We are satisfied that the trial court was in error in holding that the state court had concurrent jurisdiction with the National Board in entertaining the controversy. If that question was at all of uncertain solution at the time the present action was commenced it was made certain by the recent decisions of the Supreme Court in the Garmon, the Amalgamated Meat Cutters and the Guss cases. It was held in those cases that in labor controversies affecting enterprises engaged in interstate commerce there is a conflict in injunctive relief which may be available under the National Act and that, available under the equity powers of the state court, and that in such a situation the federal law affords the exclusive remedy, thus depriving the state court of jurisdiction to issue injunctions.
The question of the power of the trial court to grant the injunctive relief awarded in this case is of vital importance. It goes to the jurisdiction of the court to proceed on that phase of the litigation. Apparently the status of the plaintiff's business, that is, whether it was engaged in interstate commerce and thus subject to the jurisdiction of the National Labor Relations Board pursuant to the Labor Management Relations Act, was not deemed of significance before the decision of this court establishing the constitutionality of the Jurisdictional Strike Act. The Labor Management Relations Act, however, as construed by the latest decisions of the Supreme Court of the United States, above cited, would be applicable if the jurisdictional facts were developed. If alleged and proved they would deprive the trial court of jurisdiction to proceed by way of injunction. On the present state of the record it seems desirable to permit the defendants to amend their answer to allege and prove, if they are able to do so, that the plaintiff is engaged in interstate commerce.
As to the award of damages there is substantial evidence in support of the judgment in the amount specified.
The judgment is reversed insofar as it awards injunctive relief, and affirmed insofar as it awards damages to the plaintiffs, with costs to neither party.
See Statute of Frauds, and Court Addressed Scope of General Laws of the State.
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Monday, November 17, 2008
Trial Court Erred in Determination Regarding Jurisdiction
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Monday, November 3, 2008
Davis v. Meyer
Davis v. Meyer, 1 S.W. 95 (Ark., 1886)
Action for conversion of goods claimed by appellants under a chattel mortgage, and claimed by appellees under a prior purchase from the mortgagor. Judgment for plaintiffs, and appeal therefrom by defendants.
Frank Tomlinson, a merchant of Pine Bluff, was indebted to both parties to this action. On the twentieth of October, 1883, he sold to Gabe Meyer & Co. a bill of merchandise, amounting to $140.15, and consisting of dry goods, tobacco, and two guns. The dry goods, which were of the value of $101.77, were packed in a box, and placed under the counter. The tobacco and guns were not separated from the rest of Tomlinson's stock. No money was paid, it being understood that the amount of the bill was to go as a credit on the debt due the purchasers, and the items were charged on the debtor's books, Meyer & Co. being furnished with a bill of parcels. Tomlinson was directed to send the goods to a certain warehouse in the town. Afterwards, on the same day, and before the goods were removed from the store, Tomlinson executed a mortgage upon the entire stock of merchandise in his store to Davis, Mallory & Co. as security for the debt he owed them, and placed them in immediate possession. They had no knowledge of the previous sale to Meyer & Co., and, when informed of it, refused to recognize the transaction, or surrender the goods to Meyer & Co., but took the goods out of the box, which had never been nailed up or closed in any manner, replaced them upon the shelves among the general stock, and sold them under their mortgage. Meyer & Co. now brought suit for the conversion of the goods; and upon a trial without a jury the circuit court held that they were entitled to recover the value of the goods that had been separated from the remainder of the stock, but not the value of the tobacco and guns, and gave judgment accordingly. Davis, Mallory & Co. have appealed.
It is superfluous to inquire whether the effect of this transaction was to transfer to Meyer & Co. the title or property in the goods, as against Tomlinson, so as to enable them to maintain replevin if he had withheld them, or to throw upon him the loss if the goods had been destroyed by fire; for as we understand the law, in order to make the sale effectual against subsequent purchasers or attaching creditors, there must have been an actual delivery,— a visible and substantial change in the possession. These goods were not ponderous nor bulky, but could have been easily delivered. See Ferguson v. Northern Bank of Ky.
We attach no importance to the fact that Tomlinson furnished to Meyer & Co. a bill of parcels. This was like a bill of sale, and insufficient evidence of a completed sale, unless accompanied by actual possession of the things sold. See Dempsey v. Gardner; McKee v. Garcelon; and Solomons v. Chesley. The only circumstance tending, even remotely, to show that Tomlinson had parted with his control of the goods, was that he had segregated a portion of them from the remainder of his stock, had boxed them up, and set them aside. This was evidence of his intention to select and appropriate them to the use of the plaintiffs. But it is not shown that the plaintiffs were even present, in person or by agent, when this was done. The box was not nailed or closed. Neither it nor the goods were marked with the plaintiffs' name or initials. The plaintiffs did not take charge of the package; nor were they to send and get the goods, but Tomlinson was to convey them to the warehouse. The plaintiffs, therefore, had no possession; and, before anything further was done, Tomlinson resold the same goods to the defendants, who had no notice of the prior sale, and who took possession. The defendants thereby obtained the better title. Crawford v. Forristall; Allen v. Carr; Veazie v. Somerby; and Garman v. Cooper.
Reversed, and remanded for further proceedings.
NOTE.
An oral contract of sale, where no part of the price is paid, is invalid, unless the buyer accepts and receives part of the thing sold; a delivery alone by the vendor is not sufficient, but there must be a receipt and acceptance by the vendee, and the acceptance must be voluntary and unconditional. See Jamison v. Simon.
A sale of chattels, where the price is not paid, and the goods are not actually delivered, in the absence of a written contract, is within the statute of frauds, and void as to creditors. See Hickok v. Buell.
But an oral contract may be taken out of the statute by a written admission in a letter to a third person. See Warfield v. Wisconsin Cranberry Co.
Where the contract for the sale of goods is oral, and no part of the price is paid, there must be not only a delivery of the goods by the vendor, but a receipt and acceptance of them by the vendee, to pass the title, or make the vendee liable for the price. See Ex parte Parker.
If, after the contract was made, the defendant takes possession of the property, (wood,) and has it repiled, this is sufficient to take it out of the statute of frauds. See Richards v. Burroughs.
And under a statute of Iowa, providing that no evidence of any contract for the sale of personal property is competent when no part of the property is delivered, and no part of the price paid, it was held that a delivery of the goods by the vendor to a common carrier is a delivery to the vendee sufficient to take the contract out of the statute of frauds. See Bullock v. Tschergi.
It is held that to constitute a delivery the goods must be set apart, Galloway v. Weck; Hoffman v. King; Carpenter v. Graham; and Galloway v. Week.
Appropriation of goods is acceptance thereof. See Wellauer v. Fellows.
Where there is a verbal order for several articles, the acceptance of a part of them, though shipped at different times from the others, will make the entire contract valid. See Farmer v. Gray.
Where a part only of the goods sold is separated from the bulk, there is no delivery of any except that part actually separated. See Holmes v. Bailey.
But it has been held that the pointing out of hogs sold, which were then accepted, although permitted to remain among and be fed with other hogs in the same drove, is a valid delivery. See Webster v. Anderson.
It is the fact of delivery under and in pursuance of the agreement of sale, not the time when delivery is made, that the statute of frauds renders essential to the proof of a valid contract. So that a delivery at a future day is sufficient if made in pursuance of the contract; and, upon the same principle, the place of delivery can make no difference. See Somers v. McLaughlin.
Action for conversion of goods claimed by appellants under a chattel mortgage, and claimed by appellees under a prior purchase from the mortgagor. Judgment for plaintiffs, and appeal therefrom by defendants.
Frank Tomlinson, a merchant of Pine Bluff, was indebted to both parties to this action. On the twentieth of October, 1883, he sold to Gabe Meyer & Co. a bill of merchandise, amounting to $140.15, and consisting of dry goods, tobacco, and two guns. The dry goods, which were of the value of $101.77, were packed in a box, and placed under the counter. The tobacco and guns were not separated from the rest of Tomlinson's stock. No money was paid, it being understood that the amount of the bill was to go as a credit on the debt due the purchasers, and the items were charged on the debtor's books, Meyer & Co. being furnished with a bill of parcels. Tomlinson was directed to send the goods to a certain warehouse in the town. Afterwards, on the same day, and before the goods were removed from the store, Tomlinson executed a mortgage upon the entire stock of merchandise in his store to Davis, Mallory & Co. as security for the debt he owed them, and placed them in immediate possession. They had no knowledge of the previous sale to Meyer & Co., and, when informed of it, refused to recognize the transaction, or surrender the goods to Meyer & Co., but took the goods out of the box, which had never been nailed up or closed in any manner, replaced them upon the shelves among the general stock, and sold them under their mortgage. Meyer & Co. now brought suit for the conversion of the goods; and upon a trial without a jury the circuit court held that they were entitled to recover the value of the goods that had been separated from the remainder of the stock, but not the value of the tobacco and guns, and gave judgment accordingly. Davis, Mallory & Co. have appealed.
It is superfluous to inquire whether the effect of this transaction was to transfer to Meyer & Co. the title or property in the goods, as against Tomlinson, so as to enable them to maintain replevin if he had withheld them, or to throw upon him the loss if the goods had been destroyed by fire; for as we understand the law, in order to make the sale effectual against subsequent purchasers or attaching creditors, there must have been an actual delivery,— a visible and substantial change in the possession. These goods were not ponderous nor bulky, but could have been easily delivered. See Ferguson v. Northern Bank of Ky.
We attach no importance to the fact that Tomlinson furnished to Meyer & Co. a bill of parcels. This was like a bill of sale, and insufficient evidence of a completed sale, unless accompanied by actual possession of the things sold. See Dempsey v. Gardner; McKee v. Garcelon; and Solomons v. Chesley. The only circumstance tending, even remotely, to show that Tomlinson had parted with his control of the goods, was that he had segregated a portion of them from the remainder of his stock, had boxed them up, and set them aside. This was evidence of his intention to select and appropriate them to the use of the plaintiffs. But it is not shown that the plaintiffs were even present, in person or by agent, when this was done. The box was not nailed or closed. Neither it nor the goods were marked with the plaintiffs' name or initials. The plaintiffs did not take charge of the package; nor were they to send and get the goods, but Tomlinson was to convey them to the warehouse. The plaintiffs, therefore, had no possession; and, before anything further was done, Tomlinson resold the same goods to the defendants, who had no notice of the prior sale, and who took possession. The defendants thereby obtained the better title. Crawford v. Forristall; Allen v. Carr; Veazie v. Somerby; and Garman v. Cooper.
Reversed, and remanded for further proceedings.
NOTE.
An oral contract of sale, where no part of the price is paid, is invalid, unless the buyer accepts and receives part of the thing sold; a delivery alone by the vendor is not sufficient, but there must be a receipt and acceptance by the vendee, and the acceptance must be voluntary and unconditional. See Jamison v. Simon.
A sale of chattels, where the price is not paid, and the goods are not actually delivered, in the absence of a written contract, is within the statute of frauds, and void as to creditors. See Hickok v. Buell.
