Allen v. Allen

550 P.2d 1137, 1976 Wyo. LEXIS 200

• Court: Wyoming Supreme Court
• Decided: June 4, 1976
• Docket: 4541
• Status: Published

Opinions

RAPER, Justice.

Appellee-plaintiff is the father of appellant-defendant. The plaintiff was the record owner of a tract of land known as the River Place, upon which he lived and farmed. The defendant was raised there and for a time after his marriage, he and his wife lived on the homestead with the plaintiff and his wife before defendant’s mother died. The defendant and his then wife, Virginia, a defendant in the district court but not a party to this appeal, wanted a place of their own and found a! tract of land to buy, known as the Hapton-stall Place. However, it was not a large enough economic unit to qualify for a Farmers Home Administration loan for its purchase.

By interim financing arranged by plaintiff, the Haptonstall Place was purchased in the defendants’ names. Both places were then conveyed to a third person, who reconveyed the land to the plaintiff-father, the defendant-son and the defendant Virginia, then the latter’s wife, as joint tenants with rights of survivorship. On the same date in 1966, all three parties mortgaged the two tracts as one to the Farmers Home Administration to secure a loan of $10,500.00 to discharge the interim financing obligation.

The plaintiff lived on the River Place; the defendants lived on the Haptonstall Place. The father paid the taxes on the River Place; and the son and his wife paid the taxes on the Haptonstall Place, carried separately for tax purposes on the county tax records. The defendants made the payments on the mortgage.

The defendant and his wife were married in 1953, divorced in 1967, remarried and again divorced in 1974. In the 1967 divorce proceeding, both in their pleadings alleged their real property to be “240 acres of land [Haptonstall Place] and an additional 400 acres of land [River Place] held for financing purposes only, all of which is subject to a real estate mortgage in the amount of Ten Thousand Five Hundred Dollars.” Testimony of the defendant-son in the 1974 divorce action was as follows:

“Q And in fact that [River Place] was transferred to you in return for your promise to look after him, was it not ?

“A No, it was not. It was for security reasons for this mortgage on F.H.A. That is the only reason my name went on that deed.”¹

The plaintiff contends that the exchange of deeds was arranged and accomplished only for the purpose of creating suitable security so that the defendants could buy the Haptonstall Place at that time. When the Farmers Home Administration mortgage was satisfied, the River Place was to be returned by conveyance to the plaintiff-father. The Haptonstall Place would remain the sole and separate property of the defendants. None of this agreement was in writing but was developed by testimony. The appellant claims the deeds are absolute as on their faces shown. The trial judge found that the “parties intended, represented and agreed that the lands [River Place] * * * was [sic] to revert and again he the sole property of the plaintiff and the lands and premises [Haptonstall Place] * * * would be the sole property of the defendants.”

The questions presented on appeal with respect to the circumstances of this case are:

1. Does the parol evidence rule preclude reformation of a deed complete in its terms ?

2. Is the oral agreement to recovery void as violative of the statute of frauds, § 16-1, W.S.1957, C.1965, in pertinent part, as follows:

“In the following cases every agreement shall be void unless such agreement, or some note or memorandum thereof be in writing, and subscribed by the party to be charged therewith:

“First — Every agreement that by its terms is not to be performed within one year from the making thereof;

* * *

“Fifth — Every agreement or contract for the sale of real estate, * *

We have narrated the happenings and proceed on the basis that the parties did orally agree that the transfer of the River Place to the defendants was solely for the purpose of giving them property adequate to secure a loan for their benefit and that upon satisfaction of the mortgage to the Farmers Home Administration, it would be reconveyed to the plaintiff. No consideration passed to the father from the son or his wife. This is done pursuant to the oft-repeated principle that we must assume that evidence in favor of the successful party is true, leave out of consideration entirely evidence of the unsuccessful party in conflict therewith, and give to the evidence of the successful party every favorable inference which may be reasonably and fairly drawn from it. Peters Grazing Association v. Legerski, Wyo. 1975, 544 P. 2d 449, 455, and references there footnoted. Any further facts that may be set out in this opinion are within the evidence shown by the record or may be reasonably inferred.

