Lichtenberg v. Anne Arundel County

Singley, J., delivered the opinion of the Court. This is an appeal from judgments of $14,500 and $5,-400 recovered by Anne Arundel County (the County) in suits against Mr. and Mrs. Jerome M. Lichtenberg (the Lichtenbergs) and Security Insurance Company of Hart ²⁰⁶ ford, as successor by merger to New Amsterdam Casualty Company, in the first case, and against the Lichtenbergs and Fidelity and Deposit Company of Maryland, in the second. In July, 1965, the Lichtenbergs, who are experienced real estate developers, sought the County’s approval of a plan to subdivide a part of Michaelton Manor, a development owned by them. Anne Arundel County Code (1957) § 32-9 requires approval of the preliminary subdivision plat, and § 32-13 gives the subdivider several choices as to the manner in which the cost of road construction and of the installation of other facilities will be secured as a condition precedent to obtaining final approval of the plat.

The Lichtenbergs chose the alternative offered by § 32-13 2(c) : “ (c) A written agreement may be made and recorded in the land records of the county, between the board of county commissioners and the developer to complete necessary improvements in the subdivision within a certain time, but prohibiting the issuance of deeds or the conveyance of property or contracts of sale for any lot in the subdivision or issuance of building permits until the work is satisfactorily completed or guaranteed by a contract between the board of county commissioners and the developer; such contract to be recorded in the land records of the county, and to be guaranteed by a surety performance bond of a surety company, or a personal bond secured by a certified check; On 21 July 1965 the Lichtenbergs entered into an agreement with the County in which they obligated themselves to construct certain roads in Michaelton Manor on or before 1 September 1967 in accordance with. specifications filed with the agreement. To the agreement was attached a performance bond for $14,500, signed by the Lichtenbergs as principals, with' New Amsterdam Casualty Comr ²⁰⁷ pany (now Security Insurance Company of Hartford) as surety. The agreement with the County contained provisions pertinent to the issue before us: “Whereas, the parties of the first part have agreed to construct and complete the building of said roads in accordance with the specifications attached hereto on or before September 1, 1967, and for the purpose of guaranteeing the completion of the construction of said roads in accordance with this agreement and the plat * * * filed herewith and made a part hereof, the parties of the first part have executed a bond with approved surety in the amount of $14,500.00, which said amount is intended to be taken as liquidated damages and have delivered said bond to the party of the second part, and upon delivery of said bond and its approval and the completion of work, as aforesaid, the party of the second part agrees to take over and maintain said roads upon completion of work, as aforesaid.” “It Is Understood And Agreed by the parties hereto that if the parties of the first part fail to construct the roads by the time specified in accordance with the plans and specifications and to convey the roadbeds and drainage easements as herein provided or shall otherwise fail to perform this agreement as herein set forth, the party of the second part shall have the right to refuse to take over and/or maintain said roads until completed or, at its option may enter into and upon said roads and to construct said roads and the parties of the first part, as well as the bond given to secure the due compliance of this agreement shall nevertheless remain liable to Anne Arundel County, Maryland, to the full ²⁰⁸ amount thereof, which sum shall be construed to be liquidated damages, and further to enable the party of the second part to carry out the above provision should it so elect, the parties of the first part have delivered to the party of the second part a fee simple deed with Special Warranty for said roads, streets, easements, structures and facilities which said properties the parties of the first part hereby warrant to be free of any liens or encumbrances and which said deed the said party of the second part may accept at any time it may deem desirable, and the parties of the first part do further warrant that they have not or will not encumber said roads, streets, easements, structures, and facilities.” (Emphasis supplied). * * * “Nothing herein shall be construed to waive the right of the County to maintain a suit against the Principals and/or Surety for liquidated damages specified.” These provisions were referred to in the bond: “Whereas, The above bounden Principal has undertaken to