15 Conn. App. 690 (1988) | Cited 7 times | Connecticut Appellate Court | August 30, 1988

The defendants appeal from the judgmentrendered, after a trial to the court, awardingthe plaintiffs specific performance of a binderof sale1 as an enforceable contract for thesale of real estate.

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The defendants claim that the trial court erred(1) in finding that the binder of sale agreementsigned by the parties created a final enforceableagreement, (2) in concluding that the plaintiffshad sustained their burden of proof with regard totheir ability to perform their obligation underthe binder of sale, and (3) in granting specificperformance. We find error.

The following facts are pertinent to thisappeal. On August 18, 1985, the parties executeda binder of sale agreement whereby the defendantsagreed to sell their home, located at 6 HazelStreet, Norwalk, to the plaintiffs for $179,000.A down payment in the amount of $1790 wasacknowledged with a superseding "contract of sale"to be signed on or before August 30, 1985, atwhich time an additional $16,110 would be paid.The sale was contingent upon the plaintiffsconducting a termite inspection and securing afirst mortgage of not less than $139,000 at thethen current interest rate for a term of thirtyyears before August 25, 1985. In addition, thebinder provided that the closing was scheduled forOctober 15. The defendants expected to move to theBoston area due to a business relocation but this didnot materialize. On or about August 28, 1985, the

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     defendants notified their broker regarding thischange of plans and their intent to withdraw fromthe binder agreement. At that particular time, thedefendants returned the 1 percent binder deposit.

At trial, the plaintiffs testified that theyapplied for a $139,000 mortgage from the GatewayBank and, on September 4, the bank sent them awritten mortgage commitment. The plaintiffs,however, never signed the commitment, paid therequired fee or provided the bank with therequested copy of the contract of sale. Aftermaking further inquiries concerning the house,the plaintiffs purchased another home in Norwalk.

The trial court concluded that the binder ofsale was a legally enforceable agreement and thatthe plaintiffs were ready, willing and able topurchase the defendants' house. The trial courtordered specific performance.

In the first claim of error, the defendantsargue that this is not a case that can be determinedby reference to the statute of frauds.2 Thedefendants contend that the parties intended thebinder to serve as documentation of their intentto enter into an enforceable contract and astatement of information for the attorneys whowould draft the document for the contract of sale.

The decisive question before us is whether thebinder of sale was a binding contract or merelyan informal writing documenting an intention tocreate a binding contract. In concluding that thebinder of sale was not an enforceable contract,we examined the plain meaning of the contract inconjunction with the intent of the parties. As ourSupreme Court has stated, "[t]he court will nottorture words to import ambiguity where ordinarymeaning leaves no room for ambiguity. Downs v.

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     National Casualty Co., 146 Conn. 490, 494,152 A.2d 316 . The circumstances surrounding themaking of the contract, the purposes which theparties sought to accomplish and their motivescannot prove an intent contrary to the plainmeaning of the language used. Connecticut Co. v.Division 425, 147 Conn. 608, 616-17, 164 A.2d 413[1960]; see 3 Corbin, Contracts 542; 4 Williston,Contracts (3d Ed.) 609." Zullo v. Smith, 179 Conn. 596,601, 427 A.2d 409 (1980).

Whether the parties intended legally to bindthemselves prior to the execution of a formalcontract is to be determined from (1) the languageused, (2) the circumstances surrounding thetransaction, and (3) the purpose that they soughtto accomplish. Klein v. Chatfield, 166 Conn. 76,80, 347 A.2d 58 (1974). A consideration of thesefactors enables a court to determine if theinformal contract, in this case the binder, isenforceable or merely an intention to negotiate acontract in the future. See Johnson v. Star Iron &Steel Co., 9 Wash. App. 202, 206, 511 P.2d 1370 (1973).

An examination of the binder of sale revealsthat, by its own terms, the parties were not bounduntil a contract of sale was drawn. The binderspecifically stated that a "CONTRACT OF SALE isto be signed on or before August 30, 1985." Thiscontract of sale, unlike the binder, was to be aformal agreement between the parties. Moreover,it contemplated a large payment of $16,110 "onsigning the superseding contract." The plainmeaning of supersede3 is "[t]o make obsolete,inferior, or outmoded . . . to make void . . .annul, override . . . to make superfluous orunnecessary . . . to take the place of . . . totake precedence over . . . ." Webster, Third NewInternational Dictionary. Applying the aforesaiddefinition of superseding we find

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     that the mere execution of the binder by theparties did not create an enforceable contract."It was essential to the creation of a contractthat a formal written agreement should beexecuted. This formal written agreement was acondition precedent to the completion of acontract, and until such formal written agreementwas executed the parties were still in the stageof negotiations for a contract and either partycould withdraw from the negotiations." AtlanticTerra Cotta Co. v. Chesapeake Terra Cotta Co.,96 Conn. 88, 101, 113 A.2d 156 (1921).