In broad spectrum, courts give lip service to the familiar rule that a written instrument, absolute on its face, cannot be varied by parol testimony but, as observed in North American Uranium, Inc. v. Johnston, 1957, 77 Wyo. 332, 348, 316 P.2d 325, 330, citing 3 Corbin on Contracts § 329, the rule has so many vagaries that it is the despair of law teachers and law writers. In North American, it is recognized that a transaction may be integrated into a complete document, only partially and in that posture, parol evidence is not admissible with respect to the part reduced to writing but parol evidence is admissible to prove that part not reduced to writing. The latter does not contradict or vary the terms of the. instrument. Parkinson v. Roberts, 1958, 78 Wyo. 478, 329 P.2d 823, 824; Bachmann v. Hurtt, 1919, 26 Wyo. 332, 340, 184 P. 709, 711. The state of facts here is that the parol evidence received is admissible in that it does not vary the terms of the deed to the straw man and the deed to the defendants but explains their purpose and proves an oral agreement to reconvey entered into previous to their execution.²

The defendant himself has established the agreement and he is bound by the doctrine of judicial estoppel. In the earlier divorce litigation, the defendant-son, in order to prevail with respect to the ranch property as against his wife, had to rely on his agreement with his father that he held the River Place in his name only for the purpose of furnishing security to the Farmers Home Administration to enable him to borrow money to buy the Hap-tonstall Place.

The principle, while denominated judicial estoppel, is sometimes referred to as a doctrine which estops a party to play fast and loose with the courts or to trifle with judicial proceedings. It is an expression of the maxim that one cannot blow hot and cold in the same breath. A party will just not be allowed to maintain inconsistent positions in judicial proceedings, as here. 31 C.J.S. Estoppel § 117, pp. 624-625.³

The role of judicial estoppel has been accepted in this state. Hatten Realty Co. v. Baylies, 1930, 42 Wyo. 69, 89-93, 290 P. 561, 72 A.L.R. 587. It was there held that where a man is successful in a position taken in a previous court proceeding, that position rises to the position of conclusiveness. It constitutes a solemn and sworn acknowledgment of the correctness of plaintiff’s claim. Following the same reasoning reached in Hatten, it would be highly inequitable for the defendant to have a decree in his divorce case holding the property not to be his and at the same time be held the owner of an interest in this proceeding. It is that very inconsistency that judicial estoppel will not tolerate. Defendant’s statements in the previous action are the very highest order of evidence against him and are entitled to judicial sanctity. He cannot play hanky-panky with the courts of this state and thus interfere with the integrity of the judicial system. See Parkinson v. California Co., 10 Cir. 1956, 233 F.2d 432, 437-438, for a discussion of Hatten.

We are not a bit concerned that the matter of judicial estoppel was not raised in the lower court or argued by either of the parties. This court has general superintending control over all the courts of the state⁴ and the Wyoming judicial system in general. It is our duty to protect its integrity and prohibit dealing lightly with its proceedings. We are at liberty to decide a case upon any point which in our opinion the ends of justice require,⁵ particularly on a point so fundamental that we must take cognizance of it.⁶

We hold the parol evidence of the whole agreement admissible under the circumstances of this case.

Now, for the statute of frauds and its applicability. The very language of part Fifth of the statute leaves it inapplicable. There was no contract for the sale of lands; the title was lent for a specific purpose. The agreement involved no sale in any sense of the word, let alone its ordinary sense. A contract for the sale of real estate contemplated by the statute of frauds, § 16-1, W.S.1957, C.1965, is one for the transfer of property or real estate, for a fixed price in money, or its equivalent. Mecum v. Metz, 1924, 30 Wyo. 495, 503, 222 P. 574, 576, reh. den. 32 Wyo. 79, 229 P. 1105.

The agreement may fall within the terms of part First of the statute so we still must concern ourselves with the applicability of that provision, assuming that technically the words embrace the oral agreement with which the court is confronted. At the time the contract was made, it could have reasonably been anticipated that the mortgage to the Farmers Home Administration would be in force for over a period of one year. (The mortgage copy in evidence is illegible as to its exact term.) In any event, at the time of trial, some eight years later, there was only an unpaid balance of $100.00.