But an oral contract may be taken out of the statute by a written admission in a letter to a third person. See Warfield v. Wisconsin Cranberry Co.
Where the contract for the sale of goods is oral, and no part of the price is paid, there must be not only a delivery of the goods by the vendor, but a receipt and acceptance of them by the vendee, to pass the title, or make the vendee liable for the price. See Ex parte Parker.
If, after the contract was made, the defendant takes possession of the property, (wood,) and has it repiled, this is sufficient to take it out of the statute of frauds. See Richards v. Burroughs.
And under a statute of Iowa, providing that no evidence of any contract for the sale of personal property is competent when no part of the property is delivered, and no part of the price paid, it was held that a delivery of the goods by the vendor to a common carrier is a delivery to the vendee sufficient to take the contract out of the statute of frauds. See Bullock v. Tschergi.
It is held that to constitute a delivery the goods must be set apart, Galloway v. Weck; Hoffman v. King; Carpenter v. Graham; and Galloway v. Week.
Appropriation of goods is acceptance thereof. See Wellauer v. Fellows.
Where there is a verbal order for several articles, the acceptance of a part of them, though shipped at different times from the others, will make the entire contract valid. See Farmer v. Gray.
Where a part only of the goods sold is separated from the bulk, there is no delivery of any except that part actually separated. See Holmes v. Bailey.
But it has been held that the pointing out of hogs sold, which were then accepted, although permitted to remain among and be fed with other hogs in the same drove, is a valid delivery. See Webster v. Anderson.
It is the fact of delivery under and in pursuance of the agreement of sale, not the time when delivery is made, that the statute of frauds renders essential to the proof of a valid contract. So that a delivery at a future day is sufficient if made in pursuance of the contract; and, upon the same principle, the place of delivery can make no difference. See Somers v. McLaughlin.
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Saturday, November 1, 2008
Friedman v. Tappan Development Corp.
Friedman v. Tappan Development Corp., 22 N.J. 523, 126 A.2d 646 (N.J. 1956).
The opinion of the court was delivered by HEHER, J.
We certified for appeal the judgment of the Appellate Division of the Superior Court, reversing a judgment of the Chancery Division awarding to plaintiffs specific performance of what was (and is) asserted to be a contract for the sale by the defendant corporation to plaintiffs of real property situate in the Borough of Old Tappan, New Jersey, bearing date February 15, 1954.
The Appellate Division concluded that the writing was 'but a gratuitous option or continuing offer' to sell the lands in question at a given price per acre, revoked prior to acceptance, and entered judgment accordingly.
Reciting that Tappan had 'offered to sell' to the plaintiff Friedman 'certain lands' in Old Tappan to which it had title, 'upon certain terms and conditions,' the agreement declared that Friedman agreed to pay Tappan 'at the rate of $400 per acre for each acre actually conveyed' to Friedman, and Tappan agreed 'to convey said acreage' to Friedman 'for the aforesaid sum of $400 per acre on demand by' Friedman; Tappan agreed 'not to sell or convey any part of its real estate holdings in Old Tappan to anyone other than' Friedman 'for a period of one year from the date hereof without' Friedman's 'express written consent to said conveyance'; and the 'purchaser,' it was provided, 'shall pay the cost of preparing a description of the property to be conveyed.'
It was then stipulated that Tappan 'make(s) no representations whatsoever as to the character of the real estate involved, zoning ordinances, state of title, marketability of title, liens, encumbrances, sewers, encroachments or restrictions of any kind whatsoever,' and 'agrees only to convey whatsoever title it has,' and 'In the event the title tendered' by Tappan 'is rejected' by Friedman 'for any reason whatsoever, then the only obligation of' Tappan 'shall be to return the money paid, and there shall be no further claims by either party against the other, be it for cost of examination of title, survey, or other expenses of whatsoever type or nature'; and that the 'sum of $400 is to be paid upon the execution of this agreement to Murray Zazeela, Esq., the attorney for' Tappan, 'to be held by him until title to the first acre of land to be conveyed hereunder is delivered to' Friedman. And then comes the concluding provision: 'However, in the event no conveyance is executed pursuant to this agreement for any land whatsoever for a period of sixty days from the date hereof, that is to say the 15th day of April, 1954, then this agreement shall be and become null and void and neither party shall have any rights or obligations hereunder other than the obligation to return said sum of $400 to' Friedman.
As found by Judge Conford, for the Appellate Division, delivery of the executed drafts of the agreement 'was not completed until March 5, 1954 or thereabout'; the plaintiff Friedman, 'a lawyer, was concededly acting for his client, the plaintiff Zackarakis'; on March 16, 1954 'Zazeela, attorney for defendant, phoned Friedman and advised him the defendant 'would not go through with the deal," and 'This was confirmed by letter of March 22, 1954 from Zazeela to Friedman'; 'Thereafter Friedman advised Zazeela that his client insisted upon going ahead with the transaction and would take all the property'; 'Defendant refused to accede and offered to return the $400 deposit mentioned in the agreement, but plaintiff declined the tender.'
Plaintiffs contend that the writing 'was a completed contract,' but 'if it were an option,' it remains to inquire whether 'there was the so-called promissory estoppel referred to by this court in' American Handkerchief Corporation v. Frannat Realty Co., in that 'title to the premises was searched at a cost of $505, and in addition, a survey was made at a cost of $200,' which, in fact, was included in the charge of $505. However, as the Appellate Division also found, 'after negotiating, but prior to receiving defendant's signed copy of the agreement,' Friedman on February 23, 1954 'wrote to a title company concerning the instant transaction, advising it that the arrangement required him 'to ascertain what I am buying,' that the acreage might be anywhere from 'five to six acres' to 'twenty to thirty acres,' and requesting that the title company 'unearth' for him the facts as to 'what I am buying," and 'Friedman did not countermand the order at any time'; the title company 'delivered to Friedman a survey of the subject property April 13, 1954,' and 'It also began a title examination of the property 'two or three weeks' prior to March 22, 1954 without express request therefore, acting on an assumption from the February 23 letter that such an examination was desired by the applicant'; and 'Its location of the property had been completed by March 22 and it made no charge therefore,' but 'it did eventually bill Friedman $505 for a survey and examination of the title and that sum was paid.' And the holding was that in this regard there was not 'factual reliance 'of substantial character' upon the offer'; the 'offer was revoked March 16, 1954,' and the evidence indicates that 'had plaintiffs called off the title company on that date their expense, if any at all, would have been minimal,' and 'In short, this is not a case where 'injustice can be avoided only by enforcement of the promise," citing Restatement, Contracts, section 90.
The argument for defendant is that (a) the writing constituted an option merely, 'not a binding contract,' 'nothing more than an offer' 'not supported by consideration,' 'withdrawn before acceptance,' citing American Handkerchief Corporation v. Frannat Realty Co., supra; (b) there was no 'mutuality of obligation and the promise of Friedman was illusory,' citing G. Loewus & Co. Inc., v. Vischia; (c) specific performance should not be decreed 'where a description of the property is uncertain and undefined,' and the 'offer lacks definiteness and certainty and is vague,' as to matters which need not be here particularized; (d) the 'offer became null and void because no conveyance was executed within 60 days from the date of same'; and (e) the doctrine of promissory estoppel has no application where, as here, the 'defendant did not induce the plaintiffs in any legal sense to incur expense in making the examination of the title,' a course taken by plaintiffs to enable them 'to determine whether it would accept the offer and purchase at the stipulated price,' which 'did not inure to defendant's benefit in any way,' and 'it clearly appears' that 'had Friedman contacted the title company on March 16, (nine days after he received the 'signed offer') when he received notice of withdrawal of the offer, there would not have been any expenses as far as the title company was concerned,' and Friedman's 'negligence' in this regard cannot be 'turned into an act of reliance based upon a withdrawn offer.'
We seek for the intention of the parties to the writing; and to that end the symbols of expression are to have a reasonable interpretation, taken and compared together in the context of the circumstances. It is not the real intent but the intent expressed or apparent in the writing that controls. Newark Publishers' Association v. Newark Typographical Union No. 103.
A contract is an agreement resulting in obligation enforceable at law; and it is basic to an agreement entailing obligatory jural consequences that the parties have a distinct intention common to both. 'Doubt or difference is incompatible with agreement.' Anson on Contracts (Turck's ed. 1929), sections 2, 3. In a word, a contract is a voluntary obligation proceeding from a common intention arising from an offer and acceptance. See Johnson & Johnson v. Charmley Drug Co. To be enforceable, a contract must be sufficiently definite in its terms that the performance to be rendered by each party can be ascertained with reasonable certainty. See Savarese v. Pyrene Mfg. Co., Culver v. Culver, Buckley v. Wood, and Wadge v. Crestwood Acres, Inc.
The writing here did not place upon plaintiffs the obligation to purchase Tappan's lands, in whole or in part; it simply granted an option to purchase the lands at the stated rate per acre, a gratuitous option that in its very nature was revocable until its exercise, an offer subject to withdrawal before acceptance.
The agreement fixed the price of the land to be conveyed at $400 per acre, and provided for the payment of $400 to Tappan's attorney, 'to be held by him' until the conveyance of the 'first acre of land to be conveyed' thereunder, but in the event that 'no conveyance is executed pursuant' to the agreement 'for any land whatsoever for a period of 60 days,' then the agreement shall become null and void and 'neither party shall have any rights or obligations' thereunder 'other than the obligation to return' to Friedman the sum so paid on the execution of the agreement.
This was an option pure and simple, a mere offer to sell, unsupported by a consideration, by the basic law of contracts revocable until an obligation comes into being by acceptance according to its terms. In case there be no conveyance 'for any land whatsoever for a period of 60 days,' I.e., a failure to exercise the option, then the agreement shall become null and void and all rights and obligations of the parties Inter se shall cease and determine, save only the obligation to return the initial payment. And this without regard to fault of either party. Indeed, the agreement thereby plainly recognizes that plaintiffs' failure to take title to the lands, in whole or in some part, would not put them in default. We cannot create a contract when the parties have not spoken in terms of legal obligation. This agreement was drafted by lawyers (Friedman and Zazeela) who were aware of the fundamental differences between a contract and an option, in terms of obligation.
A continuing offer grounded in a sufficient consideration constitutes an 'option,' as the term is known to the law. Since it is a promise upon a legal consideration, it is irrevocable for the time of its continuance, and thus it takes the classification of a contract; and the want of mutuality has no significance. Though irrevocable, the option is but an offer; and notice of its unqualified acceptance, E.g., where the subject matter concerns the sale of goods or personal property, ordinarily serves to create a bilateral executory contract of sale as in the case of the conventional offer of sale and its unconditional acceptance. See American Handkerchief Corporation v. Frannat Realty Co. and Martindell v. Fiduciary Counsel, Inc.
