Charles County Broadcasting Co. v. Meares

Singley, J., delivered the opinion of the Court. In June, 1968, Meares and two associates, a partnership doing business as B & M Broadcasting Company (Meares), contracted to purchase the broadcasting facilities of Radio Station WSMD-FM, located at La Plata, Maryland, from Charles County Broadcasting Company, Inc. (Broadcasting) for $100,000.00, of which $40,000.00 was to be paid in 90 days. The contract was expressly subject to the consent of the Federal Communications Commission (the Commission) to the transfer of the station’s license from Broadcasting to Meares. 1 When the contract had not been performed by June, 1970, Meares brought an action against Broadcasting in the Circuit Court for Charles County, seeking specific performance and damages for breach of contract. The specific performance sought by Meares was actually an order that Broadcasting execute an additional agreement which had become a necessary condition to approval of the transaction by the Commission.

Broadcasting answered, denying that it was obligated under the contract to do so. From a decree entered in January, 1973, awarding damages in the amount of $147,500.00, with interest and costs, in Meares’ favor against Broadcasting, Broadcasting has appealed. Broadcasting assigns six reasons why the decree of the lower court should be vacated, which we shall restate and consider in order, supplying such additional facts as may be pertinent to our consideration: (i) The lower court could not retain jurisdiction ³²⁴ once Meares voluntarily withdrew his claim for equitable relief. (ii) The failure of Broadcasting to execute an “accommodation agreement” did not constitute a breach of the contract of sale with Meares.

(iii) When Meares sought specific performance, with full knowledge of the facts, he waived any breach by Broadcasting. (iv) Meares’ failure substantially to perform his part of the bargain under the contract of sale prevented his assertion of a breach by Broadcasting. (v) The evidence was insufficient to support the damages awarded below. (vi) Loss of bargain damages may not be awarded when there are no facts alleged in the bill of complaint to give notice of or support for such a claim.

It will be helpful, before considering each of Broadcasting’s contentions, to set out a brief overview of the manner in which this Court has dealt with specific performance cases. The granting of specific performance rests within the sound discretion of the trial court, Horst v. Kraft, 247 Md. 455, 459 , 231 A. 2d 674, 676 (1967); Restatement of Contracts § 359 (1) (1932). If a contract is fair, reasonable and certain, specific performance may be granted almost as a matter of course, Excel Co. v. Freeman, 252 Md. 242, 246 , 250 A. 2d 103, 106 (1969). This is true even if the contract is contingent, if the contingency can be met, Scheffres v. Columbia Realty Co., 244 Md. 270, 284 , 223 A. 2d 619, 626 (1966); within the time stated, Paape v. Grimes, 256 Md. 490, 499 , 260 A. 2d 644, 649 (1970).

See generally Chapman v. Thomas, 211 Md. 102 , 126 A. 2d 579 (1956). While specific performance has been historically associated with contracts for sale of land, it has been invoked to enforce other contracts for at least a century, Simpson, Fifty Years of American Equity, 50 Harv. L. Rev. ³²⁵ 171, 173 (1936). See Board of County Comm’rs v. MacPhail, 214 Md. 192 , 133 A. 2d 96 (1957) (paving public road); Wolbert v. Rief 194 Md. 642, 650-51 , 71 A. 2d 761, 764-65 (1950) (sale of a business).

It has long been established that if the remedy of specific performance is possible when the vendee brings suit, but while the action is pending, a vendor disables himself from performing his contract, damages may be awarded in lieu of specific performance, Busey v. McCurley, 61 Md. 436, 448 (1884); Powell v. Young, 45 Md. 494, 498 (1877); Green v. Drummond, 31 Md. 71, 84 (1869); Rider v. Gray, 10 Md. 282, 300 (1856); 1 Pomeroy, Equity Jurisprudence § 237f, at 443 (5th ed. 1941); Miller, Equity Procedure § 672 (1897); Pomeroy, Specific Performance of Contracts § 294, at 372 (2d ed. 1897). 2 See Kappelman v. Bowie. 201 Md. 86, 90 , 93 A. 2d 266, 268 (1952) (“equity may refuse . . . to . . . enforce a hard bargain”). If a complainant files a bill for specific performance at a time when he knows specific performance is impossible, and the sole remaining prayer for relief is for damages, his bill will be dismissed, Davis v. Winter, 168 Md. 613, 618-19 , 178 A. 604, 605-06 (1935). Although specific performance cannot be decreed once performance has become impossible, Powichrowski v. Sicinski, 139 Md. 376, 383 , 114 A. 899, 901-02 (1921), damages may be awarded in the same equitable proceeding, Restatement of Contracts, supra, § 363 and illustration 1 at 657, provided that at the time the action was commenced in equity, specific performance was in fact obtainable, Harris v. Harris, 213 Md. 592, 597 , 132 A. 2d 597, 600 (1957). Compare Prucha v. Weiss, 233 Md. 479, 485 , 197 ³²⁶ A. 2d 253, 256, cert. denied, 377 U. S. 992 (1964), where an equity court was held to be without jurisdiction to grant money damages when no independent grounds of equitable jurisdiction were present.

