Chertkof v. Philadelphia, Baltimore & Washington Railroad Co.

McWilliams, J., delivered the opinion of the Court. The Chertkofs 1 have appealed from the decree of the chancellor, Cullen, J., dated 21 October 1968, dismissing their bill for the specific performance of what they insist is a contract with the Railroad 2 for the purchase of a ⁵⁵⁹ parcel of its real estate. We shall affirm Judge Cullen’s disposition of the dispute. Chertkof sought to acquire from the Railroad a 19 acre tract of land in Anne Arundel County lying for the most part between the west side of the Railroad’s right of way and a small stream known as Stony Run.

The tract is a little over a mile long; it is at no point as much as 400 feet wide; for much of its length it is from 25 to 100 feet wide and at one point it is only ten feet wide. The northern boundary coincides with the south side of the Baltimore-Washington Expressway. The south end appears to border on Stony Run Road. In August 1965 the Railroad caused to be prepared, using one of its printed forms, an agreement which it calls an “optional receipt.” It states that the Railroad had agreed through “W. R. Dunn, Jr., Real Estate Agent, subject to the approval of the Board of Directors” to sell to the Chertkofs the property delineated on an attached plat for $10,000, of which $1,000 had been paid in cash; the balance was to be paid upon the delivery of the deed.

The agreement requires the insertion in the deed, if executed, of a number of restrictive conditions seldom seen in run-of-the-mine deeds. The concluding paragraphs, being especially relevant to the issue before us, are set forth in full: “The delivery of said, deed and settlement therefor (including the apportionment of the taxes to the date of such settlement) shall be made at such place as shall be mutually agreed upon and on a day to be mutually agreed upon but within thirty (30) days after Grantor has notified Grantee that said Grantor is ready for settlement; and upon the failure of Grantee to make such settlement at the time and place so fixed, the sum paid on account will be retained by Grantor as liquidated damages; and thereafter ⁵⁶⁰ Grantee shall not have any interest whatever in said premises. “In the event Grantor’s Board of Directors fails to approve this sale, or in the event it should develop that Grantor’s title to said premises for any reason is not good and marketable, clear of all liens and encumbrances, excepting as aforesaid, and Grantee shall not be agreeable to accept title of such lesser quality as the Grant- or is willing to give, then the sum paid on account will be refunded to the Grantee, who hereby agrees to accept same, whereupon this writing shall be cancelled and annulled and neither party hereto shall have any claim whatever against the other by reason hereof.” (Emphasis added.) The agreement was sent to Chertkof along with a letter dated 2 September 1965, which reads as follows: “Herewith is agreement, in duplicate, covering the sale of the above mentioned property to you for consideration of $10,000.00. Will you please sign your names on the lines indicated, having two witnesses sign on the lines opposite your names and return both copies of the agreement to this office for execution on the part of the Railroad Company, together with your check in the amount of $1,000.00, made payable to the Railroad Company. The agreement will be dated when executed on behalf of our company. “It is understood, however, that this agreement is not to be construed to be a commitment on behalf of the Railroad Company, as it is necessary to secure Executive and Board approvals before the sale can be consummated. [Emphasis added.] “After the agreement has been executed on the part of the Railroad Company, a copy will be returned for your file. ⁵⁶¹ “Your attention is expressly directed to the fact that this agreement shall be of no effect and null and void if same is not signed and returned within thirty (30) days from the date hereof.

Yours very truly, /s/ F. J. Geist Real Estate Agent” VTH :naf Chertkof, himself a real estate broker, said he read and understood both the agreement and the letter. The agreement, signed by the Chertkofs, and a $1,000 check dated 7 September 1965 were returned to the Railroad which, by letter dated 14 September, acknowledged the receipt thereof, enclosing a fully executed copy of the agreement dated 13 September. Frederick J. Geist, the Railroad’s real estate agent in 1965 and 1966, testified as follows: “THE WITNESS: When we had a sale of real estate being considered, we have to first fix in mind that there are three levels generally that the matter has to go through. We have the lowest, which is the division level, which takes a close look at the proposition.

If we can get preliminary approvals from our divisional people, we send an optional form receipt of agreement to our regional level, which embraces three divisions. If the regional level sees no basic objections to the proposition as submitted to it, it comes back to the divisional level. That is, the executed optional receipt does. Then the divisional people start to progress the thing all over again.” “THE WITNESS: At this point, the division has the responsibility of preparing a paper, which would be called the executive sale form letter.

This is the paper which is approved by ⁵⁶² officers in the division, the region and the system level, prior to actual preparation and execution of a deed. As far as — I think the original question was duties.” “THE WITNESS: The executive sale form letter is the responsibility of the division to prepare for submission, again through the division, then to the region and then to the system.” Victor T. Hippie (VTH), Geist’s assistant, whose service in the real estate department spanned 27 years, was Chertkof’s only contact with the Railroad. He had been doing business with Hippie since 1958. In his “past dealings” with the Railroad, Chertkof had bought “many, many properties.” “They [the Railroad] were always tardy in settlement” he said. “They generally notified us [of settlement] within a reasonable time; within a year, I would say” he added.