Indeed, 'mutuality of obligation' is a term not always clearly understood. It suggests that unless both parties are bound, neither is bound. And in this, it is ofttimes confused with 'consideration.' 'Mutuality' signifies more than reciprocal undertakings by the parties; there may be an undertaking and an executed consideration. A 'unilateral contract' may consist of a single binding promise if supported by an executed consideration, or is under seal at common law.
A unilateral contract 'is one in which there is a promise on one side only, the consideration on the other side being executed'; such contracts are not void, but are equally as valid as bilateral contracts, consisting solely of mutual promises to do some future act, in which the consideration of the promise of one party is a promise on the part of the other'; the term "unilateral' is often used to express absence of mutuality'; in the case of 'contracts made up solely of mutual promises, each the consideration for the other, where the promises of one party are so expressed as not to be absolutely binding on him, but to be performed only if such party so wills, or a promise on but one side and no consideration therefore, the one who makes the absolute promise in the one case, or the sole promise in the other, is not bound to perform'; the 'reason sometimes given is that the contract is unilateral, or void for want of mutuality,' but the 'real reason is that there is not a sufficient consideration for the promise'; "Consideration is essential; mutuality of obligation is not, unless the want of mutuality would leave one party without a valid or available consideration for his promise. " See Rich v. Doneghey. The doctrine of mutuality of obligation 'appears therefore to be merely one aspect of the rule that mutual promises constitute considerations for each other'; where there is 'no other consideration for a contract, mutual promises must be binding on both parties,' but 'where there is any other consideration for the contract, mutuality of obligation is not essential.' See Meurer Steel Barrel Co. v. Martin and Armstrong Paint & Varnish Works v. Continental Can Co.
'Mutuality of obligation,' says Professor Corbin, 'should be used solely to express the idea that each party is under a legal duty to the other; each has made a promise and each is an obligor'; this is the meaning with which the term is commonly used, but 'it is sometimes declared that it means nothing more than that there must be a sufficient consideration,' and even though 'one of the parties has made no promise and is bound by no duty, the contract has sufficient mutuality if he has given an executed consideration,' a sound result although the rationalization is questionable, and now it is generally agreed that 'it is consideration that is necessary, not mutuality of obligation.'
But, as said in a footnote to this section, 'As in any other case, this executed consideration must be one that is itself sufficient to make the return promise binding.' And reference is made to Schneller v. Hayes, holding that the consideration was not sufficient, because it was no more than performance of a preexisting duty to the promissor.
And where an offered promise receives no return promise, but can be accepted piecemeal by rendering a requested part performance, thus constituting a unilateral contract on the offered terms, such part performance, unless so rendered as to justify the implication of a promise to render the full performance proposed in the offer, leaves the offer revocable at the will of the offeror to all but the rendered part performance.
Here, no consideration was given for the option, and so the writing does not constitute an option contract irrevocable for the term prescribed. Indeed, there is no suggestion of a supporting consideration. Plaintiffs' contention is that 'there was an implied obligation on Friedman to buy any property needed from the defendant,' and if the writing be deemed an option, it became 'effective by a change of position on the part of the plaintiffs,' in the nature of a promissory estoppel, a gratuitous offer made irrevocable by 'subsequent action in reliance upon it,' citing American Handkerchief Corporation v. Frannat Realty Co., supra. As stated supra, the option agreement provided for an initial payment of $400 to Zazeela, the attorney for Tappan, to be held by him until title to the 'first acre of land' had been conveyed to Friedman, ostensibly to cover the purchase price of the first acre should the option be exercised, and, as we have seen from the last paragraph of the agreement, to be returned should no conveyance be made 'for any land whatsoever for a period of 60 days,' in which event the agreement was automatically rendered null and void. These provisions bespeak the character of the payment in terms excluding any suggestion of consideration given for the option. The question is largely one of intention. See American Handkerchief Corporation v. Frannat Realty Co. Consideration is the price bargained for and paid for a promise. If it is bargained for as the exchange for the promise, the promise is not gratuitous. See Coast National Bank v. Bloom.
It is to be observed that we are asked not to consider the point because in the trial court plaintiffs read the agreement as an option and not as a binding contract, exercisable by the purchase of at least one acre by April 15, 1954, and the remaining lands within a year, in whole or in part, and proceeded accordingly.
And, for the reasons assigned by the Appellate Division, the doctrine of 'promissory estoppel' is inapposite. The things done by the offeree did not constitute an election to exercise the option; nor were they induced by the offeror on the supposition of a contract of sale. Plainly, the offeree was seeking information concerning the quantum of the land made the subject of the offer and the state of the title, presumably circumstances considered by the offeree relevant to the policy and wisdom of exercising the option. Indeed, the survey of the land was made without cost prior to the delivery of the executed option, and the expense of searching the title could have been avoided in the main were action promptly taken when notice came that the offer to sell had been withdrawn.
The term 'promissory estoppel' is of comparatively recent origin in our jurisprudence, not altogether clear in its quality and import. It is not a true estoppel, but a departure from the classic doctrine of consideration that the promise and the consideration must purport to be the motive each for the other, in whole or at least in part, and it is not enough that the promise induces the detriment or that the detriment induces the promise if the other half is wanting, Wisconsin & Michigan R. Co. v. Powers, Holmes, C.J.; Coast National Bank v. Bloom, supra, a professed adaptation of the principle of estoppel to the formation of contracts where, relying on a gratuitous promise, the promisee has suffered detriment. See Martin v. Meles. There is in such circumstances no representation of an existing fact, but merely that the promissor at the time of making the promise intends to fulfill it. The reliance is on a promise, and not on a misstatement of fact, and so the estoppel is termed 'promissory' to mark the distinction.
In this country, the doctrine has been generally confined to charitable subscriptions, where difficulty has been encountered in sustaining the promise under the conventional theories of consideration, and to certain promises between individuals, for the payment of money, enforced as informal contracts created without a manifested mutual assent or consideration. See Allegheny College v. National Chautauqua County Bank. Promissory estoppel, said Judge Learned Hand, 'is now recognized as a species of consideration.' See Porter v. Commissioner of Internal Revenue.
But opposed in principle are cases holding that performance of a detrimental condition attached to a gratuitous promise is not a substitute for consideration, and the promissor is not liable if he breaks his promise; and that a detriment incurred in reliance on a promise is not sufficient consideration unless the detriment was requested as consideration. See Wisconsin & Michigan R. Co. v. Powers.
It is generally held that the principle of estoppel is applicable to In futuro promises, if subject to estoppel at all, only where they relate to an intended abandonment of an existing right, and are made to influence others who in fact are induced thereby to act or to forbear: E.g., where one who has induced his creditor to forbear to bring action upon his claim by a promise of payment or a promise not to plead the statute of limitations as a defense, even though such forbearance was not requested as consideration for the promise, and though the new promise (because not in writing or for some other reason) was not binding as such. In those cases, 'no new right is created. The court does not sustain an action on the promise; it reaches the desired result by allowing a defense to an action or allowing an original right to be enforced by merely prohibiting the interposition of a defense.'
And it has been held that a license to divert a watercourse could not be revoked after the licensee had made improvements and invested capital in consequence of it. See Rerick v. Kern. But 'no slight acts or merely technical reliance will serve. The weight of authority, moreover, is opposed to these decisions and holds a gratuitous license revocable though action has been taken in reliance upon it.' See our own case of Lawrence v. Springer, holding that the expenditure must be made 'in reliance upon such license,' and the loss 'irreparable' unless there be equitable intervention.
The basis of equitable interposition for specific performance in behalf of one who has been given a gratuitous promise of land is entry and the making of improvements on the land in reliance on the promise. Equity regards only possession of the land and improvements. No other detriment would suffice.
The rationale of all these holdings is action in justifiable reliance on a promise and the hardship involved in refusing enforcement of the promise. A promise which the promissor should reasonably expect to induce action or forbearance of a 'definite and substantial character' on the part of the promisee, and which does induce such action or forbearance, is binding 'if injustice can be avoided only by enforcement of the promise.'
The principle thus invoked is not germane. Plaintiffs would render a gratuitous option irrevocable by the mere voluntary doing of that which had no relation to consideration or false inducement, and thus set at naught the common intent and purpose. The offeror had no reason to believe the offeree would cause a search of the title to be made before acceptance of the offer; and the offeree knew the risk in this regard before acceptance of the offer. Such was the nature of the option. The case is patently not within the cited principle.
Professor Corbin admonishes, section 204, that although the use of the phrase 'promissory estoppel' made some headway Ad initium 'because it satisfied the need of the courts for a justification of their enforcement of certain promises in the absence of any bargain or agreed exchange,' it is nevertheless 'objectionable'; the 'word estoppel is so widely and loosely used as almost to defy definition; yet, in the main, it has been applied to cases of misrepresentation of facts and not to promises,' and the American Law Institute 'was well advised in not adopting this phrase and in stating its rule in terms of action or forbearance in reliance on the promise.'
Affirmed.
For affirmance: Justices HEHER, WACHENFELD and BURLING--3.
For reversal: Chief Justice VANDERBILT and Justice JACOBS--2.
The opinion of the court was delivered by HEHER, J.
We certified for appeal the judgment of the Appellate Division of the Superior Court, reversing a judgment of the Chancery Division awarding to plaintiffs specific performance of what was (and is) asserted to be a contract for the sale by the defendant corporation to plaintiffs of real property situate in the Borough of Old Tappan, New Jersey, bearing date February 15, 1954.
The Appellate Division concluded that the writing was 'but a gratuitous option or continuing offer' to sell the lands in question at a given price per acre, revoked prior to acceptance, and entered judgment accordingly.
Reciting that Tappan had 'offered to sell' to the plaintiff Friedman 'certain lands' in Old Tappan to which it had title, 'upon certain terms and conditions,' the agreement declared that Friedman agreed to pay Tappan 'at the rate of $400 per acre for each acre actually conveyed' to Friedman, and Tappan agreed 'to convey said acreage' to Friedman 'for the aforesaid sum of $400 per acre on demand by' Friedman; Tappan agreed 'not to sell or convey any part of its real estate holdings in Old Tappan to anyone other than' Friedman 'for a period of one year from the date hereof without' Friedman's 'express written consent to said conveyance'; and the 'purchaser,' it was provided, 'shall pay the cost of preparing a description of the property to be conveyed.'
It was then stipulated that Tappan 'make(s) no representations whatsoever as to the character of the real estate involved, zoning ordinances, state of title, marketability of title, liens, encumbrances, sewers, encroachments or restrictions of any kind whatsoever,' and 'agrees only to convey whatsoever title it has,' and 'In the event the title tendered' by Tappan 'is rejected' by Friedman 'for any reason whatsoever, then the only obligation of' Tappan 'shall be to return the money paid, and there shall be no further claims by either party against the other, be it for cost of examination of title, survey, or other expenses of whatsoever type or nature'; and that the 'sum of $400 is to be paid upon the execution of this agreement to Murray Zazeela, Esq., the attorney for' Tappan, 'to be held by him until title to the first acre of land to be conveyed hereunder is delivered to' Friedman. And then comes the concluding provision: 'However, in the event no conveyance is executed pursuant to this agreement for any land whatsoever for a period of sixty days from the date hereof, that is to say the 15th day of April, 1954, then this agreement shall be and become null and void and neither party shall have any rights or obligations hereunder other than the obligation to return said sum of $400 to' Friedman.
