitted facts, the surrounding circumstances, and all explanatory and corroborative and rebutting evidence, to convince the court that there is no serious possibility of consummating a fraud by enforcement.

When the mind of the court has reached such a conviction as that, it neither promotes justice nor lends respect to the statute to refuse enforcement because of informality in the memorandum or its completeness in detail. Corbin on Contracts, § 22.1, pp. 703-04 (Rev. ed.1997). In this case, the existence of an oral contract was established by the testimony of appellant’s own witness, Mr. Janus, who was decedent’s counsel and the drafter of the will. On direct, Mr. Janus testified that, during a meeting of Mr. Janus, the decedent, and appellee, the decedent informed Mr. Janus that he was selling his house to appellee.

Mr. Janus testified that he advised the decedent to put the agreement in writing but that the decedent did not want to pay the cost of preparing a contract. Finally, he testified that the decedent decided to have a will prepared rather than a contract only because the preparation of a will was less expensive than the preparation of a contract. On cross-examination, Mr. Janus further testified that, at the meeting, it was revealed to him that the contract price was $100,000, and that $12,000 had been paid, leaving a balance of $88,000. He could not remember if he was so informed by the decedent or appellee, but he did remember that, at the very least, the decedent acknowledged that these facts were true.

Mr. Janus also testified that, as of the time of the meeting, appellee had moved onto the property. Appellee and another witness supplied the details that appellee had moved onto the subject property in the fall of 1990, and had begun making $1,000 monthly payments at that time. On the strength of this testimony, the trial court found that, prior to the drafting of the will, the decedent and appellee had entered into a contract for a ⁷⁷⁵ purchase price of $100,000 payable in $1,000 monthly installments, $12,000 of which had been paid as of the time the will was drafted. Appellant offered no evidence to contravene these basic facts.

Instead, appellant makes arguments that are almost wholly legal in nature. Appellant argues that a will is ambulatory and has no legal effect until the testator’s death. According to appellant, the decedent could have revoked the terms of his will any time up to the date of his death with no legal repercussions. Thus, appellant asserts, a bequest in a will cannot constitute and is “completely different from a contractually binding memorandum sufficient to take a case out of the Statute of Frauds.” Contrary to appellant’s assertion, although a will is freely revocable anytime prior to the testator’s death, it still may constitute a memorandum of a collateral agreement sufficient to satisfy the statute of frauds.

See Corbin on Contracts, supra, § 22.6, pp. 735-36. Indeed, the will, on its face, describes the terms of a land installment contract between appellee and the decedent. Compare Chilcoat v. Reid, 154 Md. 378 , 140 A. 100 (1928) (devise of real property conditioned upon payments of support to the testator’s niece that bore no relationship to value of property). Moreover, the terms expressed in the will are consistent with the version of events testified to by Mr. Janus, and ultimately found by the trial court.

Arguably, the will does not expressly reference the contract that was found by the trial court; it does not reference a contract that was made in 1990 for the sale of the subject property for a purchase price of $100,000. 5 It is clear ⁷⁷⁶ from the testimony of the drafter of the will, however, that that fact is the fault of the drafter. In any event, there was sufficient evidence of part performance to satisfy the statute. 6 Specifically, there was evidence that appellee moved onto the subject property and began making monthly payments in the fall of 1990. At the time of the meeting with Mr. Janus, $12,000 had been paid. Thereafter, appellee continued making monthly payments up to and including August, 1995, including the payment of real estate taxes and expenditures for repairs.

Appellant nonetheless maintains that the payments made by appellee do not constitute part performance sufficient to satisfy the statute of frauds because they are not unequivocally, directly, and specifically referable to the contract. More specifically, appellant argues that the payments made prior to the decedent’s death could just as easily have been rent as payments on a land installment contract. Further, the payments made after decedent’s death are referable to the bequest in the will. The types of acts that will satisfy the doctrine of part performance are such that the court shall, by reason of the act itself, without knowing whether there was an agreement or not, find the parties in a position different from that which, according to their legal rights, they would be in if there were no contract.

Unitas v. Temple, 314 Md. 689, 709 , 552 A.2d 1285 (1989) (quoting J. Pomeroy, Specific Performance of Contracts, § 107, at 259 n. 2 (3d ed.1926), in turn quoting Dale v. Hamilton, 5 Ha. 369, 381 (1846)). ⁷⁷⁷ Mann v. White Marsh Properties, Inc., 321 Md. 111 , 581 A.2d 819 (1990), a case cited by appellant, was a suit for specific performance of an oral contract for the sale of land. In that case, the Court of Appeals held that summary judgment was properly granted in favor of the seller when the purchaser’s sole avoidance of a statute of frauds defense was the contention that there had been part performance. The purchaser had argued that certain preparatory steps he had taken — obtaining Baltimore County’s approval of a percolation test and a building permit — were conditions precedent of the oral contract and, thus, constituted part performance. The Court noted that there was no dispute that the acts had been performed.

Rather, there were conflicting inferences to be drawn from those undisputed primary facts. The acts were consistent both with the purchaser’s contention that a contract existed, and the seller’s contention that the parties had not completed negotiating a contract. Under these circumstances, the Court ruled that the acts were not unequivocally referable to the contract and that summary judgment was properly granted based on the statute of frauds defense. In this case, appellant offered no