Court Opinion

ID: 7841269
Source: CourtListenerOpinion
Date Created: 2022-09-08 17:01:11.071087+00
Date Added: 2024-06-11T16:04:35.882557
License: Public Domain

Shea, J., with whom Hull, J., joins,
dissenting. I disagree with the conclusion reached in Part II of the majority opinion that we may affirm the judgment without resolving the significance of the provision of the land sale agreement, which follows the stipulation for interest of 12 percent per annum on the purchase money mortgage, declaring: “The A.P.R. may vary at option of Buyer.” At trial the plaintiff testified that, when the defendant had requested a change in the closing date from January 10,1985, as originally proposed, to January 10,1986, he had also agreed that the mortgage interest rate “may not be twelve percent; it may be eleven percent or ten percent, whatever the bank going rates are at that time.” He also testified that both he and the defendant had made “an oral agreement that we had to keep [the interest rate] at one or one and a half above prime” and that “[i]f interest rates went down, then my interest, fixed rate, would go down also.”
The provision concerning the option to vary the A.P.R. was added to the clause relating to the purchase money mortgage at the time the contract of sale was executed. The plaintiff’s attorney, who prepared the contract of sale but was not present when the parties, without counsel, inserted the A.P.R. provision and signed it, testified that he did not know “what A.P.R. was” and that “it could be subject to a variety of *655interpretations, annual percentage rate.” (Emphasis added.) The trial court made no finding as to the meaning of this provision.
The majority regards the ambiguity in the agreement created by the A.P.R. provision as a “meritless issue,” relying upon the principle that indefiniteness in some terms of an agreement is not fatal “ ‘if those terms are not material to the bargain,’ ” quoting United States v. Bedford Associates, 657 F.2d 1300, 1310 (2d Cir. 1981), cert. denied, 456 U.S. 914, 102 S. Ct. 1767, 72 L. Ed. 2d 173 (1982). This court for many years has held, however, that the terms of a purchase money mortgage in a land sale contract are essential to its validity when specific performance is sought, as in this case. Montanaro v. Pandolfini, 148 Conn. 153, 157-58, 168 A.2d 550 (1961) (purchase money mortgage provision specifying amount, duration and rate of interest, but failing to indicate amount of monthly payment held too “ambiguous, indefinite and uncertain” to satisfy statute of frauds); Sullivan v. Ladden, 101 Conn. 166, 168, 125 A. 250 (1924) (“We have uniformly held that where a written agreement for the sale of land provides that a portion of the purchase price shall be secured by a mortgage, the agreement must fix the time the mortgage is to run, in order to satisfy the requirements of the statute of frauds.”); Gendelman v. Mongillo, 96 Conn. 541, 546, 114 A.2d 914 (1921) (“ ‘[I]f the memorandum shows that the sale was upon credit, the terms of such credit must be stated.’ ” quoting Ebert v. Cullen, 165 Mich. 75, 130 N.W. 185 [1911]). The requirement that the financial terms of a purchase money mortgage be fully set forth in a land sale agreement is generally regarded as a prerequisite for compliance with the statute of frauds. 1 Restatement (Second), Contracts § 131, comment g, illustration 16.
The majority also maintains that it is unnecessary to resolve the significance of the A.P.R. provision *656because it merely gives the plaintiff an option that he may never elect to exercise. The issue of whether a written contract is too indefinite to satisfy the statute of frauds, however, must be decided on the basis of its provisions at the time of execution. If the A.P.R. provision rendered the agreement of the parties too indefinite for the purpose of fashioning a decree of specific performance on December 20, 1984, when they signed it, nothing either of them later could do unilaterally would remedy that defect. The plaintiff cannot retrospectively restore enforceability to this contract, if it was not there originally, by electing not to exercise the right not to be bound to the 12 percent interest stipulation simply because it may now be advantageous to do so. If the effect of exercising his option for a lower interest rate pursuant to the A.P.R. provision would render the contract unenforceable for indefiniteness, the plaintiff would have under this contract a right to perform or not to perform as he chooses. His promise to purchase the property would then have been illusory and could not have constituted consideration for the defendant’s promise to sell. “Words of promise do not constitute a promise if they make performance entirely optional with the purported promisor.” 1 Restatement (Second), Contracts § 76, comment d. “Where the apparent assurance of performance is illusory, it is not consideration for a return promise.” Id., § 77, comment a.
Without a finding as to the significance of the A.P.R. provision, particularly whether there is some limitation on the broad option it appears to give the plaintiff to select the interest rate on the purchase money mortgage, this essential term of the contract is too vague for enforcement. I would remand the case for further proceedings to resolve this issue.
Accordingly, I dissent.