Brooks v. Towson Realty, Inc.

⁶⁴ Hammond, J., delivered the opinion of the Court. As part of one transaction Scott Brooks and his wife executed two documents, identical except for the property described and its price, whereby they agreed to sell to Towson Realty, Inc., three contiguous parcels of land—Parcel A (land fronting on Dulaney Valley Road) for which the stated price was $75,000, and Parcel B (back land) for which the purchase price was stated to be $3,000. 1 The appeal is from a decree which declared that the two documents are two separate and distinct contracts and that Towson Realty had exercised an option granted by the contracts to cancel as to Parcel A, and which ordered the Brooks to convey Parcel B to Towson Realty. 2 The Brooks’ basic contention is that there was but one contract to sell the land for $78,000, divided into two parts solely at the request and for the convenience of Towson, and that there can be no conveyance required as to Parcel B unless Parcel A is settled for also. Towson Realty contends that there were two distinct contracts, which entitled it to consummate one and to defer or reject settlement for the other. In 1957 the Brooks acquired some ten acres, part of a larger tract located between the Dulaney Valley Road and the York Road, in Baltimore County.

This acquisition adjoins four acres, formerly part of the same tract, conveyed to Tow- ⁶⁵ son Realty in April 1958. These latter four acres, on which Towson Realty has erected two stores now leased to Taubman’s and the Great Atlantic & Pacific Tea Company, were the subject of the litigation reported in Hill v. Towson Realty, Inc., 221 Md. 389 , in which this Court on February 11, 1960, decided that certain language in an 1890 deed did not restrict the land involved to cemetery use. The Brooks formed Prospect Hill Cemetery, Inc., and conveyed to it 6j4 acres of the land they bought, retaining individually some 3.9 acres, adjacent on the west and south to the 4 acres Towson Realty previously acquired out of the same tract. By the two separate documents, each dated June 7, 1958, and executed at the same time, the Brooks agreed to sell to Towson lj¿á acres of the land they retained.

Parcel A, the subject matter of one of the contracts, fronting 133 feet on the Dulaney Valley Road with an irregular depth of some 125 feet, contained approximately 15,500 square feet, and was sold at a price stated in the contract to be $75,000. Seventy-five hundred dollars was paid at the signing of the contract, and $11,400 was to be paid “immediately upon Buyer’s obtaining a special permit enabling Buyer to erect a gasoline filling station upon the above described or adjacent premises” and $56,100 was to be paid at the time of settlement, which was to be not later than 485 days after the signing of the contract. Parcel A is south of the tract on which stand Taubman’s and the A & P store. Parcel B, which is north and west of Parcel A and west of Taubman and the A & P store (and to the rear of the latter), was agreed to be conveyed by the other contract.

It contains some 52,000 square feet and the price stated in the contract was $3,000, of which $300 was paid at the signing and $300 was to be paid upon the obtention of the gasoline station permit, and $2,400 at the time of settlement. During June and July of 1958, Towson, as it was permitted expressly to do in the contracts, cleared and graded to the level of Dulaney Valley Road most of Parcels A and B. In the first week of October, 1958, Towson paved almost all of Parcel B. On October 15, 1958, Towson applied to a title company ⁶⁶ for a title examination and policy with respect to Parcel B but not as to Parcel A. The title company notified Towson that it would issue a title policy without cemetery restrictions. On October 17, Towson notified Brooks’ counsel that settlement would be held on October 20, 1958, as to Parcel B. The Brooks refused to settle for Parcel B unless there was settlement for Parcel A. The parties are in conflict as to what occurred at a meeting on the day settlement had been called for. Towson saying that Brooks’ only objection was to settlement for Parcel B alone, and the Brooks saying that they then complained that Towson had breached the contracts as to Parcels A and B in that it had not applied for the permit for the filling station “forthwith” as the contract required, and had performed the “possessory act” of paving Parcel B without making the second of the scheduled payments which the contracts called for if possessory acts of that kind were performed.

On November 5, 1958, the Brooks instituted suit for a declaration as to their rights under the contracts. The application for the special exception for the filling station was granted on November 24, 1958, and became final on December 5. On November 26 the Hill suit (which was decided February 11, 1960, by this Court) was filed in the circuit gourt, claiming that the 4-acre tract on which Towson had erected the stores was restricted to cemetery use. On December 22, the title company notified Towson’s counsel that, pending the outcome of the Hill suit, they would not issue the title policy without the exception as to cemetery use.

