Case Title: Quenneville v. Buttolph

Citation: 175 Vt. 444, 2003 VT 82, 833 A.2d 1263

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 2003-09-05T00:00:00Z

Document:
Quenneville v. Buttolph (2002-333); 175 Vt. 444; 833 A.2d 1263

2003 VT 82

[Filed 05-Sep-2003]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.

                                 2003 VT 82

                                No. 2002-333

  Richard and Bettina Quenneville	         Supreme Court
  	
                                                 On Appeal from
       v.	                                 Addison Superior Court

  Thomas and Mary Buttolph, 	                 April Term, 2003
  Elizabeth Campbell and Karen Houghton

  Matthew I. Katz, J.

  Andrew Jackson, Middlebury, for Plaintiffs-Appellees.

  Charles S. Martin of Martin & Associates, Barre, for Defendants-Appellants
    Campbell and Houghton.

  James C. Foley, Jr. of Deppman & Foley, P.C., Middlebury, for
    Defendants-Cross-Appellants Buttolph.

  PRESENT:  Amestoy, C.J., Dooley, Johnson and Skoglund, JJ., and Allen, C.J.
            (Ret.), Specially Assigned

        
       ¶  1.  AMESTOY, C.J.   Defendants Elizabeth Campbell and Karen
  Houghton appeal the Addison Superior Court's decision extinguishing their
  claim to the Buttolph Farm and its owner corporation, Buttolph Farms, Inc. 
  Appellants Campbell and Houghton argue that the superior court erred in
  finding that no contractual relationship existed between them and the
  Buttolphs and in refusing to enforce the terms of the agreements they
  reached.  Co-defendants Thomas and Mary Buttolph cross-appeal the decision
  of the superior court ordering them, as the sole shareholders of Buttolph
  Farms, Inc., to convey the farm to plaintiffs Richard and Bettina
  Quenneville based on an oral agreement for the sale of the farm.  The
  Buttolphs argue that the Superior Court erred in finding and enforcing an
  oral agreement between the Buttolphs and the Quennevilles for the sale of
  the farm.  We affirm.

       ¶  2.  In late March 2000, cross-appellants Thomas and Mary Buttolph
  began negotiating with appellant Elizabeth Campbell, a Rutland accountant,
  for the sale of the Buttolph Farm, located in Shoreham, Vermont.  Campbell
  met numerous times with Mr. Buttolph over the next several weeks to discuss
  a sale and to examine the farm's financial and tax records.  Since the farm
  was held in "C" Corporation ownership by Buttolph Farms, Inc., upon selling
  the farm as real estate, the Buttolphs would incur double taxation that
  would consume an estimated 50% of the $500,000 sale price.  During her
  meetings with the Buttolphs, Campbell structured an offer advantageous to
  both parties: she would acquire the farm by purchasing its owner
  corporation Buttolph Farms, Inc., paying far less than the nominal asking
  price in the process, while at the same time providing the Buttolphs a
  greater return on the sale and avoiding the double taxation incurred by
  selling the farm as real estate. 
   
       ¶  3.  On April 7, 2000, Campbell gave Buttolph a check for $1,000 to
  demonstrate that, as her memo on the check said, "we're serious."  On April
  28, Campbell met with the Buttolphs and their accountant, John Chamberlain,
  to discuss the terms of the proposed deal.  The parties discussed a deal in
  which Campbell and Houghton would purchase the Buttolph Farms, Inc. stock
  with an owner-financed payment of $56,000, assume $200,000 of Yankee Farm
  Credit debt, permit Tom Buttolph's father to remain in his trailer on the
  property, and continue to carry his health insurance through the
  corporation.  Moreover, the Buttolphs would keep their cows, equipment, and
  the right to collect the value of Agrimark stock and USDA drought relief,
  expected to be worth $270,000 collectively.

       ¶  4.   On April 28, 2000 Tom Buttolph requested that Campbell prepare
  the following handwritten memo, which he signed: 

    4/28/00.  

    We agree to sell our stock in Buttolph Farms, Inc. to Karen
    Houghton and Liz Campbell for $56,000.  This sale is after we have
    taken possession of the cows, the feed the equipment, except for
    various small equipment (Grey Matter).  Details of this deal will
    be stipulated in a formal agreement.  To be reviewed and signed
    later.   
    T. Buttolph II
    /s/ Thomas Buttolph II

  On May 22, 2000 the Buttolphs' attorney sent a letter to the attorney of
  Campbell and Houghton denying the existence of any binding agreement
  between the parties.  At various points in their ongoing negotiations,
  Campbell and Buttolph also discussed the disposition of sundry farm
  equipment referred to as "grey matter."  Although the parties agreed that
  the value of the "grey matter" would be included in the overall sale price,
  the superior court found that their disputes about the exact items included
  in this list were never resolved.
   
       ¶  5.  Before the Buttolphs had started the negotiations with
  Campbell and Houghton, plaintiff-appellees, the Quennevilles, had looked at
  the farm for possible purchase.  Within a few days after their April 28
  meeting with Campbell, the Buttolphs began negotiating for sale of the farm
  with the Quennevilles.  The Buttolphs and Quennevilles met as many as six
  times to discuss the terms and structure of the sale.  The negotiations
  culminated in a July 6, 2000 meeting between the Buttolphs, Quennevilles,
  and their respective attorneys, during which, according to the superior
  court, the parties orally agreed to the terms of the sale.  Under those
  terms, the Quennevilles would purchase Buttolph Farms, Inc., thereby
  acquiring the farm itself, by assuming approximately $200,000 of Yankee
  Farm Credit debt, financing through Chittenden Bank an $80,000 payment for
  an unmortgaged 148 acre parcel of the farm, and paying a balance of $70,000
  to the Buttolphs.  This last payment consisted of $5000 that the
  Quennevilles had already paid in cash and a $65,000 seller-financed
  promissory note with a rate of nine percent and a five-year balloon note. 
  Although a written agreement was prepared by their attorneys, it was never
  signed, and the trial court found that only an oral agreement was reached
  between the parties.

