Court Opinion

ID: 9564576
Source: CourtListenerOpinion
Date Created: 2023-08-21 19:03:32.656769+00
Date Added: 2024-06-11T09:18:32.022208
License: Public Domain

Donworth, J.
— Halsey and wife (appellants) owned a large farm in Asotin County (partly tillable land and partly pasture land) subject to a mortgage. They listed this land for sale with Mason & Teague (brokers) of Lewiston, Idaho.
These brokers showed the property to Schweiter brothers (respondents), who were desirous of purchasing the tillable land only. Appellants were agreeable to selling that portion of the land but had no legal description thereof.
Respondents needed not less than fifty thousand dollars to finance the deal. The mortgagee was willing to increase the amount of the mortgage to fifty thousand dollars at six per cent interest. Respondents were so advised by the brokers, who also suggested that a loan might be obtained from a life insurance company at a lower rate.
On October 23, 1956, the parties executed an earnest-money receipt. Although the earnest-money receipt indicated that the legal description of the property to be sold was attached, there was, in fact, no legal description attached at the time the receipt was executed. The brokers had a legal description of the entire property, and respondents instructed them to retain respondents’ copy of the receipt. Several weeks later, upon completion of a survey, the legal description of the tillable land was attached thereto by the brokers, and respondents were notified of this fact.
An agent of an insurance company viewed the land and requested additional security for a fifty-thousand-dollar loan. Respondents were willing to include in the mortgage certain other property owned by them.
On December 1, 1956, respondents, together with one of the brokers, went to Spokane with a legal description of all the land to be covered by the mortgage and made a formal application for a loan. Ten days later, the brokers were notified by the insurance company that the loan had been *709approved. They promptly notified respondents of this fact. Respondents asked that the closing of the transaction be delayed until after January first for tax reasons.
Meanwhile, the insurance company asked for a preliminary title report and a copy of the proposed deed from appellants to respondents. These were furnished, and later a proposed note and mortgage to be signed by respondents were furnished by the insurance company.
The parties had had discussions concerning construction of a fence between the tillable land and the pasture land. Appellants had orally agreed to construct such a fence but the work had been delayed by the weather. It was agreed through the brokers that part of the proceeds of the sale would be held by the brokers until the fence had been completed.
Appellants executed the deed and the brokers requested respondents to execute the note and mortgage. Respondent J. E. Schweiter went to the brokers’ office and stated that his wife had refused to sign the papers. On January 11, 1957, respondents gave notice of rescission of the transaction and appellants promptly tendered performance, which was refused by respondents.
On April 26, 1957, respondents instituted this action for the purpose of obtaining a declaration of the rights and duties of the parties under the earnest-money agreement. Shortly thereafter, appellants sold the tillable land to a third party for seven thousand dollars less than respondents had agreed to pay for it.
Appellants filed an answer containing a cross-complaint in which they sought to recover the seven-thousand-dollar loss on the sale, plus other special damages.
The trial court rendered a memorandum decision holding that the earnest-money agreement was void because it contained no legal description of the real estate involved in the transaction.
Appellants challenge the following italicized portion of finding of fact No. 3:
“ ‘That said earnest money receipt, executed by plaintiffs on October 23, 1956, and prepared by Clark Mason, agent *710for defendants, does not contain a description of lands involved in this transaction, and at the time of its execution there was not attached to said earnest money agreement any legal description sufficiently definite to locate said real property without recourse to oral testimony.’ (emphasis ours)”
Appellants also assign error to the entry of conclusions of law Nos. 1 and 2, reading as follows:
“I. That the earnest money executed by plaintiffs on October 23, 1956, designated as Exhibit A and attached to plaintiffs’ complaint and introduced as Plaintiffs’ Exhibit No. 1, is void as being in violation of the Statute of Frauds;
“II. That plaintiffs shall have judgment against defendants in the sum of $5,000.00 plus interest at the statutory rates from date of demand, January 11, 1957;”
Finally, appellants allege that the trial court erred in dismissing their cross-complaint with prejudice.
