E. A. Coronis Associates v. M. Gordon Const. Co.

• Decision Date: 12 January 1966
• Docket Number: No. A--1005,A--1005
• Citation: 216 A.2d 246,90 N.J.Super. 69
• Parties: , 3 UCC Rep.Serv. 42 E. A. CORONIS ASSOCIATES, a corporation of the State of New Jersey, Plaintiff-Respondent, v. M. GORDON CONSTRUCTION CO., a corporation of the State of New Jersey, Defendant-Appellant.
• Court: New Jersey Superior Court — Appellate Division

Page 69

90 N.J.Super. 69

216 A.2d 246, 3 UCC Rep.Serv. 42

E. A. CORONIS ASSOCIATES, a corporation of the State of New Jersey, Plaintiff-Respondent, v. M. GORDON CONSTRUCTION CO., a corporation of the State of New Jersey, Defendant-Appellant.

No. A--1005.

Superior Court of New Jersey Appellate Division.

Argued Nov. 15, 1965.

Decided Jan. 12, 1966.

Sam J. Abraham, Linden, for appellant (Magner, Abraham & Kahn, Linden, attorneys.)

Peter A. Adams, Newark, for respondent.

Before Judges GOLDMANN, FOLEY and COLLESTER.

The opinion of the court was delivered by

COLLESTER, J.A.D.

Summary judgment on cross-motions therefor was entered in favor of plaintiff E. A. Coronis Associates (Coronis) on defendant M. Gordon Construction Company's (Gordon) counterclaim in the Superior Court, Law Division.

This litigation began when plaintiff brought suit on three contracts not here pertinent. Defendant admitted liability thereon, but counterclaimed for breach of a contract to supply and erect structural steel on one of its projects. Gordon is a general contractor. In anticipation of making a bid to construct two buildings at the Port of New York Authority's Elizabeth Piers it sought bids from subcontractors. Coronis designs, fabricates, supplies and erects structural steel. On April 22, 1963 it sent the following letter to Gordon 'April 22, 1963

Mr. David BenZvi

Gordon Construction Co.

Elizabeth Avenue

Linden, N.J.

Subject: Bldgs. 131 & 132 Elizabeth Port Authority Piers Structural Steel

Dear Mr. BenZvi:

We regret very much that this estimate was so delayed. Be assured that the time consumed was due to routing of the plans through our regular sources of fabrication.

We are pleased to offer:

All structural steel including steel girts and purlins

Both Buildings delivered and erected $155,413.50

All structural steel equipped with clips for wood girts & purlins

Both Buildings delivered and erected 98,937.50

NOTE:

This price is predicated on an erected price of .1175 per Lb. of steel and we would expect to adjust the price on this basis to conform to actual tonnage of steel used in the project.

Thank you very much for this opportunity to quote.

Very truly yours,

E. A. CORONIS ASSOCIATES

/s/ Arthur C. Pease

Arthur C. Pease'

Gordon contends that at some date prior to April 22 the parties reached an oral agreement and that the above letter was sent in confirmation.

Bids were opened by the Port Authority on April 19, 1963, and Gordon's bid was the lowest. He alleges that Coronis was informed the same day. The Port Authority contract was officially awarded to Gordon on May 27, 1963 and executed about two weeks later. During this period Gordon never accepted the alleged offer of Coronis. Meanwhile, on June 1, 1963, Coronis sent a telegram, in pertinent part reading:

'Due to conditions beyond our control, we must withdraw our proposal of April 22nd 1963 for structural steel Dor Buildings 131 and 132 at the Elizabeth-Port Piers at the earliest possible we will resubmit our proposal.'

Two days later, on June 3, 1963, Gordon replied by telegram as follows:

'Ref your tel. 6--3 and for the record be advised that we are holding you to your bid of April 22, 1963 for the structural steel of cargo bldgs 131 and 132.'

Coronis never performed. Gordon employed the Elizabeth Iron Works to perform the work and claims as damages the difference between Coronis' proposal of $155,413.50 and Elizabeth Iron Works' charge of $208,000.

Gordon contends that the April 22 letter was an offer and that Coronis had no right to withdraw it. Two grounds are advanced in support. First, Gordon contends that the Uniform Commercial Code firm offer section, N.J.S. 12A:2--205, N.J.S.A., precludes withdrawal and, second, it contends that withdrawal is prevented by the doctrine of promissory estoppel.

