Assignment task:
The case of Harvey v. Dow involves a suit between a daughter and her parents for the transfer a piece of land on which the daughter built a house. The Dows are the parents of Teresa Harvey, their adult daughter. Throughout Teresa's early childhood, she and her parents always discussed building a home on the land owned by her family and that they would convey a parcel of land to her for that purpose. In 1999, with her parent's permission, Teresa and her future husband Jarrod Harvey placed a mobile home on her parent's land. Teresa did not have a deed for the property nor did she pay rent. Sometime in early 2003, Teresa and her husband decided to build a house on the land where their mobile home had been located. Initially, the Dows offered to assist Teresa and her husband in financing the home from a home equity line for the house. As fate would have it, Teresa's husband was killed in a motorcycle accident. Teresa received the proceeds from a life insurance policy from Jarrod's death and used it to finance her home. Her father helped her obtain building permits for the house, although there was no discussion of her parents executing a deed at that time. There is conflicting testimony as to whether Teresa and her father discussed executing a deed when her home was completed, but construction began on her new house for a cost of approximately $200,000. The home was finished in May, 2004. It is important to note some additional facts:
(1)Teresa's father helped build her house;
(2)Teresa lent her brother $25,000, which it appears went unpaid; and
(3)Teresa's parents did not like her new live-in partner.
To say the least, Teresa's relationship with her parents deteriorated. Teresa sued her brother and forbade her parents from seeing their grandchildren. (The Dows sued Teresa to see the grandchildren!) Although Teresa continued to ask for a deed to finance other projects, her parents refused. She sued her parents to compel the conveyance of the property. The focus of the case was whether the Statute of Frauds applied or whether Teresa could show detrimental reliance and thus an exception to the Statute of Frauds. The court in this case focused on a number of facts, even though there was no writing documenting any agreement between Teresa and her parents. First, Teresa made a $200,000 investment, which her parents sanctioned. Second, Teresa's parents helped and supported her in the construction of the house. And finally, Teresa's parents acquiesced in the construction of the house even deciding where it should be built. Because of this, the Court centered its analysis on the issue of detrimental reliance. Adopting the Restatement (Second) of Contracts, the court stated:
A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. The remedy granted for breach may be limited as justice requires.
Restatement (Second) of Contracts § 90(1) (1981).
The Appeals Court found that Teresa had relied to her detriment in that she believed that one day she would receive the property as a gift or inheritance. And, more importantly, her father's conduct in particular implied that her conclusions were legitimate.
The court stated that had Teresa not built on the property with her parents consent, and had there only been discussions to convey the property in the future, the result may have been different. As the court observed "[a]t least as to the land on which Teresa's house now sits, a promise by Jeffrey Dow, Sr. to convey that specific parcel could be implied from his conduct, and if that implication is made, given that Teresa now has an immobile $200,000 asset on that parcel," the refusal to enforce the promise to convey the land would be fraudulent. Ultimately, to not find a promise to convey the land, even absent a written document, would be unjust and inequitable. Concluding that there are exceptions to the Statute of Frauds, the court reminded the parties, specifically Teresa's parents, that the
Statute of Frauds does not always bar the enforcement of an unwritten promise to convey land: [S]pecific performance of a contract that does not satisfy the statute of frauds is warranted only "if it is established that the party seeking enforcement, in reasonable reliance on the contract and on the continuing assent of the party against whom enforcement is sought, has so changed his position that injustice can be avoided only by specific enforcement." (citations omitted).This equitable exception to the statute of frauds may apply if one party's reliance has resulted in "an irretrievable change in position." (citations omitted.) It is beyond question that construction of a $200,000 immobile house constitutes an irretrievable change in position....
Questions for Review
Review Harvey v. Dow. What facts would have changed the court's result? Are there other issues that the court could have considered in finding for Teresa? What did the court order the lower court to do? Explain your answers.