Pradhan v. Maisel

Lowe, J., delivered the opinion of the Court. Pinkas Fliegel (Fliegel) a real estate broker sued RMR Corporation (RMR) and Gerson T. Maisel (Maisel) for a commission claimed due for having sold a small shopping center to Sachindra N. Pradhan (Pradhan), who also sued RMR and Maisel for specific performance. The cases were tried together before Judge Samuel W. H. Meloy sitting as the Circuit Court for Prince George’s County. He decided that the contract of sale never came into existence because of the failure of a condition precedent.

Both Fliegel and Pradhan appealed. RMR was a corporation incorporated in the District of Columbia authorized to buy, hold or sell real estate. Although it had owned and sold at least two other properties, its then single asset was the College Park shopping center. Maisel, the president of RMR listed the property for sale with Fliegel for $180,000.00.

The entire stock of RMR was held by three parties in equal shares, Maisel the president, Mr. Sites the secretary and the estate of Romeo Cantilena through its personal representative. The three also comprised the Board of Directors. Fliegel interested Dr. Pradhan in the property but not to the extent that he offered the full purchase price. Twice contracts were submitted for amounts under that price and twice Maisel rejected them out of hand.

After the last rejection, Fliegel with one of his agents (Masciana) proceeded to negotiate a compromise higher than the rejected offer but lower than the list price from Maisel. Upon reaching a satisfactory figure, they completed a form contract by hand and obtained Maisel’s signature. The effect of that signature, i.e., whether it merely indicated Maisel’s approval subject to the secretary’s concurrence, or whether Maisel’s signature alone operated to bind the corporation, is the crux of this case. ⁶⁷³ As might be guessed the testimony relevant to that issue differed. Maisel testified that it was a procedural short-cut in no way intended to bind the corporation without the signature of the secretary Mr. Sites: “A $160,000.

Then he said I will write another contract. So, we proceeded from the basement into the dining room where this contract was written. Then he said, ‘this contract here will be presented to Mr. Pradhan.’ Mr. Masciana pleaded that he could not possibly ever get this contract approved. It was just too much money and there was the pleading, constantly by Mr. Masciana.

He didn’t think he could ever get it accepted, the price had to be reduced, but then Mr. Fliegel told him to take it to Mr. Pradhan and make an attempt to get it approved, but in the meantime Mr. Fliegel told me to affix my signature because he will bring it back to me and I would present it to the secretary for signature and that will be when it is one less step to take, so my signature was placed on the contract before anyone elses knowing that Mr. Fliegel would bring it back to me. I would discuss it with Mr. Sites and proceed from there.” Mr. Fliegel’s recollection was not the same: “Q Mr. Fliegel, did you discuss at the time of that negotiation on November 1st that you have already testified to, did you discuss with Mr. Maisel his authority? A Yes. I was asking Mr. Maisel what is the need of the signature of the secretary and he says not, T am, have the controlling shares.

I acquired the majority since one of the partners died and I always do sign these contracts and they always, my people always agree it was me.” For emphasis he added: “A Well, as a matter of fact I want him to, I ⁶⁷⁴ wanted to go to the secretary. He said, ‘You don’t need it.’ He kept assuring me, you don’t need it.” On cross-examination he was asked: “Q Did he ask you to bring it back to him, not what he expected. Did he ask you to bring the contract back to him? A I think the way he said, ‘go see if your buyer is going to sign it.’ That is what he said.

Q Then, ‘bring it back to me’ ? A Well, I think that is what he said, just to see if your buyer will sign it then you have a deal. Q Did he say, ‘then you have a deal or did he say A ‘If your buyer sign it then you have a deal.’ That is the word he said.” A third version was provided by Fliegel’s agent Masciana who was present at the signing: “THE WITNESS: Well, actually we didn’t discuss anything until he signed it. When he signed Mr. Fliegel picked up the, he was writing it, picked up and said this is a corporation we would like to have somebody, you know, counter sign, a secretary or something.

Then I told him, how come, I didn’t know, you know, you didn’t tell me it .was a corporation. Fliegel had never told me it was a corporation. I assumed that Mr. Maisel was the sole owner, but then he said, you know, we have to have somebody else’s signature. Mr. Maisel objected to that.