We shall dispose of the assignments in the order in which they are raised.
Finding of fact No. 3 is wholly supported by the evidence. It is undisputed that, at the time the earnest-money agreement was executed by the parties hereto, it neither contained nor had attached to it an adequate legal description of the lands involved in this transaction. The legal effect of attaching the description at a subsequent date will be discussed later in this opinion.
Conclusion of law No. 1 is in accord with the law of this state. We have consistently held that an earnest-money agreement containing an inadequate legal description of the property to be conveyed is void as being in violation of the statute of frauds. Martin v. Seigel, 35 Wn. (2d) 223, 212 P. (2d) 107, 23 A. L. R. (2d) 1 (1949); Leo v. Casselman, 29 Wn. (2d) 47, 185 P. (2d) 107 (1947); Fosburgh v. Sando, 24 Wn. (2d) 586, 166 P. (2d) 850 (1946); Martinson v. Cruikshank, 3 Wn. (2d) 565, 101 P. (2d) 604 (1940).
Conclusion of law No. 2 does not follow from conclusion of law No. 1 and is, therefore, erroneous. Although the earnest-money agreement was unenforcible and could not be made the subject of reformation, this does not entitle respondents to a return of their earnest money. At no *711time did appellants repudiate the contract. On the contrary, they tendered performance and did not otherwise dispose of the property until after respondents commenced this action. Under these facts, the case falls directly within the rule of Dubke v. Kassa, 29 Wn. (2d) 486, 187 P. (2d) 611 (1947), wherein we said:
“The applicable rule is that a vendee under an agreement for the sale and purchase of property which does not satisfy the statute of frauds, cannot recover payments made upon the purchase price if the vendor has not repudiated the contract but is ready, willing, and able to perform in accordance therewith, even though the contract is not enforcible against the vendee either at law or in equity. 49 Am. Jur. 870, § 564; 37 C. J. S. 779, § 256; 2 Restatement of the Law of Contracts 614, § 355; Johnson v. Puget Mill Co., 28 Wash. 515, 68 Pac. 867 (dicta).”
Further in the opinion we also said:
“It does not seem to be, nor can it be, seriously urged that appellants sacrificed their right to retain the payment received, because they sold the property to a third person after the respondent had commenced this action.”
Unfortunately, neither party called the trial court’s attention to the Dubke case, supra.
Browne v. Anderson, 36 Wn. (2d) 321, 217 P. (2d) 787 (1950), involved a refusal by the prospective lessee to execute a lease after he had paid the prospective lessor five hundred dollars earnest money pursuant to a certain written memorandum signed by the lessor’s authorized agent on her behalf. The action was brought by the prospective lessee to recover this earnest money. The trial court denied recovery and this court affirmed, quoting with approval from Johnson v. Puget Mill Co., 28 Wash. 515, 68 Pac. 867 (1902), the following:
“ ‘In Ketchum v. Evertson, 13 Johns. 358-364 (7 Am. Dec. 384), it is said:
“ ‘ “It may be asserted, with confidence, that a party who has advanced money, or done an act in part performance of an agreement, and then stops short, and refuses to proceed to the ultimate conclusion of the agreement, the other party being ready and willing to proceed and fulfill all his stipu*712lations, according to the contract, has never been suffered to recover for what has been thus advanced, or done. The plaintiffs are seeking to recover the money advanced on a contract every part of which the defendant has performed, as far as he could by his own acts, when they have voluntarily and causelessly refused to proceed, and thus have, themselves, rescinded the contract.
“ ‘ “It would be an alarming doctrine, to hold, that the plaintiffs might violate the contract, and, because they chose to do so, make their own infraction of the agreement the basis of an action for money had and received. Every man who makes a bad bargain, and has advanced money upon it, would have the same right to recover it back that the plaintiffs have.” ’ ”
In the Browne case, we also cited the Dubke case, supra, and reaffirmed its rationale.
Thus it appears that this court, in accord with the great weight of authority (169 A. L. R. 187), has consistently denied recovery of earnest money paid under a void or unenforcible agreement to convey real estate where the buyer has defaulted and the seller was at all times ready, able and willing to consummate the transaction.
