Steele v. Goettee

MARVIN H. SMITH, Judge, Specially Assigned. This case concerns an in gross contract for the sale of real estate and the determination of a trial court in a declaratory judgment action brought by the buyer that the seller should specifically perform the contract. We shall reverse the judgment of the Court of Special Appeals contained in Goettee v. Steele, 71 Md.App. 520 , 526 A.2d 626 (1987), and thus shall affirm the decree of the trial court that the seller specifically perform the contract. Aside from the issue of whether this was a sale in gross, the facts are undisputed.

Those which we shall relate are gleaned from the findings of fact of the trial court or are uncontroverted facts taken from the record. Under Maryland Rule 886 when an action has been tried by the lower court without a jury, this Court will review the case upon both the law and the evidence, “but the judgment of the lower court will not be set aside on the evidence unless clearly erroneous and due regard will be given to the opportunity of the lower court to judge the credibility of the witnesses.” There is no contention that the trial judge erred in finding that this was an in gross contract. Elvira B. Chaney died on February 6, 1985. John G. Goettee qualified as the personal representative under her will on March 8, 1985.

She owned a home in Annapolis at Giddings and Forbes Avenues where she had lived for a number of years. Goettee is both an accountant and a lawyer. He has been practicing law since about 1964 and began representing Mrs. Chaney in accounting matters back in the 1950’s. Goettee testified that once he had qualified as personal representative he obtained plats and a tax map of Mrs. Chaney’s property.

The tax map showed approximate di ¹⁴ mensions of 100 feet across the front for the two lots owned by Mrs. Chaney and approximately 150 feet down the sides. From a realtor he obtained a plat prepared by a surveyor in 1952 that showed an area of approximately 17,500 square feet. Goettee procured an appraisal of subject property under date of March 25, 1985. It estimated the fair market value at $261,000.

Goettee requested of an Annapolis surveyor a feasibility study of the property in question. He advised Goettee on April 16, 1985: “The configuration of property shown was obtained from deed found in Liber WMB 22/282 with plat recorded at WMB 22/269. There appears, however, to be a boundary problem and/or deed discrepancy that can only be resolved by a field survey. City records indicate a ‘gap’ in boundaries and deed plotting likewise reflect a possible gap.

Field investigation indicates possession possibly different from title lines.” On April 24, 1985, the realtor with whom Goettee ultimately listed the property requested a survey. In a contract dated May 14, 1985, Goettee listed this property with that realtor stating the area was approximately 15,650 square feet. The asking price was $395,000. The petitioners here were excluded as potential buyers from that listing as was Rev. Lance, an adjoining landowner.

Petitioners Marshall K. Steele, III, and Stephen E. Faust are physicians who practice in partnership. They own a building directly across the street from the Chaney property. They proposed erection of a building on the Chaney property, if they could purchase it, of about 14,000 square feet, the size of the building occupied by them. Faust paced off the Chaney property down two sides and concluded that the lot contained approximately 21,000 square feet, a conclusion he did not communicate to his attorney.

Using information which he said he procured from the realtor to whom we have previously referred, this attorney prepared ¹⁵ for Steele and Faust a contract with Goettee for the sale of the subject property. In that contract the property is described as: “16,000 square feet, more or less, together with improvements thereon located at 716 Giddings Avenue, Forbes Street, Annapolis Maryland, as further described in the Land Records of Anne Arundel County, at Liber, folio.” The contract called for a sale price of $279,500 with a down payment of $10,000. This contract was submitted to Goettee on May 10, 1985. On May 28 Goettee returned the contract and check, stating, “[a]s explained, we expect to receive more than $18.00 per square foot for this property and have listed it with a real estate broker for $395,000.

We may not receive a contract for this amount, but we thought we would wait a reasonable time to see what surfaces.” In late June Dr. Faust called Goettee by telephone, learned that no other offers had been made, expressed his and Dr. Steele’s interest in purchasing the property, and asked what price Goettee really wanted. Goettee said $300,000. Dr. Faust testified: “I was using a phone with a long extension cord and I walked into an examining room with a window looking out on this piece of property and I said, now look, Mr. Goettee, I want to be completely clear about this. What we are talking about is this corner property with the fence around it that I am looking out of my window at, right now.