The oral agreement was partially performed. The plaintiff, pursuant to the agreement, through a straw man, conveyed an interest in the River Place to the defendant and his wife. He performed that part of his bargain. All three then mortgaged the property to the Farmers Home Administration in order to acquire funds to purchase the Haptonstall Place for the defendants. Plaintiff performed that part of his bargain. The defendants alone have substantially paid off the mortgage, so that part of the agreement has been performed. In order to complete performance of the oral agreement, it is only necessary for the defendants to pay off the Farmers Home Administration mortgage in full and convey their paper interest in the River Place back to the plaintiff and for the plaintiff to convey his paper interest in the Haptonstall Place to the defendants. There is no indication that plaintiff has ever been unwilling to do that. For all intents and purposes the plaintiff has fully performed; he makes no claim to any interest in the Haptonstall Place.

If performance on one side of a contract is fully executed, the contract is not within the statute of frauds. Hageman & Pond v. Clark, 1951, 69 Wyo. 154, 172, 238 P.2d 919, 926.

Even if it should be considered that there has not been full performance by the plaintiff because he has yet to convey his paper interest in the Haptonstall Place to the defendants, his substantial part performance is enough to remove the contract from the statute of frauds. Crosby v. Strahan's Estate, 1958, 78 Wyo. 302, 324 P.2d 492. Even though the plaintiff in Crosby failed to prove even part performance, the court fully discussed the rule and the performance necessary to come within the rule. In 78 Wyo. at 316, 324 P.2d at 497, this court said :

“ * * * The promisee of an oral contract, in order to be able to rely on the doctrine of estoppel [against the defendant’s claim that the contract is within the statute of frauds], must be able to show that he has changed his position substantially for the worse and that he has incurred unjust and unconscionable injury and loss. * * * ”

Then, also, in Crosby, 78 Wyo. at 320, 324 P.2d at 499, the doctrine of estoppel was collated to the doctrine of partial performance as based on estoppel and said that the part performance to take an oral agreement to convey real estate outside the statute of frauds must be substantial performance and of a sort that refusal to enforce the agreement would not only deny intended contract rights but cause an unjust and unconscionable injury. See also Butler v. McGee, Wyo.1962, 373 P.2d 595, 597.⁷ Such would be the case here. The plaintiff would lose a substantial interest in his ranch, never intended by the parties and if under the statute would be unfair and inequitable.

An agreement between parties may consist of one or more than one document, such as an agreement to make an agreement, deeds, as here, mortgage, and perhaps after their execution, an agreement to reconvey upon the happening of an event. We are only concerned here with the whole agreement of the parties. A reformation decree does not require the parties to execute any new instrument or instruments. The decree itself constitutes the only instrument necessary and is of the highest order.⁸

The action filed in the district court was one for a declaratory judgment requesting adjudication of the plaintiff’s rights under the deeds. Apparently, the trial became one for reformation and that relief⁹ was awarded by the trial court. A reformation decree does adjudicate the rights of the parties. The case was presented to us as one only in reformation. However, in order to here avoid another action for specific performance when the purpose of the reformation has been served, the trial court should anticipate that potential. The court’s decree should include a provision so providing; we have the authority to modify the district court judgment and decree. Rule 72(c), W.R.C.P.¹⁰ The modified decree should also provide for recon-veyance.¹¹

The evidence is firm that neither plaintiff nor defendants at the inception of the agreement ever intended that the River Place belong to the defendants except for the very limited purpose for which it was conveyed. The trial court properly allowed reformation of the conveyance to conform to the intention of the parties.

Affirmed with directions to the district court to modify its judgment and decree consistent with this opinion.