Conclusion of law No. 3, to the effect that appellants’ cross-complaint should be dismissed with prejudice, was not erroneous.
Appellants cite Hedges v. Hurd, 47 Wn. (2d) 683, 289 P. (2d) 706 (1955), in support of the proposition that even though an earnest-money agreement may be insufficient to meet the legal test for specific performance, it can still form the basis for an action for damages for breach thereof.
The rule contended for by appellants applies to those situations where the contract involved is too indefinite in its terms to be specifically enforced, but yet is certain enough to constitute a valid contract for breach of which damages may be recovered. The rule has no application where the contract fails to satisfy the statute of frauds.
In the Hedges case, supra, we said:
“The earnest-money receipt and agreement in the instant case adequately describes the subject matter of the sale as certain real estate and a few items of personal property. *713There is no problem as to the competency of the parties, the adequacy of the consideration, misrepresentation or fraud, or whether there is a memorandum or writing sufficient to satisfy the statute of frauds. . . . [Italics ours.]
“We now come to this question: What elements are essential to a simple, valid and binding contract for the sale of land in an action for damages for breach thereof? As indicated above, the earnest-money receipt herein involved contained an adequate description of the property. It specified the total purchase price, the method of payment of principal and interest; provision was made for prorating taxes, insurance, and liens; for payment of water and other utilities, for possession, and for the deposit in escrow of the balance of the down payment by the purchasers, and a warranty deed by the seller. In view of what was said as to the earnest-money receipt in the Hubbell case, supra, we are convinced that the aforementioned things constitute and embrace all of the essential elements of a simple, binding contract for the sale of land, and that the earnest-money receipt or contract in the instant case was breached by the appellant in the instant case.”
See, also, Goodwin v. Gillingham, 10 Wn. (2d) 656, 117 P. (2d) 959 (1941); Richardson v. Taylor Land & Livestock Co., 25 Wn. (2d) 518, 171 P. (2d) 703 (1946).
 Appellants take the position that in the present case the attachment of the legal description of the lands to the earnest-money agreement by the brokers several weeks subsequent to the time the parties executed the agreement, was sufficient to satisfy the statute of frauds in this case. Appellants cite Edwards v. Meader, 34 Wn. (2d) 921, 210 P. (2d) 1019 (1949), in support of their position.
In the Edwards case, supra, the earnest-money agreement contained a provision reading: “ ‘Legal Des. to be entered by agent.’ ” In accordance with this authorization, the legal description was inserted in the earnest-money agreement by the real-estate agent a day or two after the instrument had been executed by the parties. In view of the provision in the earnest-money agreement, quoted above, we held:
“. . . the agent was authorized by the instrument itself to insert the description therein and that he did so in compliance with this authority. This having been done in the manner stated in the findings, the earnest money agree*714ment was complete and constituted a valid instrument under the statute of frauds.”
During the course of that opinion, we expressly distinguished the case of Leo v. Casselman, supra, by stating:
“The cited case [Casselman] is readily distinguishable from the case at bar because in the Casselman case the instrument itself contained no authorization to any person to place the description on the hack thereof, while here, the earnest money receipt expressly provided that the description was to be entered by the agent. ...” (Italics ours.)
Likewise, the case at bar is distinguishable in the same manner as the Casselman case, supra. Here, the instrument itself contained no authorization to any person to attach a legal description thereto. Nor can we imply such authority from the fact of the real-estate brokers’ possession of the earnest-money agreement signed by both parties. Barth v. Barth, 19 Wn. (2d) 543, 143 P. (2d) 542 (1943).
Since the contract is in violation of the statute of frauds, it is void and cannot form the basis of an action at law to recover damages for the breach thereof, as such an action presupposes a valid contract.
The judgment of the trial court, in so far as it awards the return of the five thousand dollars earnest money to respondents, is reversed with directions to dismiss the action. In all other respects, the judgment is affirmed.
Mallery, Weaver, Rosellini, Ott, and Foster, JJ., concur.