Oral Agreement to Convey Land
This is an appeal from an order denying specific performance of an oral agreement to convey land in Saline County.
In November 1997, appellant sued appellee X in the Saline County Chancery Court alleging that appellee had orally agreed in 1994 to sell appellant three tracts of land totaling 17.45 acres.
On one two-acre tract, a shop and a building designated as a showroom are located. Appellant alleged that he had partially performed his obligations and sought specific performance of the agreement.
Appellee denied the existence of a contract to sell the property and raised the statute of frauds as a defense. After a trial, the chancellor found that the parties never entered into a contract. We disagree and reverse and remand.
At trial, appellant testified that the parties agreed upon a purchase price of $ 900,000, with a $ 300,000 down payment to be paid within two years; appellant would execute a twenty-year note at eight percent interest for the $ 600,000 balance.
According to appellant, the parties originally agreed that he would satisfy the down payment by transferring an automobile worth $ 25,000, diamonds valued at $ 25,000, $ 25,000 in merchandise, and the balance in cash and merchandise to appellee.
He said that he gave appellee merchandise, a coin collection, and $ 25,000 in cash toX the down payment; appellee, however, later claimed that some of the items were not worth as much as appellant had represented and requested that appellant take them back.
Appellant testified that he did so, and the parties agreed that the amount of the down payment would be increased to $ 315,000; that henceforth, all payments would be in cash; and that the time for satisfaction of the down payment would be extended from two to three years.
He stated that, by September 1997, he had paid appellee all of the $ 315,000 down payment and had made forty monthly payments of $ 5,018.64.
Appellant admitted that, of the forty checks that he had given appellee, twenty-six had indicated that they were for "lease" payments but explained that he had made these notations as an accommodation to appellee, who was attempting to hide the sale from his ex-wife.
Appellant also testified that, between 1994 and 1997, he secured a tenant, X, for the tract with the showroom, found tenants for the other two tracts, insured the land, made repairs and improvements to the property, paid appellant for the 1994 real property taxes, and paid the utilities.
Appellant explained the lack of a written document by stating that he had refused to sign the first two purchase agreements that appellee had prepared because they did not accurately reflect their agreement and that the third document was erroneously titled "lease with option to purchase."
The testimony of other witnesses supports appellant's position that this transaction was a sale. X testified that he originally believed that appellant owned the property and had, until September 1997, made his lease payments to appellant.
X, a loan officer with the bank holding the mortgage on the land, testified that appellee had led him to believe that appellant was purchasing it.
At the conclusion of appellant's case in chief, appellee moved to dismiss. the chancellor then made the following remarks:
In order for me to require someone to specifically perform on a contract, I have to have a contract. Whether it's in writing or oral, there's got to be a contract. the essence of any contract, as you know, as well as I do, is there's got to be a meeting of the minds, and there never has been. Your client's own testimony, "If we could have ever gotten a contract that we could have agreed upon and signed." There simply is no contract. for the record, to the extent that it might appear there was one, and there was none, there was insufficient partial performance that would remove the case from the statute of frauds. But the basis of the Court's ruling is, there is no contract and never was. the case is dismissed without prejudice. the only place that this can be remedied will be in a court of law.
In the order dismissing this case, the chancellor found: "There is not, nor has there ever been, a contract between the parties.... This dismissal shall be without prejudice so that appellant may pursue any remedy at law which he may have. "
The chancellor's dismissal for insufficient evidence at the conclusion of appellant's case amounted to a directed verdict. Ark. R. Civ. P. 50(a).
In reviewing a directed verdict, we view the evidence in the light most favorable to the party against whom the verdict was granted and give it its highest probative value, taking into account all reasonable inferences deducible from it. Nicholson v. Simmons First Nat'l Corp., 312 Ark. 291, 849 S.W.2d 483 (1993).
The making of an oral contract for the sale of land must be proven by clear and convincing evidence. Dolphin v. Wilson, 328 Ark. 1, 942 S.W.2d 815 (1997).
Clear and convincing evidence is that degree of proof that will produce in the fact-finder a firm conviction respecting the allegation sought to be established. Creson v. Creson, 53 Ark. App. 41, 917 S.W.2d 553 (1996).
The evidence demonstrates that the transaction at issue clearly had the requisite objective indicators of mutual agreement necessary to form a contract and that appellant established, by clear and convincing evidence, that an agreement was reached.
Appellant established the property's purchase price, the amount of the down payment and the manner in which it would be satisfied, the amount of each monthly payment, and the term of the contract.
In our view, appellant's actions in securing tenants, making repairs and improvements to the property, and securing insurance on it, along with the substantial amount of money he paid appellee, overwhelmingly demonstrate that both parties viewed this transaction as a sale. One cannot reasonably conclude that appellant's actions were those of a tenant.
Appellant also urges us to find that his part performance of the alleged oral contract removed it from the operation of the statute of frauds, Ark. Code Ann. 4-59-101(a)(4) (Repl. 1996).
At the conclusion of the trial, the chancellor said that the statute of frauds was not satisfied; however, he made it clear that the basis of his decision was that there never was a contract. to prevent any misunderstanding upon remand, it is necessary that we now address this issue.
Appellant is correct in arguing that partial or full payment of consideration together with the taking of possession by the purchaser is sufficient to remove an oral contract from the statute of frauds. Langston v. Langston, 3 Ark. App. 286, 625 S.W.2d 554 (1981).
See also McKim v. McLiney, 250 Ark. 423, 465 S.W.2d 911 (1971); Marshall v. McCray, 241 Ark. 184, 406 S.W.2d 863 (1966); Harper v. Albright, 228 Ark. 760, 310 S.W.2d 475 (1958); Chadwell v. Pannell, 27 Ark. App. 59, 766 S.W.2d 38 (1989); Humann v. Renko, 2 Ark. App. 32, 616 S.W.2d 26 (1981); Sossamon v. Davis, 271 Ark. 156, 607 S.W.2d 405 (Ark. App. 1980).
This has been held to be true even when both parties agreed that a contract was made but were not fully in agreement as to the terms. White v. White, 254 Ark. 257, 493 S.W.2d 133 (1973).
As discussed above, appellant paid a substantial amount of money to appellee, made improvements and repairs, and secured tenants, from whom he collected rent, for the property. Appellant's actions were more than sufficient to remove the contract from the statute of frauds.
Appellee offers an alternative reason to affirm the decision of the chancellor - that, because this was really an ejectment action, the chancery court was without jurisdiction to hear this case. We disagree. the question of subject-matter jurisdiction is determined by the characterization of the case. Priest v. Polk, 322 Ark. 673, 912 S.W.2d 902 (1995).
Appellant's complaint clearly requested specific performance of the alleged oral contract to convey the land; at trial, counsel for appellant repeated his request for such relief. Specific performance is an equitable remedy cognizable only in equity. Hardy Constr. Co. v. Arkansas State Highway and Transp. Dep't, 324 Ark. 496, 922 S.W.2d 705 (1996).
Our supreme court has long held that, when an estate or interest in land is the subject matter of an agreement, the jurisdiction of a court of equity to enforce specific performance is undisputed and does not depend upon the inadequacy of the legal remedy in the particular case. See, e.g., Dickinson v. McKenzie, 197 Ark. 746, 126 S.W.2d 95 (1939).
We reverse and remand for further proceedings consistent with this opinion.
Reversed and remanded.