IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
January 2006 Term
HEARTLAND, L.L.C., A WEST VIRGINIA
LIMITED LIABILITY COMPANY,
CARL D. SIEGEL, REBECCA A. SEARS,
AND HICKORY PLAINS, L.L.C.,
A MARYLAND LIMITED LIABILITY COMPANY
Plaintiffs Below, Appellants
McINTOSH RACING STABLE, L.L.C.,
A VIRGINIA LIMITED LIABILITY COMPANY
Defendant Below, Appellee
Appeal from the Circuit Court of Jefferson County
The Honorable Thomas W. Steptoe, Jr., Judge
Civil Action No. 03-C-261
Reversed and Remanded
Submitted: March 29, 2006
Filed: May 12, 2006
Michael J. Farrell Kenneth
J. Barton, Jr.
Robert L. Hogan Brendan
Farrell, Farrell & Farrell, L.C. Steptoe & Johnson,
Huntington, West Virginia Martinsburg,
Attorneys for the Appellants Attorneys
for the Appellee
Justice Albright delivered the Opinion of the Court.
SYLLABUS BY THE COURT
1. A circuit court's entry of summary
judgment is reviewed de novo
. Syl. Pt. 1, Painter v. Peavy,
W.Va. 189, 451 S.E.2d 755 (1994).
2. A motion for summary judgment should
be granted only when it is clear that there is no genuine issue of fact to be
tried and inquiry concerning the facts is not desirable to clarify the application
of the law. Syl. Pt. 3, Aetna Cas. & Sur. Co. v. Federal Ins. Co.
of New York,
148 W.Va. 160, 133 S.E.2d 770 (1963).
3. If there is no genuine issue as
to any material fact summary judgment should be granted but such judgment must
be denied if there is a genuine issue as to a material fact. Syl. Pt. 4, Aetna
Cas. & Sur. Co. v. Federal Ins. Co. of New York,
148 W.Va. 160, 133 S.E.2d
4. A party who moves for summary judgment
has the burden of showing that there is no genuine issue of material fact and
any doubt as to the existence of such issue is resolved against the movant for
such judgment. Syl. Pt. 6, Aetna Cas. & Sur. Co. v. Federal Ins.
148 W.Va. 160, 133 S.E.2d 770 (1963).
5. A deed must be upheld if possible.
All instruments must be so construed as to pass an estate, when such was the
intention; and it will be presumed from the making of a deed that the grantor
intended to convey some property by it. Syl. Pt. 7, Proudfoot v. Proudfoot, 214
W.Va. 841, 591 S.E.2d 767 (2003).
6. A deed will not be set aside for
incapacity of the grantor, or for undue influence, misrepresentations, or fraud
upon the part of the grantee, except upon a clear showing of one or more of these
facts by the evidence. Syl. Pt. 1, Hardin v. Collins, 125 W.Va.
81, 23 S.E.2d 916 (1942).
7. A deed drawn and executed in anticipation
of the creation of the grantee as a corporation, limited liability company, or
other legal entity entitled to hold real property is not invalidated because
the grantee entity had not been established as required by law at the time of
such execution, if the entity is in fact created thereafter in compliance with
the requirements of law and the executed deed is properly delivered to the entity,
the grantee, after its creation.
This is an appeal by Heartland, L.L.C., Carl
D. Siegel, II, Rebecca A. Sears, and Hickory Plains, L.L.C., (hereinafter Appellants)
from a summary judgment order entered by the Circuit Court of Jefferson County
in favor of the Appellee, McIntosh Racing Stable, L.L.C. (hereinafter Appellee or McIntosh
Racing). The Appellants instituted this civil action against the Appellee
for breach of contract regarding the sale of a horse stable located in Jefferson
County, West Virginia. The Appellants contend that the lower court erred by granting
summary judgment in favor of the Appellee and maintain that genuine issues of
material fact remain for jury determination. Upon thorough evaluation of the
record, briefs, arguments of counsel, and applicable precedent, this Court reverses
the summary judgment order of the lower court and remands this matter for further
proceedings consistent with this opinion.
I. Factual and Procedural History
January 12, 2003, Dr. Siegel, Ms. Sears, and Marc J. Sharp entered into a
written purchase agreement to purchase a horse stable (See
and real estate from the Appellee,
McIntosh Racing, for $400,00.00. (See
In February 2003, a severe snow storm caused a portion
of the stable's roof to collapse, necessitating extensive repair. On April
4, 2003, a dry closing (See
was conducted, with attorney Charles Howard jointly
retained to handle the closing. The record contains significant deposition
testimony regarding the discussions and agreements generated at this dry closing.
