McKeever v. Washington Heights Realty Corp.

Delaplaine, J., delivered the opinion of the Court. Jesse A. McKeever and Guy Whiteford, partners in a real estate agency in Washington, brought this suit'for injunction in the Circuit Court for Prince George’s County to restrain Washington Heights Realty Corporation and Waldo M. Ward, its president, from selling lots in Forest Heights, a suburban development of 136 acres of land on Livingston Road, and from interfering with their own selling thereof during their exclusive agency. In 1941 Ward applied to Whiteford for a loan of $25,000, to be secured by a deed of trust on the tract of land. Whiteford, finding that he could obtain a loan through David A. Baer, an attorney and expert in building construction, submitted to Ward an offer to arrange for the loan for a period of two years for the following compensation: (1) Commission of $1,000, (2) one-third ²¹⁹ interest in a part of the tract set aside for a commercial area, and (3) exclusive agency for the sale of lots “during period of loan, namely, two years.” Ward set the prices as follows: 200 lots at $650 each, $130,000; 200 lots at $450 each, $90,000; total, $220,000.

He estimated that, in addition to $3,000 payable for interest on the loan for two years the corporation would spend $130,000 for road construction, water supply, advertising, selling and taxes. On May 28, 1941, the corporation presented to Mc-Keever & Whiteford a written application for a loan for two years, bearing interest at six per cent. On the same day, after Baer reported that his client would have the money available within ten days, an agreement was executed wherein the corporation agreed to give McKeever & Whiteford for procuring the loan the compensation as previousely decided upon: (1) Commission of $1,000 in cash, (2) one-third interest in the commercial area, containing approximately six acres, to be free of encumbrances within two years, and (3) exclusive agency for the sale of lots “during the period of the above described loan.” It appears that a few days later Ward asked Baer to make the note payable “on or before” two years from date. Accordingly, on June 9, in his instructions to a title company, Baer requested preparation of a deed of trust to secure a note for $25,000 payable to the order of Virginia Manning “on or before” two years from date, with interest at six per cent.

Miss Manning, while employed in the office of McKeever & Whiteford, was merely a straw man in the transaction, and she endorsed the note without recourse, and the note was delivered to Marcus S. Goldnamer, lender of the money. In November, 1941, the corporation paid off the loan, and claimed that the agency was terminated. The Chancellor dismissed the bill of complaint, holding that McKeever & Whiteford had failed to show that the term of the agency was for the unqualified period of two years. It is elementary that where a contract has been entered into by competent parties, it is not within the power of ²²⁰ either , party to rescind-it without an. option to do. so .or without the consent of the other party, .in the absence ¡of fraud, duress or undue influence, or unless the equities, are such that:he should not be permitted to enforce it... Á meeting of the minds is required not only to make, a contract, but also..to rescind or modify it,after it has been made. Ño party has a right to rescind or mpdify. a contract merely because he finds, in. the light of changed conditions, that he has made a bad deal.

A court should ,npt undertake to redraft a written-instrument merely.because .one .of the parties thereto has.become dissatisfied .with its provisions. Vincent v. Palmer, 179 Md. 365 , 19 A. 2d 183 . It is unquéstioned.that..the written agreement of May 28, 1941, .read in,,connection with .the. nóte, and deed of trust,.is the final, apd . complete expression pf ¿he agreement of. the parties. It is also recognized that ¿he standard of interpretation of an integration is the.meaning which would be.attached to. the integration by a.-reasonably .intelligent person . acquainted, with all operative .usages and. knowing all the. circumstances ..prior .to, .and •contemporaneous, with the'making of - the, integration, other than oral- statements by the parties of whát they intended it to mean.

