Goodwin v. Southtex Land Sales

Texas Court of Civil Appeals · Contracts

Contractsstatute of fraudsone-year provisionlimitationsbreach of contractseller's damagesmitigationapparent authority

Facts

Goodwin Nurseries alleged that Southtex Land Sales, Inc. and Mary O'Brien Shary, as independent executrix of the John H. Shary estate, agreed in March 1946 to buy 40,000 budded citrus trees at $1.50 each when the trees reached a trunk diameter of 5/8 to 3/4 inch. A March 18, 1946 letter from Roy K. Straw, signed for the John H. Shary Estate, changed the varieties to be budded and stated that 40,000 seedlings were to be budded with no advance payment required. Goodwin testified that enough trees for the contract were ready by fall 1946, and defendants continued taking trees under the agreement until December 1947, ultimately accepting and paying for 28,225 trees but leaving 11,775 untaken. After defendants failed to respond to Goodwin's later inquiries and there was no market for the remaining small trees, Goodwin rehabilitated frozen trees and sold them with other trees, then sought damages for the untaken balance.

Issue

Whether plaintiffs' breach-of-contract claim was barred by the one-year statute of frauds or the two-year statute of limitations, whether plaintiffs proved a proper measure of damages, and whether the evidence was sufficient to bind the executrix through Straw's actions.

Rule

A contract falls within the one-year statute of frauds only if, at the moment it is made, it cannot possibly be fully performed within one year. In a delayed-performance contract, limitations does not begin to run until it appears that the defaulting party has repudiated the contract and will not continue performance. Where a buyer refuses to take goods and the seller remains ready to perform, damages may be measured by the contract price for the untaken goods minus costs of performance not incurred and minus the net amount realized through reasonable mitigation. An executrix may be bound where the agent acted with apparent authority, the estate's business was continued in the same manner, and no verified denial of the agent's authority was filed as to the signed instrument.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In April, Lena Ortiz, who runs a nursery in McAllen, orally agrees to grow 12,000 ornamental shrubs for Mesa Verde Development, a fictional Arizona land company. The buyer promises to take and pay for each shrub at $18 once it reaches 24 inches tall, and uncontradicted testimony shows the shrubs could have reached that height by November of the same year, though actual pickups stretched into the following summer.

If the buyer argues the agreement is unenforceable under the one-year statute of frauds because performance in fact lasted more than a year, what is the best answer?

Explanation. The controlling rule is narrow: the one-year provision applies only if, at the moment of contracting, there is not the slightest possibility of full performance within one year. Here, the buyer was obligated to accept when the shrubs reached the specified size, and the evidence shows that could have happened within the year. Actual performance extending longer does not bring the contract within the statute. (Derived from Goodwin v. Southtex Land Sales (n.d.).)