Mr. John McIntosh, owner of the horse stable and representative of Appellee
McIntosh Racing, participated in the dry closing. The initial purchasers, including
Mr. Sharp, Dr. Siegel, and Ms. Sears, also participated in the dry closing.
Attendees also included Randy L. Cohen, representative of Hickory Plains, L.L.C.;
Sarah Stern, daughter of Mr. McIntosh; and Franklin Greg Smith,
a horse trainer working with Mr. Cohen.
The Appellants contend that the parties agreed
at the dry closing that one of the original purchasers, Mr. Sharp, was to be
replaced by purchaser Hickory Plains, L.L.C.,
represented at the dry closing by Mr. Cohen. Hickory Plains, L.L.C. would then
partner with Dr. Siegel and Ms. Sears to create Heartland, L.L.C. (hereinafter Heartland).
The Appellants also contend that based upon the required roof repairs, the
parties agreed that the purchase would not be completed until the Appellee
had repaired the roof and had obtained a certificate of occupancy for the stable.
Furthermore, the Appellants maintain that
there was considerable discussion at the dry closing regarding the fact that
Mr. Siegel, Ms. Sears, and Hickory Plains, L.L.C., intended to create the limited
liability company under the name of Heartland, to own and manage the horse stable
being purchased. The record reveals that the Articles of Organization for Heartland
were signed at the dry closing, in the presence of Mr. McIntosh and all attendees.
The attorney, Mr. Howard, testified that he had planned to file those Articles
of Organization with the West Virginia Secretary of State's office at a later
date, thereby officially creating the legal entity of Heartland. A limited liability
company is a specialized type of organizational entity, first established in
this state in 1996 and presently appearing in Chapter 31B of the West Virginia
Code. (See footnote 4)
Virginia Code § 31B-2-201 (1996) (Repl. Vol. 2003) specifies that [a]
limited liability company is a legal entity distinct
from its members. See also
Larry E. Ribstein, A Critique of
the Uniform Limited Liability Company Act,
25 Stetson L. Rev. 311 (Winter
Based upon the intent to formally organize
a limited liability company under the name of Heartland, the deed to the property
was prepared with the grantee name of Heartland. A deed of trust was executed
at the dry closing for the balance of the purchase price, $330,000.00, with the
Appellee as the lender.
On April 18, 2003, a notice of condemnation
was issued regarding the stable. Repairs were apparently attempted during the
ensuing months, but the purchase was never completed. (See
On August 15, 2003, the Appellee sought to rescind the
agreement to sell the stable to Heartland based upon the fact that Heartland
had not been properly organized under West Virginia law as a limited liability
company. The Appellee contended that it had not entered into a binding contract
with a competent party since Heartland did not technically exist at the time
the deed was signed. The Appellee maintains that it had no knowledge that Heartland
was not a formally organized limited liability company at the time the deed was
signed at the dry closing. Mr. McIntosh testified in his deposition that he
was unaware of the status of the formation of Heartland during the dry closing.
He was, however, aware that repairs to the roof of the stable needed to be
completed before the transaction could be completed.
On October 1, 2003, Heartland's Articles
of Organization were filed with West Virginia Secretary of State's Office. The
Appellants instituted this civil action the following day, seeking specific performance
and alleging breach of contract. Subsequent to substantial discovery, the lower
court granted the Appellee's motion for summary judgment on March 16, 2005, finding
as follows: (1) Heartland was not a party to the contract since it did not exist
until October 1, 2003; (2) Heartland unreasonably delayed in filing Articles
of Organization after the documents were signed at the dry closing on April 4,
2003; (3) purchase, deed, and loan documents signed at the dry closing lacked
mutuality of remedy and mutual assent; (4) there was no proper assignment of
interest in accordance with Statute of Frauds; (See
and (5) the Appellee was justified in rescinding the
contract because the initial purchasers did not attempt to close the transaction
within a reasonable period of time. The Appellants
contend that the lower court erred by granting summary judgment based upon the
following: (See footnote
(1) questions of fact exist regarding the agreements made at the
dry closing, thereby precluding summary judgment; (2) the assignment of the right
to become a participant in the transaction did not violate the Statute of Frauds;
and (3) the lower court should have permitted a jury to determine the reasonableness
of the delay in attempting to close the transaction.