As found by Judge Conford, for the Appellate Division, delivery of the executed drafts of the agreement 'was not completed until March 5, 1954 or thereabout'; the plaintiff Friedman, 'a lawyer, was concededly acting for his client, the plaintiff Zackarakis'; on March 16, 1954 'Zazeela, attorney for defendant, phoned Friedman and advised him the defendant 'would not go through with the deal," and 'This was confirmed by letter of March 22, 1954 from Zazeela to Friedman'; 'Thereafter Friedman advised Zazeela that his client insisted upon going ahead with the transaction and would take all the property'; 'Defendant refused to accede and offered to return the $400 deposit mentioned in the agreement, but plaintiff declined the tender.'
Plaintiffs contend that the writing 'was a completed contract,' but 'if it were an option,' it remains to inquire whether 'there was the so-called promissory estoppel referred to by this court in' American Handkerchief Corporation v. Frannat Realty Co., in that 'title to the premises was searched at a cost of $505, and in addition, a survey was made at a cost of $200,' which, in fact, was included in the charge of $505. However, as the Appellate Division also found, 'after negotiating, but prior to receiving defendant's signed copy of the agreement,' Friedman on February 23, 1954 'wrote to a title company concerning the instant transaction, advising it that the arrangement required him 'to ascertain what I am buying,' that the acreage might be anywhere from 'five to six acres' to 'twenty to thirty acres,' and requesting that the title company 'unearth' for him the facts as to 'what I am buying," and 'Friedman did not countermand the order at any time'; the title company 'delivered to Friedman a survey of the subject property April 13, 1954,' and 'It also began a title examination of the property 'two or three weeks' prior to March 22, 1954 without express request therefore, acting on an assumption from the February 23 letter that such an examination was desired by the applicant'; and 'Its location of the property had been completed by March 22 and it made no charge therefore,' but 'it did eventually bill Friedman $505 for a survey and examination of the title and that sum was paid.' And the holding was that in this regard there was not 'factual reliance 'of substantial character' upon the offer'; the 'offer was revoked March 16, 1954,' and the evidence indicates that 'had plaintiffs called off the title company on that date their expense, if any at all, would have been minimal,' and 'In short, this is not a case where 'injustice can be avoided only by enforcement of the promise," citing Restatement, Contracts, section 90.
The argument for defendant is that (a) the writing constituted an option merely, 'not a binding contract,' 'nothing more than an offer' 'not supported by consideration,' 'withdrawn before acceptance,' citing American Handkerchief Corporation v. Frannat Realty Co., supra; (b) there was no 'mutuality of obligation and the promise of Friedman was illusory,' citing G. Loewus & Co. Inc., v. Vischia; (c) specific performance should not be decreed 'where a description of the property is uncertain and undefined,' and the 'offer lacks definiteness and certainty and is vague,' as to matters which need not be here particularized; (d) the 'offer became null and void because no conveyance was executed within 60 days from the date of same'; and (e) the doctrine of promissory estoppel has no application where, as here, the 'defendant did not induce the plaintiffs in any legal sense to incur expense in making the examination of the title,' a course taken by plaintiffs to enable them 'to determine whether it would accept the offer and purchase at the stipulated price,' which 'did not inure to defendant's benefit in any way,' and 'it clearly appears' that 'had Friedman contacted the title company on March 16, (nine days after he received the 'signed offer') when he received notice of withdrawal of the offer, there would not have been any expenses as far as the title company was concerned,' and Friedman's 'negligence' in this regard cannot be 'turned into an act of reliance based upon a withdrawn offer.'
We seek for the intention of the parties to the writing; and to that end the symbols of expression are to have a reasonable interpretation, taken and compared together in the context of the circumstances. It is not the real intent but the intent expressed or apparent in the writing that controls. Newark Publishers' Association v. Newark Typographical Union No. 103.
A contract is an agreement resulting in obligation enforceable at law; and it is basic to an agreement entailing obligatory jural consequences that the parties have a distinct intention common to both. 'Doubt or difference is incompatible with agreement.' Anson on Contracts (Turck's ed. 1929), sections 2, 3. In a word, a contract is a voluntary obligation proceeding from a common intention arising from an offer and acceptance. See Johnson & Johnson v. Charmley Drug Co. To be enforceable, a contract must be sufficiently definite in its terms that the performance to be rendered by each party can be ascertained with reasonable certainty. See Savarese v. Pyrene Mfg. Co., Culver v. Culver, Buckley v. Wood, and Wadge v. Crestwood Acres, Inc.
The writing here did not place upon plaintiffs the obligation to purchase Tappan's lands, in whole or in part; it simply granted an option to purchase the lands at the stated rate per acre, a gratuitous option that in its very nature was revocable until its exercise, an offer subject to withdrawal before acceptance.
The agreement fixed the price of the land to be conveyed at $400 per acre, and provided for the payment of $400 to Tappan's attorney, 'to be held by him' until the conveyance of the 'first acre of land to be conveyed' thereunder, but in the event that 'no conveyance is executed pursuant' to the agreement 'for any land whatsoever for a period of 60 days,' then the agreement shall become null and void and 'neither party shall have any rights or obligations' thereunder 'other than the obligation to return' to Friedman the sum so paid on the execution of the agreement.
This was an option pure and simple, a mere offer to sell, unsupported by a consideration, by the basic law of contracts revocable until an obligation comes into being by acceptance according to its terms. In case there be no conveyance 'for any land whatsoever for a period of 60 days,' I.e., a failure to exercise the option, then the agreement shall become null and void and all rights and obligations of the parties Inter se shall cease and determine, save only the obligation to return the initial payment. And this without regard to fault of either party. Indeed, the agreement thereby plainly recognizes that plaintiffs' failure to take title to the lands, in whole or in some part, would not put them in default. We cannot create a contract when the parties have not spoken in terms of legal obligation. This agreement was drafted by lawyers (Friedman and Zazeela) who were aware of the fundamental differences between a contract and an option, in terms of obligation.
A continuing offer grounded in a sufficient consideration constitutes an 'option,' as the term is known to the law. Since it is a promise upon a legal consideration, it is irrevocable for the time of its continuance, and thus it takes the classification of a contract; and the want of mutuality has no significance. Though irrevocable, the option is but an offer; and notice of its unqualified acceptance, E.g., where the subject matter concerns the sale of goods or personal property, ordinarily serves to create a bilateral executory contract of sale as in the case of the conventional offer of sale and its unconditional acceptance. See American Handkerchief Corporation v. Frannat Realty Co. and Martindell v. Fiduciary Counsel, Inc.
Indeed, 'mutuality of obligation' is a term not always clearly understood. It suggests that unless both parties are bound, neither is bound. And in this, it is ofttimes confused with 'consideration.' 'Mutuality' signifies more than reciprocal undertakings by the parties; there may be an undertaking and an executed consideration. A 'unilateral contract' may consist of a single binding promise if supported by an executed consideration, or is under seal at common law.
A unilateral contract 'is one in which there is a promise on one side only, the consideration on the other side being executed'; such contracts are not void, but are equally as valid as bilateral contracts, consisting solely of mutual promises to do some future act, in which the consideration of the promise of one party is a promise on the part of the other'; the term "unilateral' is often used to express absence of mutuality'; in the case of 'contracts made up solely of mutual promises, each the consideration for the other, where the promises of one party are so expressed as not to be absolutely binding on him, but to be performed only if such party so wills, or a promise on but one side and no consideration therefore, the one who makes the absolute promise in the one case, or the sole promise in the other, is not bound to perform'; the 'reason sometimes given is that the contract is unilateral, or void for want of mutuality,' but the 'real reason is that there is not a sufficient consideration for the promise'; "Consideration is essential; mutuality of obligation is not, unless the want of mutuality would leave one party without a valid or available consideration for his promise. " See Rich v. Doneghey. The doctrine of mutuality of obligation 'appears therefore to be merely one aspect of the rule that mutual promises constitute considerations for each other'; where there is 'no other consideration for a contract, mutual promises must be binding on both parties,' but 'where there is any other consideration for the contract, mutuality of obligation is not essential.' See Meurer Steel Barrel Co. v. Martin and Armstrong Paint & Varnish Works v. Continental Can Co.
'Mutuality of obligation,' says Professor Corbin, 'should be used solely to express the idea that each party is under a legal duty to the other; each has made a promise and each is an obligor'; this is the meaning with which the term is commonly used, but 'it is sometimes declared that it means nothing more than that there must be a sufficient consideration,' and even though 'one of the parties has made no promise and is bound by no duty, the contract has sufficient mutuality if he has given an executed consideration,' a sound result although the rationalization is questionable, and now it is generally agreed that 'it is consideration that is necessary, not mutuality of obligation.'
But, as said in a footnote to this section, 'As in any other case, this executed consideration must be one that is itself sufficient to make the return promise binding.' And reference is made to Schneller v. Hayes, holding that the consideration was not sufficient, because it was no more than performance of a preexisting duty to the promissor.
And where an offered promise receives no return promise, but can be accepted piecemeal by rendering a requested part performance, thus constituting a unilateral contract on the offered terms, such part performance, unless so rendered as to justify the implication of a promise to render the full performance proposed in the offer, leaves the offer revocable at the will of the offeror to all but the rendered part performance.
Here, no consideration was given for the option, and so the writing does not constitute an option contract irrevocable for the term prescribed. Indeed, there is no suggestion of a supporting consideration. Plaintiffs' contention is that 'there was an implied obligation on Friedman to buy any property needed from the defendant,' and if the writing be deemed an option, it became 'effective by a change of position on the part of the plaintiffs,' in the nature of a promissory estoppel, a gratuitous offer made irrevocable by 'subsequent action in reliance upon it,' citing American Handkerchief Corporation v. Frannat Realty Co., supra. As stated supra, the option agreement provided for an initial payment of $400 to Zazeela, the attorney for Tappan, to be held by him until title to the 'first acre of land' had been conveyed to Friedman, ostensibly to cover the purchase price of the first acre should the option be exercised, and, as we have seen from the last paragraph of the agreement, to be returned should no conveyance be made 'for any land whatsoever for a period of 60 days,' in which event the agreement was automatically rendered null and void. These provisions bespeak the character of the payment in terms excluding any suggestion of consideration given for the option. The question is largely one of intention. See American Handkerchief Corporation v. Frannat Realty Co. Consideration is the price bargained for and paid for a promise. If it is bargained for as the exchange for the promise, the promise is not gratuitous. See Coast National Bank v. Bloom.
It is to be observed that we are asked not to consider the point because in the trial court plaintiffs read the agreement as an option and not as a binding contract, exercisable by the purchase of at least one acre by April 15, 1954, and the remaining lands within a year, in whole or in part, and proceeded accordingly.
