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LINSAY v. MCENEARNEY ASSOC.



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LINSAY

v.

MCENEARNEY ASSOC.


June 9, 2000

Record No. 991945

CYNTHIA LINDSAY

v.

McENEARNEY ASSOCIATES, INC.

FROM THE CIRCUIT COURT OF ARLINGTON COUNTY

William T. Newman, Jr., Judge

Present: All the Justices


OPINION BY JUSTICE LEROY R. HASSELL, SR.

The primary issue we consider in this appeal is whether a
contract that must be in writing pursuant to the statute of
frauds, Code ? 11-2, may be modified by a parol agreement.

I.

A.

This case was decided on a motion for summary judgment.
Therefore, we must adopt the facts and inferences from those
facts that are most favorable to the nonmoving party, Cynthia A.
Lindsay, unless those inferences are forced, strained, or
contrary to reason. Levine v. Selective Ins. Co. of
America
, 250 Va. 282, 283, 462 S.E.2d 81, 82 (1995); Renner
v. Stafford, 245 Va. 351, 353, 429 S.E.2d 218, 220 (1993).

Lindsay executed a written "Exclusive Right to Represent
Buyer Agreement" with McEnearney Associates, Inc., which
gave McEnearney Associates the exclusive right to represent
Lindsay in any real estate transactions for the purchase of a
home. The written agreement required Lindsay to pay McEnearney
Associates a commission of three percent of the sales price of
any residential real property that Lindsay purchased between
August 13, 1997, and November 30, 1997.

Subsequently, Lindsay signed a sales contract for the purchase
of property located at 2343 South Nash Street in Arlington
County. She negotiated the price and terms of the sale "on
her own," and she purchased the property without the
assistance of McEnearney Associates. Lindsay claimed that she
entered into an oral agreement with Loretta Connor, McEnearney
Associates’ sales associate. Pursuant to the terms of that parol
agreement, Lindsay claims that she was required to pay to
McEnearney Associates a commission of one percent rather than
three percent because Lindsay found the property that she
purchased without the assistance of McEnearney Associates. She
closed on the property, and a statement shows that McEnearney
Associates received a commission of one percent. In response to
requests for admission, Lindsay admitted that she did not sign a
written modification of the "exclusive right to represent
buyer agreement."

B.

McEnearney Associates filed a warrant in debt against Lindsay
in the Arlington County General District Court and alleged that
Lindsay breached the written agreement. Lindsay alleged in the
general district court that McEnearney Associates breached the
agreement, and she asserted that the written contract had been
orally modified. She asserted a defense of accord and
satisfaction based upon the oral modification. Lindsay also filed
a counterclaim, seeking a refund of an earnest money deposit on a
real estate contract that was never accepted. The general
district court entered a judgment in favor of Lindsay, and
McEnearney Associates appealed the judgment to the circuit court
for a trial de novo as permitted by Code
?? 16.1-106 and -107. Lindsay did not appeal the general
district court’s judgment denying her counterclaim.

McEnearney Associates filed a motion for summary judgment in
the circuit court and asserted that it was entitled to judgment
because the "exclusive right to represent buyer
agreement" required that Lindsay pay McEnearney Associates a
three percent sales commission in the event that Lindsay
purchased residential property, that Lindsay purchased and closed
upon such property, but she only paid a one percent commission to
McEnearney Associates. Continuing, McEnearney Associates asserted
that the written "exclusive right to represent buyer
agreement" could not be modified orally. Responding, Lindsay
asserted in the circuit court that the contract between the
parties had been modified orally and that she had a viable
defense of accord and satisfaction that could not be defeated by
the statute of frauds. The circuit court granted summary judgment
in favor of McEnearney Associates, and Lindsay appeals.

II.

Code ? 11-2, often referred to as the statute of frauds,
states in relevant part:

"Unless a promise, contract, agreement, representation,
assurance, or ratification, or some memorandum or note thereof,
is in writing and signed by the party to be charged or his agent,
no action shall be brought in any of the following cases:

 . . . .

"7. Upon any agreement or contract for services to be
performed in the sale of real estate by a party defined in
? 54.1-2100 or
? 54.1-2101. . . ."

Code ? 54.1-2100 defines real estate broker as

"any person or business entity, including, but not
limited to, a partnership, association, corporation, or limited
liability corporation, who, for compensation or valuable
consideration (i) sells or offers for sale, buys or offers to
buy, or negotiates the purchase or sale or exchange of real
estate . . . ."

Code ? 54.1-2101 defines real estate salesperson as
"any person, or business entity of not more than two persons
unless related by blood or marriage, who for compensation or
valuable consideration is employed either directly or indirectly
by, or affiliated as an independent contractor with, a real
estate broker, to sell or offer to sell, or to buy or offer to
buy, or to negotiate the purchase, sale or exchange of real
estate, or to lease, rent or offer for rent any real estate, or
to negotiate leases thereof, or of the improvements
thereon."

