Smart v. Graham, City Comptroller

Forsythe, J., delivered the opinion of the Court. In this case, Harry K. Smart and Fred W. Moe filed a bill of complaint in the Circuit Court No. 2 of Baltimore, City, on behalf of themselves, and all other taxpayers who would desire to come in, against the Mayor and City Council, the Board of Estimates, the Commissioners of Finance, the City Comptroller, and the City Solicitor, of Baltimore City, and Charles H. Buck and Scott B. Appleby. The bill asked for an injunction to restrain the defendants from acting under and in pursuance of an offer to purchase, and a contract of sale, of the Hotel Rennert property in Baltimore City, dated September 17th, 1940, between the City officials of Baltimore City, and the,said Scott B. Appleby; that the acceptance and approval of the offer of purchase of the said Appleby be declared void; that the contract of sale with Appleby be declared void, annulled and set aside; that the City Comptroller and Board of Estimate's be required to accept for consideration the offer of purchase of the said Harry K. Smart, and such other bona fide offers as may be presented; and that the City officials be restrained from executing a deed to the said property to the defendant, Scott B. Appleby. After answers by all of the defendants and after hearing testimony, the court, on November 1st, 1940, passed a decree dismissing the bill of complaint.

It is from that decree this appeal was entered. The principal facts in the case are undisputed, and at the hearing in this court, the appellants eliminated “such questions' as the general powers of ordinary parties to a contract to modify its terms and waive its conditions; the broad discretionary power of municipal officers; and ordinary fraud, which is not alleged.” (Appellants’ brief, p. 3). ⁴⁷⁹ From the record it appears that on April 8th, 1940, the trustee under a mortgage deed of trust sold the Hotel Rennert property, at public auction, to the Mayor and City Council of Baltimore, for the sum of $162,888.16. That amount was offered by the City authorities because it represented the amount of taxes due on the property, and also because it was the lowest amount the trustee, under a decree of court, was permitted to accept. The highest bid obtained at the sale, other than that of the City, was $95,000.

A deed for the property was given to the City on May 22nd, 1940. By an ordinance passed by the Baltimore City Council, and approved by the Mayor on July 10th, 1940, the “City Comptroller was authorized to sell in accordance with section 13, of the Baltimore City Charter, all those two lots of ground * * * known as the Hotel Rennert, said property being no longer needed for public use.” Section 13, of the City Charter, Code Pub. Loc. Laws 1930, art. 4, is as follows: “Nothing contained in this Charter shall prevent the Mayor and City Council * * * from, in any manner, disposing of any building or parcel of land no longer needed for public use; provided, that such disposition shall be authorized and provided for by ordinance, and shall be approved by the Commissioners of Finance by their uniting in the conveyance thereof, and shall be made at public sale, unless a private sale be expressly authorised by the Board of Estimates and so entered on their minutes.” In a letter dated July 20th, 1940, the appellant Smart, submitted to the Mayor and City Council an offer “to pay the sum of $115,000.00, in cash, for the Hotel Rennert property, including all improvements and fixtures.” The offer was accompanied by a certified check in the sum of $10,000, as a deposit.

That offer (Appellants’ Exhibit C) was subject to the following terms and conditions: (1) The City was to convey lot A, in fee simple, to Fred W. Moe, or his nominee, and lots B and C to Harry K. Smart, or his nominee; (2) The City must, prior to September 1st, 1940, issue all necessary permits to raze ⁴⁸⁰ the buildings on the said lots; (3) The City must, prior to September 1st, 1940, issue all necessary permits for the erection of a filling station on lot A, and for the installation and operation of gasoline pumps and tanks,' and for the erection on lots B and C, of a two-story garage with a parking roof; (4) the said offer had to be accepted on, or before, August 1st, 1940. By a letter of July 31st, 1940, the acting City Comptroller accepted the Smart offer “contingent upon the obtention, before September 1st, 1940, of the permits” mentioned in the offer of July 20th, 1940. The Board of Estimates, on July 31st, 1940, passed a resolution, which appears in its minutes of the meeting of that date, authorizing the City Comptroller to sell at private sale, for the sum of $115,000, the Hotel Rennert property, including all improvements and fixtures, contingent upon the, obtention of the above-mentioned permits. The City Council adjourned on0 August 27th, 1940, without passing the ordinance necessary for the erection of a garage and filling station on the Hotel Rennert property. ■ Immediately following the refusal of the City Council to pass the ordinance authorizing the issuance of the permits above mentioned, the acting Comptroller, Mr. Dell, talked to Mr. Smart, about the matter.