II. Standard of Review
Pursuant to Rule 56 of the West Virginia
Rules of Civil Procedure, summary judgment is required when the record reveals
that there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law. W.Va.R.Civ.Pro. 56(c); see
also Hager v. Marshall,
202 W.Va. 577, 505 S.E.2d 640 (1998). In reviewing
a lower court's entry of summary judgment, this Court applies a de novo
Pt. 1, Painter v. Peavy,
192 W.Va. 189, 451 S.E.2d 755 (1994) (A
circuit court's entry of summary judgment is reviewed de novo
This Court has repeatedly stated that [a]
motion for summary judgment should be granted only when it is clear that there
is no genuine issue of fact to be tried and inquiry concerning the facts is not
desirable to clarify the application of the law. Syl. Pt. 3, Aetna Cas. & Sur.
Co. v. Federal Ins. Co. of New York, 148 W.Va. 160, 133 S.E.2d 770 (1963). See
also Syl. Pt. 1, Williams v. Precision Coil, Inc., 194 W.Va. 52, 459
S.E.2d 329 (1995). In syllabus point four of Aetna Casualty, this Court
explained: If there is no genuine issue as to any material fact summary
judgment should be granted but such judgment must be denied if there is a genuine
issue as to a material fact.
In determining whether a genuine issue of
material fact exists, this Court construes the facts in the light most favorable
to the party against whom summary judgment was granted. Masinter v. Webco
Co., 164 W.Va. 241, 242, 262 S.E.2d 433, 435 (1980); Alpine Prop. Owners
Assn. v. Mountaintop Dev. Co., 179 W.Va. 12, 17, 365 S.E.2d 57, 62 (1987).
Syllabus point six of Aetna Casualty also explains: A party who
moves for summary judgment has the burden of showing that there is no genuine
issue of material fact and any doubt as to the existence of such issue is resolved
against the movant for such judgment. (See
A. The Deed
In evaluating issues surrounding the sale
of real property, particularly with reference to the validity of a deed, this
Court explained as follows in syllabus point seven of Proudfoot v. Proudfoot, 214
W.Va. 841, 591 S.E.2d 767 (2003): A deed must be upheld if possible. All
instruments must be so construed as to pass an estate, when such was the intention;
and it will be presumed from the making of a deed that the grantor intended to
convey some property by it. This Court has also specified, in syllabus
point one of Hardin v. Collins, 125 W.Va. 81, 23 S.E.2d 916 (1942), that [a]
deed will not be set aside for incapacity of the grantor, or for undue influence,
misrepresentations, or fraud upon the part of the grantee, except upon a clear
showing of one or more of these facts by the evidence.
Regarding the necessity of delivery of a
deed and the finality of the transaction on the exact date of the signing of
the deed, this Court explained in Hawley v. Levy, 99
W.Va. 335, 128 S.E. 735 (1925), that in the absence of evidence to the
contrary, an instrument is supposed to become effective on the date it bears.
This is merely a presumption, however, and may be rebutted by evidence. Even
in case of a deed, the actual date of delivery may be shown, and if the time
of delivery is different from the date of the instrument, the deed is effective
only from the date of delivery. 99 W.Va. at 339, 128 S.E. at 736. In Bennett
v. Neff, 130 W.Va. 121, 42 S.E.2d 793 (1947), this Court held that [a]
deed, however, is not delivered when something remains to be done by the parties
who propose to deliver it, or when the delivery is upon the condition that
it shall not take effect until executed by all the grantors and it is never
executed by all of them 130 W. Va. at 138, 42 S.E.2d at 802.
The grantor in the present case, Appellee
McIntosh Racing, maintains that summary judgment in its favor was proper based
upon the fact that the grantee, Appellant Heartland, L.L.C., had not yet been
formally organized as a legal entity on the date upon which the deed was signed.