He said it really was not necessary. That he had done all of the business of the corporation on his own, on both of the times that his signature was good. We insisted, we would like to have someone else.” On three occasions Maisel or his attorney wrote Fliegel who was presumably acting on behalf of Pradhan expressing ⁶⁷⁵ Maisel’s inability to arrange settlement at the time set by Fliegel and postponing that event for 32 days. Each letter concluded that this additional time would permit Maisel either to discuss “the matter more fully with Mr. Sites, the Secretary of R.M.R. Corp. who, I understand from Mr. Morris Schwartz, attorney for R.M.R. Corp. must sign the deed transfer.” or that “he [Maisel] will need this additional time to obtain the consents of the other two stockholders.” Finally Mr. Schwartz wrote the attorney whom Fliegel had indicated would represent Pradhan: “RMR Corporation is unable to settle on the purchase offer signed by Sachindra Pradhan, dated November 1, 1973, and which was never fully executed by RMR.” Appellants Fliegel and Pradhan by identical briefs raise five questions.

The first two relate to the requirement of Md. Rule 342 setting forth “Matters to be Pleaded Specially.” Appellants claim that a special plea is necessary before a defense “That the Contract made was Ultra Vires” Md. Rule 342 c 1 (g), may be asserted. They further allege that subsection (j) of the same rule requires that “a denial of the execution of any written instrument alleged in the pleadings” must be specially pleaded. On the principles thus expressed there is no doubt; however, we fail to see the relevancy here. There was no assertion by appellee that the corporation was without authority to sell.

The defense was that the corporation did not contract, not that it had no authority to do so. The authority in dispute was Maisel’s — not the corporation’s. Nor was there any denial in the record that the instrument was executed. To the contrary Maisel expressly admitted signing it as is indicated by his testimony repeated here.

The admission of the signature, however, does not foreclose a defense under the general issue plea relating to the legal effect of that signature. The defense asserted is precisely that pled, i.e., that appellees were not indebted as alleged because they had not promised as alleged. ⁶⁷⁶ Appellants would have us interpret the Rule to require a special plea whenever one denied that he had entered a contract. Such is not the intent of the rule. Under the former statute 1 after which the Rule is fashioned a failure to deny the execution of the instrument operated as an admission of the execution.

It is an unnecessary procedural burden of proving the signature when that is not an issue, from which a plaintiff was relieved by the Act (Rule), Cf. Farmers & Mechs. Natl. Bank v. Harper, 151 Md. 358, 361 ; Banks v. McCosker, 82 Md. 518, 525 .

Even the dicta in a partnership case quoted by appellants explains that purpose: “At common law, whenever a declaration alleged a partnership or a corporation or a written instrument material under the pleadings, and issue was joined on the general issue pleas, the burden was on the plaintiff to prove the existence of the partnership or the corporation or the genuineness of the instrument. In the great majority of cases it was impossible to refute the allegation ... In order to obviate this useless procedure, the Legislature in 1888 enacted the rule that whenever the pleadings in an action at law allege the partnership of any parties, or a corporation, or the execution of any written instrument filed in the case, the same shall be taken as admitted unless denied by the next succeeding pleading of the opposite party ... The object of the statute is to facilitate the trial of cases by requiring defendants to declare whether they demand such proof.” McBriety v. Phillips, 180 Md. 569, 571-572 .

Finally, although the same questions are raised and arguments set forth by both appellants, we fail to see how Pradhan can complain. He received adequate notice of his opposition’s arguments because his equity suit was answered in detail, paragraph by paragraph, setting forth the defense of unfulfilled condition precedent. ⁶⁷⁷ Appellants’ next three questions assert that the trial court erred 1) in finding a condition precedent to the contract, 2) in failing to find a subsequent ratification of the contract, and 3) in declining to hold that Maisel had apparent authority to execute the contract on behalf of RMR. As to question 2, there is simply no evidence of subsequent ratification. Question 3 is subsumed by question 1 in this case since if all parties were aware of the existence of a binding contract depended on fulfillment of the