LaRoque v. LaHood

ALPERT, Judge. Thomas Joseph “Joe” LaRoque, Sr., died on April 13, 1990. His widow Jean contends that before Joe died the ⁶²⁸ couple had orally agreed to transfer all of their individually held real property to each other as tenants by the entirety. There are two primary issues on appeal: (1) whether Jean’s unilateral conveyance of two farms from her name individually to the couple as tenants by the entirety constituted part performance sufficient to take the alleged oral agreement out of the Statute of Frauds, and (2) with respect to a certain business enterprise managed by the couple, whether the evidence presented established that this business was a partnership between Jean and Joe.

BACKGROUND Appellant Jean E. LaRoque [“Jean”] is the widow of the late Thomas Joseph LaRoque, Sr., [“Joe”,] her second husband, whom she married on September 8, 1988. Joe was killed by a cow on April 13, 1990. Upon Joe’s death, Thomas G. LaHood, Esq., was appointed Special Administrator of Joe’s estate, and was subsequently named as the Personal Representative of the estate. It is in the capacity of Personal Representative that Mr. LaHood acts as the appellee herein.

The background leading up to this litigation may be summarized as follows: Jean married her first husband, the late Thomas Wedding, in August of 1969. Together they ran a country store in Newburg, in Charles County, Maryland. In the course of their fourteen-and-one-half years of marriage, Jean bore Mr. Wedding two children: Kevin, who was 28 at the time of trial, and Chris, who was 21. Mr. Wedding died on February 13,1984, thereby leaving Jean with (as is relevant here) sole title to two pieces of real property: (1) “Oak Grove Farm,” which Mr. Wedding and Jean had purchased as tenants by the entirety in February, 1982, from Mr. Wedding’s grandmother, and (2) “Locust Grove Farm,” which Mr. Wedding had acquired prior to marrying Jean, ⁶²⁹ but which he devised to Jean solely in his will. 1 Jean had known Joe casually since 1974.

After the death of Mr. Wedding, Jean and Joe renewed their friendship. They began dating in the spring of 1984. Prior to the time that Jean and Joe had begun dating, Joe had been working to open a new and used truck sales, parts and repair business. To that end, on May 6, 1983 Joe acquired three parcels of land, comprising approximately 4.781 acres, in Charles County, Maryland.

Within a few months thereafter, Joe commenced construction of a large commercial building on part of that land. On August 23, 1983, he opened a commercial bank account in the name of “Newburg Truck Parts and Equipment,” of which account Joe was sole owner. By September, 1985, Jean and Joe had moved in together. About this time Joe was ready to open his business — which would become known as Newburg Super Truck Parts [“the business”] — but funds for inventory were lacking.

Seeking to assist Joe in getting the business off the ground, on September 10, 1985 Jean “put in” $100,000 of her personal funds by depositing same in the business’s commercial bank account. No promissory note was given for her “contribution.” The business opened its doors on September 16, 1985; in front of the business the couple had hung a neon sign reading “J & J,” which stood for “Joe and Jean.” By September, 1986, Jean’s name had been put on Joe’s personal bank account; by January 15, 1987, Jean had became a joint owner of the commercial bank account as well. On September 8, 1988, Joe and Jean married. As indicated above, Jean brought to the marriage two substantial pieces of realty titled in her name only, Locust Grove Farm and Oak Grove Farm.

In addition to owning the land on ⁶³⁰ which the business operated, Joe also brought to the marriage several other pieces of realty titled in his name only: on January 3, 1977, he had acquired two lots in a subdivision known as “Woodland Point,” in Charles County, Maryland; and on April 17,1980, Joe had purchased an additional four lots, totalling approximately 3.34 acres, these lots being located in Prince George’s County, Maryland. During the time that Jean and Joe were married, and during all times relevant to this litigation, both parties worked at and for the business, though neither derived any financial compensation therefrom. Testimony indicated that the parties jointly managed the office and maintained the books and accounts of that business. During the spring of 1989, Joe and Jean sought to increase the equity in Newburg Super Truck Parts 2 .

Correspondingly, on May 26, 1989, Jean “put in” an additional $30,000 to the business by depositing those funds into the business’s commercial bank account. On or about September 8, 1989, the couple went to a restaurant to celebrate their first wedding anniversary. What the couple discussed at that restaurant raises one of the two primary issues in the case sub judice. Jean contends that she and Joe agreed to title all of their property— including (as is relevant here) each parcel of their respective real property — as a tenancy by the entirety.