However, where the. application of the standard of. interpretation to an integration produces an uncertain or ambiguous result, any agreements .prior to .or. contemporaneous with the integration are. admissible to establish the meaning.-of the integration. 1 Restatement, Contract, Secs. 230, 238. While parol evidence is generally inadmissible to vary or contradict the terms of a written instrument, and no evidence is admissible for the purpose of adding any provisions to, an instrument which purports on its ..face to be. an integration (Markoff v. Kreiner, 180 Md. 150, 23 , A. 2d 19), yet when any. doubt arises-from its . language as to the intention of • the.parties, extraneous evidence may be admitted to. assist the court, in comprehending its meaning. Not only may evidence of facts collateral to the instrument be introduced, but also contemporaneous statements indicating the understanding of the parties as to the meaning of the ²²¹ language, for such statements are part of the surrounding circumstances. Lambdin v. Dantzebecker, 169 Md. 240, 247 , 181 A. 353 , 102 A. L. R. 277.

By no other means would it be possible to comprehend the true meaning of an instrument or the effect to be given to its language. As stated in Reed v. Merchants Mut. Ins. Co., 95 U. S. 23 , 24 L. Ed. 348, 349 , a consideration of the situation of the parties and other circumstances existing at the time of the execution of an instrument is often necessary to prevent the court, in construing its language, from falling into mistakes and even absurdities.

Even if there were any doubt in this case whether extraneous evidence is admissible to explain the meaning of the agreement of May 28, 1941, there is certainly no question that such evidence is admissible under the principle that a written contract, which through accident or mistake, fails to express the actual agreement of the contracting parties, may be reformed in equity upon clear and satisfactory proof. Johnson v. National Mut. Ins. Corp., 175 Md. 543 , 3 A. 2d 460 .

Justice Holmes made a clear explanation of this qualification of the parol evidence rule in Goode v. Riley, 153 Mass. 585 , 28 N. E. 228, 229 , in these words: “It is not necessarily fatal that the evidence is parol which is relied on to show that the contract was not made as it purports on the face of the document to have been made. * * * So it is settled, at- least in equity, that this particular kind of parol evidence — that is to say, evidence of mutual mistake as to the meaning of the words used — is admissible for the negative purpose we have mentioned. And this principle is entirely consistent with the rule that you cannot set up prior or contemporaneous oral dealings to modify or override what you knew was the effect of your writing.” So it is held in this State that where a written instrument is intended to carry into execution a memorandum or oral agreement, but fails to express the manifest intention of the parties on account of a mistake of an attorney, agent or draftsman, whether from carelessness, thoughtlessness, forgetfulness or lack of skill, equity will correct the mis ²²² take to make the instrument express, the real intention of the parties. Hoffman v. Chapman, 182 Md. 108 , 34 A. 2d 438 . We specifically hold that when a written instrument does not finally state the term of an agency, and is signed by one party thereto and completed by the other, to whom it had been entrusted in its incomplete condition for completion, exterinsic evidence is admissible to make certain the actual duration of the term, and to show that the instrument was completed in an unauthorized manner by an attorney or agent, even though there is no evidence of fraud.

Kidder v. Greenman, 283 Mass. 601 , 187 N. E. 42, 88 , A. L. R. 1370. In this case appellants testified that Baer acted without their knowledge and consent, and they never saw the note and deed of trust, but they distinctly understood that they were to have the exclusive agency for the exact period of two years. Baer testified that, while he had been renting an office from McKeever & Whiteford, he was not connected with the agency. He also stated that he did not receive any fee from them, but was paid by Goldnamer.

He declared positively that he arranged to have the words “on or before” inserted in the note and deed of trust without mentioning this form to either McKeever or Whiteford. He said that, while he understood they were to have the sales agency, he did not read the agreement and knew nothing about the term of the agency. “I did not see,’' he explained, “where it concerned them at all what the terms of the loan were. * * * When I agreed on this proposition, I am frank to say the matter never occurred to me. I did not think it had any effect. I see now that it did; but it never passed through my mind at all.” From the language of the offer made by McKeever & Whiteford, the application of the corporation for the loan, the explanation made by Baer, and other facts and circumstances of the case, it becomes clear that the parties understood that the term of the agency was to extend without qualification for the period of two years.

It follows, therefore, that appellants were entitled to injunctive relief. Undoubtedly a person may invoke the ²²³ aid of a court of equity to prevent the conveyance of real estate where such conveyance would be inequitable. 2 Story, Equity Jurisprudence, 12th Edition, Sec. 953. We realize that a court of equity will ordinarily not specifically enforce a contract for