After receiving the signed agreement from Geist (actually Hippie) Chertkof ordered the title examination. It was completed early in December. Geist received a letter, dated 10 January 1966, from A. J. Hafner, the Railroad’s Manager of Industrial Development, which is as follows: “F. J. Geist “This refers to proposed sale of 19 acres, between Stony Run Road and Baltimore-Washington Expressway to Howard L. Chertkof. “Mr. D. B. Lenny, Assistant General Manager, Industrial Development, Philadelphia, advised that Mr. Smucker [Vice President, Operations] is opposed to selling this land because of current industrial activity in this general area. A. J. Hafner” Geist testified that he sent the letter to Hippie with the following endorsement: “VTH Tell Chertkof no (with thanks) and ccs to all ⁵⁶³ persons we wrote to for approval telling them reasons for rejection.

FJG 1/13” Hippie telephoned Chertkof and told him he “had run into a snag.” He passed on to him the contents of Hafner’s letter to Geist and suggested they “wait and see the outcome of this particular industrial activity, as to how it affected the premises in question, and perhaps the matter could be resolved after the industrial activity had been consummated.” He said they “were in touch with each other from then on until the time that letter [infra] was written cancelling the sale” and tendering the return of the $1,000 deposit. Chertkof denied having been told the contents of the Hafner letter but he did say that he had talked to Hippie on “many occasions” between December 1965 and November 1866. He thought it was “at least once every two to four weeks.” In these conversations, at one time or another, Hippie revealed to him, in justification of the cancellation, plans for a high-speed rail line which might require the flattening of the curve of the main line where it passed through the property, negotiations with county authorities concerning rights of way and negotiations with others for the assembly of industrial tracts. At no time did Chertkof indicate a desire or intention to withdraw or demand the return of the $1,000 deposit.

On 8 November 1966 Geist (Hippie) wrote to Chertkof as follows: “Dear Mr. Chertkof: “Pursuant to telephone conversation with our Mr. Hippie, we are unable to secure approval of the above sale and would appreciate your arranging for all parties to the agreement to meet with our Mr. Hippie in order that we may return the money paid on account. [Emphasis added.] “It will be necessary for Robert and Jack ⁵⁶⁴ Chertkof as well as yourself to be present to sign a cancellation endorsement attached to the original agreement. Very truly yours, /s/ F. J. Geist Real Estate Agent” vth Chertkof, on 15 November 1966, replied as follows: “Dear Mr. Geist: “I wish to acknowledge receipt of your letter of November 8, 1966 on the above subject, and evidently, you do not have the true facts in this matter. “Your letter states: * * we are unable to secure approval of the above sale * * *.’ However, more than eight months ago we were advised that the contract had been approved and told that the reason for the delay in settlement was due to the tremendous work load of your Engineering Department in Philadelphia, which department was preparing the description of the land required for the preparation of the deed. “We are making demand that a settlement take place on or before December 20, 1966; otherwise, we will file legal proceedings. Very truly yours, /s/ Howard L. Chertkof HLC :cd bcc: Mr. Howard A. Sweeten” (An attorney) On 21 November 1966 Geist, for the Railroad, replied. His letter follows: “Dear Mr. Chertkof: “Yours of November 15,1966: “Please refer to this Railroad’s standard optional receipt form of agreement in the subject matter dated September 13, 1965, particularly to ⁵⁶⁵ the third and fourth lines thereof reading in part ‘subject to the approval of the Board of Directors of said Grantor’ and to the last paragraph on Page 2 thereof reading in part ‘in the event Grantor’s Board of Directors fails to approve this sale * * * then the sum paid on account will be refunded to the Grantee, who hereby agrees to accept same, whereupon this writing shall be cancelled and annulled and neither party hereto shall have any claim whatever against the other by reason hereof.’ “We regret to advise you that we have been unable to secure the approval of this sale by our Board of Directors. “Accordingly, will you please arrange for the proper execution and witnessing of the attached Rider, then telephone this office, at which time we will arrange to meet with you in your office and deliver to you the $1,000 refund of down money in exchange for the executed and witnessed Rider.

Yours very truly, /s/ F. J. Geist Real Estate Agent” FJGmaf At this point there should be included in this recital the resolution of the Railroad (Pennsylvania) 'adopted by its Board of Directors on 21 February 1962: “RESOLVED that any sale of real estate or an interest therein which, in the opinion of the President, any Vice President or the General Manager, Real Estate, shall be no longer necessary for the operation of the Company’s railroad, and which involves a consideration not exceeding $100,000., may be made upon such terms and for such consideration as in the judgment of the President, any Vice President or the Gen ⁵⁶⁶ eral Manager, Real Estate, are just and reasonable, and any of them is authorized to enter into and execute in the name of the Company, under its corporate seal or otherwise, contracts or agreements for the sale of such real estate or interest therein, the authority so exercised to be reported semiannually to the Board. “RESOLVED that the President, any