(Mr. LaHood, as personal representative of Joe’s estate and appellee herein, contends that such an agreement, if it occurred at all, is barred by the Statute of Frauds.) Nevertheless, and the couple’s alleged agreement notwithstanding, on or about December 21, 1989 Jean executed with Joe a deed, which deed conveyed Jean’s two farms from Jean as sole title holder to Jean and Joe as tenants by ⁶³¹ the entirety. The granting clause of this deed reads as follows: NOW, THEREFORE, THIS DEED WITNESSETH: That for no monetary consideration and in consideration of the love and affection held for her husband, the Grantor, Jean E. LaRoque, formerly Jean E. Wedding, does hereby grant and convey to and unto Jean E. LaRoque and Thomas J. LaRoque, as tenants-by-the-entire-ties ... [fee simple title to Locust Grove Farm and Oak Grove Farm]. In early 1990 the couple filed a joint 1989 federal tax return. Attached to this tax return was a form designated by the Department of the Treasury as the so-called “Schedule C.” Schedule C is captioned “Profit or Loss From Business (Sole Proprietorship); Partnerships, Joint Ventures, Etc.

Must File Form 1065.” On the top of the form Joe, as an individual, is listed as the sole proprietor of Newburg Super Truck Parts. And on April 13,1990, Joe — never having correspondingly retitled any of his real property into a tenancy by the entirety — was killed by a cow. On January 11, 1991, Jean filed suit in the circuit court for Charles County against Mr. LaHood (the appellee herein, as aforementioned) in which Jean sought (as is relevant here) (1) to have the circuit court declare that Jean and Joe had an enforceable agreement; she also prayed that the court should specifically enforce same, and (2) to have the circuit court declare that Newburg Super Truck Parts was a family partnership. Following an evidentiary hearing, the circuit court (Bowling, J.), inter alia and pursuant to an Order for Judgment dated September 16, 1991, (1) denied Jean’s complaint for a declaratory judgment that the parties had an enforceable agreement, (2) denied Jean’s complaint for specific performance regarding the alleged agreement, and (3) denied Jean’s complaint for a declaratory judgment that Newburg Super Truck Parts was a family partnership. ⁶³² Following a timely appeal by Jean, we are now asked to resolve two basic questions: I. Whether the deed to Locust Grove Farm and Oak Grove Farm from Jean as sole title holder to Jean and Joe as tenants by the entirety, which deed states that Jean’s consideration for the transfer of title is her love and affection for Joe, constitutes part performance of the alleged oral contract between them (sufficient to take the alleged oral agreement out of the Statute of Frauds), which contract called for each of them to transfer individually titled real property to both of them as tenants by the entirety? and II.

Based upon the evidence presented, whether the trial court erred in finding that Joe and Jean were not partners in a family business? We respond to each question in the negative, and therefore we shall affirm the trial court. THE LAW A. Jean contends that she and Joe had agreed to retitle all of their individually held real property as tenancies by the entirety. Jean further contends that, pursuant to and in reliance on that agreement, she proceeded to convey Locust Grove Farm and Oak Grove Farm to she and Joe as tenants by the entirety.

Mr. Lahood, as appellee herein, argues that the alleged oral contract is within the Statute of Frauds, and is therefore unenforceable. Jean counters that her actions in so conveying her farms constitute part performance, thus rendering the oral contract enforceable by removing it from the Statute of Frauds. While Jean and Mr. LaHood disagree as to its application, both parties agree that Unitas v. Temple, 314 Md. 689 , 552 A.2d 1285 (1989) is the dispositive precedent. We agree that TJnitas is indeed dispositive of this Statute of Frauds issue. ⁶³³ The facts in Unitas may be briefly summarized as follows.

In 1968, Dr. Raymond Rangle began dating Janet Temple, a woman who worked for him. Despite an abiding love for one another and a relationship which lasted over fourteen years, the couple never married, a fact which caused much distress to Ms. Temple. Several times during those fourteen years Ms. Temple became sufficiently frustrated at Dr. Rangle’s successful attempts at avoiding marriage, and, correspondingly, several times she broke off their relationship. Each time she subsequently returned to him.

The Court of Appeals noted, [Temple’s] concern over her status with [Rangle] became pronounced in March, 1982 because she had then reached her fortieth birthday and was still not married. This concern reached its zenith on 9/27/82 when [Temple] told [Rangle] in her most emphatic terms thus far that, since [Rangle] had not yet made any provisions for [Temple’s] future despite his past promises and since she was already 40 years old, she was leaving [Rangle] for good. For the next few nights, [Rangle] came to [Temple’s] house and tried to assure [Temple] and her parents that her fears were unfounded and that [Temple] didn’t have to worry about her pension or future financial security. Unitas, id. at 694-95, 552 A.2d 1285 (quoting trial court).

In addition, Temple and her parents testified that Rangle stated in unequivocal terms that if Temple would return to work and resume the couple’s social relationship, Rangle would make a will leaving his entire estate to Temple. Id. at 695 , 552 A.2d 1285 . Indeed, Temple subsequently returned to Rangle, stating that she did so because she loved him, she knew that he needed her, and because he said that he was getting his affairs in order preliminary to marriage. And, consistent with his alleged promises, Dr. Rangle signed — although improperly executed — a “will,” which essentially provided income to Temple for life.

