36 Haw. 219 | Haw. | 1942
The Molokai Ranch, Limited, brought ejectment against the defendants for restitution of a certain parcel of land situated at Maalehua on the island of Molokai, upon which the defendants were and are now living.
In addition to a general denial, the defendants interposed two alleged equitable defenses. Throughout the proceedings before the lower court, as well as on appeal, the attorney for the defendants argued that an oral contract, enforceable in equity, between the parties for the sale and purchase of the property in question, existed as the primary basis of the defenses and this theory was reflected by his objections and exceptions below and in his grounds of appeal to this court. The first defense alleged that by reason of such a contract the defendants had equitable title, which prevented the plaintiff from asserting its legal title to regain possession in ejectment. The second defense, as an alternative to the first, invoked the doctrine of equitable estoppel for the purpose of defeating the plaintiff's action. At the close of the trial plaintiff's attorney moved for a directed verdict against the defendants. This motion was granted by the trial judge and a directed verdict *221 entered. A motion for a new trial was denied and the defendants have brought their appeal to this court.
Assuming, for the purpose of disposing of the first defense, that an oral contract for the sale of the property in question did exist between the parties, enforceable in equity, and that as a result thereof, together with subsequent acts of the parties, the rights of the defendants ripened into a complete equitable title to the premises involved, such a title would not under the rulings of this court constitute a defense to an action in ejectment at law. (Magoon v. Kapiolani Estate,
The remaining defense presents two phases of the doctrine of equitable estoppel which may be applicable to the case before us. One is estoppel by conduct (or estoppel in pais). The other is the equitable doctrine of part performance. Both phases depend on the evidence relating to the dealings between the defendants and one George Cooke, the president and manager of the plaintiff corporation, who, the jury would have been justified in finding, had the authority to speak for the plaintiff. The dealings consisted primarily of conversations. The defendants are *222
uncertain in their evidence as to when these conversations occurred in relation to their entry on September 15, 1934, upon the property of the plaintiff at Maalehua at a rental of $50 a month. However, this uncertainty becomes immaterial and without legal significance if the conversations were merely the expressions of future hopes or intentions. In such a case none of the statements made by Cooke to the defendants would be sufficient to give rise to estoppel by conduct. They would be subject to change and withdrawal and therefore of necessity would be uncertain and not final. Consequently, any reliance upon them would have been unjustified and the doctrine of equitable estoppel could not be successfully invoked for the reason that they could not properly form a basis or inducement upon which the defendants could have reasonably adopted any fixed or permanent course of action in respect to the property of the plaintiff. (Bankruptcy of Spencer,
The record unequivocally shows that the defendants and Cooke dealt with each other on an equal basis, without suggestion of any fiduciary relationship between them. It is manifest from the record, particularly from the evidence of the defendants, that both the parties had at least an equal means of knowledge of all the material facts. If anything, the defendants were in a better position to know, for they were direct participants therein. They were at no time mistaken, misled or deceived as to any material fact or circumstance. There was no fraud or deception alleged or shown. Judged by the decisions of this court the plea of estoppel by conduct wholly fails. (Kauhi v. Keoni Liaikulani, in theEstate of Liaikulani, deceased,
In Kamohai (k.) v. Kahele (w.),
Hence, in the absence of an actual contract or a fiduciary relationship between the parties, estoppel by conduct is not present where the truth is known to both parties or where they have equal means of knowledge. (Loff v. Gibbert,
The mandatory prohibitions of the statute of frauds (R.L.H. 1935, § 3900) apply equally to courts of law and to courts of equity that "No action shall be brought and maintained * * * Upon any contract for the sale of lands, tenements or hereditaments, or of any interest in or concerning them; * * * Unless the promise, contract or agreement, upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and be signed by the party to be charged therewith, or by some person thereunto by him in writing lawfully authorized." Therefore, it is clear that there is no remedy whatsoever in law afforded to the defendants under *224
the statute and none in equity unless equitable principles outside of the express language of the statute intervene. Courts of equity consistently have excepted from the operation of the statute of frauds oral contracts for the sale of land where there has been part performance, so-called, of the contract. Such a doctrine, although purely a creation of equity, is also recognized by courts of law as an equitable defense within the more comprehensive doctrine of equitable estoppel. In Riggles
v. Erney,
Thus the primary thesis of the defendants, that the conversations formed an oral contract which equity will enforce because a refusal to do so would amount to a fraud, must be considered, construing the evidence in a light most favorable to the theory of the defense and weighing the equities in favor of the defendants, if such a contract did exist and they have partially performed it. (See Morris *225 v. Ballard, 16 F. [2d] 175, 56 App. D.C. 383, 49 A.L.R. 1461.)