Is that right? “And then he said, yes, that’s right. “And I said, what you are selling and what we are buying is the area inside this fence, is that right? “And he said, yes. “And I said, well, I am going to put something in the contract to that effect and initial it and we’ll send it over with a change in the purchase to three hundred thousand dollars. ¹⁶ “And he said, fine.” Goettee confirmed this conversation. The contract was resubmitted with the purchase price changed to $300,000 and a provision added at the end: “This contract is additionally contingent upon the completion of a survey showing that the actual boundaries of the property are within two (2) feet of the fence surrounding the tract.” A contract of sale was signed by all parties on July 3, 1985. Goettee’s deposition was read into evidence. He was questioned about the contingency: “Q Now let me ask you a question, what did you understand that last contingency to mean?

That is the contingency on the last page of the contract? “A It only meant to me that he was endeavoring to buy the whole tract. “Q What was the tract that you were selling? “A What was surrounded by the fence. I [sic] was my thought at that time that the contract was signed. “Q That was the piece that you believe was owned by Mrs. Chaney that extended from the Lance property all the way down to Forbes Street and from Giddings Avenue back to the fence behind Grauls Market? “A Right. “Q The entire corner parcel? “A Right.” After the contract was signed, a survey, which had been requested by the realtor on April 24, was completed. We attach a copy of that plat to this opinion which the reporter is directed to reproduce. That survey shows an area of 22,047 square feet.

Interestingly, however, it shows an abandoned portion of Forbes Avenue running through the dwelling. One of the Chaney deeds called for a place of beginning at a certain distance from the intersection of Ridgely Avenue and Giddings Avenue. The other deed called for the point of beginning to be at the intersection of Giddings Avenue and Forbes Street. ¹⁷ After the survey was received, according to Faust, Goettee called him. “He said, there is an additional parcel. It has got another title to it.

There is more land here than we thought and we need to—you need to pay more money.” However, Goettee said he did not change the listing with the realtor at $395,000 after receiving the survey. Goettee testified that after the survey came in showing 22,000 square feet, he called the attorney for Faust and Steele and told him that he thought he should have $400,000 for the property but if the doctors would pay him $350,000 “without any qualms, one way, shape or form, [he] w[ould] settle.” Based on information supplied by the surveyor, Goettee had a deed prepared in September from the owner of the abandoned Forbes Street area, conveying the property to him as personal representative. He said he asked his real estate agent to see if he could acquire the property for $500. The husband of the owner called Goettee and said they would sell for $1,000.

Goettee said he “didn’t do anything for the thousand ($1,000) because I reasoned in my mind should the plaintiffs prevail in this suit, let them pay the thousand ($1,000) dollars to get the adverse possession.” On January 22, 1986, Drs. Steele and Faust filed a complaint for declaratory judgment asking that they be declared the equitable owners “of the property located at 714-716 Giddings Avenue,” and that the agreement of sale dated July 3, 1985, be declared valid and enforceable against Goettee as personal representative of the estate of Mrs. Chaney. The trial judge (Wolff, J.), filed a comprehensive and well-reasoned opinion. He decreed specific performance.

The Court of Special Appeals reversed. It said that “[e]ven though [it] reverse[d], [its] review of the record indicates that there was sufficient evidence to support th[e] factual conclusion of the [trial] court” that “the sale of the property was in gross, and not by the acre.” The Court of Special Appeals stated that “[o]n several occasions, th[is] ¹⁸ [C]ourt has allowed the abatement of price when the sale was in gross,” citing Kriel v. Cullison, 165 Md. 402, 406, 414-15 , 169 A. 203 (1933), “(upholding the trial court’s abatement of $561.50 for the deficiency in a contract conveying ‘forty-five acres, more or less’)” and Reigart v. Fisher, 149 Md. 336, 348-49 , 131 A. 568 (1925), “(ordering a two thousand dollar abatement for shortage in a contract conveying seven acres more or less).” 1 The intermediate appellate court said that this Court “has taken great pains in construing qualifying phrases such as ‘more or less,’ ‘about,’ or ‘approximately’ in a manner that will minimize the harsh effects of an in gross contract.” 71 Md.App. at 524-26 , 526 A.2d at 628-29 . It further observed that “[e]ven when th[is] Court has refused to allow rescission or adjustment in the purchase price, it has issued the warning that qualifying phrases such as ‘more or less’ should not provide a universal haven or refuge against all personal liability.” 71 Md.App. at 526-27 , 526 A.'2d at 629. The court further said: “Although the circuit court determined that the actions of appellees as buyers did not reach the level of fraud, we find disturbing the circumstances surrounding the transaction.

