Facts
- Mark Shaughnessy and his wife orally agreed with Bernt Eidsmo to lease a dwelling house and lot for one year (May 1, 1943–Apr. 30, 1944) at $47.50 per month.
- As part of the oral lease, Eidsmo agreed to an option allowing plaintiffs to buy the property at lease end for 5,000 on a contract for deed, crediting all rent paid during the lease term toward the price, with the balance payable in $32.50 monthly installments including taxes and 5% interest.
- Plaintiffs took possession on May 1, 1943, paid $570 in rent during the lease term, and made additional payments consistent with the contemplated purchase arrangement after the lease term ended.
- Before and at lease expiration, plaintiffs notified Eidsmo they elected to exercise the option and demanded a contract for deed; Eidsmo repeatedly stated he lacked time to have a contract drawn and told them not to worry because his word was good.
- After Apr. 30, 1944, plaintiffs remained in possession and paid an additional $570 between May 1, 1944 and May 1, 1945, treating the payments as purchase payments under the exercised option.
- Eidsmo denied granting a binding option and asserted any possible sale would be at a higher price and subject to a mortgage; he had not disclosed the mortgage at the time of the lease.
- The trial court credited plaintiffs’ version, found them ready, willing, and able to perform, and ordered specific performance of the contract for deed; Eidsmo appealed from the order denying a new trial.
Issues
- Whether the evidence supported the trial court’s findings on the existence and terms of the oral option and resulting contract for deed.
- Whether an oral option to purchase associated with an oral one-year lease to commence in the future is barred by the statute of frauds.
- Whether full performance of the one-year lease and plaintiffs’ acts after exercising the option removed the transaction from the statute of frauds under part performance.
- Whether part performance requires proof of “unjust and irreparable injury” in addition to possession and part payment referable to a vendor–vendee relationship.
Decision
- The Minnesota Supreme Court affirmed the order denying a new trial and left in place the decree requiring specific performance on the terms found by the trial court.
- The court held the trial court’s factual findings were supported by the evidence and were not subject to appellate reweighing absent being manifestly and palpably contrary to the record.
- The court held an option to purchase is a unilateral contract (an irrevocable offer) and is not itself within the statute of frauds.
- The court held an oral one-year lease to begin in the future is within the statute of frauds, but full performance of the lease removes it from the statute’s operation.
- The court held possession (or retention of possession) plus part payment, when done in reliance on and with unequivocal reference to the vendor–vendee relationship, is sufficient part performance to permit specific enforcement of an oral land-sale contract, without a separate showing of irreparable injury.
- The court expressly overruled prior Minnesota decisions requiring proof of irreparable injury as an additional element of part performance.
Legal Principles
- Appellate courts do not resolve conflicts in evidence; trial court findings stand unless manifestly and palpably contrary to the evidence.
- An option to purchase land is an irrevocable and continuing offer creating personal rights; it conveys no interest in land until exercised.
- Exercising an option creates a new contract for purchase and sale, which may implicate the statute of frauds unless avoided by recognized exceptions.
- An oral lease for one year that commences in the future falls within the statute of frauds, but full performance of the lease term removes that bar.
- For part performance of an oral land-transfer contract, possession (or retention of possession with the vendor’s assent) combined with payment of part or all of the price, with unequivocal reference to a vendor–vendee relationship, permits specific performance.
- A plaintiff seeking specific performance based on part performance need not also prove “unjust and irreparable injury” beyond the possession-and-payment showing.
Conclusion
The court enforced the buyers’ exercised oral purchase option and ordered specific performance because the factfinder credited the buyers’ account and their continued possession plus payments were acts of part performance unequivocally referable to a vendor–vendee relationship, rendering the statute of frauds unavailable without requiring any separate showing of irreparable injury.