The contracts provided that in the event the title company should refuse to issue its policy free of restrictions as to cemetery use, the buyer had the right to declare the contract null and void. On January 9, 1959, counsel for Towson, while conducting a formal deposition of the Brooks, notified them that settlement for Parcels A and B would be held at the title company on January 12, and on that same day counsel for the Brooks notified counsel for Towson Realty that they were prepared for settlement on both parcels. Eater the same day, counsel for Towson called off the settlement because the unrestricted title policies could not then be obtained. ⁶⁷ At the trial the Brooks proffered testimony that Towson engaged a real estate broker to attempt to obtain from them a tract of land (a smaller version of what is now Parcel B) in the rear of the Taubman and A & P stores for a price of from $12,000 to $15,000. The Brooks categorically refused the offer, stating that they would not be interested in selling any portion of the back land unless the land fronting on Dulaney Valley Road also was bought.

Further negotiations ensued and an agreement was reached for the sale of a parcel of land fronting on Dulaney Valley Road for 133 feet with a depth of 351 feet at a price of $500 a front foot, or $66,500. Thereafter, the parties agreed on the sale and purchase of land in back of this tract at a price of 44^ a square foot which, after adjustments as to size, totalled $11,500. A contract was drawn in April, 1958, for the sale of the land to be conveyed by the Brooks individually at a price of $78,000, and counsel for the parties went over it clause by clause, making changes suggested by one or the other. As a result, a second contract calling for the same total acreage and price was prepared in May, 1958, by counsel for the Brooks and was delivered to counsel for Towson for execution.

On May 16, 1958, counsel for Towson told counsel for the Brooks that his clients, for income tax reasons and for purposes of financing, would like to divide the land into parcels and to put a price of $75,000 on Parcel A, which was redescribed so as to have a depth of approximately 125 feet (which, of course, added correspondingly to the size of Parcel B), and a price on Parcel B as thus enlarged of $3,000. Counsel for the Brooks replied that this would be agreeable to his clients, saying in substance: “We don’t care what you do with it as long as we get our money.”' Thereafter, three contracts, each dated June 7, 1958, covering Parcels A, B and C were signed by Towson and delivered to counsel for the Brooks with three separate checks, on the specific condition that the checks were not to be delivered until all of the documents had been signed. 3 ⁶⁸ Included as part of the proffer were the drafts of the preliminary contracts and preliminary plats. At the conclusion of the proffer, the court asked counsel for Towson whether he would submit a contradicting proffer, and was answered that he would submit on the proffer by the Brooks. Judge Raine rejected the proffer on the ground that the testimony was an attempt to add to or modify integrated written agreements by parol evidence, saying that “In order to make the performance of each contract contingent on the performance of the others, the Complainants must rely on a ■collateral oral agreement” and that since “* * * the rights of the parties would be seriously affected by the parol modification,” the contract could only be treated as three separate and ■distinct contracts.

He said further that there had been no material breaches of the contract as to Parcel B and that the contract as to Parcel A had been effectively disavowed by Towson on December 5, 1958, when the filling station permit became assured, because it did not then pay the second payment of $11,400 called for by the contract under such circumstance. The court treated the failure to pay as equivalent to exercising the option to cancel if an unrestricted title policy could not be obtained. We agree that there were no material breaches as to the contract for Parcel B, but think there was no basis for the holding that there had been effective disavowal as to Parcel A by Towson. On January 2, 1959, in open court counsel for Towson said flatly that his client was willing to settle for all three parcels if a title policy free of cemetery restrictions could be obtained.

On January 9, by letter, Towson’s counsel notified the Brooks that several days later his client would settle for all three properties, and the Brooks agreed to make settlement at that time. Neither in pleading, testimony, brief or argument has Towson ever unequivocally taken the position that the contract as to Parcel A was not in force and effect. Time is not declared in terms to be of the essence of the contract and in view of the position of the parties and the fact that since the decision of the Hill case in February, 1960, it is conceded that the title policy free of cemetery restrictions ■can be obtained, there is no reason why Towson should now '.be able to disavow the contract on that ground. ⁶⁹ We think the proffered testimony should have been admitted, although not to aid in determining the legal existence or validity of the contracts or in varying their terms. It was proffered not only to show that what purported to be three contracts were actually one contract, but for the purpose of showing misrepresentations and lack of good faith on the part of Towson.

We think it was material to show the situation and background of the parties and the subject matter of the contracts at the time they were entered into and to aid the court in determining whether the contract as to Parcel B was one which a court of equity would specifically enforce. In Ginther v. Townsend, 114 Md. 122, 128 , a specific performance case, the Court said: “Parol evidence may always be resorted to for the purpose of explaining the position of the parties and of the subject matter and other surrounding circumstances at the time of concluding the contract, so that the Court may be put into the position of the parties, may see with their eyes, and may understand the force and application of the language employed by them.” In Dixon v. Dixon, 92 Md. 432, 442, the Court adopted the language of the New Jersey court that “A purchaser, in resisting a claim for specific performance of the contract, is entitled to show, by parol evidence or otherwise, circumstances making it unconscionable or unjust to grant this relief, which is purely equitable, and which entitles him to insist that the vendor must be left to his remedy at law on the contract.” Whether or not the chancellor