Earls v. Corning

Citations: 207 Or. App. 706; 143 P.3d 243; 2006 Ore. App. LEXIS 1368Docket: 04CV0104; A125858

Court: Court of Appeals of Oregon; September 13, 2006; Oregon; State Appellate Court

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Plaintiffs Dean and Corinne Earls appealed a trial court judgment that denied their request for specific performance of a real estate contract with Katherine Waters, concluding the contract lacked sufficient definiteness due to the absence of a closing date and the seller's failure to indicate acceptance of the offer. Upon de novo review, the appellate court reversed this decision, noting relevant facts from the record. The contract, titled “OWNER’S SALE AGREEMENT AND EARNEST MONEY RECEIPT,” was a preprinted form filled out by Dean Earls. He specified a purchase price of $180,000, indicated a $1,000 earnest money payment, and stated that the balance would be paid in cash at closing. Although the form included a section for a closing date, Earls left it blank. The acceptance section contained check boxes for Waters to indicate her acceptance or rejection, but she did not check the box for acceptance, although she signed the document and endorsed the earnest money check. Following the signing, Earls initiated a loan application and opened an escrow account. Waters died six days later without surviving relatives, leading to Earls being appointed as a special administrator. During this time, he discovered diaries kept by Waters that contained entries confirming her intent to sell the house to him, including specific references to their agreement and conditions.

Defendant was appointed as the personal representative of Waters’s estate but chose not to honor a sale agreement with plaintiffs, who sought specific performance. At trial, Earls testified that he made an initial oral offer of $175,000 for the property, which Waters accepted. He later proposed increasing the price to $180,000 in exchange for Waters leaving behind personal property, to which she agreed. Earls indicated that he left certain sections of the written agreement blank, including the personal property list and closing date, to simplify the transaction for financing purposes. Despite Waters not checking a box indicating acceptance on the written agreement, Earls asserted her approval through her verbal agreement and signing the document.

The court found that it could not specifically enforce the agreement due to ambiguities regarding the purchase price and the personal property involved, stating that it would need to determine the nature of the $5,000 increase. The court's judgment denied the plaintiffs' claims, citing three incomplete agreements that were inconsistent, the lack of a performance date, and the absence of a clear acceptance of the offer by Waters. The agreements were deemed too vague and incomplete to be enforceable. On appeal, plaintiffs contend that the trial court erred in its conclusion that the written agreement did not satisfy the legal requirements for a contract, particularly disputing the findings regarding the existence of multiple incomplete agreements.

Waters did not check the acceptance box for the offer, but evidence suggests she accepted it through her statements and actions, including her diary notations and endorsement of the earnest money check. The absence of a specific closing date is argued not to invalidate the agreement. The trial court incorrectly found that it needed to determine the purchase price and property details for specific performance, as plaintiffs sought only the real estate, not Waters’s personal property. The defendant contends that the written agreement lacks clarity regarding the property and closing time, referencing case law that outlines essential terms for land sale agreements. However, the plaintiffs maintain that the agreement clearly specifies the real property and the price of $180,000. The court ultimately agrees with the plaintiffs regarding Waters's acceptance, indicating that her intentions were clear despite not marking the acceptance box. The case focuses solely on the interpretation of the written agreement, which is deemed definite in its terms for the sale of real estate.

Testimony of an oral acceptance of a written offer is admissible to establish a contract's existence. A contract must be definite in all material respects for specific enforcement, including a fixed time and place for closing in a land sale contract. However, the Supreme Court's decision in Howard v. Thomas allows for exceptions; if sufficient intent is demonstrated, a court can determine "subordinate details" not explicitly stated in the contract. Though the Supreme Court has slightly retreated from this position, courts can still imply a reasonable time for closing when it is omitted, as established in Sexton v. Berenson. The determination of what constitutes a reasonable time is based on the specific facts, circumstances, and terms of the contract involved.

Evidence indicates that when plaintiffs and Waters signed the sale agreement, they intended for plaintiffs to secure a mortgage from a third-party lender and pay Waters in cash. Testimony from the plaintiffs' mortgage broker confirmed that financing could be arranged in approximately 30 to 40 days. The defendant, as Waters's successor, is obligated only to remove any personal property from the house and transfer the property title to plaintiffs. Plaintiffs seek an order for specific performance within 60 days, which the court finds reasonable. The terms of the agreement are sufficiently definite for specific enforcement. The court reversed and remanded for judgment granting specific performance, allowing 60 days from the date of the opinion to complete the transaction. The trial court previously denied plaintiffs' claims for damages, which they do not contest on appeal. The defendant claims a letter from plaintiffs' attorney attempted to make the sale contingent upon the sale of plaintiffs' current residence, but does not clarify how this affects the agreement's validity. Plaintiffs do not argue that such a contingency exists and simply request specific performance without contingencies. Notably, plaintiffs seek specific performance of the agreement with the least favorable terms for them. The statute of frauds is not meant to protect against fraudulent conduct. The defendant does not contest that Waters accepted plaintiffs' offer.