Defendants, Walter and Mary, owned a farm as tenants in common which plaintiff wanted to buy. Walter advised plaintiff that the asking price was $100,000. Plaintiff counter-offered for $75,000, but Mary refused, saying there was "no way" she could sell it for that price. Plaintiff and Walter later finally agreed on $85,000 for a lease with an option to purchase, and Mary said she would not sell for less than that amount.
Walter, plaintiff, and their attorneys then formed a contract for the agreement. None but Walter knew that he did not know the property outright, but he never claimed to be acting as his wife's agent and plaintiff did not do a title search. It was not until two years later that it came to light that Mary had a 50% ownership in the land.
Plaintiff made substantial improvements on the property while he leased it, and after five years of leasing, he exercised his option to purchase. Defendants refused to honor the option agreement, and plaintiff sued for specific performance.
Trial court found for the plaintiff and order specific performance.
Did Walter have authority to sell his wife's share in the property?
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[T]he three elements required to show the existence of an agency relationship include:
- a manifestation by the principal that the agent will act for him;
- acceptance by the agent of the undertaking; and
- an understanding between the parties that the principal will be in control of the undertaking.
Ratification is defined as "the affirmance by a person of a prior act which did not bind him but which was done or professedly done on his account." Ratification requires "acceptance of the results of the act with an intent to ratify, and with full knowledge of all the material circumstances."
The facts do not support the trial court's finding that Walter acted as Mary's agent in the discussions. Saying that one would not less for less that an amount is not the equivalent of agreeing to sell it for that amount. And even though Walter typically handled the business aspects of the farm, that does not inherently make him his wife's agent. Walter had never signed any business documents as her agent; she did it herself.
Nothing shows that Mary intended to ratify the agreement. She may have observed the land being used and benefitted from the payments, but her husband had the right to lease his interest in the land and it is reasonable that he would have shared the money with his spouse. Her failing to repudiate the agreement was not needed, as it was never claimed to have been done on her behalf.
While Walter was not able to contract on behalf of his wife, he still contracted to provide full ownership of the land, despite not owning it. He may still be held liable for this.
No, Walter did not have authority as he was neither her agent, nor did she ratify the transaction.
Judgment against Mary Stefanovicz set aside and the case remanded to have judgment entered in her favor.
Judgment against Walter Stefanovicz set aside and the case remanded for a new trial limited to the form of relief.
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