Mr. Dell testified “after the Council refused to pass the ordinance, I called him (Smart) and asked him what to do with thé’ check and Mr. Smart’s counsel asked me to hold the check several days; on that occasion Mr. Smart’s counsel told me they might be interested in developing a new offer. * * * I was never told by Mr. Smart, or his counsel, that he was interested in the purchase of the property after the Gasoline Ordinance failed; the only conversation I had with Mr. Smart, or his counsel, was when his counsel told me they might develop another offer and they told me to hold the check for $10,000.00. I returned it with a letter by registered mail” (Record, p. 63). In the letter of September 4th, returning the check, Mr. Dell stated “your liability, as well as the liability of the City of Baltimore, in connection with your offer to pur ⁴⁸¹ chase the Hotel Rennert property, hereupon ceases and determines.” Mr. Dell further testified that on September 7th, 1940, he received a letter dated September 6th, 1940, from Mr. Charles H. Buck, which contained an offer to purchase the Rennert property for $110,000. That letter, and offer, was presented to the Board of Estimates at its meeting on September 10th, 1940.

The Buck offer was accompanied by a cashier’s check for $10,000. The offer stated that the “principal will agree in said contract of purchase that he will consent to the taxation of said property, for the year 1941, based upon an assessment not in excess of the purchase price, plus the cost of the improvements he contemplates making.” The offer also was subject to the condition that an ordinance be passed permitting the erection of a partially closed, and partially open, parking garage. The permit to store, and sell, gasoline was not required. The offer was made for acceptance on, or before, 1 o’clock P. M. on September 10th, 1940, otherwise it was to be considered withdrawn, and the $10,000 check returned.

The Board of Estimates, on September 10th, considered and accepted the Buck offer. Mr. Smart was present at that meeting, and requested an extension of one week, in order to make another offer. His request was refused. When the Buck offer was accepted, it was the only actual offer before the Board of Estimates, and unless accepted by 1 o’clock P. M. of that day, it would have been withdrawn.

The contract of sale following the Buck offer was executed with the principal, Scott B. Appleby, on September 17th, 1940. The contract was in accordance with the terms of the offer of September 6th, except that it contained the following paragraph: “The stipulation in the offer of Charles H. Buck for the purchase of the property on behalf of the Vendee, requiring the passage of an Ordinance by the City Counsel of Baltimore, to permit the use of said property as a partially closed and partially open parking garage, is waived by the Vendee, ⁴⁸² without prejudice, however, to the right of the Vendee to make application to the City Council, for such permission, in regular course, after the Vendee shall have paid for said property and become the owner thereof.” On September 24th, 1940, two weeks after the Buck offer had been accepted, and one week after the contract with Appleby had been executed, Mr. Smart submitted another offer to purchase the property for $120,000. The offer was subject to the following conditions: (1) That the City, prior to December 1st, 1940, issue all permits necessary for the construction on the premises of a three-floor parking and storage building, and for a private bridge over Little Sharp Street, at a nominal cost; (2) That Smart and Moe grant to the City, and waive all interest and title to that part of the premises referred to as a triangular corner of Liberty and Saratoga Streets. The appellants contend that the sale, to -Appleby, should be set aside, (1) because the provisions of the Baltimore City Charter have not been complied with (2) the property was not sold for the highest price obtainable, and was sold for less than the appraised value, (3) that the contract of sale is not valid and enforceable, and (4) because of an erroneous ruling of the court on some of the testimony.

