Goldman v. Harford Road Building Ass'n

Parke, J., delivered the openion of the Court. The questions on this appeal were raised by the separate demurrers of the Harford Road Building Association, Henry W. Ritter, and Joseph Bilz, the three appellees here and the defendants below, to the bill of complaint of the appellant, William Goldman. The appellant contends that the conduct of the appellees raised a constructive trust specifically to be enforced for his benefit as a prior expectant purchaser of a parcel of land, which was later sold by the owner, Joseph Bilz, to Henry W. Ritter, the agent for the Harford Road Building Association, with notice of the appellant’s desire to purchase the land mentioned. The material allegations of fact, which are admitted by the demurrer, and which are the basis of the appellant’s contention, may be thus, summarized.

The course of the appellant’s negotiations, at the beginning of March, 1925, for the purchase of an improved parcel of land in Baltimore City from its owner, Joseph Bilz, had proceeded to the point where the owner had named a selling price of eight thousand dollars. The appellant was willing to pay this sum, but did not possess sufficient money, so he thereupon applied to the Harford Road Building Association for a loan of from four to five thousand dollars, which was to be secured by a first mortgage lien on the property, which he proposed to buy. The association sent its representatives to examine the property and, in the course of this examination, it learned the name of the owner of the property and his agent for its sale, and the price at which the owner was willing to sell. After securing this information, the association “secretly and with intent to deprive” the appellant “of the opportunity of purchasing said property, and with the intent to profit through the information obtained as afore ⁶⁸⁰ said, immediately, for itself and for its own benefit and interest, and' without any notice to” the appellant, “began to negotiate with said owner and his agent for the purchase of said property, and within a few days caused a written contract of sale to be executed by the defendant, Joseph Bilz, and one Henry W. Bitter, an attorney at law, as purchaser,” but who was acting in the purchase as the agent of his principal, the Harford Boad Building Association, which thus bought the property for eight thousand dollars.

Within a day or two- after making his application for the loan, the appellant inquired of the association in reference to the requested loan, and he was told that the loan would be granted, but that, as the association was not then in command of the funds, it would require about ninety days before the money could be supplied. The appellant was desirous of securing the property, immediately, so he made- application for the loan to another building association, which agreed to furnish the money at once, but when the appellant sought the owner to make the contract of purchase he learned from the owner that the property had been sold to the Harford Boad Building Association; and further inquiry developed the fact that, at the time the officers of the association had stated to him that he could obtain the loan in about ninety days, the association had in fact purchased, or were about to consummate the purchase of, the property mentioned. The deed for the property had not been delivered to either the association or to the appellee; Henry W. Bitter, its agent, before the filing of the bill of complaint in this cause on June 3rd, 1925; and by the bill of complaint the appellant tendered himself as being “willing to assume and complete, upon reasonable notice,” the contract of purchase between the appellee Bilz and the association through its agent Bitter. The prospective relation between the appellant and the association on these admitted facts was merely to be that of borrower and lender, and, in their direct negotiations and in the making of the contemplated loan, both were and would necessarily be principals, as each was immediately acting on ⁶⁸¹ his or its own. account and so could not be acting in a representative capacity for the other. 1 Sugden on Vendors (8th Am.

Ed.), 147, top of page 219. Hence the further averment of the bill of complaint that the application by the appellant to the association for the loan made the association the agent of the appellant is a conclusion of law which finds no support in the allegations of facts contained in the bill of complaint. The association was requested to furnish to the appellant a certain amount of money provided the appellant became the purchaser of a particular piece of property. The association did not undertake to refrain from competing with, the appellant in the purchase of the property, which was on the market for sale; nor had the appellant bound himself to secure his mortgage loan from the association, and, upon being notified of the time within which the association would lend him the sum desired, he terminated his negotiations with the association, and forthwith made application to another building association for the loan and secured at once the credit accommodation sought.

It follows that the undisclosed bargaining for and buying of the property by the association was neither a breach, nor the inducing of a breach, of any subsisting contract of the appellant with either the association or the owner of the land. If the association had induced the owner of the land to break a contract between the owner and the appellant for the sale and purchase of the land, the appellant would have a right of action in tort against the association, under the rule first announced in Lumley v. Gye (1853), 2 E. & B. 216, and now firmly established in this jurisdiction. A contract, it is true, can only impose its obligations upon those who are parties to it, but a duty rests upon third persons not to interfere, without lawful justification, with the due performance of the obligations of the parties under the contract. Knickerbocker Ice Co. v. Gardiner Dairy Co., 107 Md. 556 , 564 ; Sumwalt Ice Co. v. Knickerbocker Ice Co., 114 Md. 403 , 414 ; Cumberland Glass Manufacturing Co. v. DeWitt, 120 Md. 381 , 392 ; Gore v. Condon, 87 Md. 368, 376 .

And so a right of action is given under this rule against a third party who un ⁶⁸² justifiably causes an existing contract to- be terminated without breach, as, for instance, where a workman is employed so long as his work is satisfactory, with the right, however, of the employer to' discharge him at any time or at the end of any period of employment, and a third party procures his discharge wholly in consequence of the threat of such third party to cause pecuniary loss to the employer if the employee be not forthwith discharged. Lucke v. Clothing Cutters Assembly, 7 7 Md. 396 , 410 ; Bottomly v. Bottomly, 80 Md. 159 , 163 ; McCarter v. Chamber of Commerce, 126 Md. 131 . But, in the language of Sir William B. Anson, “There is a clear distinction between inducing A to break his contract with X, and inducing A not to enter into a contract with X. The man who induces another to break a contract induces him to do what is in itself actionable; but no liability attaches to the refusal to make a contract. Consequently, where A is induced not to contract with X, the inducement, if it is to be actionable, must be of an unlawful kind, as for example acts of coercion and intimidation.” Anson on Contracts (Am.

Ed. by Corwin), p. 345. Of course, if the formation of a contract is prevented by any form of fraud, an action arises, as is illustrated by Canton Lumber Co. v. Burton Lumber Co., 143 Md. 9 , where it was alleged that a servant in the course of his employment had fraudulently conspired with a third party to prevent by deceit and misrepresentation his master from securing a trade contract, whereby the employer suffered a pecuniary loss, and it was recognized that the third party and the servant were liable, if the conspiracy had been established, and, as it was not, the servant remained responsible in tort. In Debnam v. Simonson, 124 Md. 354 , the gravamen of the declaration was that an architect employed by a builder had fraudulently and maliciously entered into a conspiracy with third parties to purchase the land upon which the projected apartment house was to be erected in accordance with the plan of the builder, and thereby caused a failure of the project to the alleged loss of the employer. The Court declared the declaration bad on demurrer, because it neither ⁶⁸³ alleged that the plaintiff had acquired any rights in the land