Opinion ID: 1092837
Heading Depth: 2
Heading Rank: 2

Heading: whether the trial court erred in applying the statute of frauds to a commission payment situation.

Text: ¶ 12. Whether the chancellor erred in applying the statute of frauds hinges upon whether the present situation classifies as a commission or an interest in land. There are certain basic rules concerning the statute of frauds that are fundamental to the determination of this issue. First, oral contracts are generally as enforceable as any other form. Putt v. City of Corinth, 579 So.2d 534, 538 (Miss. 1991). Since Fairchild failed to cross-appeal upon the chancellor's finding that a valid oral contract existed, the fact that the contract was oral alone does not sound the death knell for Allred's case. Steinwinder v. Aetna Cas. & Sur. Co., 742 So.2d 1150, 1151 (Miss.1999). However, the statute of frauds does require that all contracts involving the sale of land be in writing. Miss.Code Ann. § 15-3-1 (1995). Furthermore, conveyances concerning mineral interests have always been held to fall within the sale of land requirement under Miss.Code Ann. § 15-3-1. See Gulf Ref. Co. v. Travis, 201 Miss. 336, 30 So.2d 398 (1947). In yet another twist, there exists case law stating that brokerage commissions (such as real estate brokers' fees) are not subject to the statute of frauds. Jefcoat v. Singer Housing Co., 619 F.2d 539 (5th Cir.1980); Barney & Hines v. Jackson, 108 Miss. 169, 66 So. 426 (1914). Therefore, the real question is whether the agreement between Allred and Fairchild should be classified as involving the sale of land or as a brokerage commission. ¶ 13. Allred supports a commission classification based mainly upon the idea that the present agreement does not actually concern Fairchild selling him an interest in land and that the agreement could have been satisfied with cash if Fairchild had sold the property for a profit immediately after acquiring it. As for the first argument, the Statute of Frauds has reference to a contract for the sale of land, and not to a contract in which one party acquires title to particular lands with the intent to convey, subsequently, part of the lands to the other party. Evans v. Green, 23 Miss. 294, 295 (1852); see also Shepherd v. Johnston, 201 Miss. 99, 28 So.2d 661 (1947); Soggins v. Heard, 31 Miss. 426, 1856 WL 2616 (1856). In the present situation, the Fairchild-Windham transaction was in writing, and Allred and Fairchild agreed that compensation would occur later, after payout. These cases indicate that Allred's compensation is exactly the type to be classified as a commission. Second, Allred argues that the chancellor misinterpreted the agreement to mean that Allred received an interest in the property as of the moment of closing. This is a misunderstanding of the specific language involved in oil and gas transactions. The chancellor correctly defined payout as it is understood in the industry; yet, he neglected to apply that definition to the facts of the case. An interest in mineral or other leases after payout means that interest does not accrue until the buyer has fully recouped the costs of securing those interests. In other words, Allred essentially had an interest in the property once it became profitable. Therefore, if Fairchild had sold the property for a profit immediately upon closing, Allred would have been entitled to 10% of the profits. However, if the Windham properties were sold at a loss, Allred would receive nothing. Allred also points out that Fairchild termed the compensation a commission in a February 1974 memo. The crux of Allred's argument is that since it is conceivable that he could have been paid in cash for his services, his agreement with Fairchild was not for the sale of land. ¶ 14. Whereas Allred bases the commission theory on the argument that the present situation does not deal with the sale of land, Fairchild looks to the purpose for the statute of frauds as justification for pulling the agreement within its requirements. The principal purpose of the Statute of Frauds ... is to require the contracting parties to reduce to writing the specific terms of their contract, especially an agreement affecting lands for more than one year, and thus to avoid dependence on the imperfect memory of the contracting parties, after the passage of time, as to what they actually agreed to some time in the past. Sharpsburg Farms, Inc. v. Williams, 363 So.2d 1350, 1354 (Miss.1978). Fairchild points to the long span of time between contract and suit as well as the controversy and inconsistencies over what was really agreed upon as indicators that this situation is precisely what the Miss.Code Ann. § 15-3-1 meant to alleviate. Furthermore, the language of the complaint states that compensation was 10% interest in the Windham properties. ¶ 15. To counter Fairchild's theory and in further support of the inapplicability of the statute of frauds, Allred asserts that the agreement essentially created a constructive trust under the control of Fairchild for Allred's benefit. Under Sample v. Romine, 193 Miss. 706, 9 So.2d 643 (1942), constructive trusts are not subject to the statute of frauds. Since it has already been determined that a constructive trust was indeed created, the statute of frauds should not have been applied.