1 . Other parts of the son’s testimony in the divorce action are to the same effect: Q “What property do you own? A I own 231 acres * * * [Haptonstall Place].” In referring to the River Place, A “I think there’s 440 acres. That belongs to my dad.” Q “What’s the ownership of that land? A My father, Norman B. Allen, Sr.” Q “You’re not the owner of an undivided one-half interest of that ranch? A It may be an undivided interest, but it was for security reasons so I could borrow money to buy this other ranch with, and that was the only reason. F.H.A. required my name on it.”

2 . While we need not and do not utilize it as a point upon which to decide this case, an interesting annotation appears in 71 A.L.R.2d 382, 384, expressing the view that as between parties to a written agreement, oral evidence is admissible to show .that the writing was a sham and not intended to create legal relations. We also only note that courts jealously scrutinize transactions, without consideration, between persons having a fiduciary and confidential relationship with each other, such as son and aged father. Bergren v. Bergren, 1957, 77 Wyo. 438, 455, 317 P.2d 1101, 1107.

3 .The cases bear out the rule. In re Estate of Cohen, 1970, 105 Ariz. 337, 464 P.2d 620; Harrell v. Horton, Okl.1965, 401 P.2d 461; Behrens v. Baldenecker, 1956, 76 S.D. 327, 77 N.W.2d 917; Long v. Knox, 1956, 155 Tex. 581, 291 S.W.2d 292. For an extremely extensive and interesting discussion of the doctrine, see the old case of Farley v. Frost-Johnson Lumber Co., 1913, 133 La. 497, 63 So. 122, L.R.A.1915A, 200, Ann.Cas.1915C, 717.

4 . Section 2, Article V, Wyoming Constitution.

5 . State Highway Commission v. Triangle Development Co., Wyo.1962, 369 P.2d 864, on rehearing 371 P.2d 408.

6 . Oedekoven v. Oedekoven, Wyo.1975, 538 P.2d 1292, 1295.

7 . 8A Thompson on Real Property (1963 Replacement) and 1975 pocketpart § 4463, p. 358, introduces his treatment of the subject of partial performance as taking the contract out of the statute of frauds by saying:

“The statute of frauds has been spoken of as being senescent but not moribund. Many courts have expressed a strong dislike to the doctrine as more likely to create than to prevent actual fraud. So equitable doc-trin.es are to be found intruding into the field to prevent a literal application of the statute where injustice would ensue. ⅜ * * ¡y

The Wyoming cases we cite are consistent with Thompson’s conclusion that the doctrine of part performance taking a transaction away from the statute of frauds is well grounded in the law.

8 . 3 Corbin on Contracts, § 615, p. 737, states: “Seldom, it is believed, has a decree for reformation contemplated the actual redrafting and execution of a reformed document. The decree itself fixes the rights and duties of the parties and the terms of their obligation. * * ⅜ ”

9 . Section 1-1058, W.S.1957, provides as follows :

“Further relief based on a declaratory judgment or decree may be granted whenever necessary or proper. The application therefor shall be by petition to a court having jurisdiction to grant the relief. If the application be deemed sufficient, the court shall, on reasonable notice, require any adverse party whose rights have been adjudicated by the declaratory judgment or decree, to show cause why further relief should not be granted forthwith.”

10 . Rule 72(c), W.R.C.P., provides as follows: “(c) Review by Supreme Gourt. A judgment rendered or final order made by the district court may be reversed in whole or in part, vacated or modified by the supreme court for errors appearing on the record.”

11 .Rule 70, W.R.O.P., provides:

“If a judgment directs a party to execute a conveyance of land or to deliver deeds or other documents or to perform any other specific act and the party fails to comply within the time specified, the court may direct the act to be done at the cost of the disobedient party by some other person appointed by the court and the act when so done has like effect as if done by the party. On application of the party entitled to performance, the clerk shall issue a writ of attachment against the property of the disobedient party to compel obedience to the judgment. The court may also in proper cases adjudge the party in contempt. If real or personal property is within the state, the court in lieu of directing a conveyance thereof may enter a judgment divesting the title of any party and vesting it in others and such judgment has the effect of a conveyance executed in due form of law. When any order or judgment is for the delivery of possession, the party in whose favor it is entered is entitled to a writ of execution upon application to the clerk.”