Leaf Co. v. Montgomery County

POLLITT, Judge. As regularly as the autumn season brings leaves, landowners are compelled to collect them. Where a sizeable amount of land is involved, the owner may need to enlist the services of others on a permanent basis. In this case, the land involved is Montgomery County, and the County enlisted the services of the aptly named Leaf Co. (Leafco).

At issue in this case is the legality of an oral contract with the County to extend a preexisting contract, where during the period of the contract the County amended its ¹⁷² Code to require all contracts to be in writing, but engaged in a course of conduct consisting of numerous oral modifications of the contract and continued to perform and receive the benefits of the contract after the oral extension. The County asserts that despite its conduct subsequent to the oral extension the contract is invalid and unenforceable, because it does not comply with legislatively mandated formalities and is therefore ultra vires. Leafco argues that the oral extension is governed by the law subsisting at the time and place of the making of the original contract, which allows oral contracts, or in the alternative, that the County, by reason of its conduct, is estopped from denying the existence of a binding contract. We conclude the County, in light of both its conduct and the reasonable and debatable belief originally held by both parties that the oral contract extension was valid, is estopped from denying the validity of the extension.

We further conclude, however, that the finding below that Leafco’s own conduct prevented the County from performing is not clearly erroneous, and that the trial judge did not err in denying Leafco damages. Before reaching the merits of the case, we first address the County’s motion to dismiss the appeal. Leafco failed to comply with Rule 1028 which required it to furnish parts of the transcript referred to in a record extract. Leafco pleads in its defense that its rule violation was the result of its counsel’s limited practice and that the violation caused the County no harm.

These contentions fail to address the problems raised by the rule violation. Leafco’s failure to include in a record extract portions of the trial transcript cited in the brief and relevant to the appeal impairs the ability of this Court to review the proceedings below. In Spivey v. Harris, 64 Md.App. 619, 623 , 498 A.2d 281, 283 (1985), we noted: Compliance with the Rules not only will provide this Court with the information necessary for disposition of the issues, but also will provide as much as possible, a procedure for both parties to bring to the Court’s attention the information which each party believes is required* ¹⁷³ for a fair review of the issues. Individual members of the bar have too frequently regarded these rules as optional and this Court has too frequently tolerated this attitude by overlooking the omissions and performing work which would have been done by counsel had counsel complied with the Rules.

Leafco’s claim of ignorance of appellate practice does not excuse its failure to comply with the few basic rules governing appeals to this Court. As Chief Judge Hammond has noted, the litigant who sails the appellate seas without using the compass of the Rules does so at his peril. Klopfer v. Werber, 264 Md. 419 , 286 A.2d 776 (1972). Since the appellee has included the necessary portions of the record in the appendix to its brief, we are able to reach the merits of the case.

In the exercise of our discretion, we will deny the motion to dismiss. In September 1971, the County entered into a contract with Leafco (and the Maryland-National Capital Park and Planning Commission) which stated as its duration: 1. Term. This contract shall be for a period of eight (8) years with ten options for renewal of one year each; such renewal options shall be subject to renegotiation as to the terms of the contract between the Corporation and the County.

The contract required the County to deliver, and Leafco to take possession of, at least 50,000 cubic yards of unshredded leaves annually. The County agreed not to sell or give away unshredded leaves for commercial purposes to anyone except the County and M-NCPPC and not to sell or give shredded leaves to anyone. The then current County Code provision governing contracting was Montgomery County Code (1965, 1969 Supp.) § 84-11, which contained no requirement that County contracts be in writing. The contract was modified in numerous fashions on several occasions.

All modifications were made orally. In 1977, the County amended the Code (Montgomery County Code (1972, ¹⁷⁴ 1977 Repl. Vol.) § 11 B-l(g)) to provide “All contracts shall be in writing.” In 1979, the original eight-year period expired, and Leafco and the County exercised the option to extend the contract “for the next year or until such time as a new .contract is executed.” Leafco reduced the agreement to writing in a letter, though this letter was never signed by the County. The County argues that because this letter was never signed, the contract was never extended.

