This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2000).
STATE OF MINNESOTA
IN COURT OF APPEALS
Rocky Larson, et al.,
Pam D. Harding, as Trustee of
the Bob Thomas Family Trust
Agreement of December 2, 1989,
Filed May 21, 2002
Hubbard County District Court
File No. C000299
John E. Valen, Fifth & Michigan, P.O. Box 1105, Walker, MN 56484 (for appellants)
Pamela D. Harding, P.O. Box 224, Nevis, MN 56467 (pro se respondent)
Considered and decided by Hanson, Presiding Judge, Schumacher, Judge, and Huspeni, Judge.
Appellants sued respondent seeking specific performance of a contract to convey real estate to appellants. The district court dismissed the suit for failure to satisfy the statute of frauds. Appellants now allege that (1) the district court erred in concluding that a writing with payment terms, separate from the purchase agreement, was required; and (2) even if a separate writing was required, the purchase agreement is enforceable on the grounds of part performance or estoppel. Because the district court did not err in deciding the issues, we affirm.
Bob Thomas was the owner of a property on Big Sand Lake (the property). In the early 1990s, Thomas conveyed the property to his girlfriend, respondent Pamela D. Harding, as trustee of the Bob Thomas Family Trust. Harding and Thomas have four children together.
At some point, Thomas contacted his friend, appellant Dale Breitweser, who is in the business of building log homes, about selling the property to Breitweser. Breitweser indicated that he would need help in buying it. Thomas suggested that, instead of cash, Breitweser could pay for the property by building log cabins on other properties. Breitweser contacted appellant Rocky Larson, and the two entered into a partnership to purchase the property.
In December 1999, Larson and Breitweser entered into a purchase agreement with Thomas to purchase the property for $100,000. But when the title was checked, Larson and Breitweser became aware that the property was actually owned by Harding as trustee. Nonetheless, Larson, Breitweser, and Thomas renegotiated the deal for $115,000.
Larson, Breitweser, and Thomas drafted a purchase agreement that called for a purchase price of $115,000. The purchase agreement referenced a two-page handwritten “promissory note” as part of the terms and conditions. The promissory note gave the payment details, including, importantly, that part of the purchase price would be paid by Breitweser building three log homes for Thomas and Harding.
When the purchase agreement was presented to Harding, she was apparently in a hurry to leave for work. She did not have time to wait until the legal description of the property was filled in, but nevertheless signed the purchase agreement, stating that she would not sign the promissory note until she had a chance to read it. The description of the property was inserted later, and all parties except Harding signed both the purchase agreement and the promissory note. Harding never signed the promissory note.
Sometime after the purchase agreement was signed, Breitweser began to construct the first of the log homes for Thomas at his own work site. At some point, Thomas and Harding went to the work site and discussed the construction of the homes. Thereafter, Thomas told Breitweser and Larson that they would not be selling the property, and Harding wrote a letter indicating that, upon review of the terms of the purchase agreement and the promissory note, she had concluded that the terms and conditions were unacceptable to her and the parties had not come to a meeting of the minds. She offered a ten-day window to continue negotiations.
Larson and Breitweser brought an action for specific performance against Harding and Thomas. After a trial to the court, the promissory note was found by the court to be a material part of the purchase agreement, the contract for sale and purchase of the real property was found not to have been concluded, and the action for specific performance was dismissed. This appeal followed.
Larson and Breitweser first argue that the district court erred in concluding that the purchase agreement did not stand alone as an agreement without the promissory note. Although the construction and effect of a contract are questions of law for the court, Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 66 (Minn. 1979), whether a contract exists is generally a fact question. Morrisette v. Harrison Int’l Corp., 486 N.W.2d 424, 427 (Minn. 1992). Findings of fact will not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the district court to judge the credibility of the witnesses. Minn. R. Civ. P. 52.01.