       ¶  6.  In late May 2000, Mr. Quenneville planted corn at the Buttolph
  Farm at a cost of between $20,000 and $30,000.  On June 8, Quenneville
  moved his herd of 400 cattle from New York to the Buttolph Farm.  He took
  care of Buttolph's sixty cows for several months without getting paid for
  the labor.  The Quennevilles also upgraded and repaired, over the course of
  the summer and at their own expense, the milking parlor, barn, roads,
  manure pit, fencing, and tenant house.  Finally, at some point it was
  orally agreed that the Buttolphs would move out of the main farmhouse by
  August 15, 2000.  Based on this agreement, the Quennevilles enrolled their
  special-needs child in the Middlebury school district, of which Shoreham is
  a member.  While engaged in these activities, and since the sale could not
  be closed while a lawsuit against Campbell and Houghton was in progress
  (see below), the Quennevilles began negotiating with the Buttolphs for a
  lease agreement.   Although they paid a monthly rent of $3,000 while the
  case was pending, a written lease agreement was never executed.
   
       ¶  7.  On June 2, 2000, the Buttolphs filed suit in the Rutland
  Superior Court seeking a declaratory judgment that their agreements with
  Campbell and Houghton were unenforceable, as well as damages for
  interference with contractual relationships, abuse of process, and
  malicious prosecution.  On June 14, Campbell and Houghton filed an answer
  and counterclaim seeking specific performance of their oral agreement
  memorialized in the note signed by Tom Buttolph.  On November 7, 2000,
  after learning that the Buttolphs were considering a settlement with
  Campbell and Houghton, the Quennevilles filed a complaint in the Addison
  Superior Court against Campbell, Houghton, and the Buttolphs, seeking
  specific performance of their oral agreement with the Buttolphs, legal and
  equitable damages, costs, and interest.  On December 1, 2000 the
  Quennevilles filed an intervenor complaint in the Rutland litigation,
  seeking the same relief as in their Addison county complaint.  On February
  22, 2001, Campbell and Houghton filed a third-party complaint against
  Buttolph Farms, Inc.  On May 2, 2001, the Rutland and Addison cases were
  consolidated in the Addison Superior Court.  A hearing on the merits was
  held before Judge Matthew I. Katz, concluding on January 2, 2002.
   
       ¶  8.  On March 19, 2002, the Addison Superior Court issued an entry
  order in which it declared that Campbell and Houghton had no enforceable
  contract for the purchase of the Buttolph Farm property or Buttolph Farms,
  Inc. stock and ordered the Buttolphs to sell the farm to the Quennevilles
  based on their oral contract.  In relevant part, the superior court found
  that while the handwritten note signed by Mr. Buttolph on April 28
  established the basic elements of an oral agreement with Campbell and
  Houghton, it also anticipated the preparation of a formal agreement at a
  later date.  Moreover, according to the court, particular issues left
  unresolved were the interest rate, amount of payments, amount of a balloon
  note, items included in the "grey matter," security for purchasers' note,
  and a possible right of first refusal to be retained by the Buttolphs on a
  small portion of the farm.  Consequently, according to the superior court,
  the Buttolphs entered neither a written agreement that encompassed all the
  terms agreed upon, nor an oral agreement that encompassed all the terms
  discussed.

       ¶  9.  Defendants Campbell and Houghton filed a motion to reconsider
  on April 3, 2002.  In response, the Addison Superior Court filed another
  entry order on May 17, 2002.  In it, the court first found that, as a
  matter of fact, the Buttolphs never reached an agreement with Campbell and
  Houghton regarding the composition of the "grey matter" list.  The court
  further found that, as a matter of law, the composition of the "grey
  matter" was a substantial part of the intended contract.   Finally, the
  superior court reaffirmed its conclusion that, since Campbell's agreement
  with the Buttolphs was for owner financing, and since the court cannot
  substitute a different agreement for one the parties made, her ability to
  pay cash was irrelevant.

       ¶  10.  On June 27, 2002 the Addison Superior Court filed its judgment
  order extinguishing the claim of Campbell and Houghton to Buttolph Farms
  and Buttolph Farms, Inc., and ordering the Buttolphs to convey the Buttolph
  Farms premises and stock to the Quennevilles in accordance with the terms
  of the purchase and sale agreement drawn up at their July 6, 2000 meeting. 
  Since the Quennevilles' New Haven, Vermont, farm was to be used as
  collateral in the original purchase and sale agreement, and part of that
  farm had subsequently been sold off to a third party, the court amended the
  agreed-upon collateral to consist of, in part, the remaining premises owned
  by the Quennevilles in New Haven, the Buttolph farm, and other specified
  property.  This appeal followed.
   
       ¶  11.  We will overturn the factual findings of a trial court only
  if they are clearly erroneous.  V.R.C.P. 52.  "[F]indings of fact must
  stand unless, viewing the record in the light most favorable to the
  prevailing party and excluding the effect of modifying evidence, there is
  no credible evidence to support the findings."  Hoover v. Hoover, 171 Vt.
  256, 258,