However, the County continued to dump leaves “with a vengeance” on Leafco property well into 1980, and the trial court (Mitchell, J.) determined that “the agreement was extended” by this letter. We will therefore treat the contract extension, as did Judge Mitchell, as based on the County’s course of conduct and oral representations. In the middle of 1980 the County stopped delivering to Leafco because of lack of dumping space, and began dumping its leaves on the land of one Bennoni Allnutt, a county farmer. At this point the County put the leaf dumping contract out for bids, and awarded the contract to a group including a former employee of Leafco.

Leafco did not participate in the bidding process. Leafco brought suit against the County in the Circuit Court for Montgomery County, arguing that the County breached the contract extension by dropping leaves on the Allnutt farm. 1 The trial court, in its memorandum, framed the question presented thus: , 1. Did the communications between the parties of October 1979 or May 1980 constitute a valid contract? Adopting 10 McQuillin on Municipal Corporations § 29.-21 (3d ed. 1966), which states flatly that “[A] charter provision that contracts are not binding unless made in writing ... is valid and mandatory,” the trial judge then ¹⁷⁵ ruled, “The County Code requires the contract to be in writing.

The Court cannot find that the evidence shows that a written contract existed.” The trial court’s ruling apparently applies to both the October 1979 and May 1980 contracts. The County, in support of the trial court’s ruling, argues that the writing requirement is an essential prerequisite to the County’s power to contract, and while the original contract need not be in writing, as it predates the legislative requirement, the oral renewal, agreed upon after the legislative amendment, is ultra vires. This argument could lead to harsh results. In this case, for example, it would void the renewal from the moment of inception, and release the County from any contractual liability despite any benefit the County accrued by disposing of fallen leaves, and despite any detriment incurred by Leafco in preparing land and equipment capable of absorbing and processing for resale as topsoil a year’s supply of these leaves.

Leafco determined, as evidenced by the contract, that the County needed to provide it with a minimum of 50,000 pounds of unshredded leaves yearly in order for Leafco to make a profit. On the other hand, the renewal benefited the County from the start, because the County was immediately able to dispose of its leaves. The County also received further benefits from its prior oral modifications of the contract, which shifted from the County to Leafco the expense of purchasing necessary land and equipment. Leafco thus incurred substantial fixed costs that would only be offset by revenue earned from the resale of large quantities of leaves.

As a result, a disavowal of the renewal in midyear by the County could enrich the County at Leafco’s expense. 2 ¹⁷⁶ Despite the harsh potential of this argument, however, it is consistent with the general rule, as stated in 10 McQuillin, supra, § 29.22. Statutes requiring municipal contracts to be in writing usually are construed to be mandatory, and a strict compliance therewith is required in order to bind a [county]. It has frequently been held that performance, or partial performance will not cure a failure to execute a written contract in accordance with a statutory mandate, [footnotes omitted] The rationale for this rule lies in the public nature of the municipal corporation, which derives its powers from and represents the interests of all its constituents. Any harm resulting from an unauthorized use of this power thus flows to the public at large, and is of a potentially abusive nature, given the generally comprehensive power of any governmental unit.

Ultra vires actions of a municipal corporation therefore, because they engender more concern than do ultra vires actions of a private corporation, are never susceptible of ratification. The County cites, as support for this position, Tuxedo Cheverly, Etc. v. Prince George’s Cty., 39 Md.App. 322 , 385 A.2d 819 (1978). In Tuxedo, this Court construed the validity of an agreement between Prince George’s County and a volunteer fire company whereby the company agreed to transfer property to the County in exchange for the County’s promise to pay encumbrances on the property and provide the fire company with manpower, benefits and equipment. In accordance with the agreement the fire company transferred its property to the County.

When the County did not provide the fire company with all the benefits specified by the agreement, the fire company brought suit for specific performance. The trial court found that the County Council had never approved the contract, as the County Charter required. This Court held that the contract was ultra vires, and therefore wholly void, citing 10 McQuillin § 29.21. ¹⁷⁷ Thus, for example, a charter provision that contracts are not binding unless made in writing by order of the council, signed by the mayor, and the draft thereof approved by the city