Opinion ID: 1788495
Heading Depth: 1
Heading Rank: 3

Heading: Breach-of-Contract Claim Against Hill and Thomas

Text: The DeVenneys argue that the trial court erred in failing to enter a summary judgment in their favor on their breach-of-contract claim against Hill and Thomas. The DeVenneys argue that Eason properly assigned the sales agreement to Hill, who was acting on behalf of the partnership composed of Hill and Thomas, and that Hill and Thomas failed to perform all the terms of the sales agreement. The DeVenneys argue that the $50,000 additional fee to hold the $150,000 check for a month after the closing and the agreement to excavate the retained lot were negotiated terms of the sales agreement. Thus, the DeVenneys argue, Hill and Thomas breached the contract by failing to perform all of the terms of the sales agreement and that they owe $200,000 for the unpaid purchase money and an additional $172,500 for the excavation of the retained lot, based on an estimate they had received on the work. Hill and Thomas argue (1) that they never agreed to the assignment of the sales agreement, (2) that they fulfilled any obligation they had by bringing $200,000 to the closing, (3) that the Statute of Frauds, § 8-9-2(7), Ala.Code 1975, required that the agreement to pay an additional $50,000 be in writing and it was not, and (4) that the agreement to excavate the retained lot could not be assigned. The DeVenneys did not present substantial evidence indicating that the $50,000 fee for allowing a late payment was part of the total purchase price represented by the assigned sales agreement. However, they did present substantial evidence indicating that Eason properly assigned to Hill and Thomas the sales agreement, which describes Eason's right to purchase the land and his obligation to excavate the retained lot. The DeVenneys also presented substantial evidence indicating that Hill and Thomas did not perform all of their duties under the assigned sales agreement.
Whether Hill and Thomas breached the sales agreement depends on whether Eason properly assigned the sales agreement to Hill and Thomas. There are no formal requirements for an assignment, and an assignment may be written, parol, or otherwise. Baker v. Eufaula Concrete Co., 557 So.2d 1228, 1230 (Ala.1990). The court must look to the substance of the assignment rather than to its form to determine whether there has been an assignment. See id. There has been an assignment (1) if the assignor intended to transfer a present interest in the subject matter of the contract, id., and (2) if the assignor and the assignee mutually assented to the assignment. See 6A C.J.S. Assignments § 73 (2004). An assignment is construed in accordance with the law of contracts. Dill v. Blakeney, 568 So.2d 774, 778 (Ala.1990). Whether the assignor intended to transfer his or her interest is a factual issue to be determined under the circumstances of the case. Baker, 557 So.2d at 1230. In assigning an executory bilateral contract, the assignor delegates his or her duties to the assignee, unless the circumstances show a contrary intention, and the assignee impliedly promises to perform the contract for the assignor. Meighan v. Watts Constr. Co., 475 So.2d 829, 834 (Ala.1985)(stating that the `assignee . . . in the absence of circumstances showing a contrary intention, becomes the delegatee of his assignor's duties and impliedly promises his assignor that he will perform such duties' (quoting Rose v. Vulcan Materials Co., 282 N.C. 643, 194 S.E.2d 521 (1973))). Hill and Thomas insist that they did not sign an acknowledgment to the assignment clause in the sales agreement and that they did not see the sales agreement until the DeVenneys sued them. First, the law does not require that an assignee sign a written acknowledgment. See Baker, 557 So.2d at 1230 (holding that the assignment can be parol). The record shows that Hill and Thomas understood from Eason that they were purchasing the land from the DeVenneys. The DeVenneys presented evidence indicating that Hill and Thomas did not object when Thornton announced that Hill would be the one who actually purchased the land. Evidence shows that Hill and Thomas were in the room when Thornton wrote the assignment clause into the sales agreement and Eason signed below it. The DeVenneys also presented evidence indicating that Hill and Thomas jointly borrowed money from the Bank and that they brought $200,000 to the closing to buy the land from the DeVenneys. Hill and Thomas did not object when the DeVenneys signed the deed over to Hill. Even though Hill and Thomas did not acknowledge the assignment clause on the sales agreement by signing next to it, the DeVenneys presented substantial evidence of Hill and Thomas's agreement with Eason to buy the land, and their actions before and at the closing indicate that they intended to assume from Eason the rights and duties under the sales agreement to purchase the land from the DeVenneys. Second, Hill, who had previously purchased at least seven residential and commercial properties, and Thomas, who has a real-estate license, undoubtedly had reviewed numerous HUD-1 Settlement Statements and had attended numerous real-estate closings. They would not have ignored the sales agreement and the HUD-1 statement that Thornton presented at the closing; however, even if they did not review either document, as purchasers and experienced businessmen in real estate, Hill and Thomas should have reviewed the documents. Therefore, they had constructive notice of the terms of the sales agreement. United Cos. Fin. Corp. v. Wyers, 518 So.2d 700, 704 (Ala.1988) (holding that [a] purchaser has constructive notice if the facts surrounding the transaction give notice, or are such that a reasonably prudent person would inquire further). The DeVenneys presented substantial evidence indicating that Eason properly assigned the sales agreement to Hill and Thomas. [11] Thus, as assignees, Hill and Thomas were obligated to perform the terms of the assigned contract. See Meighan, 475 So.2d at 834.