The Appellants, however, contend that certain conditions, allegedly agreed upon
during the dry closing, had to be satisfied prior to the completion of this real
Regarding a question similar to the one presented
in the case sub judice, this Court, in Spring Garden Bank v. Hulings Lumber
Co., 32 W.Va. 357, 9 S.E. 243 (1889),
explained as follows: The first question presented is: Is the deed to
the Hulings Lumber Company void, because at the date of said deed, the said
company had not been incorporated. 32 W.Va. at 360, 9 S.E. at 244. The Spring
Garden Court resolved that question as follows:
I have been unable to find any
case, in which it has been decided, that a deed made to a corporation having
a potential existence at the date of the deed, and which had obtained its charter
and completed its organization at the time the deed was delivered to it, was
void or ineffectual as a conveyance to the corporation. On the contrary in Wharf
Co. v. Judd, 108 Mass. 224, the court held, that a deed conveying land to
a corporation dated after the date of its charter and before its organization
was a valid conveyance. The court, in its opinion, on page 228, says: The
acceptance of the deed will be presumed as soon as the plaintiffs (the corporation)
were competent to take it. Bank v. Bellis, 10 Cush. 276; Ward v. Lewis,
4 Pick. 518; Bank v. Dandridge, 12 Wheat. 64, 70. And these plaintiffs
could accept a deed as soon as they became competent to make a contract under
32 W.Va. at 361-62, 9 S.E.at 244-45. The Spring Garden Court also explained
that the corporation had at the date of said deed a potential existence
and it subsequently became an actual and legal corporation. Id.
at 363, 9 S.E. at 245.
The issue of deed preparation prior to incorporation
of the recipient was also tangentially addressed in Clarksburg Electric Light
Co. v. City of Clarksburg, 47 W. Va. 739, 35 S.E. 994 (1900). In that case,
this Court explained: I have
no doubt that a deed for land made to a corporation named before incorporation,
and so dated, but delivered after incorporation, would be good. The date of delivery
and acceptance can be shown. It is never a deed until acceptance. Guggenheimer
v. Lockridge, 39 W. Va. 457 (19 S. E. 874); 5 Thomp. Corp. § 5802. The
latter authority says that a deed of conveyance of land to an intended
corporation before its organization will take effect upon the event of its organization;
for its acceptance of the deed, when it becomes capable of accepting, will be
47 W.Va. at 750, 35 S.E. at 998.
This resolution is consistent with cases
in other jurisdictions which have addressed this narrow issue. In Community
Credit Union Services, Inc. v. Federal Express Services Corp., 534 A.2d 331
(D.C. App. 1987), for instance, the District of Columbia Court of Appeals explained
that a property transfer between a debtor and a putative corporation was not
effective until that corporation gained legal existence. 534 A.2d at 334. The
same result was reached in John Davis & Co. v. Cedar Glen # Four, Inc.,
450 P.2d 166 (Wash. 1969). The Washington court reasoned as follows:
Although it is true as a general
rule that a deed is void if the named grantee is not a legal entity, the facts
of this case fall within an exception to the rule.
deed to a corporation made prior to its organization, is valid between the parties.
Title passes when the corporation is legally incorporated. This is particularly
true as against one who does not hold superior title when the corporation goes
into possession under the deed. 6 Thompson on Real Property, § 3011
(1962); 2 Patton on Titles, § 337 (2nd ed. 1957).
450 P.2d at 170.
In Bader Automotive & Industrial Supply
Co. Inc., v. Green, 533 S.W.2d 695 (Mo. App. 1976), the parties had entered
into an employment agreement, including a covenant not to compete, prior to the
incorporation of the plaintiff's business. 533 S.W.2d at 696-97. The defendant
attempted to avoid the terms of the agreement by contending that the corporation
could not ratify a contract that had been executed before the date of incorporation. Id. at
699. The Bader court responded, It is a well settled principle that
'[w]here one contracts with a body assuming to act as a corporation or by a name
distinctly implying a corporate existence, both parties in a suit upon the contract
are usually estopped from denying such corporate existence.' Id. (quoting Schneider
v. Best Truck Lines, Inc., 472 S.W.2d 655, 659 (Mo. App.1971)). Similarly,
in P.D.2000, L.L.C. v. First Financial Planners, Inc., 998 S.W.2d 108
(Mo. App. 1999), the Missouri appellate court held that a contract executed before
the formation of the L.L.C. became the L.L.C.'s contract when adopted by the
L.L.C. after its formation. 998 S.W.2d at 110-111. The P.D.2000 court
held that the contracting party, knowing the L.L.C. was in the formation process,
was estopped to deny the existence of P.D.2000" and could not withdraw
from the contract before the L.L.C. had formed. Id. at 111.