Lindsay argues that the statute of frauds does not apply to
the written contract she signed with McEnearney Associates or,
alternatively, that the statute of frauds has no application here
because the contract has been fully performed. We disagree.

The purposes of Code ? 11-2 are to provide reliable
evidence of the existence and terms of certain types of contracts
and to reduce the likelihood that contracts within the scope of
this statute can be created or altered by acts of perjury or
fraud. For example, we stated in Reynolds v. Dixon,
187 Va. 101, 106, 46 S.E.2d 6, 8 (1948), that "[t]he statute
[of frauds] was founded in wisdom and sound policy. Its primary
object was to prevent the setting up of pretended agreements and
then supporting them by perjury. There is further a manifest
policy of requiring contracts of so important a nature as the
sale and purchase of real estate to be reduced to writing since
otherwise, from the imperfection of memory and the honest
mistakes of witnesses, it often happens either that the specific
contract is incapable of exact proof or that it is
unintentionally varied from its original terms."

Accord Wright v. Pucket, 63 Va. (22
Gratt.) 370, 373 (1872).

We held in Heth’s v. Wooldridge’s, 27 Va. (6
Rand.) 605, 609-11 (1828), that the statute of frauds rendered
unenforceable an oral modification of a written contract for the
sale of land. Explaining our holding, we stated that the parol
modification of an agreement required to be in writing by the
statute of frauds would permit "the very mischiefs which the
statute meant to prevent." Id. at 610.

The written contract that Lindsay executed with McEnearney
Associates falls within the scope of Code ? 11-2 because
the contract is an agreement for services to be performed in the
sale of real estate by a real estate broker and a real estate
salesperson. Applying our established precedent, we hold that
when, as here, a contract is required to be in writing pursuant
to Code ? 11-2, any modification to that contract must also
be in writing and signed by the party to be charged or his agent.

It is true, as Lindsay observes, that in certain circumstances
written contracts, even those that contain prohibitions against
unwritten modifications, may be modified by parol agreement. See
Reid v. Boyle, 259 Va. 356, 369-70, 527 S.E.2d 137,
145 (2000). This principle, however, does not apply to an
agreement which must be in writing to satisfy Code ? 11-2.

We find no merit in Lindsay’s contention that the statute of
frauds does not apply to her agreement with McEnearney Associates
because the agreement has been fully performed. The agreement has
not been fully performed because, as Lindsay admitted in the
circuit court, she failed to pay McEnearney Associates three
percent of the sales price of the real property she purchased.

Lindsay argues that the circuit court erred by ruling that the
statute of frauds barred the presentation of her evidence of an
accord and satisfaction as a defense to McEnearney Associates’
breach of contract claim. We disagree.

We have discussed the following principles of accord and
satisfaction which are equally pertinent here:

" ‘Accord and satisfaction is a method of discharging a
contract or cause of action, whereby the parties agree to give
and accept something in settlement of the claim or demand of the
one against the other, and perform such agreement, the
"accord" being the agreement, and the
"satisfaction" its execution or performance.’

" ‘The thing agreed to be given or done in satisfaction
must be offered and intended by the debtor as full satisfaction,
and accepted as such by the creditor.’

" ‘Thus an accord and satisfaction is founded on contract
embracing an offer and acceptance. The acceptance, of course, may
be implied, and as a general rule, where the amount due is
unliquidated, i.e., disputed, and a remittance of an
amount less than that claimed is sent to the creditor with a
statement that it is in full satisfaction of the claim, or is
accompanied by such acts or declarations as amount to a condition
that if accepted, it is accepted in full satisfaction, and the
creditor accepts it with knowledge of such condition, then accord
and satisfaction results.’ "

Virginia-Carolina Elec. Works, Inc. v. Cooper,
192 Va. 78, 80-81, 63 S.E.2d 717, 718-19 (1951) (citations
omitted); accord John Grier Constr. Co. v. Jones
Welding & Repair, Inc.
, 238 Va. 270, 272, 383 S.E.2d 719,
720-21 (1989).

We hold that the statute of frauds does not permit Lindsay to
establish a defense of accord and satisfaction. The purported
contract that constitutes the accord is predicated upon the
existence of an oral modification of Lindsay’s written
"exclusive right to represent buyer agreement" with
McEnearney Associates. Yet, as we have already stated, Code
? 11-2 requires that any modifications to that contract
must be in writing. Thus, Lindsay cannot assert the defense of
accord and satisfaction based on a contract that violates the
statute of frauds. Approval of this defense in these
circumstances would permit Lindsay to circumvent the statute of
frauds.

In view of our holdings, we need not consider Lindsay’s
remaining contentions. Accordingly, we will affirm the judgment
of the circuit court.

Affirmed.

 

 

 

 

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