IN THE COURT OF APPEALS OF TENNESSEE

AT KNOXVILLE

February 13, 2008 Session

LARRY THORNTON v. JOE MARCUM, and wife, MONA MARCUM

Direct Appeal from the Chancery Court for Campbell County

No. 05-166 Hon. Billy Joe White, Judge

No. E2007-01326-COA-R3-CV - FILED MARCH 31, 2008

Plaintiff and defendants entered into a verbal agreement wherein plaintiff would purchase two lots

from the defendants at an agreed price. Plaintiff made payments as agreed over a period of time, but

before the lots were completely paid for defendants sold one of the lots to a third party. Plaintiff

brought this action for specific performance and the Trial Court ruled that the verbal agreement

violated the Statute of Frauds. However, the Trial Court invoked the theory of equitable estoppel

against defendants, ordered specific performance, and awarded damages for the lot sold, which was

part of the purchase agreement. On appeal, we affirm.

Tenn. R. App. P.3 Appeal as of Right; Judgment of the Chancery Court Affirmed.

HERSCHEL PICKENS FRANKS,P.J., delivered the opinion of the Court, in which D.MICHAEL SWINEY,

J., and SHARON G. LEE, J., joined.

Johnny V. Dunaway, LaFollette, Tennessee, for appellants.

Reid Troutman, LaFollette, Tennessee, for appellee.

OPINION

This is essentially an action to enforce an oral contract to purchase land, where
Plaintiff made agreed payments for three years.

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plaintiff had made installment payments on the agreed purchase price. At the conclusion of the 1

proof, the Trial Court found that the parties had reached a verbal agreement, specific in terms,

relative to the sale of two lots, and ordered specific performance of the agreement with one lot, and

awarded damages of $11,000.00 for the other lot, which the defendants had later sold.

The Court found that the facts were clear that the parties had negotiated a deal for the

purchase of the two lots for $28,000.00, and that a contract was drawn up, but not signed. The Court

found that in April of 2005, someone trespassed on the land and caused a good deal of damage, and

at that point plaintiff received a letter from defendants' attorney saying the contract had been

cancelled. The Court found that the sole purpose of this attempted cancellation was "for the

fraudulent intent of obtaining more money from another purchaser. I think that agreement was

already made and the defendant wanted to get title back to these two lots for the purpose of selling

them for a larger amount of money." The evidence does not preponderate against the Court's

findings of fact. Tenn. R. App. P. 13(d). 

The Trial Court then observed that the Statute of Frauds would apply, but that the

equitable estoppel exception would also apply, such that the parties’ agreement should be enforced

despite the fact the writing was never signed. Defendants appealed and raised these issues:

1. Did the Trial Court err in applying the equitable estoppel exception to the

Statute of Frauds defense?

2. Did the appellee have the requisite standing to bring suit against appellants?

The Trial Court found that the Statute of Frauds would apply, since the agreement

involved a sale of real property. Tenn. Code Ann. §29-2-101(a). There is no dispute in this case that

the parties had no written contract signed by defendants, and thus plaintiff, under the statute, would

be barred from bringing an action based on the parties’ verbal agreement for the purchase of the

subject lots.

The Trial Court found, however, that the equitable estoppel exception to the Statute

of Frauds should be applied based on the facts of this case. The Trial Court relied on Autry v.

Boston, Jr., et al., 2006 WL 1132075 (Tenn. Ct. App. Apr. 28, 2006), authored by Judge Swiney,

where the Court invoked equitable estoppel to allow specific performance of a verbal agreement to

purchase a house, where the purchaser and his deceased wife (who was the daughter of defendants)

had paid a $2,000.00 down payment, and had renovated the house at a substantial expense. The

sellers reneged on the deal after their daughter passed away, but the Trial Court held the contract was

valid and enforced it, based on the doctrine of equitable estoppel. 

As this Court has previously recognized: 
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the purpose of the Statute of Frauds is not to allow a party to avoid agreements he or

she has made. Cobble v. Langford, 190 Tenn. 385, 390, 230 S.W.2d 194, 196

(1950). It has long been recognized in our courts that strict application of the Statute

of Frauds can lead to evils as undesirable as those it was designed to limit or prevent.

Southern States Development Co., Inc. v. Robinson, 494 S.W.2d 777, 781 (Tenn. Ct.

App. 1972). Consequently, it "should not be used to avoid contracts or to grant a

privilege to a person to refuse to perform what he has agreed to do." GRW

Enterprises, Inc., 797 S.W.2d at 611, quoting Cobble, 190 Tenn. at 390, 230 S.W.2d

at 196. Neither should its enforcement render it "an instrument of hardship and

oppression." Id., citing Baliles, 578 S.W.2d at 624.

In order to prevent such results, our courts have held that in some circumstances a

party is estopped to assert the Statute of Frauds to avoid contractual undertakings in

the interest of equity and fairness. Estoppel based on principles of equity may be

applied in a number of situations, including to preclude assertion of the Statute of

Frauds to avoid an agreement to transfer real property, and is generally described as:

... the effect of the voluntary conduct of a party whereby he is absolutely

precluded, both at law and in equity, from asserting rights which might

perhaps have otherwise existed, either of property, of contract, or of remedy,

as against another person, who has in good faith relied upon such conduct,

and has been led thereby to change his position for the worse, and who on his

part acquires some corresponding right, either of property, of contract, or of

remedy. 

