Stefanowicz Corp. v. Harris

Thompson, Jm delivered the opinion of the Court. When this case originally came for trial in the Circuit Court for Baltimore County the bill of complaint was summarily dismissed. On appeal this Court reversed because ¹³⁸ of the erroneous summary nature of the procedure. We did not reach the merits of the case.

See Harris v. Stefanowicz Corp., 26 Md. App. 213 , 337 A. 2d 455 (1975). After a second trial in the Circuit Court for Baltimore County, a decree awarding $63,615.00 was entered in favor of the appellees and cross-appellants, Richard E. Harris, et ux. The Stefanowicz Corporation, the appellant, presents a multi-faceted attack on that decree. On February 23, 1972, the appellees, Richard E. Harris and Joan Harris, his wife, entered into a contract to purchase from the appellant, The Stenfanowicz Corporation, a “Queen Anne” model dwelling house to be constructed on Lot 21, Block R in Stefanowicz’s Ravenview (Spring Lake) Development in Baltimore County.

The “Queen Anne” was described as “now existing on Lot 15, Block M in said development.” According to the contract, the lot was valued at $15,000, the house at $39,000 and various extras at $8,375, totalling $62,375. At the time the contract was executed the Harrises, appellees, accompanied by their real estate agent, J. Thomas Lutz, met with Wanda Cosgrove, a sales agent for Grempler Realty, the broker for the appellant. Mrs. Cosgrove called Walter Stefanowicz of The Stefanowicz Corporation to discuss an acceptable settlement date to put in the contract, and Mr. Stefanwicz indicated that June 30, 1972, “sounds all right.” Thereafter, The Stefanowicz Corporation signed the contract. On May 16, 1972, the Harrises’ counsel, Marvin H. Schein, at the direction of the Harrises, directed a letter to The Stefanowicz Corporation, the full text was as follows: ‘This office represents Mr. and Mrs. Richard E. Harris with regard to your contract to building the dwelling on the above-captioned lot. “The contract calls for completion and settlement on or before June 30, 1972.

The buyers have a mortgage commitment that expires August 22, 1972. Please note that we must have settlement prior to August 22, 1972. “Whereas Mr. Harris states you have not broken ¹³⁹ ground yet, we request that since the deadline is rapidly approaching you begin construction without delay.” (Emphasis in original letter). Mr. Stefanowicz did not reply to the letter of May 16, because “it didn’t call for a reply” and “because there was no need for any reply.” He assumed that Mr. Schein had authority to extend the expected settlement date for his clients, and he understood the letter as extending the time for delivery of the house to August 22. On July 7, 1972, Mr. Schein again wrote to The Stefanowicz Corporation, the full text of which follows: “Whereas no response has been received to our letter of May 16, 1972 regarding the above-captioned property, and the expiration date for your performance has passed, please be advised that Mr. and Mrs. Richard E. Harris hereby cancel their contract and request refund of the $3,000.00 heretofore paid. “Unless your refund of $3,000.00 is received within one week from the date of this letter we are instructed to institute prompt suit not only for the down-payment but also for damages resulting from your inability and failure to perform.” (Emphasis in original letter).

As found by the trial judge, “Stefanowicz did not reply to the July 7, 1972, letter as he felt, under the terms of the contract, no response was necessary. He felt nothing was due to Harris, and stopped work. He instructed Mr. Lee of M.C.A. Company (Stenfanowicz’s Company Engineers), to slow down.” On September 11, 1972, this suit was brought on the contract and the Harrises, appellees, prayed relief as follows: “A. ORDER the Defendant to execute to the Plaintiffs a sufficient conveyance of a good and merchantable title of said property at and for the purchase of $15,000.00, adjusted by the $3,000.00 ¹⁴⁰ deposit being held by the Defendant with all proper guaranties and warranties, free of liens and encumbrances, all pursuant to the settlement apportionment terms stated in the contract. “B. ORDER the Defendant to promptly restore the real estate to its condition at the time the contract was negotiated or pay, in the alternative, to the Plaintiffs the sum of $10,000.00 as damages or such sum as the Court may deem appropriate under the circumstances, said restoration to be completed within a reasonable time from the date of this Honorable Court’s Order. “C. ORDER the Defendant to pay unto the Plaintiffs such sum of money as would represent the damages suffered by the Plaintiffs in their loss of the benefits of their bargain. “D. ORDER the Defendant to pay unto the Plaintiffs such other interest, costs and damages as are allowable by law. “E. GRANT unto the Plaintiffs such other and further relief as the nature of their cause may require.” In an amended answer filed February 5, 1974, the appellants, The Stefanowicz Corporation, stated in part as follows: “15. That further answering said Complaint, Defendant avers that: “(a) Plaintiffs breached the contract between the parties when, on July 7, 1972, they communicated with Defendant through their authorized agent and attorney a demand for refund of their $3,000 deposit, which demand was not authorized by either the contract or by law.

