Clayman v. Goodman Properties, Inc.
| Decision Date | 13 December 1973 |
| Docket Number | No. 71-1238,71-1238 |
| Citation | 171 U.S. App. D.C. 88,518 F.2d 1026 |
| Parties | Stanley CLAYMAN and Melvin Clayman, Appellants, v. GOODMAN PROPERTIES, INC. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Burton A. Schwalb, Washington, D.C., with whon Charles R. Dennenfeld, Washington, D.C., and Christopher Sanger, Gaithersburg, Md., were on the brief, for appellants.
Nelson Deckelbaum, Washington, D.C., for appellee.
Before FAHY, Senior Circuit Judge, and ROBINSON and WILKEY, Circuit Judges.
This appeal challenges a judgment of the District Court halting a suit in which appellants sought damages from appellee for an alleged breach of contract. Stanley and Melvin Clayman, the appellants, assert that Goodman Properties, Inc., the appellee, dishonored an agreement entitling them to acquire a half interest in an apartment project. Goodman Properties says it justifiably terminated the agreement. At the conclusion of the parties' evidentiary presentations over four days of trial, the District Court directed a verdict for Goodman Properties, and the Claymans assign that action as error. We affirm.
Goodman Properties owns a 140-unit garden-type apartment project in Bladensburg, Maryland, formerly known as Gateway Apartments. 1 In the 1960's, the project had fallen into poor physical and financial condition. Until his death in August, 1969, the principal officer and stockholder of Goodman Properties was Reuben Goodman, a dermatologist and an investor, primarily in the stock market. For many years Dr. Goodman had known the Claymans, 2 who were dentists and also investors, mainly in real estate. 3 The Claymans had built several garden-type apartments, and were associated in the ownership and management of other similar properties.
In early 1968, Dr. Goodman and the Drs. Clayman conducted a series of taiks centering on the problems of Gateway Apartments, which Dr. Goodman attributed to faulty management. The Claymans inspected Gateway Apartments, made recommendations to Dr. Goodman, and a business proposition soon emerged. It was, in the main, a proposal that the Claymans take over the management and rehabilitation of Gateway Apartments on a fee basis with an option to purchase a half interest therein. During the course of the negotiations, the Claymans introduced Dr. Goodman to David H. Hillman, and informed Dr. Goodman that they desired to bring him into the transaction. Hillman was a certified public accountant with some experience in property management, and in those capacities had performed satisfactorily for the Claymans in the past. 4 Dr. Goodman concurred, and Hillman became a participant along with the Claymans. 5
The negotiations culminated in a written contract, dated April 1, 1968. The parties thereto were Goodman Properties, on the one side, and the Claymans and Hillman on the other. 6 The agreement required the latter to manage and renovate 7 Gateway Apartments, awarded them a fee on gross income, 8 and extended to them a one-year option to buy a 50 percent interest in the enterprise. 9 The term of the contract was one year initially and thereafter until canceled by one side or the other, subject to earlier termination on occurrence of any of certain specified contingencies.
During the months ensuing, the resuscitation of Gateway Apartments, both physically and financially, went forward. The premises were improved, rent scales were restructured and leases to tenants were strengthened. Although the project continued to operate at a deficit, the vacancy rate dropped, 10 gross receipts rose, 11 and cash distributions to Goodman Properties increased. 12 These were results of planning and execution in which the Claymans and Hillman each played some part. 13
During the latter part of 1968, however, the arrangement began to deteriorate. As we have stated, Dr. Goodman died in August. In October, Hillman told counsel for Goodman Properties, that he would be terminating his association with the Claymans with respect to Gateway Apartments. 14 In late December or early January, counsel was informed that Hillman had dissolved his relationship with the Claymans, and that event marked the beginning of the end.
