The Wisconsin Court of Appeals recently adjudicated a dispute about the legal standard applicable to a decades-old contract to transfer property after the owner’s death. See Haug v. Greve, 2015AP54 (April 26, 2016). The case involved the common law statute of frauds, as well as two Wisconsin statutes adopted at the very end of the twentieth century. Ultimately, the court of appeals affirmed the lower court’s holding that a contract to devise real property upon death which is governed by Wis. Stat. § 853.13 is exempt from the statute of frauds, both under the common law and as codified in Wis. Stat. § 706.001.
Robert Greve died in 2002. After his second wife, Bernice, died in 2012, a dispute arose between Robert’s estate and his children from his first marriage. The conflict centered on ownership of a riverfront cabin property. The Estate contended that the property should devise as provided in Robert’s will, while Robert’s children claimed that title passed to them under an earlier deed.
In 1960, Robert’s mother, Mildred, had deeded the cabin property to herself and to her son as joint tenants with a right of survivorship. In 1972, Mildred deeded her interest in the cabin property but reserved a life estate “to enjoy the use of the property in connection with Robert Greve and his family.” The 1972 deed also contained evidence of a contract that stated “Robert Greve does further agree, that he will, in the event he owns the [property] at the time of his death, devise and bequeath [the property] to his children in equal shares.” Mildred signed the deed, but there was neither a signature nor a signature line for Robert. In 1999, Robert executed a will that left ninety-five percent of his estate to Bernice, and divided the rest between his two children. The 1999 will did not mention the cabin property.
Robert’s children maintained that the terms of the 1972 deed provided that the property devised to them. But Robert’s Estate disagreed, arguing that the provision of the 1972 deed devising the property to Robert’s children at the time of his death was invalid. The invalidity argument rested on the statute of frauds, which has traditionally applied to contracts to make a will to transfer real property. The statute of frauds, which has deep origins in the common law, requires that contracts to transfer property must satisfy several criteria, including being set forth in writing and signed by all parties to the agreement. See, e.g., Stuesser v. Ebel, 19 Wis. 2d 591, 120 N.W.2d 679 (1963). In 1999, Wisconsin codified the statute of frauds in Wis. Stat. § 706.001. The codified version conforms to the common law in requiring written, signed agreements to transfer land. See Wis. Stat. § 706.02(1). Here, because Robert had not signed the 1972 deed, the Estate argued that any agreement the deed evidenced to pass the cabin property to his children was unenforceable under both the common law and the codified versions of the statute of frauds.
The Circuit Court for Forest County held the 1972 deed constituted an enforceable contract to devise property. Relying on Wis. Stat. § 853.13(1)(d), the court found that clear and convincing extrinsic evidence established the existence of a contract. The court also found that Robert subsequently breached that contract by failing to uphold his promise to convey the property to his children. The evidence on which the trial court relied included the deed itself, as well as testimony by Robert’s aunt (Mildred’s sister-in-law) that she was present during two separate conversations between Robert and Mildred regarding their intent that the cabin would convey to Robert’s children. The trial court reasoned that the agreement was exempt from the statute of frauds codified in Wis. Stat. § 706.001 because the contract itself was not an interest in land, but instead a contract to make a will. Such contracts fall within the scope of Wis. Stat. § 853.13.
On appeal, the Estate argued that Wis. Stat. § 853.13’s provision allowing clear and convincing evidence to prove the existence of a contract to devise property was inapplicable to the 1972 deed, because the deed preceded the creation of the statutory provision by a quarter-century. The Estate urged the appellate court to follow the common law principles in effect in 1972, under which the statute of frauds governed contracts to transfer real property upon an owner’s death. The Estate argued that the agreement between Mildred and Robert became irrevocable upon Mildred’s death in 1976, which was more than 20 years before the enactment of either Wis. Stat. § 853.13, governing the creation of contracts to devise property, or Wis. Stat. § 706.001, codifying the statute of frauds.
The appellate court rejected this argument, holding that Robert and Mildred’s agreement did not become irrevocable until Robert’s death in 2002. Prior to his death, the court reasoned, Robert had unilateral authority to convey the property to anyone. However, by not exercising this authority, Robert allowed the 1972 agreement to become irrevocable when he died. The agreement thus took effect in 2002 and was governed by the law in effect at that time. As a result, the agreement was subject to Wis. Stat. § 853.13(1)(d) rather than the statute of frauds, either as established by the common law or as codified in Wis. Stat. § 706.001. The appellate court also made clear that it considered Robert and Mildred’s 1972 agreement worthy of protection, noting that, even if the statute of frauds governed, the court would have used its equitable authority to enforce the 1972 agreement.
The implications of the court’s approach are yet to be seen in other Wisconsin property transfer cases. It is notable that the determination of which legal regime applied to the dispute was resolved by looking to the date on which the agreement at issue became irrevocable; for that reason, future cases with different facts may continue to argue for the application of the common-law statute of frauds or other legal authority predating Wis. Stat. §§ 706.001 and 853.13. While the Haug court’s rationale for enforcing the 1972 agreement can be read as favoring leniency about the formal requirements for contracts to transfer real property, the case is fact-specific and does not establish a broad rule. As a result, the case does not relax the burden Estates or other individuals face when making arrangements for future transfers of real property.
Law clerk Syed Madani assisted in researching and writing this post.