Funger v. Mayor of Somerset

Singley, J., delivered the opinion of the Court. ³¹⁴ The troubles which the appellants, Mr. Morton Funger and his business associates (hereafter referred to as “Community Builders” or “Community”), have had with the Town of Somerset (the Town), Funger v. Mayor and Council of Town of Somerset, 244 Md. 141 , 223 A. 2d 168 (1966) ; Chevy Chase Village and Town of Somerset, Maryland v. Montgomery County Board of Appeals, 249 Md. 334 , 239 A. 2d 740 (1968), have occupied almost as much of this Court’s attention as did the difficulties which the Prince de Bearn had with his father-in-law. 1 It all started simply enough. Somerset, located in Montgomery County, Maryland, is an independent municipality, incorporated in 1906. 2 The Town, which covers some 220 acres, lies generally to the west of Wisconsin Avenue, immediately northwest of the District of Columbia line. There are some 400 single-family homes in Somerset, the entire Town being zoned R-60, 3 except for the tract which is the subject of this controversy, and one other tract of 2 acres, both of which are zoned R-H. 4 The median income of the residents of the Town is $17,-700; the median value of the residences, $34,000, with some selling for as much as $60,000. Mr. Warren Jay Vinton, Somerset’s mayor, and himself a planner of some reputation, describes Somerset as “an upper middle class community.

Citizens appear to love it, and want to defend it, and they appear to be relatively happy in the Town. No house ever comes for sale in the Town but what it is snapped up within a few days.” Somerset had something else to recommend it. Within the Town limits and abutting on its southern and eastern boundaries lay the Bergdoll property, an undeveloped wooded tract of some 30 acres, traversed by a stream. This was not the sylvan idyll which it seemed, however.

Situated just across the District of Columbia line, in the burgeoning Washington metropolitan area, the tract was ripe for development. The southeastern corner of the property is diagonally opposite the Chevy Chase store of ³¹⁵ Saks Fifth Avenue; to the south is a commercial area ringed with high rise apartments and office buildings. Some 20 years ago, there had been an abortive effort to have it rezoned for apartments, and 10 years ago the Hecht Company had sought commercial zoning, but had been persuaded to withdraw its application. This was the situation in April of 1961 when Community Builders purchased the Bergdoll property for $1,100,000.

On 31 May 1961, the purchasers filed an application for R-10 5 zoning and this set off a barrage of legal artillery which has to this day illumined the horizons of the Montgomery County Council, the Circuit Court for Montgomery County and this Court. Somerset opposed the R-10 zoning and to buttress its opposition, collected petitions signed by 1600 residents of Montgomery County. Community Builders struck their tents, and withdrew their application in November, 1962, without prejudice. On 30 November 1962, they countered with an application for R-H zoning for some 25 acres of the tract.

After a town meeting, Somerset determined to oppose the application and to condemn a portion of the Bergdoll tract for park purposes. Following a hearing on 16 April 1963, the Montgomery County Planning Board recommended that the Maryland-National Capital Park and Planning Commission consent to the Town’s acquisition of some 15 acres as a park. It is not without significance that immediately after the 16 April 1963 hearing, the action was transferred from the administrative battleground to the negotiating table. The result and not the progress of two weeks of bargaining is important.

On 30 April 1963, Community Builders wrote the following letter: “The undersigned as owners of the property described in the above application hereby agree, in consideration of the Town of Somerset, Maryland, recommending approval of 18.1906 acres of R-H zoning, that should such zoning be granted, they will enter into such agreement as may be appropriate to limit the development of such tract of land ³¹⁶ for a period of twenty years to a density equal to 16 acres of land zoned R-H based upon the regulations as of the date of the zoning change. All other rights permitted under the R-H zoning shall be applicable to the entire 18.1906 acres. “It is understood that there is embraced within the aforementioned 18.1906 acres an area containing 2.1906 acres in which the Town of Somerset shall be granted a scenic and conservation easement for the benefit of the inhabitants of the Town of Somerset.” and at 7:40 A.M. on the day following, 1 May 1963, the Somerset Town Council adopted a resolution: “RESOLVED by the Mayor and Council of the Town of Somerset that it is hereby recommended to the Montgomery County Council, sitting as the District Council, that it grant R-H zoning for a parcel of 18.1906 acres being a portion of the land which is the subject of Rezoning Application C-927. A plat of the said parcel of 18.1906 acres and its metes and bounds are attached hereto. “In consideration of such recommendation, Community Builders, the owner of said land, shall, if such rezoning is granted, give the Town of Somerset a perpetual easement for scenic and conservation purposes of 2.1906 acres, being a strip approximately 85 feet in width along the western boundary of said parcel of 18.1906 acres. Community Builders shall, if such rezoning is granted, also enter into a 20 year covenant with the Town of Somerset to limit the development of the 18.1906 acres to the density and the uses permitted under R-H zoning for 16 acres only, in accordance with the regulations in effect on the date of the rezoning, if granted.

