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| Stonewall. Get it? |
By Elizabeth Kruska
There’s a particular piece of commercial property in Woodstock. Stonewall wanted to buy it from Oliver Block and started negotiating. A contract was created and Stonewall signed it, but Oliver Block did not. Then Oliver Block sold the property to a third party, Stardust. These names delight me and I feel like they could all be pretty good names for racehorses.
Stonewall was upset and sued, saying there was a valid contract and that Oliver Block should be required to perform the contract. Oliver Block moved for summary judgment, which was granted on the basis of the Statute of Frauds because Oliver Block didn’t sign the contract. Stonewall appeals and SCOV affirms. I had no idea we were in for a Statute of Frauds opinion. I’m tickled.
The short backstory is this. The Stonewall people started negotiating with the Oliver Block people. There was some contract negotiation back and forth. Oliver Block sent over a contract, which Stonewall wanted to amend. Those amendments were made, and Oliver Block sent an updated contract along with a request for a deposit. Stonewall signed that contract with and sent a deposit check. Oliver Block deposited the check (actually, their lawyer deposited the check into his trust account—this is the right way to do this) but never signed the contract. A little over a week later, Oliver Block informed Stonewall it couldn’t go through with the terms as negotiated and laid out in the contract.
Meanwhile . . . Oliver Block had been negotiating with Stardust (and possibly with Spiders From Mars). Oliver Block and Stardust came to acceptable terms and inked a deal. About two weeks later, Oliver Block’s lawyer returned Stonewall’s deposit money to them, since their deal was off.
Stonewall, obviously upset, sued Oliver Block in federal court. Although, it appears the suit was filed in the individual names of the Stonewall officials, and I’m not totally sure why. Perhaps that’s not relevant. Anyway, Oliver Block responded to the suit by filing an affidavit that denied the existence of agreed-upon terms and saying it never authorized the deal. Ultimately the federal case was dismissed.
Stonewall then filed in state court, seeking specific performance of the contract. Oliver Block filed a motion for summary judgment, which the court granted, reasoning the Stonewall purchase agreement was not an enforceable contract under the Statute of Frauds. There was an additional part of the summary judgment motion having to do with fraud. That part of the motion was denied by the court but later dismissed by stipulation of the parties.
Stonewall appeals, arguing that there was a valid contract. By signing the negotiated contract and sending the deposit per Team Oliver Block’s instructions, Stonewall argues it was accepting the terms and the contract was complete. It furthers its argument by saying the Statute of Frauds was satisfied by either Oliver Block’s affidavit filed in federal court or a couple of emails sent by Oliver Block’s lawyer. Oliver Block and Stardust disagree.
SCOV agrees the Statute of Frauds is not satisfied and affirms the trial court’s grant of summary judgment.
First of all, as we’ve discussed a lot of times, summary judgment is granted where there is no genuine issue of material fact and where the moving party is entitled to judgment as a matter of law. When SCOV reviews a summary judgment order from a trial court, it reviews it de novo, or anew. SCOV’s job in this case is to determine whether the trial court correctly applied the law.
Second, the fun part! The Statute of Frauds is one of those very old laws brought over from Merry Olde England when our nation was but a wee tot. It’s been part of Vermont law since at least 1779 and it’s been doing a good job so we've kept it around by codifying it into statute.
The whole point, as the name suggests, is to protect the parties from fraudulent contracts. It also helps to protect land-sale contracts, to make sure they’re really what the parties want to do. When it comes to land sales, to satisfy the Statute of Frauds the parties really need two things: a writing and a signature affixed to the writing.
Now, not every contract needs to be in writing of course. My favorite example has to do with buying a donut: I give you the money, you give me the donut. That’s a contract. I know I’ve quoted this before, but it’s a perfect example of when parties do not need to “bring ink and paper into” a transaction. But as contracts become more complicated or more valuable or about the purchase and sale of land (land > donut), they’re going to need to be in writing.
Here there was a writing. Stonewall could very clearly point to the written contract and argue that it contained sufficient information to set forth the terms of the contract. A “writing” can even consist of several different documents if, put together, their contents can clearly indicate the terms of the transaction. Even an oral contract can be part of this.
SCOV is very clear that the Statute of Frauds applies in this case because the Statute of Frauds applies to land-sale contracts. That’s what this was, so that’s why we’re talking about it. There were some pieces. There was the initial contract, which was a writing. It was signed by Stonewall. It was never signed by Oliver Block, but Stonewall says these other writings by Oliver Block satisfy that purpose.
First, Stonewall contends Oliver Block’s federal court affidavit fits the bill. Although there are times an affidavit might help complete the Statute of Frauds, SCOV says not this time. It even happens that affidavits repudiating contracts have been used to show the existence of a contract. Here, even though the affidavit was obviously signed by Oliver Block (as affidavits are), that writing didn’t endorse the fact of the contract. In fact, it basically said, “I asked my lawyer to create a contract so I could negotiate. They signed what I sent but I didn’t actually agree.” Oliver Block wasn’t repudiating an existing contract; it was saying there never was a contract to begin with because there never was an actual meeting of the minds.
There were also some emails between Team Stonewall and Oliver Block’s lawyer that Stonewall wanted to use to show the existence of the contract. SCOV disagrees.
The first email from the lawyer was descriptive. It said “attached you will find: 1. A revised Agreement with changes shown; and 2. A revised Agreement (clean copy) for execution… please execute and get copies back to me while mailing me the deposit check. Frank.” Apparently Stonewall signed and sent the check because the next day the lawyer wrote, “I have received the signed agreement and the deposit check for $25000.”
Stonewall took the position that the fact the lawyer basically signed the email with his own name was sufficient to satisfy the Statute of Frauds, arguing that the lawyer acted as Oliver Block’s agent and was permitted to do this. The problem is, even though the typed name in the email might serve as an electronic signature, there was also no additional writing authorizing the lawyer to conclude the contract on behalf of the client.
The Statute of Frauds does permit a third person, or agent, to conduct land deals on behalf of a principal. There must also be a written authorization for this. This happens all the time: someone can’t attend a real estate closing so they execute a written power of attorney and have that person do the closing for them. Vermont doesn’t have a formal requirement, but it has to be in writing and it has to be unambiguous about the writing’s purpose.
It’s pretty clear Oliver Block gave the lawyer permission to create the contract, but did not give the lawyer permission to sign the contract on its behalf.
So, SCOV affirms.
Justice Robinson writes a concurrence. Justice Robinson’s non-majority opinions almost always bring out additional information and facts from the record that make you go, “Hmm.” If we did emojis around here it would be that face with the quizzical look and the hand on the chin.
Stonewall and Oliver Block had been negotiating this possible sale for weeks. An assistant associated with Oliver Block (so, not the lawyer noted above), sent some documents to Stonewall with an email that said, “if this is in order, please … execute the agreements” with instructions to send them to the lawyer along with the check. Had it stopped there, there probably would have been a contract. But Stonewall got in touch with the lawyer and made some amendments, and that is the writing Stonewall signed.
The point of the Statute of Frauds isn’t to let people back out of contracts, it’s to avoid attempts to enforce agreements that never existed. It seems that the first contract sent by the assistant showed Oliver Block’s intention to contract with Stonewall. Oliver Block’s subsequent affidavit would actually have supported the first contract because it validates the facts around that proposal.
However, since Stonewall didn’t accept that initial proposal and countered with a different proposal of their own, there was no longer a meeting of the minds and thus there was no longer the basis for a contract.
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