Statute of Frauds. John Peck, an employee of V.S.H. Realty, Inc, asked Abdu Nessralla, his father-in-law, to act as a "straw" (a person who is put up in name only to take part in a deal) in V.S.H.'s acquisition of real property near Nessralla's farm. In

Question

return, Peck agreed to act as a straw to assist Nessralla in purchasing other nearby property—the Sturtevant farm. Nessralla purchased the property V.S.H. wanted and conveyed it to V.S.H. Subsequently, Peck purchased the Sturtevant farm and conveyed the property to himself and his cousin. Nessralla took no part in the purchase of the Sturtevant farm, provided none of the purchase price, and did not know that the purchase had taken place until about a month later. When Nessralla learned of the purchase and asked Peck to sell the farm to him, Peck refused. Nessralla filed a complaint seeking specific performance of Peck's oral agreement to convey the Sturtevant farm to him. The trial court dismissed Nessralla's action, concluding that the Statute of Frauds operated as a complete defense. Nessralla appealed, arguing that Peck was estopped from pleading the Statute of Frauds as a defense. Nessralla claimed that he suffered injury in reliance on the oral agreement, both because he purchased property on Peck's (V.S.H.'s) behalf and because he took no action to purchase the Sturtevant farm on his own behalf. Will the appellate court uphold the trial court's ruling? Explain.

Answer 1

Statute of Frauds
Yes. The state intermediate appellate court upheld the trial court's ruling, concluding that Nessralla's claim had no merit. The appellate court acknowledged that under some cir-cumstances a plaintiff's detrimental reliance on, or partial performance of, an oral agreement to convey property may estop a defendant from pleading the Statute of Frauds as a defense. Specific performance under this rule may be warranted when the party seeking relief suffers "the infliction of an unjust and unconscientious injury and loss." The court disagreed with Nessralla's claims of injury, pointing out that he provided no money toward the purchase of the farm and offered no evidence that he would have attempted to purchase it, or would have sought out another to do so on his behalf, had the oral agreement not existed. "Such illusory ‘reliance' on an oral agreement to convey property does not rise to a level which estops the defendant from pleading the Statute of Frauds." The court cited other cases in which specific performance had been held to be appropriate in the following types of circumstances: when a plaintiff made a down payment, took possession, made substantial improvements, and sold a prior residence; when a plaintiff furnished part of the consideration and took possession; and when a plaintiff paid the purchase price, made minor improvements, and took possession.