All other rights permitted under R-H zoning shall be applicable to the entire 18.1906 acres subject to the above mentioned easement of 2.-1906 acres.” At this juncture, an agreement had been reached, the letter of 30 April constituting the offer, the resolution of 1 May, the acceptance: Community Builders were to seek R-H zoning for ³¹⁷ 18.1906 acres of the Bergdoll tract, and Somerset would recommend 6 that the request be granted by the Montgomery County Council. In the event that rezoning were granted, Community Builders would: (1) Give Somerset a perpetual easement over 2.1906 acres “for scenic and conservation purposes”; (2) By covenant, agree that for 20 years the 18.1906 acres would be used only for purposes and uses permitted in an R-H zone as of the date of the zoning change 7 and agree that should R-H zoning be granted for the entire 18.1906 acres, density would be limited to that permitted for 16 acres. 8 As is so frequently the case in armistice negotiations, there was another understanding, not exactly a secret covenant, but one which Community Builder’s counsel wanted to be regarded as a “separate and distinct transaction.” It was embodied in an undated letter which was delivered to Somerset on 30 April 1963: “The Town of Somerset and The Maryland National Capital Park and Planning Commission have indicated that a public park located within the Town of Somerset would benefit the residents of the community. It has also been indicated that property owned by the undersigned would be suitable for such purposes. In recognition of our community responsibilities we agree to provide such property as a donation for the public good as follows: “The undersigned hereby agree to donate two (2) acres of land as described in Exhibit A for use as a public park or for such other public purposes as may be deemed appropriate.

We also acknowledge our intention to donate an additional eight (8) acres for the same purposes contiguous to the presently donated two (2) acres in four equal annual increments beginning in 1964. ³¹⁸ “In the event it is desired, at any time, to use for such purposes a part of the ten (10) acres that we intend to donate, we agree to lease the undonated balance of the ten (10) acres at an annual rental of $100.00 per acre. “In order to assure you of the good faith nature of our pledge, we agree to provide such security as may be deemed appropriate to provide for the future donations as promised herein. “The undersigned also agree to grant to the Town of Somerset an option to purchase a two (2) acre parcel averaging approximately 111.5 feet in depth running parallel to the rear lot lines of lots fronting on Dorset Avenue, as shown on the attached plat. Such right to purchase shall be available to the Town of Somerset up to December 31, 1963, and such purchase price shall be $125,000.00 per acre. If such purchase is consummated the owners will receive (in a form mutually agreed upon) Town Serial Bonds for the full purchase price running for 15 years at per cent interest. Principal payments to begin 3 years from date of issuance. “The undersigned has authority to sign on behalf of the owners of the parcel of land located in the Town of Somerset and known as part of the Bergdoll Tract.” This oiler was accepted by the Council at its meeting on 1 May-prior to the adoption of the resolution with respect to rezoning heretofore quoted, and the acceptance was confirmed by a letter from Mayor Vinton dated 25 May 1963.

There was great activity on 1 May 1963. After the early morning meeting of the Somerset Council, the parties met with Maryland-National Capital Park and Planning Commission, apparently to discuss the park aspects of the proposal, since the acquisition had to be approved by the Commission 9 and was, in fact, later approved. Then a visit was made to the Montgomery County Planning Board, which recommended R-H zoning for 18.2 acres. ³¹⁹ A public meeting of the Somerset Council was held on the evening of 6 May 1963, which was attended by some 125 citizens. The mayor described the result of the negotiations.

The minutes reflect that “[a]fter a long discussion, the actions taken by the Mayor and Council on these matters were overwhelmingly approved * * *. A number of those who spoke * * * expressed their confidence in the Mayor and Council and extended their congratulations and thanks for a job well done.” A hearing on Community Builders’ application for rezoning was held before the Montgomery County Council on 9 May 1963, and on 18 June 1963, the Council rezoned 18.1906 acres of the Bergdoll tract R-H. Peace came, at long last, to the Town of Somerset. By letter of 25 May 1963, Mayor Vinton had formally accepted the gift of the park land. On 9 June 1963, Community Builders entered into an option agreement 10 by which the Town was given the right to purchase 2 acres of the unzoned portion of the tract for $250,000 and on the same day executed a deed conveying to the Town for park purposes the first of the five 2 acre parcels which comprised the remainder of the unzoned portion.