In Allen v. Scott, Hewitt and Mize, L.L.C., 2006
WL 88658 (Mo. App. 2006), a case remarkably similar to the present case, the
Allens sold land to Thomas C. Scott, who was in the process of forming a limited
liability company, to be identified as Scott, Hewitt and Mize, L.L.C. At closing,
the Allens deeded the property to Scott, Hewitt and Mize, L.L.C.,despite the
fact that the certification of organization had not yet been issued to formally
organize the company. The Allens later sued to rescind the contract. Summary
judgment was granted to Scott, Hewitt and Mize. The appellate court affirmed,
reasoning as follows:
consider first the Allens' argument on appeal that the sale and conveyance should
be rescinded because Scott, Hewitt and Mize did not exist until nine days after
closing. Even assuming all facts in favor of the Allens, it is wholly irrelevant
that Scott, Hewitt and Mize was not organized at the time that the Allens contracted
with Scott. The Allens contract was with Scott. It is of no consequence to the
Allens that Scott assigned his interest to an entity that, because of a defect
in its organizational paperwork, had not finished the organizational process.
The formation issues of Scott, Hewitt and Mize are irrelevant to the Allens'
contract with Scott.
2006 WL at *1.
if this were not the case, Scott, Hewitt and Mize was capable of receiving a
valid conveyance despite its not having complete [sic] the organizational process.
Generally, to be valid, a conveyance requires a grantee in esse capable
of taking and holding title to property when the conveyance occurs. Allmon
v. Gatschet, 437 S.W.2d 70, 74 (Mo.1969). However, equitable rights
may result in favor of a subsequently formed corporation named as a grantee. Id. (citing White
Oak Grove Benevolent Society v. Murray, 145 Mo. 622, 47 S.W. 501
(1898)). The Allens cannot challenge the transfer on the basis that Scott,
Hewitt and Mize was not yet a de jure entity.
Id; see also Framingham Sav. Bank v. Szabo, 617 F.2d 897 (1st Cir. 1980); Petroff
v. Arbona, 336 So. 2d 178 (Ala. 1976); CMG Realty of Connecticut, Inc.
v. Colonnade One at Old Greenwich Ltd. Partn., 653 A.2d 207 (Conn. 1995); American
Legacy Found. v. Lorillard Tobacco Co., 831 A.2d 335 (Del. Ch. 2003); Source
Direct, Inc. v. Mantell, 870 P.2d 686 (Kan.1994); Katz v. Prete,
459 A.2d 81 (R.I. 1983).
Based upon the foregoing authority, this
Court holds that a deed drawn and executed in anticipation of the creation of
the grantee as a corporation, limited liability company, or other legal entity
entitled to hold real property is not invalidated because the grantee entity
had not been established as required by law at the time of such execution, if
the entity is in fact created thereafter in compliance with the requirements
of law and the executed deed is properly delivered to the entity, the grantee,
after its creation.
Thus, in the case sub judice, we conclude
that the lower court erred in holding that the deed was invalid simply because
Heartland did not exist on the date the deed was signed. The Appellants specifically
aver that all parties were aware of the status of Heartland and that Heartland
would formally assume ownership of the property when the Articles of Organization
were filed and the legal existence of Heartland was finalized. Thus, according
to the assertions of the Appellants, there was no misrepresentation or subterfuge
in the procurement of the deed. In that regard, the events and alleged agreements
of the dry closing merit examination within this opinion.
B. Dry Closing
Based upon this Court's review of the record
and the deposition testimony concerning the events occurring at the dry closing,
it appears that all individuals agreed at the dry closing that the roof would
have to be repaired prior to completion of the sale. Thus, the repair of the
roof appears to have been one of the conditions precedent to completion of the
sale. The significant factual disagreements, however, focus upon the degree to
which the representative of the Appellee, Mr. McIntosh, realized that Heartland
had not yet been formally organized and that Heartland would consist of Hickory
Plains, L.L.C., Dr. Siegel, and Ms. Sears. In the view of this Court, these factual
discrepancies regarding the representations of the Appellants constitute genuine
issues of material fact necessitating jury resolution of this matter and precluding
Examples of such factual discrepancies are
rampant throughout the record. For example, despite Mr. McIntosh's assertion
that he had no understanding of the formative stages of Heartland as of the date
of the dry closing, the attorney for the parties, Mr. Howard,
testified that during the two-hour dry closing meeting, he explained to all
parties that Hickory Plains, L.L.C., was being substituted for Mr. Sharp as
a member of Heartland. Mr. Howard further testified that Mr. McIntosh, as representative
of the Appellee, appeared to fully comprehend the discussions, seemed to have lucid
conversation, and did not raise any questions or objections to what was
transpiring. Dr. Siegel testified that Mr. Howard discussed the formation of
Heartland and attended to the signing of the Articles of Organization for Heartland.