I

Prior to the enactment of the Uniform Commercial Code an offer not supported by consideration could be revoked at any time prior to acceptance. American Handkerchief Corp. v. Frannat Realty Co., 17 N.J. 12, 109 A.2d 793 (1954). The drafters of the Code recognized that the common law rule was contrary to modern business practice and possessed the capability to produce unjust results. See Corbin, 'The Uniform Commercial Code--Sales, Should it be Enacted,' 59 Yale L.J. 821, 827 (1950). The response was section 2--205 (N.J.S. 12A:2--205, N.J.S.A.) which reverses the common law rule and states:

'An offer by a merchant to buy or sell goods in a Signed writing which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time. * * *' (Emphasis added)

Coronis' letter contains no terms giving assurance it will be held open. We recognize that just as an offeree runs a risk in acting on an offer before accepting it, the offeror runs a risk if his offer is considered irrevocable. Cf., James Baird Co. v. Gimbel Bros., Inc., 64 F.2d 344 (2 Cir. 1933). In their comments to section 2--205 of the Code the drafters anticipated these risks and stated:

'However, despite settled courses of dealing or usages of the trade whereby firm offers are made by oral communication and relied upon without more evidence, such offers remain revocable under this Article since authentication by a writing is the essence of this section.' Uniform Commercial Code (N.J.S. 12A:2--205, N.J.S.A.), comment, par. 2

We think it clear that plaintiff's writing does not come within the provision of section 2--205 of a 'signed writing which by its terms gives assurance that it will be held open.' See Wilmington Trust Company v. Coulter, 200 A.2d 441 (Del.Sup.Ct.1964).

Having so concluded, we need not consider the question of whether the Coronis letter was an offer or whether the letter dealt with 'goods.' We note in this connection that Coronis quoted the price for structural steel delivered and erected.

II

Defendant also argues that even if plaintiff's writing of April 22 is not a firm offer within the meaning of section 2--205, justice requires that we apply the doctrine of promissory estoppel to preclude its revocation. Restatement, Contracts, § 90 provides:

'A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.' ¹

Defendant argues that it relied on plaintiff's bid in making its own bid and that in justice would result if plaintiff could now revoke. Thus, defendant contends that plaintiff's bid is made irrevocable by application of the doctrine of promissory estoppel.

No New Jersey case has applied the rule in our State. But our highest court has twice implied that in appropriate circumstances it would. Friedman v. Tappan Development Corp., 22 N.J. 523, 126 A.2d 646 (1956); American Handkerchief Corp. v. Frannat Realty Co., supra. The general rule is that estoppel only applies to representations of facts past or present. Berman v. One Forty-five Belmont Ave. Corp., 109 N.J.Eq. 256, 261, 156 A. 830 (Ch.1931). The significant function of promissory estoppel is to apply an estoppel to representations or promises as to future events. 31 C.J.S. Estoppel § 80, pp. 466, 467 (1964). Writing for the court in Friedman, Justice Heher recognized that the doctrine was not truly an estoppel in the historical sense. He described the doctrine by stating:

'The term 'promissory estoppel' is of comparatively recent origin in our jurisprudence, not altogether clear in its quality and import. It is not a true estoppel, but a departure from the classic doctrine of consideration that the promise and the consideration must purport to be the motive each for the other, in whole or at least in part, and it is not enough that the promise induces the detriment or that the detriment induces the promise if the other half is wanting, Wisconsin & Michigan R. Co. v. Powers, 191 U.S. 379, 386, 24 S.Ct. 107, 48 L.Ed. 229 (1903), Holmes, C.J.; Coast National Bank v. Bloom, supra (113 N.J.L. 597, 602, 174 A. 576, 95 A.L.R. 528 (E. & A.1934)), a professed adaptation of the principle of estoppel to the formation of contracts where, relying on a gratuitous promise, the promisee has suffered detriment. Martin v. Meles, 179 Mass. 114, 60 N.E. 397 (Sup.Jud.Ct.1901), Holmes, C.J. There is in such circumstances no representation of an existing fact, but merely that the promisor at the time of making the promise intends to fulfill it. The reliance is on a promise, and not on a misstatement of fact, and so the estoppel is termed 'promissory' to mark the distinction. Williston on Contracts (rev. ed.), section 139.' (22 N.J., at pp. 535, 536, 126 A.2d at p. 652)

The evolving nature of the doctrine under examination is illustrated by the variation in the expressions of the authorities in its characterization. Thus it has been called a 'species of consideration,' Porter v. Commissioner of Internal Revenue, 60 F.2d 673, 675 (2 Cir. 1932), affirmed, 288 U.S. 436, 53 S.Ct. 451, 77 L.Ed. 880 (1933); and the 'equivalent of' or a 'substitute for' consideration. Allegheny College v. National Chautauqua County Bank of Jamestown, 246 N.Y. 369, 159 N.E. 173, 175, 57 A.L.R. 980 (Ct.App.1927). The doctrine has found basic acceptance throughout the country. However, the courts have not agreed on where the doctrine is to be applied. They frequently state that in this country promissory estoppel 'has been generally confined to charitable subscriptions, where difficulty has been encountered in sustaining the promise under the conventional theories of consideration, and to certain promises between individuals for the payment of money, enforced as informal contracts.' Friedman v. Tappan Development Corp., supra, 22 N.J. at p. 536, 126 A.2d at p. 653; 1 Williston, Contracts (3d ed.1957), § 140, pp. 611, 612. While the doctrine...