Buffaloe v. Hart

Citations: 441 S.E.2d 172; 114 N.C. App. 52; 23 U.C.C. Rep. Serv. 2d (West) 354; 1994 N.C. App. LEXIS 267Docket: 939SC430

Court: Court of Appeals of North Carolina; March 15, 1994; North Carolina; State Appellate Court

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Patricia Hart and Lowell Thomas Hart (defendants) are appealing the denial of their motions for a directed verdict and judgment notwithstanding the verdict in a breach of contract case brought by Homer Buffaloe (plaintiff). The case originated from a complaint filed on November 13, 1989, in Franklin County Superior Court, where defendants denied the existence of a contract and claimed it violated the statute of frauds. The jury trial took place in September 1992.

Plaintiff, a tobacco farmer, testified that he had a verbal agreement with the defendants to rent five tobacco barns for the 1988 farming year, which was based on a handshake and cash payments, without any written contract. He paid $2,000 in rent and $992.64 for tobacco rent to Mrs. Hart. Following this, he proposed to buy the barns for $20,000 in four annual installments of $5,000, which the defendants accepted in a handshake agreement.

After applying for a loan to finance the purchase, which was denied, plaintiff reconfirmed the payment terms with Mr. Hart. Defendants agreed to insure the barns for 1989, contingent on plaintiff reimbursing them for the cost, which he did on October 20, 1989. 

During the 1989 tobacco season, plaintiff attempted to sell the barns, advertising them in The News and Observer. He received a $500 down payment from a buyer for two barns and another $1,000 deposit from a different buyer for three barns. The case revolves around the validity of the oral contract and the enforcement of the terms agreed upon by both parties.

In fall 1989, Mrs. Hart contacted the plaintiff, Homer Buffaloe, to discuss selling him five barns. He indicated he would finalize the arrangement within a few days and planned to deliver a payment. On October 23, 1989, he delivered a personal check for $5,000 to Mrs. Hart, specifying it was for the barns. Although she offered a receipt, he declined, stating the check sufficed. The following day, Mrs. Hart informed him she had sold the barns to someone else. Subsequently, she mailed the torn check back to him, having damaged it significantly. Plaintiff learned that the defendants sold the barns to the same buyers he had intended to sell them to. Testimonies from Randy Baker and J.R. Fowler, Jr. indicated that Buffaloe acted as if he had purchased the barns, and auctioneer Jack Stone held a check for $41,000 related to the barns in escrow until confirming the sale status with Buffaloe. 

Defendants claimed that Buffaloe initially agreed to pay $20,000 over four years but later sought to pay the total upfront after loan approval fell through. When Buffaloe proposed to return to a rental agreement instead, Mr. Hart's wife informed him that the $5,000 was insufficient due to increased tobacco production. She subsequently returned the check. After presenting evidence, the jury found that a contract existed between Buffaloe and the Harts, that he accepted the barns under the contract's terms, that the Harts accepted the payment, and that they breached the contract.

No rental contract existed for the tobacco barns in 1989 between plaintiff Homer Buffaloe and defendants Lowell Thomas Hart and Patricia Hart. The jury awarded Buffaloe $21,000 in damages, but the defendants' motion for judgment notwithstanding the verdict was denied. Two main issues were considered: (I) whether a personal check from the plaintiff, detailing the property and indicating partial payment, satisfies the statute of frauds; and (II) whether there is substantial evidence that both parties accepted the barns and the check, thereby exempting the contract from the statute of frauds.

The barns qualify as "goods" under the Uniform Commercial Code (UCC), which stipulates that contracts for the sale of goods priced at $500 or more must be in writing and signed by the party against whom enforcement is sought (N.C.G.S. 25-2-201). A writing can be deemed insufficient if it omits or inaccurately states terms, but it is enforceable to the extent of the quantity specified.

The defendants contended that the check failed to meet the requirements of the statute of frauds since it was not endorsed by them. A check can satisfy these requirements if it indicates a contract of sale, is signed by the party against whom enforcement is sought, and specifies a quantity. Although the check specified "five barns" and was signed by the plaintiff for $5,000, it did not include any endorsement from the defendants, thus failing to meet the necessary criteria of being signed by the party against whom enforcement is sought.

Consequently, the lack of the defendants' signatures rendered the alleged oral contract unenforceable under Section 25-2-201. Past cases were cited to illustrate that similar checks and letters lacking endorsement did not satisfy the statute of frauds.

Defendants claim that the part performance exception under Section 25-2-201(3)(c) is inapplicable because the plaintiff did not take any overt actions indicating acceptance of the contract. They argue that the check delivered by the plaintiff to Defendant Patricia Hart does not constitute partial payment since it was never legally accepted. However, it is established that for part performance to apply, the seller must deliver goods that the buyer accepts voluntarily and unconditionally, which can be inferred from the buyer's conduct. The official comment to Section 25-2-201 states that the buyer must deliver something accepted by the seller as performance, and part payment can be made by money or check if accepted.

The determination of whether the plaintiff accepted the check as part payment is a factual question for the jury. Evidence presented shows that the plaintiff communicated intentions to purchase the barns, reimbursed the defendants for insurance, paid for improvements, took physical possession, and assisted in marketing the barns. The plaintiff also delivered a check for $5,000, which remained unreturned for several days. 

Under the standards for directed verdicts and judgments notwithstanding the verdict, this evidence supports the jury's conclusion that a contract existed between the plaintiff and the defendants. The jury found that the plaintiff accepted the barns under the contract's terms, and the defendants accepted the payment. The question of whether possession of the check by the seller for 30 days amounts to acceptance remains for the fact finder. Cited cases illustrate enforceable contracts where checks were delivered and later returned. Consequently, the trial court's denial of the defendants' motions for directed verdict or judgment notwithstanding the verdict was upheld, indicating no error in the proceedings.