In their discussions relative to the future sale of the property in question, the defendants expressed to Cooke an ambition to own some day the property in question and a hope that the plaintiff would afford them an opportunity to purchase when they would be ready and able to do so. Cooke responded by saying that such an opportunity would be extended if enough of the plaintiff's directors could be won over to his present view that certain people should own homes on Molokai. The measure for the purchase price was to be the appraised value at the time of future sale. After such a determination, the parties would then negotiate the terms of payment. In this connection, there was no suggestion whatsoever that past payments of rent would apply towards the purchase price when ascertained.
Indeed, the conversations are more worthy of note for what they did not contain than for what they did. It is apparent that many of the usual provisions of contracts for the purchase and sale of real estate were completely omitted. They did not disclose what the essential terms and conditions of the contemplated contract of sale were to be. No mention was made of the character of deed by which title should be conveyed. The method of appraisal by which the purchase price was to be determined was not disclosed. In that the plaintiff supplied all the water for utility purposes to the property in question, which is arid land, terms and conditions relative to water supply naturally would be factors to be considered before the value of the property could be appraised. Such important particulars were not mentioned nor were other material elements of the contemplated contract considered, such as the terms and conditions of payment of the purchase price, provisions relating to interest, taxes and insurance, together *226 with the question of default in any payments thereof. Other essential terms were uncertain. The conversations did not specify whether the area to be sold included an adjacent subsistence farm, allotted without additional rental to the defendants by the plaintiff more than a year after their entry to the original area. The time of performance when the contemplated contract of sale would be executed was made dependent upon the uncertain, indefinite and unascertainable time of when the defendants would be ready and able to buy if the opportunity were extended to them.
Construing the conversations, it is significant, in our opinion, that the terms of payment were expressly left to future negotiations. From the nature of the other incomplete and uncertain terms and conditions essential to the validity of the contemplated contract, they also would of necessity have to be settled by future negotiations before a binding contract of sale could be consummated. Consequently, the dealings were incomplete and not concluded. They, in substance, amounted to nothing more than an exchange of present intentions to enter into future negotiations of essential terms of a prospective sale, looking forward to an uncertain time when a contract could be executed, and it is apparent from the record that the contemplated contract was to be bilateral and not unilateral.
Are such mere expressions, not culminating in a binding agreement, enforceable in equity? The defendants answer in the affirmative upon the theory that the expressions, taken together, constituted an oral contract which has been partially performed. However, before the question of performance can arise, such a contract must be found to exist with all the requisites of an enforceable contract in equity had it been in writing. Therefore, those requisites, apart from the statutory requirement of a written instrument, are material in determining whether the *227
conversations formed the kind of a contract which a court of equity will enforce to escape the prohibition expressed in the statute of frauds. (Keller v. Joseph,
The contract for the sale of land which a court of equity will enforce must have all the essential requirements of a valid contract at law. It must be binding at law in order to be enforceable in equity. (Hughes v. City of Buffalo,
The duty of specific performance, which courts of equity enforce, is a reciprocal one. One test of the right to specific performance is that the right must be mutual. (Herley, Inc. v.Harsch,
Therefore, it is abundantly clear from all the authorities that mere expressions, not culminating in a binding agreement, are not enforceable in equity, and that, had the conversations been reduced to writing and signed by the plaintiff, they nevertheless would not have formed a *229
concluded or completed contract nor a contract which a court of equity would enforce. In addition, they would fail to meet the essential requirements of a valid contract at law. Hence, there was nothing for a court of equity to enforce under the rule of specific performance and it follows that an enforcement will not be indirectly accomplished by a court of law under the doctrine of equitable estoppel. (Beaverton Power Co. v. Wolverine PowerCo.,
Consequently, the doctrine of equitable estoppel was unsuccessfully raised as a defense. There was no evidence tending to establish any elements of estoppel by conduct or elements of the doctrine of part performance. The underlying hypothesis of the doctrine of part performance is a subsisting and legally valid contract, enforceable in equity had the contract been in writing, to which any acts of performance must strictly refer, and in reference to which the setting up of the statute of frauds would amount to a fraud.
This court said in Opunui v. Kauhi,
In conclusion, the trial judge properly rejected as a matter of law the defense of an equitable title. In respect to the remaining defenses under the doctrine of equitable estoppel, it was not a question, as it otherwise would have been, of whether the defendants had sustained their burden of proof (Hata v.Dean Witter,
The judgment below is affirmed.