The Better Chancery Practice Blog

By: Donald Campbell

William Howard, Jr. and John Carpenter Nelson, Jr. own property in Forrest County, Mississippi just north of Camp Shelby.  The area is wooded and undeveloped.  There is a “woods road” that runs from a paved road (Northgate Road) that traverses the land owned by Howard and Nelson, but the location of the road requires Howard and Nelson to cross the other’s property.

In May/June 2021, Howard and Nelson orally entered into an agreement whereby Nelson would convey about .06 acres to Howard, which would allow Howard to use the existing road without crossing Nelson’s property.  In exchange, Howard agreed to convey to Nelson a 15-foot strip of property to provide full access off of Northgate Road to Nelson’s property and also a right of ingress/egress to existing woods road. The agreement was never reduced to writing.

In reliance on the agreement, Howard paid to have a survey completed, had deeds drafted, and obtained a partial release from a bank in anticipation of the transaction being completed. 

May 5, 2022, before executing the deeds, Nelson passed away and his estate refused to recognize the agreements. 

Howard filed a complaint in Forrest County Chancery Court alleging breach of the oral contract for the exchange of land.  Although recognizing that the statute of frauds ordinarily required a contract for the transfer of property to be in writing, Howard alleged an exception to the statute of frauds applied – equitable estoppel.  The case was assigned to Chancellor Rhea Hudson Sheldon.  Chancellor Sheldon held that the agreement had to be in writing to be enforceable and that equitable estoppel did not apply and granted Nelson Estate’s motion to dismiss.

Howard appealed and the case was assigned to the Court of Appeals.  A panel consisting of Judges Wilson, Westbrooks, and McDonald heard the case.  Judge Wilson wrote for a unanimous court affirming the chancellor: Howard v. Nelson, 2024 WL 4354185 (Miss. Ct. App. 2024).

The Court of Appeals began its analysis by noting that, ordinarily, the transfer of an interest in land must satisfy the statute of frauds to be enforceable.  However, there is a “well-established” exception to the statute of frauds – equitable estoppel.  If a claim for equitable estoppel can be established, a party can enforce an agreement even though it does not satisfy the statute of frauds.

The elements to establish equitable estoppel are:  (1) belief and reliance on some representation; (2) change of position as a result thereof; and (3) detriment or prejudice caused by the change of position.  The court of appeals noted that equitable estoppel should only be allowed in exceptional circumstances.

Here, Howard did not allege any facts that would demonstrate the type of detriment that would justify the application of equitable estoppel – instead “he undertook some typical preparations for a land transaction” (hiring a lawyer, having surveys done, obtaining a partial release).  Furthermore, a year passed between the time of the oral agreement and the death of Nelson, further indicating that Howard did not suffer the type of detrimental reliance contemplated by equitable estoppel.

The court affirmed the chancellor’s dismissal of Howard’s complaint.

Professor’s Notes

The equitable estoppel exception to the statute of frauds is premised on the idea that a party should not be able to make an oral agreement, know/expect that the other party would rely on that oral promise and then, after that reliance has occurred, seek to refuse enforcement of the agreement.   Crucial to an equitable estoppel claim is sufficient evidence of reliance to an extent that it would be unjust to deny enforcement of the oral agreement.

To give an example of when equitable estoppel would apply, consider Martin v. Franklin, 245 So. 2d 602 (Miss. 1971).  In this case (which was cited by the Court of Appeals), the state straightened a road that went across property owned by Martin and Franklin.  The parties agreed to verbally swap land so that the road became the agreed-upon border of the property.  Thereafter, Martin, relying on the oral agreement, constructed a house on the property.  Franklin, who observed the construction, did not say anything until the contractor was putting locks on the doors and then asked the contractor, “Do you know you are building a house on my land?”  The Supreme Court held Franklin could not enter into an oral agreement, stand by and allow Martin to incur the cost of a house in reliance on the oral promise and then seek to deny the existence of an agreement.  Therefore, the oral promise to convey the property was enforceable.

The court of appeals is correct to note that the type of reliance and prejudice contemplated by equitable estoppel is more than “typical” costs that would be incurred in the purchase of property.  If that was all that was required it would make the statute of frauds meaningless. The prejudice such that it would be inequitable to allow the other party (here Nelson) to deny enforcement of the agreement despite there being no writing.  This might be building on the property or selling their home in reliance on the promise of the seller to convey the property (the Property textbook favorite Hickey v. Green, 442 N.E.2d 37 (Mass. Ct. App. 1982)).        

Tagged: equitable estoppel, statute of frauds