Facts
- A builder owned a lot with a nearly completed dwelling and negotiated an oral sale of the house and lot to a prospective buyer for $8,500.
- The buyer was to assume a $4,500 “bank mortgage” and pay $4,000 in cash, but the mortgage did not yet exist and the parties did not agree on the mortgagee or mortgage terms.
- After expressing dissatisfaction, the buyer stated he would proceed if the seller made specified changes to the house, completed it in a particular manner, and removed certain trees.
- The seller performed the requested alterations and completion work, removed the trees, and procured a $4,500 bank mortgage on the premises.
- The buyer refused to complete the purchase.
- The seller later sold the property to another buyer for $8,250 and, to make that sale, repainted and repapered at the new buyer’s request.
- The seller sought to recover (1) expenses for the buyer-requested alterations and completion work, (2) repainting/repapering expenses for the later sale, and (3) the $250 difference between the oral price and the resale price.
Issues
- Whether an oral agreement for the sale of real estate requiring the purchaser to assume a $4,500 bank mortgage is enforceable when the mortgagee and essential mortgage terms are unspecified.
- Whether, despite unenforceability of the express agreement, the seller may recover in implied contract (restitution/quantum meruit) for expenditures incurred at the buyer’s request in reliance on the agreement.
- Whether restitution may include repainting/repapering expenses incurred to sell to a third party and the contract-price/resale-price differential.
Decision
- The court held the oral land-sale agreement was too indefinite to be enforced because the provision requiring assumption of a $4,500 bank mortgage failed to specify the mortgagee and the mortgage debt’s essential terms and conditions.
- The court recognized a potential implied-in-law obligation to pay reasonable compensation for the buyer-requested alterations and completion work performed in good faith in reliance on the supposed bargain.
- The court limited restitution to the reasonable value of the buyer-requested work, reduced by any benefit the seller retained from those alterations.
- The court rejected recovery for repainting and repapering done to satisfy the later purchaser and rejected recovery of the difference between the oral price and the resale price.
- Because the trial court’s judgment did not rest on the correct legal measure, the court found error and ordered a new trial.
Legal Principles
- A real estate sale agreement is unenforceable for indefiniteness when a material financing term—assumption of a mortgage—omits the identity of the mortgagee and the mortgage’s essential terms and conditions.
- Even if part performance could remove a transaction from the statute of frauds, an agreement must still be sufficiently definite in its material terms to be enforced.
- When an express contract is void or unenforceable, restitution may be available where the plaintiff, acting in good faith, rendered services or furnished materials at the defendant’s request with a shared expectation of compensation.
- Restitution for buyer-requested work is measured by reasonable compensation, offset by any benefit accruing to the plaintiff from the work.
- Restitution does not extend to expenses incurred solely to complete a later, separate transaction with a third party, nor does it permit benefit-of-the-bargain damages on an unenforceable contract.
Conclusion
The court treated the parties’ oral land-sale bargain as unenforceable because a key mortgage-assumption term lacked essential detail, but allowed limited restitution for work the buyer specifically requested in reliance on the supposed sale, while denying later sale-related expenses and expectancy-based losses, and remanded for a new trial on the proper measure of recovery.