Dr. Siegel also testified that everybody that was in that room was very
clear that the _ that Heartland, L.L.C., was being formed and that we were
signing all the documents on that day, and I'm absolutely _ I mean I would
be totally shocked if Mr. McIntosh didn't understand that.
Ms. Sears testified that Mr. McIntosh was very
aware we were forming it [Heartland] that day, because we had discussions about
it. We all sat around the table and did everything sort of together. Mr.
Cohen, the representative of Hickory Plains, L.L.C., testified that it appears
that everyone was aware that Heartland's papers were to be signed and thereafter
filed. Ms. Stern, daughter of Mr. McIntosh, testified that she had driven her
father to the dry closing because he had been on pain medication due to a broken
leg sustained when he fell from a tree.
Mr. McIntosh (See
footnote 9) testified that he understood that the stable's roof needed
to be repaired before all matters could be finalized. He also understood that
Dr. Siegel, Ms. Sears, and Mr. Sharp were members of Heartland. Although he could
not recall the attorney explaining the balloon note and the deed, he insisted
that he understood what was occurring at the dry closing. He explained as follows:
[I] subsequently found out that
Heartland did not exist and that gave me pause to wonder just who I was dealing
with. I was given the impression at the dry closing that this was just another
corporation. I mean like, for instance, you might say that you're buying a car
that was made by General Motors. Well, how many times would you think to go back
and legally check to see if General Motors was a legal corporation that could
sell you a car.
In light of the foregoing factual issues,
as evidenced by the varying explanations concerning the events of the dry closing,
this Court concludes that summary judgment was improperly granted in this case.
In determining whether a genuine issue of material fact exists, facts must be
construed in the light most favorable to the Appellants, against whom summary
judgment was granted. The record reveals genuine issues of material fact regarding
the agreement for delay in the completion of the sale, pending repair of the
roof and formation of Heartland. If indeed those conditions were adequately discussed
decided at the dry closing, a determination to be properly made by a jury,
there exits no legal impediment to the consummation of such an agreement to
delay completion of the sale until certain conditions were met. The genuine
issues of material fact regarding the arrangements agreed upon during the dry
closing must be evaluated by a jury. (See
footnote 10) This Court is not adjudicating the issues surrounding
the dry closing; it is only ruling that the factual issues deserve evaluation
by a jury.
C. Alleged Violation of Statute of Frauds
The Appellee also asserts that summary judgment
was appropriate because any attempted assignment of the initial sales contract
was not in writing; thus, the Statute of Frauds was violated. The Appellee's
contention is based upon the fact that the written purchase agreement contemplated
that the property would be purchased by Dr. Siegel, Ms. Sears, and Mr. Sharp.
The deed contained the grantee name of Heartland. At the time the deed was signed,
the membership of Heartland had been changed to Dr. Siegel, Ms. Sears, and Hickory
Plains, L.L.C. The Appellee, who denies knowledge of the changes, asserts that
the Statute of Frauds is violated, and this Court must now determine if there
is sufficient memorialization in a written document to allow this issue to
be considered by a jury.
As this Court has previously recognized,
the underlying purpose of the statute of frauds is to prevent the fraudulent
enforcement of unmade contracts, not the legitimate enforcement of contracts
that were in fact made. Timberlake v. Heflin,
180 W.Va. 644, 648,
379 S.E.2d 149, 153 (1989) (citation omitted). (See
The following observations were included in Richard
A. Lord, 10 Williston on Contracts § 29.4 at 437-38 (footnotes omitted): The
Statute of Frauds was not enacted to afford persons a means of evading just obligations;
nor was it intended to supply a cloak of immunity to hedging litigants lacking
integrity; nor was it adopted to enable defendants to interpose the Statute as
a bar to a contract fairly, and admittedly, made. In brief, the Statute was
intended to guard against the perils of perjury and error in the spoken word. Therefore,
if after a consideration of the surrounding circumstances, the pertinent facts
and all the evidence in a particular case, the court concludes that enforcement
of the agreement will not subject the defendant to fraudulent claims, the purpose
of the Statute will best be served by holding the note or memorandum sufficient
even though it is ambiguous or incomplete.
