Kammert Bros. Enters., Inc. v. Tanque Verde Plaza Co

In Kammert Bros. Enters., Inc. v. Tanque Verde Plaza Co., 4 Ariz. App. 349, 360, 420 P.2d 592, 603 (1966), vacated on other grounds, 102 Ariz. 301, 428 P.2d 678 (1967), the Court addressed whether a contract required by the statute of frauds to be in writing could be orally modified to extend the buyer's time to make contract payments. In Kammert, the buyer contracted to purchase real estate, made a down payment, and agreed to pay the balance over time. 4 Ariz. App. at 352-53, 420 P.2d at 595-96. When the first installment of principal came due, the buyer asked for an extension, which the seller's attorney granted under certain additional conditions. Id. at 354, 420 P.2d at 597. The parties did not, however, sign a written amendment. Id. At a later date, the seller informed the escrow agent that the original contract was in default. At a trial for breach of contract, the jury found that the seller had agreed to give the buyer an extension, that the buyer had offered to pay the full amount due, and that the seller had refused in bad faith to accept payment. Id. at 359, 420 P.2d at 602. The jury also found that the seller had led the buyer to believe that it had an extension and that the buyer had acted on that belief. Id. On appeal, the seller argued that a written sale contract could not be materially modified by an oral agreement. Id. at 360, 420 P.2d at 603. Although this court found that the law was "not unanimous," id., the Court concluded that "the majority and better view is that such an extension is not enforceable, in the absence of estoppel, if it does not comply with the statute of frauds." Id. The Court further rejected the buyer's estoppel argument because its actions in reliance on the oral extension were not clearly referable to the extension. Id. at 361, 420 P.2d at 604. However, the Court also concluded somewhat inconsistently that the evidence supported a finding that the seller had waived strict performance of the contract. Id. at 362, 420 P.2d at 605. The supreme court vacated our opinion on grounds unrelated to whether such an extension must be in writing to satisfy the statute of frauds. It stated that "regardless of whether the extension agreement would be considered enforceable under the statute, its existence is evidence of the seller's intent to waive strict performance" of the contract's forfeiture provisions. 102 Ariz. at 305, 428 P.2d at 682. Thus, it ruled, the oral extension of time for payment, "followed by conduct . . . inconsistent with demanding strict compliance with the contract, resulted in a waiver of the forfeiture provisions." Id. In that event, because the seller had waived strict performance, until the seller informed the buyer that strict compliance was necessary, the buyer could not be in default. Id.