Statute of Frauds; Contracts

Nix v Powell, 241 Wis 2d 572, 624 NW2d 421 (Wis App Ct 2001).

Facts: William and Rhonda Nix entered a contract to purchase property from Floyd Powell, Jr. The contract made the Nixes responsible for renter's insurance, taxes, and utilities. The contract also provided that for the first and second year of the contract, the Nixes could not be more than one month behind in payments. Powell was the only party to sign the contract. The Nixes occupied the house for 16 months before a fire destroyed it. In this time, they were two months behind in payments but Powell continued to accept their checks without a dispute.

After the fire, Powell received the proceeds from the insurance settlement, and he refused to continue the contract sale to the Nixes. The Nixes sued to compel Powell to honor the contract for sale of the property. The trial court, through its equity powers, ordered Powell to complete the sale. Powell made the following arguments on appeal: (1) the court should have granted him summary judgment because the contract did not comply with the statute of frauds; (2) the Nixes were not entitled to relief because they materially breached the contract; and (3) the trial court wrongly exercised its discretion because the Nixes failed to show a basis for equitable relief.

Holding: The appellate court affirmed the judgment of the trial court. Powell was not entitled to summary judgment simply because he was the only party to sign the contract. Wisconsin law allows courts to grant equitable relief even if the contract does not meet the statute of frauds. The statute of frauds is just one factor in determining whether the court should grant equitable relief. The trial court did not err in denying summary judgment. Powell made an issue of late payments by the Nixes only after the lawsuit commenced. Until the fire, he accepted their checks and applied them toward the balance due. Because he was aware of the late payments and never attempted to enforce the provision of the contract, he was estopped from raising the issue on appeal. The trial court properly rejected the argument that the Nixes were not due relief because they materially breached the contract. Finally, the trial court did not wrongly apply its discretion in granting equitable relief to the Nixes. Wisconsin law allows the court to enforce the contract if the party against whom enforcement is sought would be unjustly enriched if the contract were not enforced. Powell would be unjustly enriched if he retained the Nix's payments, the insurance settlement, and the property. Fairness dictates that he convey the property in its damaged state.

EDITOR'S NOTE: Under Illinois law, the result of this case would likely be the same. Because the purpose of the statute of frauds is to prevent injustice, it is appropriate for Illinois courts to apply equitable principles when the application of the statute of frauds would produce an inequitable result. Conness v Conness, 94 Ill App 2d 281, 236 NE2d 753 (3rd D 1968). In order to prevent Powell from becoming unjustly enriched at the expense of the Nixes, the Illinois courts would also likely have ordered Powell to complete the sale.

© ATG atgc0205vol26

 

Print this page