A new difficulty arose in December of 1963. Somerset had planned to issue town bonds to finance the purchase of the 2 acre tract on which it held an option. Frustrated by a taxpayer’s suit which had been instituted on 10 July 1963, but had not been decided at the time when the option was about to expire, an arrangement was reached with Community Builders by which Community agreed to convey to the Town the 2 acres under option without the receipt of any consideration provided that the declaration of covenant be modified so that the computation of density would be based on 18.1906 acres instead of on 16, as had been originally agreed. Community confirmed this by letter of 1 April 1964, and on 4 May 1964, entered into a declaration of covenant, agreeing that the use and density limits to be applied in the development of the 18.1906 acre tract should, for a period of 20 years from 18 June 1963, be those in effect at that date. ³²⁰ The practical result of this modification was to increase from 697 to 793 the number of apartment units which Community could place on the 18.1906 acre tract and to increase from 10 to 12 acres the area which was to be conveyed to Somerset without cash consideration.

The 2.1906 acre tract to be subjected to a perpetual easement for scenic and conservation purposes was left undisturbed. On 29 June 1964, Community executed the deed creating the easement and an escrow agreement with Realty Title Insurance Company, under which there were deposited four deeds of gift, ■each conveying to Somerset a 2 acre tract, the first of which was to be delivered to the town on 9 June 1965; the second, •on 9 June 1966; the third, on 9 June 1967; and the fourth, on '9 June 1968. It would appear that a deed for the 2 acre tract •originally the subject of the option was also deposited under the escrow agreement, but the record does not disclose a date. The peace which Community had purchased at a high price 11 was short-lived.

Hostilities commenced again in December, 1964, when it first became known that the apartment building which was being planned was 30 stories high. According to Mayor Vinton, there was “[f Juror and commotion. The citizens of the town were indignant. They felt they had a representation from the builders to build a project of 12 or 14 stories’ height, and a hue and cry was raised throughout the town * * The outburst of civic indignation led to the scheduling of a town meeting on 11 February 1965 at which the Community proposal was presented.

A postcard poll was called for, with the following results: “Are you opposed to a building of 30 stories high; or not opposed ?” “Opposed” 263 “Not opposed or neutral” 41 “Should the town resist actively in any legal manner it could the proposal for 30 stories ?” “Resist actively” 256 “Take no further action” 48 This was an unconditional declaration of war; Somerset and ³²¹ Community Builders marshaled their forces, and preparations began for a major engagement on the forensic battlefield. First, however, the parties engaged in a series of tactical maneuvers. On 19 February, Mayor Vinton appeared before the Montgomery County Council in support of a proposal to impose a height limitation on buildings in an R-H zone. On 17 March, Somerset retained special counsel to represent the Town in the controversy.

On 13 April, counsel for Community advised Realty Title Insurance, the escrow agent under the agreement of 29 June 1964, that no delivery was to be made of the four deeds of gift covering the 2 acre tracts, and that a return of the undelivered deeds would be sought. On 8 June 1965, there was introduced in the Somerset Council an ordinance limiting buildings to a height of 160 feet or 17 stories. On 9 June, Mayor Vinton, not knowing of the letter to Realty Title, asked for and received delivery of the third 12 deed; on 10 June, when Realty Title told him that the deed had been delivered in error and asked for its return, the mayor sent Mrs. Vinton to Rock-ville to record it. On 15 June the height ordinance was passed, effective 5 July 1965.

On 12 June, Community had applied to the county for the approval of a site development plan and the issuance of a building permit for excavation and foundations for a 24 story apartment house. The plan was approved and the permit issued by the director of the Department of Inspection and Licenses of Montgomery County on 28 July 1965, despite protests filed by Somerset on 26 March 1965 and on 21 May and 28 May, before the application was filed and a petition for hearing filed 4 June, which wTas later supplemented. On 29 July 1965, Community filed a complaint in the Circuit Court for Montgomery County for declaratory and injunctive relief, alleging that the Somerset height ordinance prevented it from constructing a building for which it had a valid permit and asked that the ordinance be declared invalid and that the Town be enjoined from enforcing it. The defendants answered and filed a counterclaim in which they sought either en ³²² forcement of the escrow agreement or an injunction against the erection of a building more than 140 feet in height and damages in the amount of $2,650,000.

Now it was Community’s turn. It filed a “plaintiff’s counterclaim” which sought: 1. Rescission of the deed of easement, rescission of the declaration of covenant, and return of the 2 acre deeds held in escrow, or alternatively, $1,500,000 damages ; 2. Reconveyance of the three 2 acre lots already conveyed, return of the 2 acre deeds held by the escrow agent, or alternatively, $5,000,000 damages; 3.

