Farr v. Newman
1963 N.Y. App. Div. LEXIS 4267, 18 A.D.2d 54, 238 N.Y.S.2d 204 (1963)
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Rule of Law:
A non-signing co-owner of real property may be equitably estopped from asserting the Statute of Frauds as a defense to a contract for sale when they actively participate in the transaction and fail to disclose their ownership interest, thereby misleading the purchaser into believing the signing co-owner has full authority to sell.
Facts:
- In 1959, Mr. and Mrs. Newman owned a 148-acre farm as tenants by the entirety.
- Mrs. Newman initiated a conversation with Farr, a neighbor, offering to sell him the farm for $3,000 cash, and wrote down the price and her contact information. Mr. Newman was present during this conversation.
- Later the same day, Farr returned and told Mrs. Newman he would purchase the property himself, to which she replied, 'Very well. That is good.'
- Farr's wife then gave a $50 cash down payment directly to Mrs. Newman.
- Upon receiving the cash, Mrs. Newman instructed her husband, 'Go in the house and make a receipt for the fifty dollars for Mr. Farr.'
- In Mrs. Newman's presence, Mr. Newman wrote and signed a memorandum acknowledging the $50 down payment on the farm for a sale price of $3,000. Mrs. Newman did not sign the document.
- The next day, the Newmans' attorney informed Farr they had another buyer and would only sell to him if he paid an additional $1,000.
- Subsequently, the Newmans, represented by the same attorney, conveyed the property to defendant Hardy, who was also represented by that attorney.
Procedural Posture:
- Farr, the plaintiff, filed an action in a New York trial court seeking specific performance of a real estate contract against defendant Hardy, the subsequent purchaser, and Mr. Newman, one of the original owners.
- Mr. Newman defaulted in appearance and pleading.
- After a trial, a judgment was entered in favor of the defendant, denying specific performance.
- Farr, as appellant, appealed the judgment to the Appellate Division of the Supreme Court of New York.
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Issue:
Does the Statute of Frauds prevent the specific performance of a real estate contract signed by only one of two co-owners (tenants by the entirety) when the non-signing co-owner initiated the sale, accepted the down payment, and was present for and acquiesced to the signing of the agreement by her husband?
Opinions:
Majority - Williams, P. J.
No, the Statute of Frauds does not prevent enforcement of the contract. The written memorandum was sufficiently definite to be enforceable, and the non-signing co-owner, Mrs. Newman, is equitably estopped from denying her husband's authority to sell the property on her behalf. Mrs. Newman's active participation—initiating the sale, setting the price, accepting the down payment, and directing her husband to write the receipt—was affirmatively misleading. She had a duty to assert her ownership interest if she did not intend to be bound, but her silence and acquiescence led Farr to reasonably rely on the validity of the sale. Furthermore, the subsequent purchaser, Hardy, is not a bona fide purchaser because the knowledge of his attorney regarding Farr's prior claim is imputed to him, meaning he is charged with notice and stands in no better position than the Newmans.
Analysis:
This decision clarifies the application of equitable estoppel as a powerful exception to the Statute of Frauds in real estate transactions involving co-owners. It establishes that a co-owner's affirmative conduct and acquiescence can be sufficient to bind them to a contract signed by another co-owner, preventing them from using the statute as a shield for bad faith. The case also reinforces the doctrine of imputed notice, emphasizing that a principal is bound by their agent's knowledge, which can defeat a claim of being a bona fide purchaser for value. This precedent holds co-owners and subsequent purchasers to a standard of fair dealing and due diligence.
