Daily Development for Friday, February 15, 2002

By: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
prandolph@cctr.umkc.edu

VENDOR/PURCHASER; STATUTE OF FRAUDS: Agent's amendment of executed deed, allegedly with Seller's consent, does not satisfy the Statute of Frauds.

Lakeside Oakland Development, L.C. v. Crawford, 2002 WL 169 216 (Mich. App. 2/01/02)

http://www.michbar.org/opinions/home.html?/opinions/appeals/2002/020102/13807.pdf

Sellers needed the easement for ingress and egress from the fast food facility. Seller executed a contract by which it was bound to provide an easement, but then for the closing executed a deed with an attached real property description that did not mention the easement despite the fact that Seller's broker had provided to Buyer by that time a survey showing the easement location. Seller's broker brought this deed to the closing, which Seller did not attend.

When Buyer complained and refused to close, Seller's broker agreed to a postponement, and later provided to the escrow agent a legal description of the easement, reporting that Seller had authorized broker to provide this description as an amendment to the deed. The escrow agent attached the description to the deed, and Buyer closed on that basis.

Later, after Buyer was well underway in its construction of the fast food structure and in improvement of the easement, Seller repudiated the easement and claimed trespass, alleging that it had never authorized its broker to amend the deed.

The trial court, under the banner of the Statute of Frauds, completely bashed Buyer, granting, in fact, sanctions for Buyer's having the temerity to suggest that the broker had some liability for all this.

Blessedly, the appeals court reversed and remanded for a finding of: (1) whether estoppel barred the Seller from asserting the Statute of Frauds; (2) whether, based upon all oral and written evidence, there was an easement granted. The appeals court also reversed the finding on sanctions, holding that there was at least a colorable claim that the broker, with whom Buyer had dealt exclusively throughout the transaction, had some duty to Buyer to get everything right. Comment 1: Perhaps Buyer's counsel saw some reason not to raise the issue of implied agency here, but to the Editor this is the key to the case. The first deed was contained an erroneous legal description. It was on a separate piece of paper, and the broker, allegedly with the express authority of the Seller, and certainly with implied authority, corrected the legal description. This happens every day. Why does this raise a Statute of Frauds problem?

Comment 2: If, on the other hand, the Seller is able to claim that the deed was not valid, then it is in breach of contract, and specific performance ought to lie. The Seller did execute the contract. And the circumstances certainly support specific performance, even if the Seller did not authorize the brokers to amend the deed. The Seller can't allege merger by deed here, because Buyer accepted only a deed that described the easement. Buyer rejected the deed without the easement description.

Comment 3: As to the brokers, well, someone ought to pay something to somebody. Either the brokers have a claim against their client for reneging on the easement, and exposing them to legal defense costs, or Seller has a claim against the brokers for misleading Seller about the easement issue and forcing the closing when Seller was not going along.

What a mess!

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Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last six years, these Reports have been collated, updated, indexed and bound into an Annual Survey of Developments in Real Estate Law, volumes 1‑6, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Maria Tabor at the ABA. (312) 988 5590 or mtabor@staff.abanet.org

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