231 P.3d 628
Warren and Betty Beaver, the sellers, owned a race horse transportation business in which Michael and Karen Brumlow, the buyers, worked for approximately ten years from 1994 until 2004.1 In October 2000, the sellers purchased twenty-four acres of property in the Village of Ruidoso Downs.2 In approximately June or July of 2001, Michael Brumlow asked Warren Beaver if he would sell some of the land for a home site, and Warren Beaver agreed.3 The parties walked the specific boundaries of the property that the sellers would sell to the buyers.4
The buyers went into possession of the land with the sellers' consent.5 In reliance on the agreement, Karen Brumlow cashed in her IRA and 401-K retirement plans at a substantial penalty.6 The buyers purchased a double-wide home and moved it onto the property.7 Warren Beaver signed an application with the Village of Ruidoso Downs for placement of the home on the property.8 The buyers also made other improvements including skirting the mobile home, pouring concrete footers and a foundation, building a deck and stairs, installing electricity, water, septic, and propane systems, bringing a Tuff Shed onto the property, and landscaping.9 Warren Beaver signed the application for the septic system.10 The buyers spent approximately $85,000 in total.11 The parties discussed formalizing the sale with the sellers' attorney, but no documents were executed because the property was encumbered by a mortgage with a due-on-sale clause.12 The buyers repeatedly requested that the contract be formalized, and the sellers responded that they would work it out.13 No specific date or price was determined, though Michael Brumlow assumed he would pay market value.14
In March 2004, Michael Brumlow gave notice and left the sellers' employment to work for a competitor.15 The relationship deteriorated, and the sellers decided not to sell the land.16 The sellers attempted to restructure the agreement as a lease, prepared an "Agreement" requiring $400 monthly payments, which the buyers signed and paid, initially believing it was for the land.17 When the buyers wrote "Land Payment" on checks, the sellers stopped cashing them and claimed it was rent.18 The buyers offered to pay fair market value and survey the property, but the sellers refused.19 The sellers then filed suit for ejectment alleging violation of a rental agreement.20 The buyers denied a rental agreement and counterclaimed for breach of contract, fraud, and prima facie tort, alleging their occupancy was pursuant to an agreement to purchase.21 The sellers pleaded the statute of frauds as a defense.22
The trial court found that the sellers entered into a contract to sell a specific portion of land to the buyers, that the sellers reneged, and that part performance removed the contract from the statute of frauds.23 The trial court allowed the buyers a choice between money damages for prima facie tort or specific performance.24 The buyers chose specific performance.25 The property was appraised at $10,000, and a survey was prepared.26 The judgment directed the buyers to tender $10,000 and the sellers to execute a warranty deed.27 All other claims were dismissed with prejudice.28 The sellers appealed to the Court of Appeals of New Mexico.29
Whether the statute of frauds bars specific enforcement of the oral agreement to sell land?30
The statute of frauds requires contracts for the sale of lands to be evidenced by a writing signed by the party to be charged.31 The doctrine of part performance removes such a contract from the statute when it has been performed to such an extent that it would be inequitable to deny effect to the agreement.32
No. The buyers went into possession of the specific land with the sellers' consent.33 In reliance on the agreement they spent approximately $85,000 cashing retirement plans, purchasing and moving a double-wide home, and making permanent improvements.34 This significant part performance by both parties makes it inequitable to apply the statute of frauds to bar enforcement.35
The statute of frauds does not bar specific enforcement of the oral agreement to sell land.36
Whether the buyers' part performance was unequivocally referable to the oral agreement to sell land?37
Part performance removes an oral contract from the statute of frauds when the acts are of such a character that an outsider, knowing all circumstances except the claimed oral agreement, would naturally and reasonably conclude that a contract existed regarding the land of the same general nature as that alleged.38 Key factors include taking possession and making valuable permanent improvements.39
Yes. The buyers took possession of the specific demarcated land with the sellers' consent.40 They moved their home onto it and expended $85,000 on improvements including utilities, septic, foundation, and landscaping.41 The sellers drove by daily, signed permit applications, and responded to repeated requests for formalization by saying they would work it out.42 These acts lead an outsider to naturally conclude a contract to sell the land existed rather than a mere license to reside.43
The buyers' part performance was unequivocally referable to the oral agreement to sell land.44
Whether the verbal agreement was sufficiently definite as to purchase price and time of performance to support specific performance?45
A contract for the sale of land is sufficiently definite for specific performance when the parties have agreed on the land to be conveyed and there has been part performance.46 This holds even if price and time are not specified, as the law implies a reasonable price at fair market value and performance within a reasonable time.47
Yes. The parties walked the specific boundaries of the land to be sold.48 The buyers assumed they would pay market value while the sellers consulted an attorney about sale documents.49 The trial court properly set the price at the appraised fair market value of $10,000 and required tender within thirty days as a reasonable time.50 The absence of a fixed price or date does not defeat enforcement where part performance has occurred and equity can supply the missing terms.51
The verbal agreement was sufficiently definite as to purchase price and time of performance to support specific performance.52
Whether the buyers had an adequate remedy at law precluding specific performance of the agreement to sell land?53
No. Land is assumed to have special value not replaceable in money.56 The buyers relied on their part performance and the sellers' part performance to compel conveyance of the specific property rather than seeking damages.57 This makes specific performance the appropriate equitable remedy despite the availability of a tort damages alternative that the buyers declined.58
The buyers did not have an adequate remedy at law precluding specific performance of the agreement to sell land.59