First, the discrepancy in quantity was not minor, but a forty percent variation. Second, from the very beginning, appellees possessed the knowledge that the actual square footage of the parcel substantially exceeded the amount recited in the contract for sale and the amount which appellant thought he was selling. Specifi ¹⁹ cally, appellee Dr. Faust admitted that he knew the size of the lot to be about 21,000 or 22,000 square feet. Third, appellant compiled considerable information regarding the parcel.

Numerous surveys indicated that the parcel’s size was in the range of 16,000 square feet as recited in the contract. Although the surveys and other data did indicate that the precise size remained in question, these documents in themselves contained nothing that would put an individual on inquiry notice that there might be a gross variance. Fourth, appellant was not the actual owner of the parcel, but was merely the personal representative of the Chaney estate, who had only visited the land and reviewed various surveys and maps. “And finally, appellant’s actions during the negotiations indicate that he considered size and the resulting per square foot cost as critical and central to reaching an agreement. Appellant rejected the first offer for $279,-000.00 since the price did not provide a minimum of $18.00 per square foot.

Appellant’s letter of May 28, 1985 clearly stated that if appellees offered a minimum of $18.00 per square foot for the entire 16,000 square foot tract, then he would consider selling the property to them. When appellees increased their offer to $300,-000.00, a value of $18.75 per square foot, based on 16,000 square feet, appellant accepted. “From these facts, we think that appellant intended to enter into an in gross contract, but not to assume the risk of extreme variation in quantity. In light of the Maryland case law that has attempted over the years to mitigate the harsh effects of in gross sales, we must reverse. In such cases as this one, the circuit court should have either ordered appellees, at their option, to pay for the excess or to rescind the contract in to to.

In reaching this decision, this court is mindful of the fact that relief to vendors who have entered into an in gross sale is rare. When the vendor happens not to be the true owner, but a fiduciary, and when the buyer possesses ²⁰ prior knowledge of the sale, however, this result is warranted.” 71 Md.App. at 527-29 , 526 A.2d at 630 . Petitioners contend that under Maryland law one who intends to enter into an in gross contract assumes the risk of variation in quantity; that the Court of Special Appeals improperly found fraud on the part of the buyers by requiring them to disclose to the seller the size of the property being sold; that in determining the intent of the parties the Court of Special Appeals improperly considered extrinsic evidence, and that the intermediate appellate court improperly concluded that 9 fiduciary/vendor is held to a lesser standard of care in the sale of real property than a true owner/vendor. On the other hand, respondents contend that the Court of Special Appeals correctly found that equitable circumstances required rescinding an in gross contract for gross mistake, that mutual mistake or misrepresentation or unilateral mistake about material facts existed which justified rescission, and that no lower standard was set for a fiduciary seller.

As we indicated at the outset, under Rule 886 we “review the case upon both the law and the evidence, but the judgment of the lower court will not be set aside on the evidence unless clearly erroneous and due regard will be given to the opportunity of the lower court to judge the credibility of the witnesses.” Rule 1086 to like effect is applicable to the Court of Special Appeals. If there is substantial evidence to support the trial court’s factual conclusion, that finding must be reviewed in the light most favorable to the prevailing party below and the appellate court should accept that conclusion. Dougherty v. Merc.-Safe Dep. & Tr., 282 Md. 617, 621-22 , 387 A.2d 244, 247 (1978). The significance of the finding by the trial court that what was involved here was a sale in gross is found by referring to the opinion of Judge Offutt for the Court in Kriel v. Cullison, 165 Md. 402, 408 , 169 A. 203, 205-06 (1933): ²¹ “A sale in gross, sometimes called a ‘contract of hazard,’ is where specific designated parcels of land are sold as a whole and there is no warranty, express or implied, as to quantity. 2 Words and Phrases, Third Series, page 446.

In determining whether a sale is by the acre or in gross, as in other contracts, the intention of the parties is controlling and