The law favors the enforcement of somewhat indefinite contracts. Brownlee v. Ertzos, 289 Minn. 83, 91-92, 182 N.W.2d 697, 702 (Minn. 1970). But when parties have left open an essential term for further negotiations, the court declines to make a contract for the parties and specific performance will not lie. Romain v. Pebble Creek Partners, 310 N.W.2d 118, 122 (Minn. 1981). The question here is whether the parties left open essential terms for further negotiations. All four parties signed an agreement designating a $115,000 price for the property, but Harding never agreed to the terms of the incorporated promissory note. Larson and Breitweser argue that the terms of the promissory note were non-essential.
Cases in which indefinite terms were not found to be essential all involved relatively small portions of an agreed upon purchase price, or were found to be otherwise less substantial terms. See, e.g., Kennedy v. Hasse, 262 Minn. 155, 162-63, 114 N.W.2d 82, 87 (1962) (contract for sale of land was not so vague as to be fatal to vendors’ right to specific performance notwithstanding some ambiguity relating to provision concerning less than ten percent of purchase price); Strandberg v. Rossman, 59 Minn. 509, 513, 61 N.W. 675, 676 (Minn. 1894) (despite the speculative nature of payment to be made from crops raised on purchased land, such was not too indefinite for specific performance where purchase price and method of payment were agreed upon); Lankton v. Lamoreaux, 27 Minn. 346, 350, 7 N.W. 360, 362 (Minn. 1880) (although payment due dates were described as “from time to time,” purchase price and interest rate were fixed and terms were, therefore, not too indefinite for specific performance). Here, the provision regarding the building of log homes involved a radically different form of payment for a substantial portion of the purchase price. The promissory note was not an insignificant part of the agreement.
The fact that Larson and Breitweser were willing to provide payment in alternative forms (for example, cash) is of no significance. The “promissory note” clearly incorporated into the purchase agreement provided for only one form of payment, Harding never signed the note or otherwise manifested assent to those terms, and even though Thomas clearly assented to payment in log homes by signing both the purchase agreement and the promissory note, it was Harding’s assent, as trustee, that was crucially withheld.
Larson and Breitweser next argue that the purchase agreement is enforceable even without compliance with the statute of frauds under the doctrines of part performance or equitable estoppel because Larson and Breitweser had begun construction on the log homes and this work was known to both Thomas and Harding. Indeed, it appears that Thomas may have induced Breitweser to begin work on the log homes to be used as payment for the property and that Harding knew that at least one log home was being built. But for equitable estoppel to apply, a party’s reliance must be reasonable. Gresser v. Hotzler, 604 N.W.2d 379, 386 (Minn. App. 2000). Even if Breitweser, in building the houses, relied on Thomas and Harding’s actions, his reliance was not reasonable. First, he was well aware that Harding never signed the promissory note or otherwise agreed to the use of log home construction as payment for the property. The only basis for his inferring Harding’s desire to have the homes built in exchange for the property comes from her visit to the construction site after construction had already begun.
Similarly, the doctrine of part performance does not take the parties’ contract out of the statute of frauds because there is nothing in the record that demonstrates that Breitweser was reasonably induced to act. See In re Guardianship of Huesman, 354 N.W.2d 860, 863 (Minn. App. 1984) (holding that the underlying principle of the doctrine of part performance is that one of the contracting parties must be induced to act).
Furthermore, we note that Breitweser built the log home on his property, not on the property at issue here. Breitweser conceded that he was able to sell the home he was building for Thomas to another buyer. Because the record does not suggest that any of Harding’s acts has placed Breitweser in a position worse than he otherwise would have been in, neither part performance nor equitable estoppel applies. See Lunning v. Land O’ Lakes, 303 N.W.2d 452, 457 (Minn. 1980) (for equitable estoppel to remove a contract from the statute of frauds, party claiming equitable estoppel must have acted upon other party’s misrepresentation in such a manner so as to “change his position for the worse”); Huesman, 354 N.W.2d at 863 (Minn. App. 1984) (equity requires specific enforcement of a contract if, in reliance upon the contract, a party has so altered his position by acts of part performance that he will incur an unjust and irreparable injury if the other party is permitted to rely upon the statute of frauds).
The district court did not err in concluding that the promissory note was an essential part of the parties’ contract. Further, the court did not err in concluding that neither estoppel nor the doctrine of part performance applied in this case.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.