Hill and Thomas argue that Eason told them that the purchase price was $200,000, not $250,000. However, they had constructive notice of all the terms of the sales agreement and of the HUD-1 statement. At most, Hill and Thomas show a unilateral mistake with respect to a contract term. Restatement (Second) of Contracts § 154 (1981) provides: A party bears the risk of a mistake when . . . . (b) he is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient, or (c) the risk is allocated to him by the court on the ground that it is reasonable under the circumstances to do so. In this case, Hill and Thomas bore the risk of the mistake. See Hackney v. First Alabama Bank, 555 So.2d 97, 101 (Ala.1989) (quoting Restatement (Second) of Contracts § 154). Hill and Thomas failed to review the closing documents, even though they were aware that they were the actual purchasers of the land. Although they acknowledge that they were aware that Eason and the DeVenneys were negotiating over the inclusion in the sales agreement of a provision addressing the excavation of the retained lot and that the checks from Eason that Thornton handed the DeVenneys at the closing were postdated, the record shows that they failed to inquire as to the impact of these transactions on their purchase of the land. Thus, the record shows that even if Hill and Thomas did not have actual knowledge of the terms of the sales agreement, they were comfortable with having limited knowledge. In light of the fact that Hill and Thomas were experienced in real-estate transactions, we believe that it is reasonable to allocate the risk of the mistake as to the purchase price to Hill and Thomas in this case. With regard to the additional $50,000 Eason promised to pay the DeVenneys for the 30-day delay in making full payment of the purchase price, Hill and Thomas correctly point out that under the Statute of Frauds this agreement should have been in writing. The DeVenneys' agreement to lend or to forbear from collecting $150,000 for a sum of $50,000 must be in writing. § 8-9-2(7), Ala.Code 1975 (stating that [e]very agreement or commitment to lend money, delay or forebear repayment thereof . . . except for consumer loans . . . less than $25,000 is to be in writing or the agreement is void). The DeVenneys argue that the postdated checks of $150,000 and $50,000 sufficiently memorialize the terms of the agreement so as to satisfy the Statute of Frauds. We disagree. The checks are too indefinite to satisfy the Statute of Frauds with respect to Hill and Thomas's obligation because they fail to state the full terms of the agreement to forbear, the mutuality of the agreement, and the intention of the parties. Webster v. Aust, 628 So.2d 846, 848 (Ala.Civ.App.1993) (holding that a check does not satisfy the Statute of Frauds when it does not disclose the full terms of the contract, the specific dates of the closing, the payment of the balance, and the mutuality of the agreement and is not a final expression of the parties' agreement). Thus, the DeVenneys' agreement to forbear on collecting, or to lend $150,000, is void. [12] See § 8-9-2(7), Ala. 1975; Webster, 628 So.2d at 848-49. The purchase price stated in the sales agreement as assigned to Hill and Thomas did not include the additional fee of $50,000. The DeVenneys did present substantial evidence indicating that the terms of the sales agreement, as assigned to Hill and Thomas, included excavating the retained lot. Mrs. DeVenney and Eason had agreed before the closing that the excavation of the retained lot would be an additional part of the purchase price. Mrs. DeVenney refused to proceed with the closing until the terms of the excavation were put in writing and made a part of the sales agreement. Thornton included the excavation clause in the sales agreement, and the clause was signed below by Eason and the DeVenneys. Hill and Thomas argue that the excavation clause cannot be assigned because, they say, (1) it was a separate agreement between Eason and the DeVenneys and (2) the clause reflects that Eason would personally perform the service for the DeVenneys. First, the sales agreement denominates Eason as the purchaser. The logical interpretation of Thornton's handwritten clause in the sales agreement is that Eason, as the purchaser, would perform the duty of excavating the retained lot. If Eason and the DeVenneys had intended to agree to the excavation of the retained lot separately from the sale of the land, then the clause would not have been included in the sales agreement. In fact, the separate agreement by Thornton to hold for 30 days two postdated checks from Eason to the DeVenneys was not reflected in the sales agreement; Thornton prepared a separate agreement that provided that Thornton would hold the two postdated checks and that Eason and the DeVenneys would not hold Thornton liable for holding them. Thus, the DeVenneys presented substantial evidence indicating that under these circumstances the entire sales agreement, including the excavation clause, was assigned to Hill, on behalf of the partnership composed of Hill and Thomas, and that, as assignees and partners, Hill and Thomas assumed all of Eason's duties. Second, although certain personal-service contracts are not assignable, Sisco v. Empiregas, Inc. of Belle Mina, 286 Ala. 72, 76, 237 So.2d 463, 466 (1970), such unassignable personal-service contracts relate to services that involve special skills, such as the painting of a portrait by an artist. Mitchell-Huntley Cotton Co. v. Waldrep, 377 F.Supp. 1215, 1222 (N.D.Ala.1974). No such special skills are necessary to excavate the retained lot. In the context of the entire transaction for the sale of the land, the fact that the clause provided that David Eason would excavate the retained lot does not indicate that the parties intended for him personally to do so. The DeVenneys presented substantial evidence indicating that the sales agreement was assigned to Hill and Thomas, as partners, and that the terms of the sales agreement included the purchase price of $250,000 and excavation of the retained lot.
