Shaughnessy v. Eidsmo – Case Brief
Summary of Shaughnessy v. Eidsmo, 222 Minn. 141, 23 N.W.2d 362 (1946).
Facts: The Shaughnessys (P) made an oral agreement to lease a house for one year from Eidsmo (D), with an option to purchase the house and the end of the lease period. The plaintiffs notified Eidsmo that they intended to exercise the option. Eidsmo assured them that he would honor the agreement but never delivered the contract. The plaintiffs remained in possession of the house after the original lease term expired and continued to pay rent while attempting to complete the purchase of the house.
The Shaughnessys sued for specific performance and the defendant challenged the factual allegations regarding the option to purchase. The trial court entered judgment for the plaintiffs and Eidsmo appealed.
Issue: 1) Under what circumstances is a lease agreement with an option to purchase not subject to the statute of frauds? 2) Under what circumstances are contracts removed from the statute of frauds?
Holding and Rule: 1) The acts of taking possession of property and of making part payment, when performed under or in reliance upon the oral contract as to be unequivocally referable to the vendor-vendee relationship, and not referable to any other relationship between the parties, are sufficient to remove the contract from the statute of frauds. 2) Contracts can be removed from the statute of frauds either by fraud or part performance.
The court found that the original lease by itself was covered by the statute of frauds because it could not be performed within one year. When the option to purchase was exercised, it became a contract for sale and therefore covered by the statute of frauds.
The court held that the oral contract was removed from the statute of frauds through possession (living in the house) and part performance (making payments that they believed would be applied to the purchase price of the house).
With respect to the remedy sought by the plaintiffs, the court noted that specific performance is normally available only where damages would be inadequate. However, in contracts for the sale of real property, money damages are presumed to be inadequate, and the plaintiff is not required to prove inadequacy.
Disposition: For plaintiffs; order denying Eidsmo’s motion for a new trial affirmed.
See Pinches v. Swedish Evangelical Lutheran Church for a law school contracts case brief in which the court held that a building contractor may be entitled to compensation for part performance where the building does not conform to the hiring party’s needs.