Peoples Drug Stores, Inc. v. Fenton Realty Corp.

Delaplaine, J., delivered the opinion of the Court. Peoples Service Drug Stores, Inc., the owner of a chain of drug stores, brought this suit in the Circuit Court for Montgomery County to compel Fenton Realty Company, Inc., to perform an alleged contract to erect a store building and to lease it to complainant. The amended bill of complaint alleges that defendant on December 20, 1945, made an offer to erect a building on the southeast corner of Colesville Road and Fenton Street in Silver Spring and to lease it to complainant, the rent to become payable upon the date of possession. The ⁴⁹² terms of the offer, which were submitted in a letter to complainant, were as follows: “The proposed store is to be 45 feet fronting on Colesville Road by a depth of 115 feet, inside dimensions, with full basement thereunder and to be built according to plans and specifications to be approved by your company with the understanding that said store will be designed in general conformity with the most recent stores opened by your company. “The rental is to be $9,000 per year and the term of the lease is to be for 15 years. * * * “It is understood and agreed that the lease itself as to form will be similar to those currently and recently drawn by your company but shall be subject to approval by the undersigned.” On December 21 the offer was accepted by complainant, subject to approval of the lease.

In the letter of acceptance R. S. Paylor, an employee of complainant in its real estate and construction division, advised Shannon & Luchs Company, realtors, of Washington, defendant’s agent, as follows: “If you will be good enough to send me a plat showing the lot number, size, etc. necessary for the proper drawing of the lease, I will endeavor to get this out for you in the near future and it is our intention to follow the usual routine lease * * *. Will submit same for your approval as well as the Fenton Realty Company.” The bill then alleges that complainant drafted a form of lease and submitted it to defendant, and defendant redrafted it and returned it. Subsequently a form of lease was agreed upon at a conference, but no lease has ever been executed. In September, 1946, Raymond M. Taylor, vice president of Shannon & Luchs Company, advised complainant that, on account of the increased cost of construction, defendant would not execute any lease or otherwise perform the agreement unless complainant would agree to an increase in rent from $9,000 to $12,500 per year.

He also wrote defendant’s attorney in Brooklyn, New York, that he felt confident that he could urge complainant to agree to. the demanded increase, and asked ⁴⁹³ him to return the copy of the lease so that it could be rewritten. The bill further alleges that it is desirable and vital to complainant’s business to secure prominent corner locations for its stores in business sections or shopping centers ; that the corner in question is the only one available in a shopping center in which department and chain stores have recently been opened; that complainant’s competitor, United Cigar-Whelan Stores, has a lease on a corner opposite the one in question; and that if the agreement to lease is not enforced, complainant will be greatly damaged. The bill prays the Court to compel defendant to execute the lease and construct the store building, or to restrain defendant from leasing or selling the land until final adjudication of the case, and to award damages. Defendant demurred, and the Court sustained the demurrer and dismissed the bill.

Complainant thereupon appealed from that decree. It is familiar law that a valid contract may be entered into by letters. Where one party makes a definite offer by letter and the other party accepts the offer unconditionally on the same terms on which it was made, the letters constitute a binding contract. Cheney v. Eastern Transportation Line, 59 Md. 557, 565 ; Wills v. Carpenter, 75 Md. 80 , 25 A. 415 ; Dalton v. Real Estate & Improvement Co., 189 Md. 210 , 55 A. 2d 789 .

But, of