Is a written agreement to sell real property, signed by the owners and accepted by the buyer, enforceable by specific performance when the sellers claim they signed it in jest while intoxicated, but the buyer reasonably believed the agreement was serious?

W. O. Lucy had long sought to buy A. H. Zehmer's 471.6-acre Ferguson farm. On the night of December 20, 1952, Lucy visited Zehmer's restaurant in McKenney, Virginia, where both men had been drinking. Lucy said he bet Zehmer would not take $50,000 for the farm, and Zehmer replied that he would. After 30 to 40 minutes of discussion, Zehmer wrote an agreement on the back of a restaurant check. Lucy objected that it was written in the singular and that Mrs. Zehmer would have to sign it too. Zehmer tore it up and wrote a new one: "We hereby agree to sell to W. O. Lucy the Ferguson Farm complete for $50,000.00, title satisfactory to buyer." Both Zehmers signed it. Lucy took the writing and offered Zehmer $5 to bind the bargain, which Zehmer refused, saying it was liquor talking and the whole matter was a joke. The Zehmers testified that Zehmer had whispered to his wife that it was only a joke so Lucy would not hear. Lucy treated the deal as real: he arranged for his brother J. C. Lucy to take a half interest, hired an attorney to examine the title, and wrote on January 2 that the title was satisfactory and he was ready to close. Zehmer replied that he had never agreed or intended to sell.

W. O. Lucy and his brother J. C. Lucy sued A. H. Zehmer and Ida S. Zehmer in the Circuit Court of Dinwiddie County, seeking specific performance of the contract to convey the farm. The Zehmers answered that the writing was prepared in jest and that no binding contract was ever made. Depositions were taken, and the trial court entered a decree holding that the Lucys had failed to establish their right to specific performance and dismissing their bill. The Lucys appealed to the Supreme Court of Virginia, assigning error to the dismissal.

(Buchanan, J.)

Yes. The writing is a binding contract, and specific performance should be ordered. The Zehmers' defenses fail on both the intoxication and the jest theories.

Zehmer was not so intoxicated that he could not comprehend the nature and consequences of the instrument. His detailed recollection of events contradicts his claim of extreme drunkenness, his wife suggested he drive Lucy home, and defense counsel conceded at oral argument that Zehmer was not too drunk to contract. See Taliaferro v. Emery, 124 Va. 674, 98 S.E. 627.

The jest defense also fails. The length of the negotiations, Lucy's insistence that Mrs. Zehmer sign, the rewriting of the agreement, the title-examination provision, the discussion of what the sale included, and the absence of any request that Lucy return the paper show a serious business transaction. Even if Zehmer secretly intended a joke, Lucy reasonably believed the transaction was serious. He promptly arranged financing, hired an attorney, and tried to close.

Contract formation depends on the objective manifestation of intent, not secret mental assent. "The law imputes to a person an intention corresponding to the reasonable meaning of his words and acts." First Nat. Bank v. Roanoke Oil Co., 169 Va. 99, 192 S.E. 764. A party's undisclosed intention is immaterial unless the other party knows of the unreasonable meaning attached to it. Zehmer's whispered statement to his wife was not communicated to Lucy, and nothing indicated a joke until after Lucy took the writing. A person cannot set up that he was merely jesting when his words and conduct would lead a reasonable person to believe he intended a real agreement.

Specific performance is discretionary, but the discretion is governed by settled equitable principles. Here there was no fraud, misrepresentation, sharp practice, or inequality between the parties. The $50,000 price far exceeded the $11,000 purchase price and the $6,300 tax assessment, and Zehmer admitted it was a good price. Where a contract is unobjectionable in nature and circumstances, specific performance is a matter of course. Bond v. Crawford, 193 Va. 437, 69 S.E.2d 470. The decree is reversed and remanded for entry of a decree requiring performance.