Dr. Rangle also ordered the preparation of certain pre-nuptial documents, which conditionally gave his entire estate to Temple; once prepared, ⁶³⁴ however, these documents were never signed by Dr. Rangle. Thus, when Dr. Rangle suddenly died shortly thereafter, he left no proper writing that provided any money for Temple. Temple, wanting her fair share of Dr. Rangle's estate, sued. The circuit court, having considered all the facts set forth above, granted specific performance of the “will,” thereby providing income to Temple for life.

Both parties appealed — Temple, because she didn’t get Rangle’s entire estate, and Rangle’s Personal Representative [“Unitas”], because Temple had gotten anything at all. The Court of Special Appeals affirmed, holding, inter alia, that the trial court was not clearly erroneous in finding that but for Rangle’s promise to make Temple financially secure, Temple “ ‘would not have returned to [Rangle] as regards either relationship, vocational or social.’ ” 74 Md.App. [506] at 522, 538 A.2d [1201] at 1209. The court said that the foregoing finding of fact “clearly establishes the requisite degree of part performance.” Id. Unitas, 314 Md. at 697-98 , 552 A.2d 1285 (emphasis in original).

The Court of Special Appeals predicated its legal conclusion on the holding in Hamilton v. Thirston, 93 Md. 213 , 48 A. 709 (1901), to wit: Applying the test set forth in Hamilton ..., the [alleged act of part performance] ‘ “would not have been done unless on account of the [parties’] agreement.” ’ ... [T]he trial judge found that Dr. Rangle had agreed to make [Temple] financially secure if she would return to his employ and social life. [Temple] did indeed resume her employment and personal relationship with Dr. Rangle, making what was for her, under her then circumstances, a most critical decision. Unitas, 314 Md. at 698 , 552 A.2d 1285 (quoting Unitas, 74 Md.App. at 521, 538 A.2d 1201 ) (citation omitted here). Judge Wenner dissented from the majority’s holding. Rather than affirm the trial court, he would have reversed because Temple’s “acts evidence her love and desire to ⁶³⁵ marry Dr. Rangle and might well have been done without the existence of any contract.” Unitas, 314 Md. at 698 , 552 A.2d 1285 (quoting Unitas, 74 Md.App. at 533 , 538 A.2d 1201 ).

Unitas (as Personal Representative of Rangle’s estate), having lost at the Court of Special Appeals, then proceeded to the Court of Appeals. The issue that court was asked to decide was therefore simple, yet subtle: What is the nature of the part performance sufficient to remove an oral agreement from the Statutes of Frauds? Was it (as Temple asserted, and as the Court of Special Appeals had held) in the nature of causation, i.e., an oral contract is removed from the Statute of Frauds if the alleged contract causes the part performance? Or was it (as Unitas asserted, and as Judge Wenner maintained) in the nature of possessing an evidentiary component, i.e., an oral contract is removed from the Statute of Frauds if the alleged contract is evidenced by the part performance?

Therefore, with respect to the doctrine of part performance, the subtle distinction between the “causation” theory (i.e., the majority’s holding) and the “evidentiary” theory (i.e., Judge Wenner’s theory) may perhaps be summarized as follows: the causation theory focuses on the effect of the contract upon the one who partially performs; the evidentiary theory focuses upon the nature of the performance itself and whether such performance necessarily and unequivocally evidences the existence of an agreement. The Court of Appeals, in reversing the Court of Special Appeals, adopted the “evidentiary theory” advanced by Judge Wenner: It is generally of the essence of such an act (of part performance) that the court shall, by reason of the act itself, without knowing whether there was an agreement or not, find the parties unequivocally in a position different from that which, according to their legal rights, they would be in if there were no contract. ⁶³⁶ Unitas, 314 Md. at 709 , 552 A.2d 1285 (quoting Dale v. Hamilton, 5 Ha. 369, 381 (1846), as reported in J. Pomeroy, Specific Performance of Contracts § 107 (3rd ed. 1926) at 259 n. 2 (“Pomeroy”)) (emphasis added here). In so holding, the Court of Appeals quoted at length from Pomeroy. We find Pomeroy’s explanation instructive: In a suit to enforce the specific performance of a verbal contract embraced within the statute of frauds, two distinct facts are established by parol evidence — the acts of part performance, and the terms of the agreement itself.

According to the theory upon which equity proceeds, in such cases, the part performance must be first proved, in order to fulfill the condition precedent for letting in parol evidence of the agreement; and this is not a mere question of the order of proofs — it involves the very principle of the jurisdiction. As soon as a sufficient part performance is made out, the plaintiff may go on and show the terms of the verbal contract. There are, therefore, two distinct branches of parol