A copy of said demand letter is attached hereto and made a part hereof as Answer Exhibit No. 1; “(b) Plaintiffs cancelled the subject contract by letter dated July 7, 1972, copy of which is ¹⁴¹ attached hereto and made a part hereof as Answer Exhibit No. 2; and “(c) Notwithstanding said breach and cancellation, Defendant is presently constructing on the subject premises a Queen Anne dwelling house in substantial accordance with the provisions of the Contract of Sale between the parties on February 3, 1972 and Defendant stands ready, willing and able to convey said premises, upon completion, (approximately April 1, 1974) to the Plaintiffs at and for the contract price, with such adjustments therefrom as may be appropriate for minor variations from contract specifications.” In his opinion, the trial judge summarized the testimony and then addressed the issues presented by the parties as follows: “1. TIME NOT OF THE ESSENCE. “The Court finds from the clear, unequivocal wording of the contract that time was not of the essence. The cases quoted by the Plaintiffs are not apposite. Although, the June 30, 1972, completion date was discussed, it was never the intention of the parties to make that the day when performance was expected. “2.

DID STEFANOWICZ PROCEED WITH DILIGENCE AND GOOD FAITH TO DISCHARGE ITS CONTRACTUAL OBLIGATION? “The Court believes that this is the key point in this case. After full and careful consideration of the testimony, the Court is convinced that Stefanowicz failed to act in good faith, failed to act with diligence, and failed to make any effort to discharge its contractual obligation to the Plaintiff. Despite the protestations of the Defendant, it is obvious that the Defendant knew the Plaintiff was insisting on completion and settlement before August 21, ¹⁴² 1972, so that arrangements could be made for the children’s schooling, and further, so that they would not lose their mortgage commitment. In spite of this, the Defendant ignored both the telephone calls of the Plaintiffs and letters from their attorney.

The Defendant failed to request grading studies in proper time, failed to apply timely for permits and failed to make any effort to complete the home as it had contracted to do. In addition, the Court believes that the allegations made by Stefanowicz that the home could have been completed in 6 weeks, including the two week time necessary for the granting of the building permit, are unsubstantiated and unbelievable. “3. THE DATE OF SETTLEMENT WAS EXTENDED UNTIL AUGUST 21, 1972. “4. PLANTIFFS’ LETTER OF JULY 7, 1972, CONSTITUTED AN ANTICIPATORY BREACH OF THE CONTRACT OF SALE. “5.

STEFANOWICZ WAS NOT GUILTY OF THE ANTICIPATORY BREACH OF THE CONTRACT ON JULY 7, 1972, BY REASONS OF HIS FAILURE TO PERFORM. “The above issues raised by the Defendant are all related to the interpretation of the letter of Plaintiffs’ counsel dated July 7, 1972, (Plaintiffs’ Exhibit No. 6). 1 “The Court has studied and restudied that exhibit. There can be no doubt that the Defendant’s interpretation of the letter, i.e., that it automatically extended the settlement date, that it was an anticipatory breach, and that it was not necessary for the Defendant to respond thereto, is utterly and totally ridiculous. It is apparent from the letter, that its intent was to put the Defendant ¹⁴³ on notice that the Plaintiff needed the house completed by a date certain. The Plaintiff advised it would lose its mortgage commitment, and further, would have trouble placing its children in school in the area of the new home after that date.