And, for the reasons assigned by the Appellate Division, the doctrine of 'promissory estoppel' is inapposite. The things done by the offeree did not constitute an election to exercise the option; nor were they induced by the offeror on the supposition of a contract of sale. Plainly, the offeree was seeking information concerning the quantum of the land made the subject of the offer and the state of the title, presumably circumstances considered by the offeree relevant to the policy and wisdom of exercising the option. Indeed, the survey of the land was made without cost prior to the delivery of the executed option, and the expense of searching the title could have been avoided in the main were action promptly taken when notice came that the offer to sell had been withdrawn.
The term 'promissory estoppel' is of comparatively recent origin in our jurisprudence, not altogether clear in its quality and import. It is not a true estoppel, but a departure from the classic doctrine of consideration that the promise and the consideration must purport to be the motive each for the other, in whole or at least in part, and it is not enough that the promise induces the detriment or that the detriment induces the promise if the other half is wanting, Wisconsin & Michigan R. Co. v. Powers, Holmes, C.J.; Coast National Bank v. Bloom, supra, a professed adaptation of the principle of estoppel to the formation of contracts where, relying on a gratuitous promise, the promisee has suffered detriment. See Martin v. Meles. There is in such circumstances no representation of an existing fact, but merely that the promissor at the time of making the promise intends to fulfill it. The reliance is on a promise, and not on a misstatement of fact, and so the estoppel is termed 'promissory' to mark the distinction.
In this country, the doctrine has been generally confined to charitable subscriptions, where difficulty has been encountered in sustaining the promise under the conventional theories of consideration, and to certain promises between individuals, for the payment of money, enforced as informal contracts created without a manifested mutual assent or consideration. See Allegheny College v. National Chautauqua County Bank. Promissory estoppel, said Judge Learned Hand, 'is now recognized as a species of consideration.' See Porter v. Commissioner of Internal Revenue.
But opposed in principle are cases holding that performance of a detrimental condition attached to a gratuitous promise is not a substitute for consideration, and the promissor is not liable if he breaks his promise; and that a detriment incurred in reliance on a promise is not sufficient consideration unless the detriment was requested as consideration. See Wisconsin & Michigan R. Co. v. Powers.
It is generally held that the principle of estoppel is applicable to In futuro promises, if subject to estoppel at all, only where they relate to an intended abandonment of an existing right, and are made to influence others who in fact are induced thereby to act or to forbear: E.g., where one who has induced his creditor to forbear to bring action upon his claim by a promise of payment or a promise not to plead the statute of limitations as a defense, even though such forbearance was not requested as consideration for the promise, and though the new promise (because not in writing or for some other reason) was not binding as such. In those cases, 'no new right is created. The court does not sustain an action on the promise; it reaches the desired result by allowing a defense to an action or allowing an original right to be enforced by merely prohibiting the interposition of a defense.'
And it has been held that a license to divert a watercourse could not be revoked after the licensee had made improvements and invested capital in consequence of it. See Rerick v. Kern. But 'no slight acts or merely technical reliance will serve. The weight of authority, moreover, is opposed to these decisions and holds a gratuitous license revocable though action has been taken in reliance upon it.' See our own case of Lawrence v. Springer, holding that the expenditure must be made 'in reliance upon such license,' and the loss 'irreparable' unless there be equitable intervention.
The basis of equitable interposition for specific performance in behalf of one who has been given a gratuitous promise of land is entry and the making of improvements on the land in reliance on the promise. Equity regards only possession of the land and improvements. No other detriment would suffice.
The rationale of all these holdings is action in justifiable reliance on a promise and the hardship involved in refusing enforcement of the promise. A promise which the promissor should reasonably expect to induce action or forbearance of a 'definite and substantial character' on the part of the promisee, and which does induce such action or forbearance, is binding 'if injustice can be avoided only by enforcement of the promise.'
The principle thus invoked is not germane. Plaintiffs would render a gratuitous option irrevocable by the mere voluntary doing of that which had no relation to consideration or false inducement, and thus set at naught the common intent and purpose. The offeror had no reason to believe the offeree would cause a search of the title to be made before acceptance of the offer; and the offeree knew the risk in this regard before acceptance of the offer. Such was the nature of the option. The case is patently not within the cited principle.
Professor Corbin admonishes, section 204, that although the use of the phrase 'promissory estoppel' made some headway Ad initium 'because it satisfied the need of the courts for a justification of their enforcement of certain promises in the absence of any bargain or agreed exchange,' it is nevertheless 'objectionable'; the 'word estoppel is so widely and loosely used as almost to defy definition; yet, in the main, it has been applied to cases of misrepresentation of facts and not to promises,' and the American Law Institute 'was well advised in not adopting this phrase and in stating its rule in terms of action or forbearance in reliance on the promise.'
Affirmed.
For affirmance: Justices HEHER, WACHENFELD and BURLING--3.
For reversal: Chief Justice VANDERBILT and Justice JACOBS--2.
Labels:
contracts,
court,
defendant refused to accede,
law,
New Jersey,
option,
real estate,
realty,
trial
Friday, October 31, 2008
Miller v. Lawlor
Miller v. Lawlor, 245 Iowa 1144, 66 N.W.2d 267 (Iowa 1954).
Plaintiffs are husband and wife. We shall, for convenience, refer to J. R. Miller as 'plaintiff' since Mrs. Miller does not seem to have taken active part in the transaction or trial. They bought their present home in Cherokee, Iowa, from one Vander Wal in the spring of 1952. It is on a sightly eminence with what is described as a 'terrific' nine mile view to the south and west across vacant property owned by defendant and to hills and woods beyond.
The part of defendant's premises immediately adjoining plaintiffs' on the south is a rectangular area referred to as the 'panhandle,' 101 1/2 feet north and south and 175 feet deep. The properties of both parties face east on South Eleventh Street.
Defendant owns a much larger additional tract extending south from the panhandle 257 feet, and west from the street 533 feet. The panhandle slopes downward gently from northeast to southwest. At about its south line the ground drops quite abruptly to the south in a 30 degree incline for 100 to 150 feet, then levels off for a distance and finally descends to the bottom of a ravine.
Plaintiff claims that before he purchased from Vander Wal, and in contemplation of such purchase, he obtained oral assurance from defendant that the latter would not build so as to obstruct the view from the house and he bought in reliance thereon. 'I said to Dr. Lawlor that I supposed he had heard I had been dickering on the Vander Wal house. He said 'I hope you purchase the house. We would like to have you as neighbors.' I told him that under no circumstances would I make a bid upon that house if his building plans were in any way to spoil the view to the south and southwest of this home. I told him Mr. Vander Wal had told me that he had an agreement with Dr. Lawlor (defendant) as to the location of his (defendant's) house and that I was over there to hear from him as to whether or not he confirmed that agreement I told him that Vander Wal had told me that Dr. Lawlor had agreed that he was building a hillside type of house down at the crest of the hill, and that it would not obstruct any view to the southwest; that the house would be low enough so that we could see over it.'
'Dr. Lawlor said, 'that's about right,' and he left the room and came back with two sheets of paper with some drawings upon it. He explained the diagrams to me that his house would be nine feet high would stand approximately seventy feet west of the east lot line. 'There is a rock pile down on the crest of the hill;' that that rock pile would be approximately the northwest corner of his house.'
Plaintiff testifies defendant said Vander Wal and he sighted from the living area of the proposed Vander Wal house 'as to what this would obscure, and that about all it would obscure is the farm buildings down in the valley.' I then said to him, 'If I purchase this house will you agree that you will not build your house north or west of that location?' and he said 'Certainly.'
Plaintiff further testifies defendant said 'according to his building plans, the north side of his house would be eighty feet south of his north lot line, and that the house would extend from the east lot line approximately seventy feet.' Plaintiff later verified the distances. He says 'The rock pile was slightly over eighty feet, measured from the fence, which I later learned was about three to four feet south of the true lot line, and approximately seventy-five feet west of the east lot line.'
Plaintiff also says he relied on defendant's statement and purchased the premises and would not have purchased without that assurance.
Defendant, while admitting there was a conversation at the time and place referred to, denies he made a statement that he would not build 'closer than eighty feet from his lot line' or 'further west than a point seventy feet from my east lot line.' 'The first time I ever heard these dimensions and measurements was when I was served (May 7, 1953) with the petition in the first lawsuit.' (This refers to a suit commenced by plaintiffs but dismissed several days before commencement of the present suit.)
Defendant's wife testifies she was present at the conversation. She is equally limited in her denial: 'During that conversation no mention was ever made of a measurement of 80 feet from the north lot line. No mention at all was made by either party of a measurement of distance of seventy feet west from my husband's east lot line.'
Neither denies any other part of plaintiff J. R. Miller's testimony. Neither denies the testimony with reference to what defendant was said to have told Vander Wal, nor the reference by him in conversation with both plaintiff and Vander Wal, to the rock pile as the northwest corner of his proposed home and the proposed height of nine feet of the house at that point. Nor is there any denial that plaintiff in effect secured from defendant a definite agreement with full realization plaintiffs were contemplating purchase of the Vander Wal premises on the strength of such agreement.
Mr. Vander Wal acquired the present Miller premises in August or September, 1951. He almost immediately thereafter commenced building the house now owned and occupied by plaintiffs. He describes it as 'designed for this particular lot so that the housewife would have access to the view no matter what part of the house she was in, with the exception of the bedroom and bathroom. The house was tailored to the lot. A type of construction known as contemporary. It was also designed so that the sun rays in winter time when the sun was low would reflect on this window wall to make use of the solar heating system. There is about twenty-eight feet of window wall on the south side of the house. There is no frames or anything.'
He testifies to a conversation with defendant in the early part of September, 1951, 'the first day of construction work. We were just staking out this particular lot and setting up chalk lines where the digging of footings was to be at that time.' The witness on that occasion first learned defendant owned the land to the south. They examined the Vander Wal plans and the witness says defendant also spoke of his own plans to build 'a hillside home of tri-level nature. He pointed out a rock pile' that 'would be the approximate west end of the home.' They viewed the site where defendant's home might be and concluded it would not obstruct the view from the upper premises.
It was stipulated at the close of Vander Wal's testimony that one Ferguson, his building superintendent or construction supervisor, would if present confirm his testimony as to a conversation between Ferguson and defendant in which the latter said his plans 'were of hillside nature' and in which the rock pile was referred to 'as the beginning of the north portion of his house and also that it would not be extended further west than the rock pile.'
There is a definite claim by Vander Wal that he obtained assurance at that time from defendant on the strength of which he (Vander Wal) went ahead with the construction. He also testifies to later conversations with defendant along the same line. At their first conference, he says, they discussed 'sharing the sewer and water,' and they later entered into a written 'Sewer and Water Agreement,' signed and acknowledged before plaintiff's brother and law partner as notary public. That was a month or more before plaintiffs became interested in buying the premises.
