Kearns v. Andree

Supreme Court of Connecticut
107 Conn. 181, 139 A. 695 (1928)

ELI5:

Rule of Law:

Where a party performs services in good faith reliance on a contract that is unenforceable due to indefinite terms, that party may recover the reasonable value of the services rendered, even if the other party did not receive a tangible benefit.

Facts:

The plaintiff, a landowner, entered into an oral contract to sell a house and lot to the defendant for $8,500.
The agreement stipulated that the defendant would assume a $4,500 bank mortgage that the plaintiff was to obtain, and pay $4,000 in cash.
The terms of the mortgage, including the mortgagee and its duration, were not specified in the agreement.
After becoming dissatisfied, the defendant agreed to honor the bargain only if the plaintiff made specific alterations to the house, finished it in a certain way, and cut down several trees.
The plaintiff completed all the requested alterations, finished the house, cut down the trees, and secured a $4,500 mortgage.
The defendant then refused to complete the purchase.
The alterations made at the defendant's request made the property less salable.
The plaintiff eventually sold the property to another buyer for $8,250 after making additional changes to suit the new buyer.

Procedural Posture:

The plaintiff sued the defendant in a Connecticut trial court to recover for expenses and losses incurred due to the defendant's refusal to purchase property under an oral agreement.
The trial court found the agreement was too indefinite to be enforced.
The trial court entered judgment for the plaintiff, but limited recovery to the value of the trees cut and the cost of repainting and repapering for the subsequent purchaser.
The plaintiff appealed the trial court's judgment to the Supreme Court of Errors of Connecticut.

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Issue:

Can a party who performs services at the request of another, in reliance on an oral contract for the sale of land that is ultimately unenforceable due to indefinite terms, recover the reasonable value of those services even if the other party received no direct benefit?

Opinions:

Majority - Maltbie, J.

Yes, a party who performs services in reliance on an unenforceable contract can recover the reasonable value of those services. The court first affirmed that the contract was unenforceable because its terms were too indefinite, specifically regarding the mortgage which lacked essential terms like the mortgagee's identity or the loan's duration. The court reasoned that while some recoveries for unenforceable contracts require a benefit to be conferred on the defendant, this is not a universal rule. Instead, this case falls into a category where recovery is based on an implied contract in law (quasi-contract). The services were performed at the defendant's explicit request and in the known expectation of compensation. Because the special contract was void, it did not prevent the law from implying an obligation to pay reasonable compensation for the services requested. The measure of recovery is the reasonable value of the services performed at the defendant's request, not the value of any benefit conferred. However, recovery does not extend to expenses incurred after the defendant's refusal to perform, such as the costs of repainting for the new buyer, as this would amount to enforcing the void contract.

Analysis:

This decision clarifies the distinction between restitution based on unjust enrichment (benefit conferred) and recovery based on reliance (services rendered at request). It establishes that for contracts void due to indefiniteness, the legal basis for recovery is an implied contract, allowing the plaintiff to be compensated for their reliance expenses even without the defendant receiving a tangible benefit. This expands protection for parties who act in good faith on agreements that fail due to technical deficiencies, shifting the legal focus from the defendant's gain to the plaintiff's reliance losses incurred at the defendant's request. Future cases involving unenforceable agreements will look to whether services were explicitly requested as a basis for recovery, separate from whether a benefit was conferred.

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