Gilton v. Chapman
1950 Ark. LEXIS 428, 230 S.W.2d 37, 217 Ark. 390 (1950)
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Rule of Law:
When a defendant refuses to perform an oral contract for the sale of land, which is unenforceable under the Statute of Frauds, the plaintiff is entitled to recover any good faith payments made towards that contract, provided the plaintiff was willing to perform their part.
Facts:
- Appellee Chapman made a $1,000 down payment to appellants Gilton on an oral contract for the purchase of a farm and equipment for a total price of $16,500.
- The contract for the sale of land was oral, making it unenforceable under the Statute of Frauds.
- Appellants Gilton claimed they were willing to convey the land if Chapman produced 'cash on the barrel-head' for the balance, which they asserted Chapman never offered.
- Appellee Chapman claimed he did offer to pay cash, in the form of a check that would have been honored, but that appellants Gilton refused to proceed with the deal.
- Chapman subsequently took back his check, believing Gilton had refused to perform the oral contract.
- Appellants Gilton also asserted a second oral contract for $15,000 was made, but this figure was merely a recalculation of the original amount, deducting the $1,000 down payment and a $500 real estate commission, and did not constitute a new agreement.
Procedural Posture:
- Appellee Chapman initiated an action in the Circuit Court to recover a $1,000 down payment he made on an oral contract for the purchase of a farm and equipment.
- Contradictory evidence regarding the performance of the oral contract was presented to a jury in the Circuit Court.
- The jury in the Circuit Court returned a verdict in favor of Chapman for $1,000.
- Judgment was duly entered by the Circuit Court in accordance with the jury's verdict.
- The defendant (appellants Gilton) appealed the judgment of the Circuit Court.
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Issue:
Does a plaintiff who has made a down payment on an oral contract for the sale of land, which is unenforceable under the Statute of Frauds, have a right to recover that payment when the defendant refuses to perform despite the plaintiff's willingness to complete the purchase?
Opinions:
Majority - Leflar, J.
Yes, a plaintiff who has made a down payment on an oral contract for the sale of land is entitled to recover that payment if the defendant refuses to perform despite the contract being unenforceable under the Statute of Frauds. The court affirmed the lower court's judgment, holding that it is well-established that a defendant who refuses to perform an unenforceable contract, with the plaintiff willing to perform, must repay amounts paid in good faith by the plaintiff. This principle is rooted in the concept of unjust enrichment and failure of consideration, as supported by precedents such as Benton v. Marshall and Littell v. Jones, and treatises like Keener, Woodward, and Williston on Quasi-Contracts and Contracts. The court emphasized that the plaintiff's knowledge of the contract's unenforceability does not alter their right to recover the fair value of what they have given. Given the conflicting testimony presented to the jury regarding Chapman's tender of payment and Gilton's refusal to perform, and finding sufficient evidence to support the jury's verdict for Chapman, the court deferred to the jury's findings.
Analysis:
This case reaffirms the equitable principle of unjust enrichment as a remedy for parties who perform in good faith under contracts that are unenforceable due to the Statute of Frauds. It protects against the unconscionable outcome of one party retaining benefits from a contract they refused to uphold, even if that contract lacked legal enforceability from the outset. The decision underscores the judiciary's role in preventing unfair dealings and highlights the importance of jury findings on disputed factual issues like tender and refusal, demonstrating judicial deference to such determinations when supported by sufficient evidence. It signals to future litigants that even in the absence of a legally binding contract, recovery for partial performance may be possible under quasi-contractual theories.