In reference to the first objection, that the sale was not made in full conipliane with the City Charter, it appears that on July 10th, 1940, the City Council passed Ordinance No. 268, which is as follows: “Sec. 1. Be it ordained by the Mayor and City Council of Baltimore, That the City Comptroller be and he is hereby authorized to sell, in accordance with Section 13 of the Baltimore City Charter, all those two lots of ground situate, lying and being in the City of Baltimore, State of Maryland, and described as follows, that is to say: * * * The improvements being known as The Hotel Rennert. Said property being no longer needed for public use.” On September 10th, 1940, at a regular meeting of the Board of Estimates, the following resolution was passed ⁴⁸³ and entered in the minutes: “Resolved: That the City Comptroller be authorized to sell, at private sale, the Hotel Rennert property, in accordance with the terms and upon the conditions, and at the price set forth in the offer dated September 6th, 1940, from Mr. Charles H. Buck.” In connection with this objection, the appellants also assert that the specific terms and conditions of a private sale must be sanctioned by the Board of Estimates. In making that contention, the facts are entirely overlooked.

The undisputed facts are that the provisions of the City Charter requiring an ordinance of the City Council was fully complied with by the passage of Ordinance No. 268, which specifically authorized the sale of the Rennert property. That ordinance was followed by the resolution of the Board of Estimates, which expressly provided for a private sale, “in accordance with the terms and conditions, and at the price set forth in the offer of September 6th, 1940, from Mr. Charles H. Buck.” The resolution was not merely a general authorization of a private sale, but it included approval of all of the terms and conditions of the sale, and of the amount to be received. That resolution was duly recorded in the minutes of the Board of Estimates of its meeting on September 10th, 1940. Mr. Smart testified (R. p. 94), “I was present on the 10th of September, before the Board of Estimates and I have read the minutes of that meeting which are substantially correct.” Thus it appears that the sale here made was in strict compliance with all legal requirements in so far as the City Charter is concerned.

Therefore, the first objection of the appellants cannot be sustained. The next objection to the validity of the sale raised by the appellants, is that the City Comptroller did not endeavor to secure the highest price obtainable for the property at private sale, and sold it for less than its actual value. The issue raised by that objection must be considered, and determined, in accordance with all the facts and ⁴⁸⁴ circumstances surrounding the transaction. These facts show that the City obtained the Hotel Rennert property, at a public auction, which had been widely advertised in New York, Philadelphia, Washington and Baltimore newspapers.

Also, the sale had a great deal of publicity through the news columns of local papers. At the sale, the highest outside bid for the property, including improvements and fixtures, was $95,000. The amount of back taxes due the City was $162,888.16, and the decree of court authorizing the sale expressly provided that the property be not sold for less than that amount. The City bid the said amount of its tax bill, and secured the property.

The point is stressed that the City, in attempting to resell the property, did not readvertise it, or place “For Sale” signs on it. It is a matter of common knowledge that the sale of the widely known Hotel Rennert, and all of the circumstances concerning the receivership, taxes due, and its ultimate purchase by the City, had for some time a great deal of publicity through the news columns of daily papers. In view of those facts, it is unreasonable to believe that any real estate brokers in Baltimore City, as well as in nearby cities, were unaware of all the facts surrounding the trustee’s sale of April 8th, and that the City desired to resell the Rennert property. Also, it is disclosed by the testimony that the City Comptroller’s office had many inquiries.

Mr. Dell testified (R. p. 70), “Since the City purchased this property, I judge probably twenty-five or thirty real estate agents, attorneys or other parties dealing in real estate, have been in touch with my office with reference to a prospective offer, or sale, of that property, the Smart