In Schlott v. Zaremski, 32 Conn. Sup. 567,345 A.2d 588 (1975), the parties signed a binder formsupplied by a real estate broker. The bindercontained the words "subject to the followingterms and conditions a formal contract." Thebinder was signed by the defendants, but no formalcontract was executed by the defendants. Theappellate session of the Superior Court held: "Inthis matter the written proposal and theacceptance by Zaremski did not create a bindingand enforceable agreement. The written proposalcontained an expressed condition that it wassubject to `a formal contract' being prepared andexecuted. The mere acceptance of the proposal byZaremski did not create a binding agreement. Thephrase `a formal contract' was a conditionprecedent to the completion of a binding andenforceable agreement and until such a contractwas executed, the parties were still in the stageof negotiation for `a formal contract.' Theparties did not intend to be bound until `a formalcontract' had in fact been executed. The intentionof the parties may be implied from the expressedlanguage used. Atlantic Terra Cotta Co. v.Chesapeake Terra Cotta Co., 96 Conn. 88, 101,113 A. 156 (1921). We agree with the trial court thatthe plaintiff is not entitled to a real estatebroker's commission, as a matter of law, because

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     no binding and enforceable written agreement wasentered into by [the prospective buyer] and thedefendants. The written proposal is not one whicha court of equity would specifically enforce."Schlott v. Zaremski, supra, 568.

The language used in the binder here indicatesthat the agreement was not intended to be anenforceable contract. Although the binderagreement had the basic details of price andpayment essential in any contract of sale for thehouse, it provided for the further negotiation ofitems involved in the purchase and sale. Moreover,only 1 percent of the negotiated price, $1790, wasincluded in the binder agreement as opposed to 9percent, $16,110, expected on the signing of thesuperseding contract. See Atlantic Terra Cotta Co.v. Chesapeake Terra Cotta Co., supra, 98.

The circumstances surrounding the bindertransaction also indicate that the binder was notintended by the parties to be legally enforceable.The binder was prepared by a broker in her officeand not by an attorney. The parties expected anattorney to draft the contract of sale. As ourSupreme Court has recognized, "considering theimportance of the transaction to the parties, thememorandum appears no more than a statement ofsome of the essential features of a proposedcontract and not a complete statement of all theessential terms." Westbrook v. Times-Star Co.,122 Conn. 473, 481, 191 A. 91 (1937).

Finally, the purpose which the parties soughtto accomplish further evidences the parties'intention that this was not a final enforceablecontract. The plaintiffs testified that they feltfree to negotiate any repair that was deemednecessary by the inspection while they were lookingforward to the receipt of the superseding contract.Moreover, the plaintiffs testified that they

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     did not sign the commitment from the bank becausethey were waiting for the signing of thesuperseding contract.

In view of our holding, it is unnecessary toconsider the other claims of error.

There is error, the judgment is set aside andthe case is remanded with direction to renderjudgment for the defendants.

In this opinion the other judges concurred.

1. "BINDER OF SALE "Aug. 18 1985 "AGREEMENT between (SELLER) Kevin & ElizabethWeiss residing at 6 Hazel St. Norwalk who herebyagrees to SELL, and Marc L. & Rhonda S. Fowlerresiding at 329-E 65th St. New York N.Y. whohereby agrees to BUY the property known anddescribed as 6 Hazel St. Colonial INCLUDING THEFOLLOWING EXTRA ITEMS stove/hood d.w. garb disp.Refr. w/D. as is s/ss. PRICE $179,000 "payable as BINDER $1790 "payable on signing superseding CONTRACT $16,110 10 % "payable by MORTGAGE $139,000 "payable on taking TITLE $22,100 "TOTAL $179,000 "This sale is contingent upon Buyer's ability toobtain a first mortgage from a bona fide lendinginstitution of not less than $139,000 at aninterest rate of current % per annum for a term of30 years. "Subject to building & termite insp. Aug 25/85. "Hale & Grant 100 East 42nd Street New York,N.Y. 10017 "Atty for Sellers: Preston Searle #(212)867-2310 "Atty for Buyers: Chuck Busek "The SELLER and BUYER agree that Palotay RealEstate in cooperation with the listing broker ISTHE BROKER in this transaction and the SELLERagrees to pay a commission as agreed. "MORTGAGE commitment to be obtained on or beforeSept. 20/85 "CONTRACT OF SALE to be signed on or before Aug.30/85 "CLOSING OF SALE to be on or before Closing Oct.15/85 "WITNESSES: (Signed) "ACCEPTED: (Signed)"

2. The trial

3. Black's Law Dictionary, 5th Ed. definessupersede as to "obliterate, set aside, annul,replace, make void, inefficacious or useless, repeal."

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