If the object of the bill is to compel specific performance and there is a prayer for general relief, damages traditionally could be awarded under that prayer, Powell v. Young, supra, 45 Md. at 496-97 ; Miller, supra, § 673. The rule as to measure of damages is articulated in Hartsock v. Mort, 76 Md. 281, 288-89 , 25 A. 303, 304 (1892), quoting, with minor editing, from Hammond v. Hannin, 21 Mich. 374, 387 (1870): “If the vendor acts in bad faith, — as, if having title he refuses to convey, or disables himself from conveying, — the proper measure of damages is the value of the land at the time of the breach; the rule, in such case, being the same in relation to real as to personal property. But, on the other hand, if the contract of sale was made in good faith, and the vendor for any reason is unable to perform it, and is guilty of no fraud, the clear weight of authority is that the vendee is limited in his recovery to the consideration money (paid) and interest, with perhaps in addition, the costs of investigating the title.” This is essentially the English rule, adopted by Flureau v. Thornhill, 96 Eng. Rep. 635 (1776).

See generally McCormick, Law of Damages § 179 (1935). Under Hartsock v. Mort, supra, we conceive good faith to be that ordinarily exhibited by a seller who is unable to perform through no fault or fraud of his own, while bad faith is that shown by a seller who refuses to perform when able to do so, Horner v. Beasley, 105 Md. 193, 198 , 65 A. 820, 822 (1907). Turning now to the facts of the matter before us, there was a paragraph in the 1968 contract of sale which is of particular significance: “This Agreement is subject to the further ³²⁷ condition that the Federal Communications Commission shall consent to a change in the location of Station WSMD-FM from La Plata, Maryland, to' Oxon Hill, Maryland. Buyer and Seller agree that they will promptly (within 60 days) and simultaneously file with the Federal Communications Commission applications for consent to the sale contemplated herein, and for a construction permit for the change in location of the station from La Plata, Maryland, to Oxon Hill, Maryland.

Buyer and Seller will vigorously prosecute said applications, and do all things reasonably necessary or appropriate to obtain a grant thereof. E both applications are not granted within a period of 24 months following the tendering of said applications for filing, this Agreement may be terminated by either party upon written notice to the other, and upon such termination, all obligations between Buyer and Seller hereunder shall cease and any monies paid hereunder by Buyer to Seller shall be returned to Buyer.” The difficulty that arose was that within a month of the execution of the June, 1968 contract of sale, a Baltimore radio station, WITH-FM, had filed with the Commission an application for a change in the location of its facilities. Because WITH-FM proposed to locate its transmitter in Catonsville, and because Meares proposed to relocate WSMD-FM’s transmitter at Piscataway, with a studio at Oxon Hill, it seems to be conceded that there would have been interference between the two stations. In October, 1968, the Commission suggested the execution of an “accommodation agreement” which was signed on behalf of Meares and WITH-FM in August of 1969. 3 It was presented to David P. Samson, Jr., president of Broadcasting, shortly ³²⁸ thereafter.

For some reason, Samson did nothing about signing the agreement until June of 1970, nearly two years later, when Broadcasting’s counsel sent to counsel for WITH-FM a counterproposal. 4 This was rejected by WITH-FM’s counsel by a letter terminating further negotiations. Within a matter of days, Meares brought suit. (i) The lower court could not retain jurisdiction once Meares voluntarily withdrew his claim for equitable relief. As we understand Broadcasting’s argument, it is essentially this: either Meares knew, or should have known, that he could not specifically enforce the contract at the time suit was instituted, or this must have become apparent to him by the time the case was tried.

Once Meares abandoned his claim for specific performance, 5 Broadcasting contends, the court lacked the power to award damages. It seems to us that there are two answers to this argument. First, despite the letter of 10 June 1970 from WITH-FM’s counsel, which foreclosed further negotiations along the line suggested by Broadcasting, there is no suggestion that the issue could not have been resolved at any time prior to or immediately after the institution of suit. If Broadcasting had been willing to sign the accommodation agreement which had been prepared by WITH-FM in August of 1969 and had been in Samson’s possession shortly thereafter, which had been signed by WITH-FM and Meares, such resolution would have been possible.

The threshold purpose of the suit was to require Broadcasting to sign the accommodation agreement, so that Commission approval could be obtained. Second, once it became apparent to Broadcasting that Meares proposed to seek damages, Broadcasting could have ³²⁹ suggested that the ease be transferred to a court of law for trial, see Maryland Rule 515 a; Barnes v. Webster, 220 Md. 473, 477 , 154 A. 2d 918, 921 (1959). Absent such a suggestion, the question cannot be raised for the first time on appeal, Rule 885, Stuart v. Johnson, 181 Md. 145, 147 , 28 A. 2d 837, 838 (1942). Moreover, as a practical matter, the question of jurisdiction was waived when Broadcasting acquiesced in Meares’ choice of a forum, Haldas v. Commissioners of Charlestown, 207 Md. 255, 263 , 113 A. 2d 886, 890 (1955), because once having assumed jurisdiction, a court of equity retains jurisdiction, Meyer v. Saul, 82 Md. 459 , 33 A. 539 (1896), until all matters are disposed of, Brewster v. Brewster. 207 Md. 193, 199 , 114 A. 2d 53, 56 (1955), including the award of damages, Real Estate Trust Co. v. Bird, 90 Md. 229 , 44 A. 1048 (1899). “The general rule in equity is that once equitable jurisdiction has attached, the equity