Henrikson v. Henrikson

127 N.W. 962, 143 Wis. 314, 1910 Wisc. LEXIS 292

• Court: Wisconsin Supreme Court
• Decided: October 4, 1910
• Status: Published

Opinion

KebwiN, J.

The question presented is whether upon the established facts the plaintiff is entitled to specific performance of the oral contract set out in the case. It is settled by •the findings and not denied that the defendant agreed orally with the plaintiff to convey to plaintiff his one-eighth interest in the real estate described in the complaint upon the death of the mother of plaintiff and defendant in consideration of the erection on said real estate of certain permanent improvements and furnishing the material and doing the work necessary therefor; that plaintiff performed and furnished in accordance with such agreement and duly performed all the.conditions of such agreement on his part to be performed; that after the death of the mother defendant refused to convey to plaintiff. The contention on the part of •the respondent is that, although the appellant fully performed •on his part in pursuance of the contract, he cannot compel specific performance, because he did not take possession and has an adequate remedy at law. The general rule is that part performance by the purchaser under an oral agreement to convey is not sufficient to take the contract out of the statute of frauds, unless possession is taken by such purchaser. The general rule has often been laid down by this court. Smith v. Finch, 8 Wis. 245; Brandeis v. Neustadtl, 13 Wis. 142; Ellis v. Cary, 74 Wis. 176, 42 N. W. 252; Blanchard v. McDougal, 6 Wis. 167; Koch v. Williams, 82 Wis. 186, 52 N. W. 257; Popp v. Swanke, 68 Wis. 364, 31 N. W. 916; Harney v. Burhans, 91 Wis. 348, 64 N. W. 1031; Horn v. Ludinglon, 32 Wis. 73. In the above and similar eases it will be seen that the purchaser, or party complaining because •of failure to carry out the oral agreement, could be restored to bis former position in an action at law. In other words, equity will not enforce an oral agreement where possession has not been taken, though partly or even fully performed by •one party, because he has an adequate remedy at law.

It is true strong language is used in some of the cases in stating the general rule, to the effect that part or even full performance of an oral contract to convey real estate by the purchaser is not sufficient without possession on the part of the purchaser. As for example in Popp v. Swanke, 68 Wis. 364, at p. 368 (31 N. W. 916), quoting from Smith v. Finch, 8 Wis. 245, the court said:

“It is only in cases where the defendant would be enabled to practice a fraud upon the complainant unless the contract is specifically executed that a court of equity will interfere. If the purchaser has gone into possession of the land so as to render him liable as a trespasser if the agreement is held void, the court will enforce performance.”

But it is also true that there is another class of cases resting upon the well settled doctrine that where there is performance or part performance by the purchaser under and in pursuance of an oral contract to convey land, though no possession be taken by the purchaser, and the vendor after performance by ■the vendee refuses to convey, equity will enforce specific performance where the vendee has no adequate remedy at law and the refusal to perform on the part of the vendor would work a fraud upon the vendee. The following are some of the authorities illustrative of this rule: Cutler v. Babcock, 81 Wis. 195, 51 N. W. 420; Martineau v. May, 18 Wis. 54; Ingles v. Patterson, 36 Wis. 373; Littlefield v. Littlefield, 51 Wis. 23, 7 N. W. 773; Wall v. M., St. P. & S. S. M. R. Co. 86 Wis. 48, 56 N. W. 367; Brown v. Hoag, 35 Minn. 373, 29 N. W. 135; Bennett v. Dyer, 89 Me. 17, 35 Atl. 1004; Seaman v. Aschermann, 51 Wis. 678, 8 N. W. 818; Scheuer v. Cochem, 126 Wis. 209, 105 N. W. 573; Freeman v. Freeman, 43 N. Y. 34. Tbe cases in tbis court which lay down tbe doctrine that possession is necessary recognize tbe exception. In Harney v. Burhans, 91 Wis. 348, at p. 352 (64 N. W. 1031), tbe court says:

“It was early decided by tbis court (Smith v. Finch, 8 Wis. 245) that tbe full payment of tbe purchase money is not sufficient to take a case out of the statute, so that specific performance will be decreed, unless accompanied by actual possession or some act whereby the vendee has received an injury for which a court of law> cannot give complete remedy