On or about January 7, 1969, counsel advised the Claymans of Goodman Properties' view that Hillman's disaffiliation constituted a breach of the contract between the parties. The contract, said the letter, 'was entered into in reliance upon the performance of duties by the three parties as an entity.' 15 Goodman Properties, the letter continued, was willing to commit the management of Gateway Apartments to the Claymans, but under a new contract mutually agreeable to those concerned. The letter inquired as to the wishes of the Claymans in that regard and suggested a meeting if they were interested. Subsequent correspondence between attorneys for the parties failed to resolve the matter, and no new contract eventuated. In late February, Goodman Properties served formal notice terminating the contract 60 days thereafter. 16
The Claymans then instituted suit. Their theory is that they fulfilled their contractual obligations to Goodman Properties and became entitled, by an alleged exercise of the option, to acquire the agreed-upon half interest in Gateway Apartments. Because Goodman Properties refused to convey that interest, the complaint claimed damages for loss of the bargain. Goodman Properties, on the other hand, has insisted not only that Hillman's withdrawal violated the contract but also that the Claymans' failure to join Hillman as a party to the litigation was fatal. 17 In its answer to the complaint, Goodman Properties first asserted that Hillman was an indispensible but unjoined party. 18 On the day before trial commenced, Goodman Properties filed a motion to dismiss the action on that ground. At the conclusion of opening statements, the District Court denied the motion without prejudice, and when the Claymans rested their case in chief, denied a motion for a directed verdict. 19 When, however, all of the evidence was in, the court directed a verdict in favor of Goodman Properties. 20 So it was that Hillman's disassociation with the Claymans in the Gateway Apartments venture exacted its full toll.
In this court, the Claymans advance two grounds for their contention that the District Court erred in directing the verdict for Goodman Properties. The first is that, as a matter of law, Hillman's withdrawal from the Gateway Apartments venture was legally innocuous because the contract did not specifically require Hillman to personally perform anything in particular. The second ground is that, as a matter of fact. the circumstances surrounding formation of the contract show that the Claymans' expected contributions to the enterprise was its vital concern and that Hillman's participation was not a condition material to exercise of the option. So, the Claymans argue, the District Court should either have directed a verdict in their favor or submitted the case to the jury for determinations as to the intentions of the parties and the substantiality of any breach caused by Hillman's departure. Goodman Properties, on the other hand, reasserts its position that the absence of Hillman as a litigant requires dismissal of the suit, a premise which the District Court accepted. 21 The question initially confronting us is whether the contract summoned the Claymans and Hillman to a standard of performance which less than all three could not possibly meet. 22
In the language of the contract, it is 'between Goodman Properties, Inc.,' which 'hereinafter (is) called the 'Owner," and 'Melvin Clayman, Stanley Clayman, and David Hillman, jointly hereinafter called 'Prospective Purchaser" or "purchaser." Goodman Properties says the word 'jointly' removes any doubt as to the parties' purpose to benefit and burden the Claymans and Hillman integrally rather than severally. 23 The Claymans say, however, that 'jointly,' taken in conjunction with the language immediately following, 'merely describes the three parties and does not mean that all three had to do everything as a group.' 24 We do not pause to resolve the dispute on this aspect of the contract for we are satisfied that for a more important reason the contract was substantively joint as to the Claymans and Hillman. 25
We have had occasion in the fairly recent past to point out that '(t)he general rule is 'that the obligation created by the promise of several persons is joint unless the contrary is made evident." 26 The contract before us falls squarely within the ambit of that principle. Throughout the contract, Goodman Properties is referred to by the word 'owner.' Similarly, the Claymans and Hillman are invariably referred to collectively by the words 'prospective purchaser' or 'purchaser,' always in the singular. Nowhere does the contract distinguish the three in any way, or separate the rights and obligations among them. On the contrary, the contract uniformly treats the three as a team, without so much as a whisper that they are to be differentiated in any wise for any purpose.
That, which is so true of the contract in general is equally to of the option provisions in particular. 'The owner hereby grants to the purchaser an option to purchase,' it reads, upon the terms and conditions laid upon 'the purchaser.' 27 This formulation, devoid of any language of severance, 28 plainly binds the Claymans and Hillman together to a performance of conditions precedent to exercise of the option. 29 To be sure, the option provision does not in so many words characterize the obligation to perform as entire and indivisible. The point, however, is not whether the contract expressly describes an obligation of two or more as joint, but whether it makes it manifest that the obligation is several. 30 Here the completely undivided nature of the performance...
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