We do not go into greater detail of the transactions between Vander Wal and defendant as plaintiffs do not seem to have relied on any agreement between those two. The matter is material however as introductory to and explanatory of what plaintiff testifies he said to defendant about it at their conference already mentioned, when the oral agreement between plaintiff and defendant is claimed to have been made. It also tends to corroborate plaintiff's testimony that definite assurance was later given him by defendant.
Plaintiffs pray that defendant be enjoined from erecting any structure on his premises closer than 80 feet from his (defendant's) north lot line or extending more than 70 feet west of his east lot line or at a height greater than nine feet above natural ground level at a point 80 feet south of said north lot line and 70 feet west of said east line.
Throughout the trial defendant carefully protected his record by appropriate and careful objections to evidence, urging the statute of frauds and other objections. He also guarded against any possible waiver by careless cross-examination or by introduction of unnecessary evidence. We have no technical problem on that score. We have the clear question as to the sufficiency of the pertinent evidence to show a contract within the exception to the statute of frauds or to establish an equitable estoppel against the ban of the statute. Testimony for that purpose was admissible.
The trial court granted injunction practically as prayed, same to 'run with and be binding upon defendant's real estate for the benefit of plaintiffs' real estate and binding upon defendant, his heirs, assigns and any subsequent owners of defendant's real estate,' but to terminate 'whenever plaintiffs, or their successors permanently terminate the use of the view.'
The decree allowed defendant a 10% tolerance or leeway on specified distances and height, and protected his right to take advantage of a written waived tendered by plaintiffs which in effect waived objection to the erection of any 'garage or residential structure:' (1) Upon the east 40 feet of defendant's premises, regardless of the height thereof; or (2) The extreme north wall of which is 60 feet or more south of defendant's north line and which does not extend more than 100 feet west of defendant's east line and the height elevation of which is six inches lower than the present floor level of plaintiffs' home; or (3) The extreme north wall of which is 60 feet or more south of defendant's north line and regardless of how far west it extends from defendant's east line, providing the portion that is more than 100 feet west of said east line does not exceed a height elevation of six feet below the present floor level of plaintiffs' home.
Defendant has appealed.
I. The trial court's decision is based upon seemingly alternative theories. After a rather thorough discussion of the theory of a contract within the exception to the Statute of Frauds because of claimed 'part performance' the court says: 'In any event, whether or not plaintiff has brought himself within the recognized exception to the statute of frauds, the doctrine of equitable estoppel entitles him to complete relief.' We deem the difference between the two doctrines more apparent than real.
We quote the pertinent part of the statutes from Iowa Code Statute of Frauds. Except when otherwise specially provided, no evidence of the following enumerated contracts is competent, unless it be in writing and signed by the party charged or by his authorized agent.
'3. Those for the creation or transfer of any interest in lands.’
Section 622.33: 'Exception: The provisions of subsection 3 of section 622.32 do not apply where the purchase money has been received by the vendor, or when the vendee, with the actual or implied consent of the vendor, has taken and held possession of premises under and by virtue of the contract, or when there is any other circumstance which, by the law heretofore in force, would have taken the case out of the statute of frauds.'
It will be observed our statute, unlike its English forerunner, does not forbid oral contracts or render them invalid. It relates merely to the manner of proof. See Berryhill v. Jones and McMinimee v. McMinimee.
A consideration of the language of these sections as applied to the Record here explains what defendant in argument calls the trial court's lack of faith in the doctrine of part performance. It is particularly difficult to speak in terms of the 'creation or transfer of any interest in lands,' 'purchase money,' 'vendor,' 'vendee,' and 'possession of the premises' under the facts shown. Plaintiffs and defendant were not in the ordinary sense vendees and vendor. There was no 'purchase money' to be received by defendant nor any taking of 'possession of the premises' by plaintiffs. As defendant in argument says 'It is a very strained interpretation' to consider defendant here as a vendor.
Of course the claimed agreement was designed to create an interest in land within the purview of the statute. It contemplated the creation of a restrictive or negative easement over defendant's premises in favor of the adjoining premises. That would surely be an 'interest.' Oral evidence of it was inadmissible unless under the statutory exception or unless defendant was estopped to claim the benefit of the statute. Plaintiffs do not claim the contrary.
The acts described in Code section 622.33 as creating the exception, i.e., payment of 'purchase money' and taking 'possession of the premises', are usually spoken of as 'part performance;' but speaking literally and technically there was here no 'part performance.' As said Fairall v. Arnold, 'The term 'part performance' is a misnomer and inaccurate, in that many matters designated as such are not in fact the performance or part performance of the contract, itself, but are those done pursuant to or in reliance upon the contract.'
The apparent difficulty might perhaps be met as the analogous situation has always been met by the law of contracts, in cases where the promisor derives no benefit but the promisee suffers a detriment. Consideration has always been held to exist in such cases. See citations in West's Iowa Digest, Contracts, Key No. 52. But 'consideration' is a broader term than 'part performance' and here the statute specifies particular acts of part performance not technically descriptive of those shown in the instant case.
The New York Court of Appeals suggests the doctrine of promissory estoppel has been used in certain cases as the equivalent of consideration. See Allegheny College v. National Chautauqua County Bank.
We conclude a determination here is unnecessary as to the relative applicability of the doctrine of part performance of contract or the doctrine of estoppel. They need not be distinguished. "Promissory estoppel' is now a recognized species of consideration. See Porter v. Commissioner of Internal Revenue. And in Fairall v. Arnold, this court quoted with apparent approval from the commentator in 101 A.L.R. 935: "The true basis of the doctrine of part performance, according to the overwhelming weight of authority, lies in the principles of equitable estoppel and fraud". The statement is undoubtedly sound.
The trial court, recognizing the close relationship between part performance (as a form of consideration) and promissory estoppel, pointed out that Code section 622.33 not only names specific acts of part performance as creating an exception but also specifies 'Any other circumstance which, by the law heretofore in force, would have taken the case out of the statute of frauds.' We deem that language sufficient to include what is now called 'promissory estoppel.' See Vogel v. Shaw and Wolfe v. Wallingford Bank & Trust Co.
II. The doctrine of equitable estoppel is applicable whenever the representation or promise relied on has been made to induce action or is reasonably calculated to induce action. The Restatement of the Law of Contracts, § 90, says: 'A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by the enforcement of the promise.' See Fried v. Fisher and Halligan v. Frey.
See also Restatement of the Law of Property, § 524: 'An oral promise that certain land will be used in a particular way, though otherwise unenforceable, is enforceable to the extent necessary to protect expenditures made in reasonable reliance thereon.' 'Comment: a Rationale,' immediately following is quite pertinent here but too long to quote.
The authorities make it clear the binding force of the promise does not depend on any personal gain or advantage to the promisor. See Fried v. Fisher where it is said: 'so from the earliest times there was recognized, the principle that an estoppel might similarly arise from the making of a promise, even though without consideration, if it was intended that the promise be relied upon and in fact it was relied upon, and a refusal to enforce it would be virtually to sanction the perpetration of fraud or result in other injustice.' As stated by an early Michigan opinion: 'The rule does not rest upon the assumption that he (the party estopped) has obtained any personal gain or advantage, but on the fact that he has induced others to act in such a manner that they will be seriously prejudiced if he is allowed to fail in carrying out what he has encouraged them to expect.' See Faxton v. Faxton.
III. We do not understand defendant questions the naked proposition that equitable estoppel may be effective to take a transaction out of the statute, or more accurately stated, that the statute may not bar oral proof of the promise as a basis for equitable estoppel. He argues however that 'plaintiff has failed to prove the following essential elements of estoppel: (1) A clear and definite oral agreement; (2) That plaintiff acted to his detriment solely in reliance on said agreement; (3) That plaintiff was without knowledge of the real facts; (4) False representation or concealment of material facts; (5) That a weighing of all the equities entitles plaintiff to the equitable relief of estoppel.' It is apparent (3) and (4) are not applicable to promissory estoppel where plaintiff relies on a promise rather than a misrepresentation of fact. There were here no unknown facts to be misrepresented or concealed.
We find quite definite (practically undenied) evidence of 'a clear and definite oral agreement,' relied on by plaintiff to his detriment. The testimony has necessarily been set out in condensed form. Defendant especially urges the indefiniteness of some of the language concerning distances, e. g.: 'approximately,' 'something better than 80 feet,' 'slightly over,' etc. He concedes the definiteness of plaintiff's own testimony in that respect but asserts it was 'squarely rebutted both by defendant and defendant's wife.'
But, as already pointed out, defendant and his wife merely denied the mention of distances in figures. They did not deny reference to the 'rock pile' as the northwest corner of their proposed house nor the measurements by which the location of the 'rock pile' was, we think, sufficiently proven. A familiar maxim of law says 'that is certain which can be made certain.' It applies here. The subsequent ascertainment in distances of the location of the rock pile is not disputed.
Neither defendant nor his wife denied plaintiff said to defendant: 'That under no circumstances would I make a bid upon that house if his building plans were in any way to spoil the view to the south and southwest.' It was no casual conversation. Defendant must have understood plaintiff was seeking an assurance upon which he could rely and without which he would not act.
There is no evidential denial of plaintiff's testimony that he went to defendant before buying and expressly stated the purpose was to learn if Vander Wal's report to him was correct and in effect to exact an agreement: 'If I purchase this house will you agree that you will not build your house north or west of that location?' (clearly referring to the rock pile).
It must be conceded the lawyer-like way--and plaintiff is a lawyer--would have been for him to have asked for a written contract. But the statutory exception does not exclude lawyers from its benefits when and if they are unwise enough to rely on it. And plaintiff had a right to accept his friend's oral promise in lieu of a written contract.
IV. Defendant's fifth 'essential element of estoppel' refers to a 'weighing of all the equities.' If by that is meant a mathematical comparison of potential disadvantages to the respective parties depending on whether the promise is or is not enforced, the proposition is unsound.
The question is not which party will suffer the greater detriment if the contention of the other prevails. That is not the rule of promissory estoppel--estoppel that arises when an innocent promisee relies, to his disadvantage, upon a promise intended or reasonably calculated to induce action by him.
In such case equity is first concerned with the plight of the innocent promisee if the promisor be permitted to seek asylum within the protection of the statute of frauds.
The Record here fairly shows plaintiffs bought the Vander Wal home on the strength of defendant's commitment as to how he would build. Were he to build as threatened, a real value would be subtracted from plaintiff's premises. The evidence makes it reasonably certain the magnificent view constituted a large part of the inducement for anyone to select such a site for a house. It was clearly the deciding factor without which plaintiffs would not have bought. It was not necessarily the sole reliance. It is sufficient that without it plaintiffs would not have acted.
Vander Wal attempted to measure any threatened damage to plaintiffs' home at 'from fifty to seventy-five per cent of its present value.' But we agree with him 'the damage cannot be evaluated in dollars and cents.' That fact merely fortifies the jurisdiction of equity to restrain this threatened wrong. An injury is said to be irreparable where there exists no certain pecuniary standard for measuring the damage. We think the Record shows that here, in the language of the Restatement, 'injustice can be avoided only by enforcement' of the promise upon which plaintiffs relied.
