Chapman v. Bomann

• Decision Date: 24 January 1978
• Citation: 381 A.2d 1123
• Parties: John W. CHAPMAN, Jr. and Margaret Chapman and Chapman-Hall Realty v. George A. BOMANN, III.
• Court: Maine Supreme Court

Page 1123

381 A.2d 1123

John W. CHAPMAN, Jr. and Margaret Chapman and Chapman-Hall Realty v. George A. BOMANN, III.

Supreme Judicial Court of Maine.

Jan. 24, 1978.

Westcott & Lynch, P. A. by John J. Lynch, Damariscotta (orally), for John and Margaret Chapman.

Clayton N. Howard, Damariscotta (orally), for defendant.

Before DUFRESNE, C. J. and POMEROY, WERNICK, ARCHIBALD, DELAHANTY and GODFREY, JJ.

WERNICK, Justice.

On September 13, 1974 John W. Chapman, Jr., his wife Margaret Chapman and Chapman-Hall Realty, as plaintiffs, brought a civil action in the Superior Court (Lincoln County) against George A. Bomann, III as defendant. Plaintiffs sought specific performance, or alternatively damages for breach, of a contract allegedly made between plaintiffs and defendant for the sale and purchase of real property in New Harbor, Maine owned by defendant and his wife Betsy as joint tenants and used by them as a summer residence. Defendant's answer included the affirmative defense that the agreement plaintiffs were seeking to enforce was unenforceable for failure to meet particular requirements of the Maine Statute of Frauds, 33 M.R.S.A. § 51(4).

Ruling on a motion by defendant asking that summary judgment be awarded in his favor, the presiding Justice on May 27, 1975, ordered entry of summary judgment for the defendant. Plaintiffs John and Margaret Chapman have appealed from this judgment. ¹

We sustain the appeal. ²

On June 8, 1974 plaintiffs signed a document, not yet signed by defendant, the contents of which set forth an agreement that, through Chapman-Hall Realty, defendant Bomann would sell and plaintiffs would purchase the Bomann summer residence at New Harbor.

The presiding Justice ordered summary judgment for defendant on the rationale that since defendant had never signed the above-described document, the agreement contained in it was unenforceable for failure to comply with the writing requirement of the Maine Statute of Frauds. 33 M.R.S.A. § 51(4).

The presiding Justice had before him for consideration facts stated in sworn answers to interrogatories and in various affidavits submitted in connection with the motion for summary judgment.

The affidavit of Joan E. Simonds, a Chapman-Hall Realty broker, disclosed that plaintiffs rejected an initial offer made by defendant and defendant then submitted a counter-proposal for a sale and purchase agreement. Plaintiffs accepted it and signed the document setting forth the agreement. Thereafter, on June 14, 1974, Chapman-Hall Realty received from plaintiff John Chapman a check for $4,000.00 which, as added to an earlier down payment of $500.00, completed a 10% Down payment to be deposited in an escrow account for the benefit of defendant. On the same day that the plaintiffs signed the document containing defendant's proposal for a purchase-sale contract the document was returned to the office of Chapman-Hall Realty. It was then forwarded to the defendant to be signed on his part.

On July 2, 1974 another person associated with Chapman-Hall Realty arranged for Joan Simonds to communicate with defendant regarding the document already signed by plaintiffs and forwarded to defendant for signature. This was done because plaintiffs had arranged, and were scheduled that same day to complete, a refinancing of their home in Massachusetts in anticipation of their purchase of defendant's summer residence in New Harbor. Joan Simonds reached defendant's wife by telephone and explained these circumstances to her and the consequent need for confirmation that the Bomanns would sign the document which had been forwarded for signature. Defendant's wife told Joan Simonds that she and her husband would sign the contract and return it to the office of Chapman-Hall Realty the following Saturday. Joan Simonds then called plaintiff Margaret Chapman and told her exactly what defendant's wife had said. The Chapmans then refinanced their Massachusetts house that same day. ³

Defendant filed an affidavit stating that he had not signed the purchase-sale document and had not signed either a note or memorandum as to it, and he had never received any portion of the purchase price and, further, plaintiffs never took possession of the premises or made any repairs to them. Defendant's affidavit also said that defendant lacked authority to bind his wife to a contract for the sale of their summer residence and that defendant had no knowledge that plaintiffs were refinancing their home on the basis of any oral negotiations.

A separate affidavit of defendant's wife stated that she had not authorized defendant to make an agreement to sell the Bomann residence in New Harbor.

To avoid applicability of the Statute of Frauds to the document signed by them and which they seek to enforce against defendant plaintiffs invoke the equitable principles of estoppel in pais and part performance.