As was succinctly explained in Wemhoff v. Investors Management Corporation
528 A.2d 1205 (D.C. App. 1987), [T]he statute [of frauds]
. . . does not
require an exhaustive, integrated statement of the agreement
in writing, but only a sufficient statement to establish that there in fact was
agreement and that the party charged should be bound by it. 528 A.2d
at 1207 (quoting Hackney v. Morelite Constr.
, 418 A.2d 1062, 1065 n.
1 (D.C. 1980). In Cunningham v. Lester,
138 S.W.3d 877 (Tenn. Ct. App.
2003), the court explained as follows: [T]o be enforceable under the
statute of frauds a signed writing must express the essential terms of the
agreement with a degree of certainty such that the agreement of the parties
can be determined without recourse to parol evidence. 138 S.W.3d at 880.
In discussing the Cunningham
case, the Court of Appeals of Tennessee
in In re Estate of Price
, 2005 WL 3159771 (Tenn. Ct. App. 2005), recognized
The statute of frauds, however,
may be satisfied by multiple writings if (1) the party to be charged signed at
least one of them, (2) the court can determine from the face of the writings
that they are related, and (3) the court can determine with certainty the essential
terms of the contract without the use of parol evidence.
2005 WL 3159771 at *4.
It is particularly significant in the present
case that Mr. Cohen, as representative of Hickory Plains, L.L.C., Dr. Siegel,
and Ms. Sears, signed the Balloon Note at the dry closing as the three members
of borrower Heartland. Although that note was not signed by Mr. McIntosh, it
identified the lender as McIntosh Racing Stables, L.L.C. Significantly, that
document specified that the borrowers were fully and personally obligated
to keep all of the promises made in this Note, including the promise to pay the
full amount owed. (See
footnote 12) The document continued:
Any person who is a guarantor,
surety or endorser of this Note is also obligated to do these things. Any person
who takes over these obligations, including the obligations of the guarantor,
surety or endorser of this Note, is also obligated to keep all of the promises
made in this Note. The Note Holder [the Appellee] may enforce its rights under
this Note against each person individually or against all of us together. This
means that any
one of us may be required to pay all of the amounts owed under this Note.
Mr. McIntosh personally signed written documents
providing evidence of the sale to Heartland. First, the deed granting the property
to Heartland was in writing and signed by Mr. McIntosh. Second, the Informed
Consent form was also in writing and signed by Mr. McIntosh. It permitted Mr.
Howard to represent both sides of the sale and specifically identified Heartland
as the borrower and the Appellee as the seller. Third, the written Settlement
Statement was signed by Mr. McIntosh, identifying the borrower as Heartland,
describing the property being sold, and summarizing the financial components
of the transaction. Fourth, Mr. McIntosh signed the Owner's Affidavit regarding
the possession of the subject real estate and other conditions concerning taxes,
liens, leases, or judgments affecting the property for purposes of title certifications.
Thus, due to fact that the substitution in
this transaction was memorialized by several written documents signed at the
dry closing, this Court finds no merit in the Appellee's assertion that there
has been a violation of the Statute of Frauds meriting a grant of summary judgment
for the Appellee. Furthermore, the grantee in the subject written deed was Heartland
as a legal entity. In this opinion, we have held that the deed is not invalidated
by the fact that Heartland had not filed its Articles of Organization by the
time the deed was
signed. In this Statute of Frauds claim, it is essentially the evolution of
the recipient grantee from three individuals, as contemplated in the written
purchase agreement, to Heartland as a legal entity composed of three members
that the Appellee is challenging. Based upon the extensive written documentation,
the deed itself, and the absence of any evidence of fraud or duress, we find
sufficient memorialization to permit these issues to go to a jury. We therefore
reverse this matter for further development.
D. Reasonable Time for Completion of Sale
The lower court also found that the Appellants
engaged in unreasonable delay in filing the Articles of Organization to form
Heartland and in attempting to complete this sale of the stable. Indeed, it is
generally held that when a condition to be performed is not limited by an agreement,
the condition must be performed or abandoned within a reasonable time. See
Pt. 2, Shepherdstown Developers, Inc. v. J. Russell Fritts, Inc
W.Va. 691, 398 S.E.2d 517 (1990). However, in the present case, there is no evidence
that the parties agreed that any condition precedent had to be performed by a
certain date, and thus the reasonableness of any delay should be resolved by
a jury. See, e.g., Howell v. Appalachian Energy, Inc
., 205 W.Va. 508,
517, 519 S.E.2d 423, 432 (1999) (What constitutes a 'reasonable period
of time' is normally a question of fact); Stone v. United Engineering
197 W.Va. 347, 360, 475 S.E.2d 439, 452 (1996) (The question of whether
the vendee had a reasonable time to cure the defect or dangerous condition
is a question of fact and is therefore for the jury).