Beazley v. Turgeon, 772 S.W.2d 53, 58 (Tenn. Ct. App.1988), quoting Church of

Christ v. McDonald, 171 S.W.2d 817, 821 (Tenn.1943). The purpose of equitable

estoppel and its objective are:

... to prevent the unconscientious and inequitable assertion or enforcement of

claims or rights which might have existed, or been enforceable by other rules

of law, unless prevented by an estoppel; and its practical effect is, from

motives of equity and fair dealing, to create and vest opposing rights in the

party who obtains the benefit of the estoppel. 

Baliles, 578 S.W.2d at 624.

Smith v. Smith, 2005 WL 3132370 (Tenn. Ct. App. Nov. 22, 2005). Our Supreme Court has also

stated:

The appellate courts of this state consistently have refused to enforce an oral contract

for the sale of land on the basis of part performance alone. Knight v. Knight, 222

Tenn. 367, 436 S.W.2d 289 (1969); Goodloe v. Goodloe, 116 Tenn. 252, 92 S.W.
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767 (1905). And, it is now a rule of property in this state that part performance of a

parol contract for the sale of land will not take the agreement out of the Statute of

Frauds. Goodloe v. Goodloe, supra. The harshness of this rule has been mitigated

by the application of the doctrine of equitable estoppel in exceptional cases where to

enforce the Statute of Frauds would make it an instrument of hardship and

oppression, verging on actual fraud. Covington v. McMurray, 4 Tenn.C.C.A. 378

(1913); Gheen v. Osborne, 58 Tenn. 61 (1872). See also Decherd v. Blanton, 35

Tenn. 373 (1855); Williams v. Conrad, 30 Tenn. 412 (1850); Bloomstein v. Clees

Brothers, 3 Tenn.Ch. 433 (1877); Interstate Co. v. Bry-Block Mercantile Co., 30 F.2d

172 (D.C.W.D.Tenn.) (1928).

"Equitable estoppel, in the modern sense, arises from the 'conduct' of the

party, using that word in its broadest meaning, as including his spoken or

written words, his positive acts, and his silence or negative omission to do

any thing. Its foundation is justice and good conscience. Its object is to

prevent the unconscientious and inequitable assertion or enforcement of

claims or rights which might have existed, or been enforceable by other rules

of law, unless prevented by an estoppel; and its practical effect is, from

motives of equity and fair dealing, to create and vest opposing rights in the

party who obtains the benefit of the estoppel." Evans v. Belmont Land Co.,

92 Tenn. 348, 365, 21 S.W. 670, 673-674 (1893).

Baliles v. Cities Service Co., 578 S.W.2d 621, 624 (Tenn. 1979). 

The burden of proof is on the party seeking to invoke equitable estoppel. Bokor v.

Holder, 722 S.W.2d 676 (Tenn. Ct. App. 1986). The Trial Court found that plaintiff had shown the

requisite elements of estoppel in this case, relying on the defendants’ conduct in “canceling” the

agreement. The Court observed that the defendants sent the letter purportedly canceling the sale

“for the fraudulent intent of obtaining more money from another purchaser." 

There is a compelling reason that the doctrine of equitable estoppel is applicable to

this case. Defendants never denied that there was an agreement to sell the property, and

acknowledged they had an oral agreement with plaintiffs to buy the property, and that payments

were made pursuant to this agreement. Defendants changed their mind about the sale, and the

Chancellor concluded this was because they could sell the property for more money and they then

told the plaintiffs they would not follow through with the deal. 

As we have often held, the basis of equitable estoppel is that “once a party acts, or

refrains from acting, in such a way as to indicate an agreement, and another party reasonably relies

on that indication of agreement, the first party cannot later assert a contrary position”. See Smith.

That is what the defendants seek to do in this case. They have admitted that an agreement existed,

allowed plaintiffs to rely on the same, and accepted $12,000.00 in payments made pursuant to the

agreement by plaintiff, and to allow defendants such a windfall would be fundamentally unfair. 
The Court added plaintiff’s wife as a party plaintiff. 2

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The Trial Court properly held that the equitable estoppel exception to the Statute of

Frauds applies.

As this Court has recognized:

Specific performance is an equitable remedy. It is not available as a matter of right

but is discretionary with the trial court depending on the facts of each case. Specific

performance is not available unless the contract is clear, definite, complete, and free

from any suspicion of fraud or unfairness. 

Courts do not, as a general matter, award specific performance when the injured party

can be fully and adequately compensated with damages. However, specific

performance is regarded as appropriate when dealing with contracts for the

conveyance of real property because real property is unique, and more often than not,

an award of damages is simply not an adequate remedy. 

GRW Enterprises, Inc. v. Davis, 797 S.W.2d 606, 614 (Tenn. Ct .App. 1990)(citations omitted). 

It was within the sound discretion of the Chancellor to award specific performance

as to the remaining lot and award damages to the plaintiffs for the loss of the lot that had been sold

to third parties by defendants. However, plaintiff had not paid the full purchase price for the two lots

and upon remand, the plaintiff may deduct the damage award from the amount he agreed to pay

defendants for the property, as plaintiff obligated himself to pay the purchase price.

Defendants also argue that plaintiff had no standing to bring suit in this matter

because he had no legal interest in the property, based on their allegation that he did not participate

in the negotiations nor expressed any “clear intent to have the contract operate for his benefit.” The

Trial Court found, however, that Mr. Thornton was present for the negotiations, that the checks

which paid for this property were paid from a joint checking account, and that Mr. Thornton had an

interest in this property transaction. The evidence does not preponderate against this finding and 2

this issue is without merit. 

In sum, the Chancellor properly found that the equitable estoppel exception to the

Statute of Frauds would apply in this case, and we affirm the decision of the Trial Court and remand,

with the cost of the appeal assessed to defendants.

___________________________

HERSCHEL PICKENS FRANKS, P.J.