While we conclude that plaintiffs' appeal must be sustained, we reach this decision on grounds other than those asserted by plaintiffs. We find it unnecessary to reach the question whether in the instant circumstances the document signed by plaintiffs, but not signed by defendant, should as such be directly enforceable as a contract binding on defendant, despite applicability of the Statute of Frauds. Rather, as more fully explained hereinafter, we decide this case by holding that the doctrine of promissory estoppel (as distinguished from estoppel in pais) applies, here, to raise genuine issues of material fact concerning (1) whether the separate ancillary promise made by defendant's wife, as attributable also to defendant, that she and her husband would sign, and return, the document signed by plaintiffs became a contract binding on defendant, and (2) whether, further, with the promise of defendant's wife being deemed a promise binding on defendant's wife and also defendant, defendant should be barred from asserting the Statute of Frauds to deny its enforceability.

1.

The doctrine currently formulated and identified by the label "promissory estoppel" has substantive roots in the law which long antecede the use of the label. It has often been said that promissory estoppel is the principle by which contract law avoids injustice through recognition of a substitute for traditional consideration. See Williston on Contracts §§ 116, 139; Allegheny College v. National Chautauqua County Bank of Jamestown, 246 N.Y. 369, 159 N.E. 173 (1927) (Cardozo, C. J.). Another approach views promissory estoppel as a particularized formulation of estoppel functioning generally as an instrument utilized by equity to prevent injustice. Professor Ames observed that even before 1500, equity gave relief to a plaintiff who had incurred detriment on the faith of a defendant's promise. Ames, Lectures on Legal History at 143 (1913). See also Pomeroy's, Equity Jurisprudence § 808b (5th Ed. 1941).

Several Maine cases mention that reasonable and detrimental reliance on the promise of another may act as a substitute for consideration. Although charitable subscriptions have been upheld on a variety of theories, in Central Maine General Hospital v. Carter, 125 Me. 191, 195, 132 A. 417, 418 (1926) this Court noted:

"It may also be true that in strict theory the sustaining of such promises to give cannot be upheld as a contract based on a valid consideration. . . . However, the courts have sustained them as contracts in numerous instances . . . where the performance in part at least of the purpose for which the funds were subscribed or promised were shown, or where liabilities were incurred on the strength of such promise . . . ." (emphasis supplied)

See also Carr v. Bartlett, 72 Me. 120 (1881).

In Colbath v. H. B. Stebbins Lumber Company, 127 Me. 406, 415, 144 A. 1 (1929) this Court referred to promissory estoppel as distinguishable from the more traditionally recognized equitable doctrine of estoppel in pais on the ground that estoppel in pais involves the misrepresentation of an existing fact. Simultaneously, however, in Colbath the Court suggested that, absent traditional consideration to make a promise binding as a contract, promissory estoppel can serve to excuse future performance of a condition or obligation.

In LaGrange v. Datsis, 142 Me. 48, 46 A.2d 408 (1946) this Court mentioned promissory estoppel as a particularized form of estoppel conceived broadly as a doctrine to do equity. Moreover, further language in LaGrange purporting to limit promissory estoppel to circumstances in which the promise involves a representation concerning the intent to abandon existing rights ⁴ is only dictum. The actual decision of the case is that defendant in fact made no promise; hence, there was nothing to generate at all the applicability of promissory estoppel, however broadly or narrowly conceived.

We are satisfied that the formulation of the principle of promissory estoppel in the Restatement of Contracts, § 90, as refined in Restatement (Second) of Contracts, § 90 (Tentative Drafts Nos. 1-7, 1973) to authorize limitation of the remedy and thus acknowledge the possibility of partial enforcement, is fundamentally in harmony with the principles already acknowledged in the law of Maine. Moreover, we find compelling the reasoning in support of the Restatement's formulation of promissory estoppel and are impressed by the widespread acceptance of that formulation in the case law of this country. See generally, 1A Corbin, Contracts §§ 193-209 (1963); 1 Williston, Contracts §§ 138-140 (3rd Ed. 1957); Annots., 48 A.L.R.2d 1069; 115 A.L.R. 152; Boyer, Promissory Estoppel: Principle from Precedents, 50 Mich.L.Rev. 639, 873 (1952).

Accordingly, we now adopt as the law of Maine the comprehensive formulation of the doctrine of promissory estoppel set forth in § 90 of the Restatement (Second) of Contracts (Tentative Drafts Nos. 1-7, 1973), reading as follows:

"A promise which the promisor should reasonably expect to induce action or forbearance on the part...