V. While the threatened injustice to the promisee is equity's first consideration, it is proper to consider the possible harshness to defendant by enforcement of his promise.
Much was urged on his behalf during the trial on the necessity, by reason of his profession especially, of easy approach to his garage from the street. That point is probably eliminated by plaintiffs' waiver recognized by the decree which preserves defendant's right under it.
Defendant was preparing to build (in addition to a garage in the northeast part of the panhandle) a house nearly 100 feet long, to be placed diagonally from northwest to southeast on the panhandle (presumably to conform to the slope of the ground from northeast to southwest) set back 27 feet from the street and far enough north to leave room for a terrace between it and the south edge where the ground begins to drop abruptly to the south. This terrace is shown on the architect's plat as 42 feet wide at the house and fanning out wider as it extends some 30 feet to the southern edge of the panhandle.
It is obvious defendant must, under the decree here, abandon that particular plan. But it is not shown impossible to design a home in some other way or of some other type that will be appropriate to and preserve equally well the advantages inherent in the location--possibly such a type as he originally had in mind.
VI. Defendant argues there was between plaintiff and himself a fiduciary or confidential relationship of attorney and client, and that the resulting presumption of fraud has not been rebutted. We find no pleading raising that defensive issue. And we find no suggestion in the Record to warn the trial court and opposing counsel that such a contention would be made.
The rule is well established that fraud, when relief on as either a cause of action or as a defense, must ordinarily be pleaded.
Of course there are exceptions to the rule but we know of none in point here. The fact that plaintiff or his law firm had acted for defendant in other matters, unrelated here, came into the Record incidentally. It was not pleaded. The case was not tried on the issue of fraud by violation of confidential relationship or otherwise. There is no indication it was intended by defendant as furnishing the basis for a claim of fraud or undue influence. We cannot find it was ever urged to the trial court and we cannot and should not consider it on appeal.
By disposing of defendant's contention in this way we are not to be understood as implying we find anything in the Record to support it had the defense been pleaded. The contrary is true. Any relation of attorney and client in other matters and at some former time (not specified) is not shown to have been such as to have any possible effect in this transaction. Defendant has been plaintiffs' family doctor. 'If he had told me that day I had to have my appendix out I wouldn't have doubted it.' Plaintiff urges that as an explanation of his failure to ask for a written contract. These relationships make more regrettable this controversy between friends but have no legal significance under this Record.
We have tried to give careful consideration to all defendant's contentions. We conclude the trial court reached the correct result and must be affirmed. It is so ordered.
Affirmed.
All Justices concur.
Plaintiffs are husband and wife. We shall, for convenience, refer to J. R. Miller as 'plaintiff' since Mrs. Miller does not seem to have taken active part in the transaction or trial. They bought their present home in Cherokee, Iowa, from one Vander Wal in the spring of 1952. It is on a sightly eminence with what is described as a 'terrific' nine mile view to the south and west across vacant property owned by defendant and to hills and woods beyond.
The part of defendant's premises immediately adjoining plaintiffs' on the south is a rectangular area referred to as the 'panhandle,' 101 1/2 feet north and south and 175 feet deep. The properties of both parties face east on South Eleventh Street.
Defendant owns a much larger additional tract extending south from the panhandle 257 feet, and west from the street 533 feet. The panhandle slopes downward gently from northeast to southwest. At about its south line the ground drops quite abruptly to the south in a 30 degree incline for 100 to 150 feet, then levels off for a distance and finally descends to the bottom of a ravine.
Plaintiff claims that before he purchased from Vander Wal, and in contemplation of such purchase, he obtained oral assurance from defendant that the latter would not build so as to obstruct the view from the house and he bought in reliance thereon. 'I said to Dr. Lawlor that I supposed he had heard I had been dickering on the Vander Wal house. He said 'I hope you purchase the house. We would like to have you as neighbors.' I told him that under no circumstances would I make a bid upon that house if his building plans were in any way to spoil the view to the south and southwest of this home. I told him Mr. Vander Wal had told me that he had an agreement with Dr. Lawlor (defendant) as to the location of his (defendant's) house and that I was over there to hear from him as to whether or not he confirmed that agreement I told him that Vander Wal had told me that Dr. Lawlor had agreed that he was building a hillside type of house down at the crest of the hill, and that it would not obstruct any view to the southwest; that the house would be low enough so that we could see over it.'
'Dr. Lawlor said, 'that's about right,' and he left the room and came back with two sheets of paper with some drawings upon it. He explained the diagrams to me that his house would be nine feet high would stand approximately seventy feet west of the east lot line. 'There is a rock pile down on the crest of the hill;' that that rock pile would be approximately the northwest corner of his house.'
Plaintiff testifies defendant said Vander Wal and he sighted from the living area of the proposed Vander Wal house 'as to what this would obscure, and that about all it would obscure is the farm buildings down in the valley.' I then said to him, 'If I purchase this house will you agree that you will not build your house north or west of that location?' and he said 'Certainly.'
Plaintiff further testifies defendant said 'according to his building plans, the north side of his house would be eighty feet south of his north lot line, and that the house would extend from the east lot line approximately seventy feet.' Plaintiff later verified the distances. He says 'The rock pile was slightly over eighty feet, measured from the fence, which I later learned was about three to four feet south of the true lot line, and approximately seventy-five feet west of the east lot line.'
Plaintiff also says he relied on defendant's statement and purchased the premises and would not have purchased without that assurance.
Defendant, while admitting there was a conversation at the time and place referred to, denies he made a statement that he would not build 'closer than eighty feet from his lot line' or 'further west than a point seventy feet from my east lot line.' 'The first time I ever heard these dimensions and measurements was when I was served (May 7, 1953) with the petition in the first lawsuit.' (This refers to a suit commenced by plaintiffs but dismissed several days before commencement of the present suit.)
Defendant's wife testifies she was present at the conversation. She is equally limited in her denial: 'During that conversation no mention was ever made of a measurement of 80 feet from the north lot line. No mention at all was made by either party of a measurement of distance of seventy feet west from my husband's east lot line.'
Neither denies any other part of plaintiff J. R. Miller's testimony. Neither denies the testimony with reference to what defendant was said to have told Vander Wal, nor the reference by him in conversation with both plaintiff and Vander Wal, to the rock pile as the northwest corner of his proposed home and the proposed height of nine feet of the house at that point. Nor is there any denial that plaintiff in effect secured from defendant a definite agreement with full realization plaintiffs were contemplating purchase of the Vander Wal premises on the strength of such agreement.
Mr. Vander Wal acquired the present Miller premises in August or September, 1951. He almost immediately thereafter commenced building the house now owned and occupied by plaintiffs. He describes it as 'designed for this particular lot so that the housewife would have access to the view no matter what part of the house she was in, with the exception of the bedroom and bathroom. The house was tailored to the lot. A type of construction known as contemporary. It was also designed so that the sun rays in winter time when the sun was low would reflect on this window wall to make use of the solar heating system. There is about twenty-eight feet of window wall on the south side of the house. There is no frames or anything.'
He testifies to a conversation with defendant in the early part of September, 1951, 'the first day of construction work. We were just staking out this particular lot and setting up chalk lines where the digging of footings was to be at that time.' The witness on that occasion first learned defendant owned the land to the south. They examined the Vander Wal plans and the witness says defendant also spoke of his own plans to build 'a hillside home of tri-level nature. He pointed out a rock pile' that 'would be the approximate west end of the home.' They viewed the site where defendant's home might be and concluded it would not obstruct the view from the upper premises.
It was stipulated at the close of Vander Wal's testimony that one Ferguson, his building superintendent or construction supervisor, would if present confirm his testimony as to a conversation between Ferguson and defendant in which the latter said his plans 'were of hillside nature' and in which the rock pile was referred to 'as the beginning of the north portion of his house and also that it would not be extended further west than the rock pile.'
There is a definite claim by Vander Wal that he obtained assurance at that time from defendant on the strength of which he (Vander Wal) went ahead with the construction. He also testifies to later conversations with defendant along the same line. At their first conference, he says, they discussed 'sharing the sewer and water,' and they later entered into a written 'Sewer and Water Agreement,' signed and acknowledged before plaintiff's brother and law partner as notary public. That was a month or more before plaintiffs became interested in buying the premises.
We do not go into greater detail of the transactions between Vander Wal and defendant as plaintiffs do not seem to have relied on any agreement between those two. The matter is material however as introductory to and explanatory of what plaintiff testifies he said to defendant about it at their conference already mentioned, when the oral agreement between plaintiff and defendant is claimed to have been made. It also tends to corroborate plaintiff's testimony that definite assurance was later given him by defendant.
Plaintiffs pray that defendant be enjoined from erecting any structure on his premises closer than 80 feet from his (defendant's) north lot line or extending more than 70 feet west of his east lot line or at a height greater than nine feet above natural ground level at a point 80 feet south of said north lot line and 70 feet west of said east line.
Throughout the trial defendant carefully protected his record by appropriate and careful objections to evidence, urging the statute of frauds and other objections. He also guarded against any possible waiver by careless cross-examination or by introduction of unnecessary evidence. We have no technical problem on that score. We have the clear question as to the sufficiency of the pertinent evidence to show a contract within the exception to the statute of frauds or to establish an equitable estoppel against the ban of the statute. Testimony for that purpose was admissible.
The trial court granted injunction practically as prayed, same to 'run with and be binding upon defendant's real estate for the benefit of plaintiffs' real estate and binding upon defendant, his heirs, assigns and any subsequent owners of defendant's real estate,' but to terminate 'whenever plaintiffs, or their successors permanently terminate the use of the view.'
The decree allowed defendant a 10% tolerance or leeway on specified distances and height, and protected his right to take advantage of a written waived tendered by plaintiffs which in effect waived objection to the erection of any 'garage or residential structure:' (1) Upon the east 40 feet of defendant's premises, regardless of the height thereof; or (2) The extreme north wall of which is 60 feet or more south of defendant's north line and which does not extend more than 100 feet west of defendant's east line and the height elevation of which is six inches lower than the present floor level of plaintiffs' home; or (3) The extreme north wall of which is 60 feet or more south of defendant's north line and regardless of how far west it extends from defendant's east line, providing the portion that is more than 100 feet west of said east line does not exceed a height elevation of six feet below the present floor level of plaintiffs' home.
Defendant has appealed.
I. The trial court's decision is based upon seemingly alternative theories. After a rather thorough discussion of the theory of a contract within the exception to the Statute of Frauds because of claimed 'part performance' the court says: 'In any event, whether or not plaintiff has brought himself within the recognized exception to the statute of frauds, the doctrine of equitable estoppel entitles him to complete relief.' We deem the difference between the two doctrines more apparent than real.
We quote the pertinent part of the statutes from Iowa Code Statute of Frauds. Except when otherwise specially provided, no evidence of the following enumerated contracts is competent, unless it be in writing and signed by the party charged or by his authorized agent.