To show a breach of contract by Hill and Thomas, the DeVenneys must show `(1) the existence of a valid contract binding the parties in the action, (2) [their] own performance under the contract, (3) the defendant's nonperformance, and (4) damages.' State Farm Fire & Cas. Co. v. Slade, 747 So.2d 293, 303 (Ala.1999)(quoting Southern Med. Health Sys., Inc. v. Vaughn, 669 So.2d 98, 99 (Ala.1995)). The DeVenneys presented substantial evidence indicating that there is a valid contract between them and Hill and Thomas. The DeVenneys also presented substantial evidence indicating that they performed their part of the contract by conveying the land to Hill. The DeVenneys showed that Hill and Thomas did not fully perform under the terms of the sales agreement: they failed to excavate the retained lot and to pay $150,000 of the purchase price to the DeVenneys. At the closing, Eason received $97,121.40, even though he was not a party to the transaction. Hill and Thomas argue that the DeVenneys transferred to Eason a portion of the $200,000 of purchase money that Hill and Thomas paid to the DeVenneys. The DeVenneys argue that the HUD-1 statement was prepared in advance of the closing by Eason, Hill, and Thomas and that Hill and Thomas must have intended to lend the money to Eason. The DeVenneys argue that they do not know the reason for the transfer and that they did not intend to convey to Eason any part of the purchase money. As the DeVenneys point out, the HUD-1 statement does not reflect on the parallel side of the Summary of Seller's Transaction, a deduction to Eason for the sum of $97,121.40 under the heading of Adjustments for items paid by seller in advance. The transfer to Eason appears only as a line item under the Summary of Borrower's Transaction. Thus, the HUD-1 statement reflects on the left side: Summary of borrower's transaction: .... Adjustments for liens paid by seller in advance City/town taxes to County taxes to Assessments to David Eason 97,121.40 The HUD-1 statement reflects on the parallel right side: Summary of seller's transaction: .... Adjustments for liens paid by seller in advance City/town taxes to County taxes to Assessments to The parties do not dispute that Eason's postdated check in the amount of $150,000 was part of the purchase price of the land. The seller's side of the HUD-1 statement shows: Cash paid at the closing $100,000 Earnest money paid by Eason + $150,000 ___________________________ ________ Total purchase price = $250,000 Thus, the HUD-1 statement appears to reflect that the transfer of $97,121.40 to Eason was from Hill and Thomas, and not from the DeVenneys. Although Eason paid the remaining portion of the purchase price, $150,000, with a postdated check, Hill and Thomas, as assignees and purchasers, had a contractual duty to make sure that the payment was made good. See Meighan, 475 So.2d at 834 (holding that the assignee impliedly promises to perform the duties of the assigned contract). The DeVenneys presented substantial evidence tending to show that because Eason was no longer a party to the transaction, his payment must have been made on behalf of the purchasers, Hill and Thomas. The HUD-1 statement reflects that each amount deposited by the purchasers was paid by or in behalf of borrower. Thus, we conclude that the sales agreement was properly assigned to Hill and Thomas, as partners. We also conclude that the additional $50,000 fee for delaying collection of part of the purchase price was not a term of the sales agreement as assigned but that the excavation of the retained lot was a term of the assigned sales agreement. Therefore, the trial court erred in entering a summary judgment in favor of Hill and Thomas on the breach-of-contract claim brought against them in their status as assignees of the sales agreement. We, therefore, reverse the summary judgment in favor of Hill and Thomas on the breach-of-contract claim, and we remand the case for further proceedings.