In the present case, the determination of
the reasonableness of the delay in finalizing this sale is a question of fact
and must be made by a jury. Thus, the lower court improperly granted summary
judgment on that issue.
Based upon the foregoing evaluation, this
Court reverses the lower court's order granting summary judgment to the Appellee
and remands this matter for further proceedings. Genuine issues of material fact
exist surrounding the agreement for the sale of this property and the Appellee's
attempt to rescind the agreement. Thus, summary judgment was inappropriate.
The stable consists of
43 stalls and is located in Ranson, Jefferson County, West Virginia.
The initial purchasers,
Dr. Siegel, Ms. Sears, and Mr. Sharp, paid a $10,000.00 earnest money deposit.
The term dry closing was
employed by the parties to distinguish this closing from one in which the
sale is completed at the closing. The evidence before this Court raises a
claim that the parties apparently anticipated that all documents would be
signed at this dry closing and that the parties would discuss and agree upon
additional issues which needed to be finalized prior to completion of the
sale. The brief of the Appellee, for instance, indicates that [s]ince
no money was exchanged at the closing, the closing was considered a 'dry
closing.' The brief of the Appellee also indicates, however, that Dr.
Siegel, Ms. Sears, and Hickory Plains did in fact place a $60,000.00 down-payment
in Mr. Howard's trust account at the dry closing. The Appellee never received
that money since those funds were returned to the purchasers when the Appellee
undertook to rescind the contract.
West Virginia Acts of
the Legislature 1996, c. 256, provided that this chapter would take effect
on July 1, 1996.
The record reveals that
the condition of the barn, subsequent to the collapse of the roof, required
the Appellee to request that the tenants remove their horses to permit renovations
to proceed. The Appellee apparently encountered resistance from some of the
tenants, occasioning further delay. The Appellee also submitted a property
damage claim to its insurer, requiring additional evaluation of the extent
of needed repairs in order to obtain indemnity asserted to be applicable
under the insurance contract for the loss suffered to the damaged property.
Code § 36-1-3 (1923) (Repl. Vol. 2005), provides as follows: No
contract for the sale of land, or the lease thereof for more than one year,
shall be enforceable unless the contract or some note or memorandum thereof
be in writing and signed by the party to be charged thereby, or by his agent.
But the consideration need not be set forth or expressed in the writing,
and it may be proved by other evidence.
The lower court granted
an extension of time to appeal, to which the Appellee objected. Upon appeal
to this Court, the Appellee cross-assigned error, alleging that the lower
court erred by permitting the Appellants to have additional time within which
to file a petition for appeal. This Court finds no merit in the Appellee's
cross-assignment of error. The decision to extend the time within which an
appeal may be filed is properly within the discretion of the lower court.
We find no justification for disturbing the lower court's decision in this
W. Va. Code § 58-5-4 (1998) (Repl. Vol. 2005).
Syllabus point five of Jividen
v. Law, 194 W.Va. 705, 461 S.E.2d 451 (1995), defines genuine
issue in the following manner:
Roughly stated, a genuine
issue for purposes of West Virginia Rule of Civil Procedure 56(c) is simply
one half of a trialworthy issue, and a genuine issue does not arise unless there
is sufficient evidence favoring the non-moving party for a reasonable jury to
return a verdict for that party. The opposing half of a trialworthy issue is
present where the non-moving party can point to one or more disputed material facts.
A material fact is one that has the capacity to sway the outcome of the litigation
under the applicable law.
This clause substantiates
the right of the Appellee to seek payment from the signers, individually, and
indicates that these promoters of the limited liability company to be formed
were personally liable under this contract. See King Features Syndicate,
Dept. of Hearst Corp. Intern. News Serv. Div. v. Courrier, 43 N.W.2d 718
(Iowa 1950) (holding that promoters of corporation are personally liable on
contracts they entered into personally, despite fact that they have contracted
for benefit of projected corporation; promoters are not subsequently discharged
from liability by adoption of contract by corporation when formed, unless there
is agreement to such effect).