'3. Those for the creation or transfer of any interest in lands.’
Section 622.33: 'Exception: The provisions of subsection 3 of section 622.32 do not apply where the purchase money has been received by the vendor, or when the vendee, with the actual or implied consent of the vendor, has taken and held possession of premises under and by virtue of the contract, or when there is any other circumstance which, by the law heretofore in force, would have taken the case out of the statute of frauds.'
It will be observed our statute, unlike its English forerunner, does not forbid oral contracts or render them invalid. It relates merely to the manner of proof. See Berryhill v. Jones and McMinimee v. McMinimee.
A consideration of the language of these sections as applied to the Record here explains what defendant in argument calls the trial court's lack of faith in the doctrine of part performance. It is particularly difficult to speak in terms of the 'creation or transfer of any interest in lands,' 'purchase money,' 'vendor,' 'vendee,' and 'possession of the premises' under the facts shown. Plaintiffs and defendant were not in the ordinary sense vendees and vendor. There was no 'purchase money' to be received by defendant nor any taking of 'possession of the premises' by plaintiffs. As defendant in argument says 'It is a very strained interpretation' to consider defendant here as a vendor.
Of course the claimed agreement was designed to create an interest in land within the purview of the statute. It contemplated the creation of a restrictive or negative easement over defendant's premises in favor of the adjoining premises. That would surely be an 'interest.' Oral evidence of it was inadmissible unless under the statutory exception or unless defendant was estopped to claim the benefit of the statute. Plaintiffs do not claim the contrary.
The acts described in Code section 622.33 as creating the exception, i.e., payment of 'purchase money' and taking 'possession of the premises', are usually spoken of as 'part performance;' but speaking literally and technically there was here no 'part performance.' As said Fairall v. Arnold, 'The term 'part performance' is a misnomer and inaccurate, in that many matters designated as such are not in fact the performance or part performance of the contract, itself, but are those done pursuant to or in reliance upon the contract.'
The apparent difficulty might perhaps be met as the analogous situation has always been met by the law of contracts, in cases where the promisor derives no benefit but the promisee suffers a detriment. Consideration has always been held to exist in such cases. See citations in West's Iowa Digest, Contracts, Key No. 52. But 'consideration' is a broader term than 'part performance' and here the statute specifies particular acts of part performance not technically descriptive of those shown in the instant case.
The New York Court of Appeals suggests the doctrine of promissory estoppel has been used in certain cases as the equivalent of consideration. See Allegheny College v. National Chautauqua County Bank.
We conclude a determination here is unnecessary as to the relative applicability of the doctrine of part performance of contract or the doctrine of estoppel. They need not be distinguished. "Promissory estoppel' is now a recognized species of consideration. See Porter v. Commissioner of Internal Revenue. And in Fairall v. Arnold, this court quoted with apparent approval from the commentator in 101 A.L.R. 935: "The true basis of the doctrine of part performance, according to the overwhelming weight of authority, lies in the principles of equitable estoppel and fraud". The statement is undoubtedly sound.
The trial court, recognizing the close relationship between part performance (as a form of consideration) and promissory estoppel, pointed out that Code section 622.33 not only names specific acts of part performance as creating an exception but also specifies 'Any other circumstance which, by the law heretofore in force, would have taken the case out of the statute of frauds.' We deem that language sufficient to include what is now called 'promissory estoppel.' See Vogel v. Shaw and Wolfe v. Wallingford Bank & Trust Co.
II. The doctrine of equitable estoppel is applicable whenever the representation or promise relied on has been made to induce action or is reasonably calculated to induce action. The Restatement of the Law of Contracts, § 90, says: 'A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by the enforcement of the promise.' See Fried v. Fisher and Halligan v. Frey.
See also Restatement of the Law of Property, § 524: 'An oral promise that certain land will be used in a particular way, though otherwise unenforceable, is enforceable to the extent necessary to protect expenditures made in reasonable reliance thereon.' 'Comment: a Rationale,' immediately following is quite pertinent here but too long to quote.
The authorities make it clear the binding force of the promise does not depend on any personal gain or advantage to the promisor. See Fried v. Fisher where it is said: 'so from the earliest times there was recognized, the principle that an estoppel might similarly arise from the making of a promise, even though without consideration, if it was intended that the promise be relied upon and in fact it was relied upon, and a refusal to enforce it would be virtually to sanction the perpetration of fraud or result in other injustice.' As stated by an early Michigan opinion: 'The rule does not rest upon the assumption that he (the party estopped) has obtained any personal gain or advantage, but on the fact that he has induced others to act in such a manner that they will be seriously prejudiced if he is allowed to fail in carrying out what he has encouraged them to expect.' See Faxton v. Faxton.
III. We do not understand defendant questions the naked proposition that equitable estoppel may be effective to take a transaction out of the statute, or more accurately stated, that the statute may not bar oral proof of the promise as a basis for equitable estoppel. He argues however that 'plaintiff has failed to prove the following essential elements of estoppel: (1) A clear and definite oral agreement; (2) That plaintiff acted to his detriment solely in reliance on said agreement; (3) That plaintiff was without knowledge of the real facts; (4) False representation or concealment of material facts; (5) That a weighing of all the equities entitles plaintiff to the equitable relief of estoppel.' It is apparent (3) and (4) are not applicable to promissory estoppel where plaintiff relies on a promise rather than a misrepresentation of fact. There were here no unknown facts to be misrepresented or concealed.
We find quite definite (practically undenied) evidence of 'a clear and definite oral agreement,' relied on by plaintiff to his detriment. The testimony has necessarily been set out in condensed form. Defendant especially urges the indefiniteness of some of the language concerning distances, e. g.: 'approximately,' 'something better than 80 feet,' 'slightly over,' etc. He concedes the definiteness of plaintiff's own testimony in that respect but asserts it was 'squarely rebutted both by defendant and defendant's wife.'
But, as already pointed out, defendant and his wife merely denied the mention of distances in figures. They did not deny reference to the 'rock pile' as the northwest corner of their proposed house nor the measurements by which the location of the 'rock pile' was, we think, sufficiently proven. A familiar maxim of law says 'that is certain which can be made certain.' It applies here. The subsequent ascertainment in distances of the location of the rock pile is not disputed.
Neither defendant nor his wife denied plaintiff said to defendant: 'That under no circumstances would I make a bid upon that house if his building plans were in any way to spoil the view to the south and southwest.' It was no casual conversation. Defendant must have understood plaintiff was seeking an assurance upon which he could rely and without which he would not act.
There is no evidential denial of plaintiff's testimony that he went to defendant before buying and expressly stated the purpose was to learn if Vander Wal's report to him was correct and in effect to exact an agreement: 'If I purchase this house will you agree that you will not build your house north or west of that location?' (clearly referring to the rock pile).
It must be conceded the lawyer-like way--and plaintiff is a lawyer--would have been for him to have asked for a written contract. But the statutory exception does not exclude lawyers from its benefits when and if they are unwise enough to rely on it. And plaintiff had a right to accept his friend's oral promise in lieu of a written contract.
IV. Defendant's fifth 'essential element of estoppel' refers to a 'weighing of all the equities.' If by that is meant a mathematical comparison of potential disadvantages to the respective parties depending on whether the promise is or is not enforced, the proposition is unsound.
The question is not which party will suffer the greater detriment if the contention of the other prevails. That is not the rule of promissory estoppel--estoppel that arises when an innocent promisee relies, to his disadvantage, upon a promise intended or reasonably calculated to induce action by him.
In such case equity is first concerned with the plight of the innocent promisee if the promisor be permitted to seek asylum within the protection of the statute of frauds.
The Record here fairly shows plaintiffs bought the Vander Wal home on the strength of defendant's commitment as to how he would build. Were he to build as threatened, a real value would be subtracted from plaintiff's premises. The evidence makes it reasonably certain the magnificent view constituted a large part of the inducement for anyone to select such a site for a house. It was clearly the deciding factor without which plaintiffs would not have bought. It was not necessarily the sole reliance. It is sufficient that without it plaintiffs would not have acted.
Vander Wal attempted to measure any threatened damage to plaintiffs' home at 'from fifty to seventy-five per cent of its present value.' But we agree with him 'the damage cannot be evaluated in dollars and cents.' That fact merely fortifies the jurisdiction of equity to restrain this threatened wrong. An injury is said to be irreparable where there exists no certain pecuniary standard for measuring the damage. We think the Record shows that here, in the language of the Restatement, 'injustice can be avoided only by enforcement' of the promise upon which plaintiffs relied.
V. While the threatened injustice to the promisee is equity's first consideration, it is proper to consider the possible harshness to defendant by enforcement of his promise.
Much was urged on his behalf during the trial on the necessity, by reason of his profession especially, of easy approach to his garage from the street. That point is probably eliminated by plaintiffs' waiver recognized by the decree which preserves defendant's right under it.
Defendant was preparing to build (in addition to a garage in the northeast part of the panhandle) a house nearly 100 feet long, to be placed diagonally from northwest to southeast on the panhandle (presumably to conform to the slope of the ground from northeast to southwest) set back 27 feet from the street and far enough north to leave room for a terrace between it and the south edge where the ground begins to drop abruptly to the south. This terrace is shown on the architect's plat as 42 feet wide at the house and fanning out wider as it extends some 30 feet to the southern edge of the panhandle.
It is obvious defendant must, under the decree here, abandon that particular plan. But it is not shown impossible to design a home in some other way or of some other type that will be appropriate to and preserve equally well the advantages inherent in the location--possibly such a type as he originally had in mind.
VI. Defendant argues there was between plaintiff and himself a fiduciary or confidential relationship of attorney and client, and that the resulting presumption of fraud has not been rebutted. We find no pleading raising that defensive issue. And we find no suggestion in the Record to warn the trial court and opposing counsel that such a contention would be made.
The rule is well established that fraud, when relief on as either a cause of action or as a defense, must ordinarily be pleaded.
Of course there are exceptions to the rule but we know of none in point here. The fact that plaintiff or his law firm had acted for defendant in other matters, unrelated here, came into the Record incidentally. It was not pleaded. The case was not tried on the issue of fraud by violation of confidential relationship or otherwise. There is no indication it was intended by defendant as furnishing the basis for a claim of fraud or undue influence. We cannot find it was ever urged to the trial court and we cannot and should not consider it on appeal.
By disposing of defendant's contention in this way we are not to be understood as implying we find anything in the Record to support it had the defense been pleaded. The contrary is true. Any relation of attorney and client in other matters and at some former time (not specified) is not shown to have been such as to have any possible effect in this transaction. Defendant has been plaintiffs' family doctor. 'If he had told me that day I had to have my appendix out I wouldn't have doubted it.' Plaintiff urges that as an explanation of his failure to ask for a written contract. These relationships make more regrettable this controversy between friends but have no legal significance under this Record.
We have tried to give careful consideration to all defendant's contentions. We conclude the trial court reached the correct result and must be affirmed. It is so ordered.
Affirmed.
All Justices concur.