And in Wall v. M., St. P. & S. S. M. R. Co., supra, the' court, after laying down tbe general rule that payment of purchase money alone is not sufficient to take tbe case out of tbe statute of frauds, but that payment of any considerable part of tbe purchase price and tbe vendee’s entry into possession and making valuable improvements would constitute-such part performance as will take tbe case out of tbe statute of frauds and justify tbe enforcement of specific performance, further says (p. 58) :

“So where there has been such part performance by the-vendee that it would operate as a fraud upon him to allow tbe vendor to repudiate the contract, tbe same will be enforced in equity.”

And in Littlefield v. Littlefield, supra, it was held to be the-settled doctrine of tbis court that tbe mere payment of tbe consideration, unaccompanied by any other act, is not such-part performance of a parol contract for tbe conveyance of land as will authorize specific enforcement, but that there must be some other, act done to raise an equity, “such as taking over possession of the lands sold under the contract by tbe purchaser; or one party must have induced the other to so act that if the contract be abandoned he cannot be restored to his former position, and a refusal to perform the contract will operate as a fraud.” To -the same effect are cases in other-courts. Bennett v. Dyer, 89 Me. 17, 35 Atl. 1004, and Brown v. Hoag, 35 Minn. 373, 29 N. W. 135.

Tbe making of valuable permanent improvements on tbe land by tbe vendee, in pursuance of tbe agreement and with tbe knowledge of tbe other party, is always considered to be tbe strongest and most unequivocal act of part performance by which a verbal contract to sell land is taken out of tbe statute. Pomeroy, Spec. Perf. secs. 126-130 and cases cited; Scheuer v. Cochem, 126 Wis. 209, 105 N. W. 573; Littlefield v. Littlefield, 51 Wis. 23, 7 N. W. 773. In tbe case before us tbe plaintiff made valuable and permanent improvements on tbe land in question under and in pursuance of tbe oral agreement that defendant would convey bis one-eigbtb interest as specified. Now, unless plaintiff bas an adequate remedy at law, tbe refusal on tbe part of defendant to carry out tbe agreement operates as a fraud upon tbe plaintiff. The question, therefore, arises whether tbe plaintiff bas such remedy. This turns upon whether be can be placed in bis former position by recovering compensation for tbe improvements made upon tbe land. Tbe defendant owned a one-eigbtb and tbe plaintiff a one-eigbtb interest in tbe land, tbe remaining six-eighths being owned one-eigbtb by each of tbe other six heirs, two of whom were incompetent. So, unless plaintiff can recover from defendant tbe full value of tbe improvements made, be bas not an adequate remedy at law. Tbe improvements made, so far as they benefited tbe property, benefited tbe whole,- and tbe interest of each owner in tbe real estate would' be enhanced in value by tbe services performed and money expended by tbe plaintiff, and tbe question is whether tbe plaintiff can recover damages beyond what defendant bas been enriched by tbe improvements. Tbe oral contract being void, it cannot serve as a basis for tbe recovery of damages. Brandeis v. Neustadtl, 13 Wis. 142; Ellis v. Cary, 74 Wis. 176, 42 N. W. ; Rowell v. Barber, 142 Wis. 304, 125 N. W. 937. As was said, by tbis court in Brandeis v. Neustadtl, supra, in a case of oral contract for purchase of land, “a contract declared void by statute is in all respects a nullity.” Such a contract is not voidable, but absolutely void, and affords no protection to the party claiming under it. Brandeis v. Neustadtl, supra. The person receiving money, however, under a void contract for the sale of land is bound to return it, on the theory that it is the money of the other party to the void contract and which the holder is bound to return. This rule would require a defendant who had become enriched by valuable improvements placed upon his land under a void contract to respond to the extent of such enhancement, upon the principle that the law implies a promise to pay for them. But the law imposes no liability on one who has under a void contract caused such improvements to be made upon another’s land, because, the contract being void and the defendant receiving no benefit, there could be no implied promise to respond for a benefit bestowed upon another. Dowling v. McKenney, 124 Mass. 478; Keener, Quasi-Contracts, 279-282; Browne, Statute of Erauds (5th ed.) § 118a; Dunphy v. Ryan, 116 U. S. 491, 6 Sup. Ct. 486; 2 Page, Contracts, §751; Banker v. Henderson, 58 N. J. Law, 26, 32 Atl. 700; Gazzam, v. Simpson, 114 Fed. 71; Day v. N. Y. C. R. Co. 51 N. Y. 583. The doctrine is well stated in Browne, Statute of Frauds (5th ed.) § 118a, as follows:

“The rule that, where one person pays money or performs services for another upon a contract void under the statute of frauds, he may recover the money upon a count for money paid, or recover for the services upon a quantum meruit, applies only to cases where the defendant has received and holds the money paid or the benefit of the services rendered; it does not apply to cases of money paid by the plaintiff to a third person in execution of a verbal contract between the plaintiff and defendant such as by the statute of frauds must be in writing. Such payment is not a payment to the defendant’s use in tbe sense of tbe rule. It is a payment to bis use, only if be chooses to abide by tbe contract, and it is bis right to refuse to do that.”

So in Keener, Quasi-Contracts, 218, 219, tbe rule is laid ■down that where one renders services under a contract void by tbe statute of frauds, in order to recover be must show that tbe defendant, if be is not compelled to pay tbe plaintiff for that which be has received, unjustly enriched himself at tbe plaintiff’s expense.

Tbe defendant here, owning a one-eighth interest, could be enriched by tbe improvements only in tbe ratio of bis interest to tbe interest of other owners'; therefore could not in an action at law be compelled to respond 'for tbe whole improvement. Tbe plaintiff, of course, could not recover for tbe benefits, if any, to bis own one-eighth interest, the expense of which improvements he might never have incurred but for the promise of defendant to convey. Nor does it seem from tbe record that there is any basis for recovery at law from any of tbe other owners for any part of the expense of tbe improvements. There is certainly none for recovery from the incompetents. Independent of statute tbe general rule is that a tenant in common cannot recover at law against his cotenant for improvements made upon tbe common property. 1 Washb. Real Prop. § 894 and cases cited. Whether plaintiff could have any allowance against any of the tenants in common of tbe property in an action of partition or other equitable action or proceeding we need not consider and do not decide, because that would be an equitable action and not an action at law and no answer to tbe plaintiff’s present action. In order to warrant tbe court in denying specific performance in tbe instant case it must appear that tbe plaintiff has a remedy at law, and such legal remedy must be “as adequate, comprehensive, and effectual as. that afforded by a court of equity.” Butterick P. Co. v. Rose, 141 Wis. 533, 539, 124 N. W. 647. Even if an action at law could be maintained against all tbe beirs to recover for tbe benefits received, jt is by no means clear that sucb action would afford an adequate remedy, because tbe reasonable cost of tbe improvements might not turn out to be tbe measure of tbeir enrichment.

Tbe theory of tbe liability of tbe defendant in tbe instant case is that tbe law raises an implied obligation on tbe part of defendant that be return that which be has received under tbe void contract. And this obligation requires him to respond only for what be has received and not for what others have received because of tbe void agreement. Tbe obligation rests upon tbe benefit received, and tbe extent of tbe obligation is measured by tbe benefit. It is true that there are some cases bolding a different doctrine, and which appear to bold that tbe liability is not measured by tbe benefit received. Parker v. Tainter, 123 Mass. 185, belongs to this class. However, in Dowling v. McKenney, 124 Mass. 478, tbe question was squarely met by tbe court, and it was held that, where one advances money to or performs services for another based upon a contract void under tbe statute of frauds, be can only recover against sucb other so much as defendant has been enriched by tbe transaction. This we believe to be a sound doctrine, and the only logical basis of recovery in sucb a case. Upon that doctrine, of course, tbe plaintiff here has no adequate remedy at law, therefore is entitled to specific performance of tbe contract. It follows, therefore, that tbe judgment must be reversed.

By the Court. — Tbe judgment of tbe court below is reversed, and tbe cause remanded with directions to enter judgment for plaintiff for specific performance.