The Defendant, in its Memorandum, indicated that it treated the contract as cancelled. The uncontradicted evidence indicated to the contrary. The fact is, the Defendant chose to ignore the letter. The Defendant argues that because of the previous letter of May 16, 1972, (Plaintiffs’ Exhibit No. 5), the Plaintiff was equitably estopped from complaining.

This again, is an unreasonable interpretation of that exhibit. As pointed out by the Plaintiff in its Memorandum, the letter of July 7, 1972, could not have been evidence of an anticipatory breach as it was not considered as such by the Defendant. At best, the most favorable interpretation in favor of the Defendant’s position that could be read into the July 7, 1972, letter would be that it was a conditional cancellation based upon the return of the $8,000.00 deposit. It is undisputed that the $3,000.00 deposit was not proffered to the Plaintiff until months after the suit was filed.

The Court does not adopt that interpretation. The Defendant relies upon Griffith vs. Schengrub, 219 Md. 27 (1959), that the delay in construction was not caused by the Defendant, but because of difficulty of obtaining a grading permit from Baltimore County. They argue (page 4 of their Memorandum of January 8, 1976), that the existing administrative standards regarding minimum construction requirements are to be considered as much a part of a construction contract, as if they were expressly referred to and incorporated in the contract itself. “The short answer to this point is that the delay was not because of the Plaintiffs’ refusal to cooperate with Baltimore County, but because ¹⁴⁴ Baltimore County refused to issue the grading permit. The delay was occasioned because Stefanowicz had proceeded to remove large amounts of dirt from the subject property and had materially altered its topography without prior county approval.

The evidence is clear that when the grading permit was applied for, the building inspectors found work had already been done materially altering the grade, and therefore, required further topographical studies. The Defendant cannot complain that Baltimore County delayed in granting a permit when the delay was the clear responsibility of the Defendant. “The Court, after carefully reviewing all of the testimony and exhibits, believes that although Stefanowicz was not guilty of an anticipatory breach of the contract on July 7, 1972, by reason of its failure to perform, that a reasonable time for the completion of the contract by the sellers would have been no later than August 21, 1972, and the house was not then completed (Plaintiffs’ Issue No. 1).” The first step in determining the contentions raised is to evaluate what effect the letter dated May 16, 1972, had on the date of settlement, June 30, 1972. As the trial judge properly found, time was not made of the essence either by the express terms of the contract or by the conduct of the parties. The accepted doctrine in the ordinary case of contract for the sale of land is that even though a certain date is stipulated as the date of settlement, unless time is made of the essence, this provision is formal rather than essential, and the parties are given a reasonable time within which to perform.

Chapman v. Thomas, 211 Md. 102, 108 , 126 A. 2d 579 (1956). While the date is relative and not to be interpreted literally, it does mean something. It cannot be totally disregarded. It is an approximation of what the parties consider a reasonable time under the circumstances of the sale, so the seller could not sit by, do nothing, and then claim an additional reasonable time to perform his side ¹⁴⁵ of the agreement.

Doering v. Fields, 187 Md. 484, 490 , 50 A. 2d 553 (1947). The words of the letter make it clear that the buyer was not insisting upon timely completion of the house by June 30, and this constitutes a waiver. Kimm v. Andrews, 270 Md. 601, 625 , 313 A. 2d 466 (1974); Evelyn v. Raven Realty, Inc., 215 Md. 467, 472 , 138 A. 2d 898 (1958). It is equally clear that the appellees were attempting to establish August 22, 1972, as a firm date of settlement, which can be done, in the appropriate case, even without the use of the words “time is of the essence.” See Acme Building Co. v. Mitchell, 129 Md. 406 , 99 A. 545 (1916).

The appellant materially changed his position in reliance upon this new date of settlement, whether it was firm or not; therefore, the appellees were estopped from asserting a date of settlement before August 22, 1972. Kimm v. Andrews, supra at 625, Evelyn v. Raven Realty, Inc., supra at 472 and Doering v. Fields, supra. Having established that the appellant had until August 22, 1972, to construct the house for the Harrises, we must now determine whether the Harrises had the right to cancel on July 7, 1972, on the basis of an