Reconveyance of the easement, nullification of the declaration of covenant, return of the es-crowed deeds, reconveyance of the three 2 acre lots, or alternatively, $4,000,000 damages. Somerset demurred to Community’s counterclaim, and the demurrer was sustained as to all three counts. The order sustaining the demurrer came to us on review in Funger v. Mayor and Council of Town of Somerset, 244 Md. 141 , 223 A. 2d 168 (1966). We reversed, in an opinion filed 12 October 1966, and remanded the case to the lower court for trial.

On 27 February 1967, Somerset repealed the height ordinance 13 and on the following day, moved to dismiss Community’s original complaint on the ground that the repeal of the ordinance made the complaint moot. On 15 May 1967, the court below granted the motion and dismissed the complaint. The case proceeded to trial on Community’s “plaintiff’s counterclaim.” From an order dismissing the counterclaim and enforcing the escrow agreement, the present appeal was taken. This wearying chronicle of events is necessary to an understanding of the problem which now confronts us.

Stripped of its complexities, the case before us presents three problems, not necessarily in order of difficulty: ³²³ 1. What was the agreement between Community and Somerset? 2. Was there a breach of the agreement by either Community or Somerset? 3. What relief can be accorded the aggrieved party ? 1.

We find that the agreement between Community and Somerset had two aspects: (1) By its letter dated 30 April 1963, Community offered',, in consideration of Somerset’s recommending R-H zoning for-18.1906 acres (a) to limit the development of the tract for a period of 20 years to the density permitted on a tract of 16-acres “based on the regulations as of the date of the zoning; change”; and (b) to subject 2.1906 acres to a scenic and conservation easement. The resolution of the Town Council adopted on 1 May 1963; accepted this offer but clarified the reference to the regulations, to be incorporated in the covenant, making clear that they related to both density and use. Community’s letter of 1 April 1964 offered to amend this-agreement, and the resolution of the Somerset Council, adopted 2 April 1964, accepted Community’s offer to convey the 2 acre-tract which had been the subject of the purchase option. Somerset performed the agreement by making the required, recommendation to the County Council; Community, by executing the declaration of covenant on 4 May 1964; the deed' of easement on 29 June 1964; and the deed of the 2 acre parcel formerly subject to option.

(2) The second aspect is found in Community’s unilateral’ and unconditional offer contained in an undated letter (delivered, according to the testimony, on 30 April 1963) by which, it agreed (a) to donate to Somerset 2 acres of park land immediately, and 8 additional acres, in annual “increments” of 2‘ acres each commencing in 1964; and (b) to grant an option to-Somerset to purchase a 2 acre tract for $250,000 on or before-31 December 1963. The offer to convey 10 acres was accepted at a meeting of the Somerset Council on 1 May 1963 and con ³²⁴ firmed by the mayor’s letter of 25 May, the execution of the option was authorized by the Council on 6 May. Community performed by executing the deed of 9 June 1963; 14 the escrow agreement of 29 June 1964; the four deeds •dated 4 August 1964, deposited in escrow; and the option agreeiment of 9 June 1963. If the story ended here, there would he no problem.

As we '•understand the contentions of the parties, Somerset argues that ■Community Builders gained the Town’s concurrence by rep- ■ resenting that the construction of a 12 to 14 story building was ■contemplated. Community, on the other hand, maintains that Somerset, in recommending R-H zoning, gave tacit approval to ' the construction of any building which could be placed in an R-H zone under the regulations applicable on 18 June 1963 to a tract 16 acres (later changed to 18.1906 acres) in size. For the resolution of this difference, we must look to the rec■ord and not to the text of letters written by Community and resolutions adopted by the Town Council, which are silent in ' this respect. Somerset’s argument is that the agreement with Community, while silent with respect to height limitations, must be inter'preted in the light of extrinsic circumstances: First, the representation made to the Town Council on 6 July 1961, in connection with the application for R-10 zoning, that Community ■planned to build three 10 story apartment buildings.

Second, the representation made at a meeting on 4 February 1963, prior 'to the application for R-H zoning, that the buildings would “probably be 12 stories.” Third, that a plat prepared by Community’s architects and dated 16 April 1963 showed a 125 foot setback line, which would be required for a building 125 feet 'in height. Finally, that a computation prepared by the architects •on 22 April 1963 could be interpreted as contemplating two 14 ■ story buildings containing 860 apartment units. It should be emphasized, however, that