Davco Realty Co. v. Picnic Foods, Inc., 40836

• Decision Date: 06 April 1977
• Docket Number: No. 40836,40836
• Citation: 198 Neb. 193,252 N.W.2d 142
• Parties: DAVCO REALTY COMPANY, a Minnesota Partnership, Appellant, v. PICNIC FOODS, INC., a Nebraska Corporation, et al., Appellees.
• Court: Nebraska Supreme Court

Page 142

252 N.W.2d 142

198 Neb. 193

DAVCO REALTY COMPANY, a Minnesota Partnership, Appellant, v. PICNIC FOODS, INC., a Nebraska Corporation, et al., Appellees.

No. 40836.

Supreme Court of Nebraska.

April 6, 1977.

Syllabus by the Court

1. It is a fundamental rule that in order to be binding, an agreement must be definite and certain as to the terms and requirements. It must identify the subject matter and spell out the essential commitments and agreements with respect thereto.

2. Absolute certainty in the terms of an agreement is not required, only reasonable certainty is necessary. A contract is not subject to the objection that it is indefinite so long as the parties can tell when it has been performed, and it is enough if, when that time arrives, there is in existence some standard by which performance can be tested.

3. In building and construction contracts, in the absence of an express agreement to the contrary, it is implied that the structure will be erected in a reasonably good and workmanlike manner and will be reasonably fit for the intended purpose.

4. In the absence of a stated time for performance, the law will imply a time of performance within a reasonable time under the circumstances.

5. The abandonment of a contract is a matter of intention to be ascertained from the facts and circumstances surrounding the transaction from which the abandonment is claimed to have resulted. An abandonment of a contract need not be express but may be inferred from the conduct of the parties and the attendant circumstances.

6. Where a contract has been rescinded by mutual consent, the parties are, as a general rule, restored to their original rights with relation to the subject matter, and they are entitled to be placed in status quo so far as possible. All rights under the rescinded contract are terminated, and the parties are discharged from their obligations thereunder.

J. Patrick Green and John C. Brownrigg, Eisenstatt, Higgins, Kinnamon, Okun & Stern, P. C., Omaha, for appellant.

Michael G. Helms, Schmid, Ford, Mooney, Frederick & Caporale, Omaha, for appellees.

Heard before WHITE, C. J., and SPENCER, BOSLAUGH, McCOWN, CLINTON, BRODKEY and WHITE, JJ.

PAUL W. WHITE, Chief Justice.

This is an appeal from an action brought by the plaintiff, Davco Realty Company (hereinafter referred to as "Davco"), seeking to have a constructive trust imposed upon the assets of the defendant, Picnic Foods, Inc., (hereinafter referred to as "Picnic"), to the extent necessary to satisfy its claim of damages.

Initially, we note that, while this action is equitable in form in that the relief sought is the imposition of a constructive trust, in substance this is a law action with Davco seeking damages for an alleged breach of contract and will be so treated on appeal.

The District Court held that the agreement entered into between the parties was too indefinite and uncertain in its terms, with regard to the construction of asphaltic paving, and thus was unenforceable. The District Court further held that the purposes for which easements were mutually conveyed by the parties were abandoned and that they should be extinguished as a matter of law. The District Court directed the parties to execute appropriate releases of the easements. We affirm the judgment of the District Court.

The facts giving rise to this dispute are as follows: The plaintiff is a Minnesota partnership, consisting of Abraham and Miriam Davidson. The defendant Picnic is a Nebraska corporation which was dissolved by the Secretary of State on August 2, 1972, for the nonpayment of occupation taxes. Defendants Burden, Devaney, and Steffen were officers and directors of Picnic at that time. The defendant, Star Stations, Inc., provided all Picnic's capital and was the intended sole stockholder of Picnic.

The parties to this suit own adjacent properties in the City of Omaha, Nebraska. Picnic's property at the time of the agreement was undeveloped. On the Davco property, a building occupied by Davidson Furniture Company was located. Davidson Furniture Company's president, Arthur Davidson, is the son of Abraham and Miriam Davidson. In the winter of 1968 or spring of 1969, Joseph Wilkerson, then an officer of Picnic, approached Arthur Davidson about obtaining for Picnic an easement across Davco's property. This easement was desired so that Picnic could have ingress and egress to its property from U. S. Highway No. 30A, known as West Dodge Road. Picnic was intending to develop several business concerns on its property and needed the easement to get customers on its property to and from West Dodge Road.

At the direction of his parents, Arthur Davidson acted as agent for Davco during these negotiations. Davco had contemplated expanding the building on its property. If however, the contemplated addition was to be built, there would be very little remaining area on Davco's lot for customer parking. Davco thus entered into an agreement with the idea and purpose of obtaining access to additional parking area, which would enable it to construct the addition.

As a result of negotiations between their respective agents, Wilkerson and Arthur Davidson, the parties entered into an agreement on January 7, 1970. According to this agreement, Picnic agreed to pave the areas covered by the easements and, in addition, certain areas on the Davco property with asphaltic concrete. Executed simultaneously with the paving agreement was an agreement providing for the exchange of easements across the parties' respective properties. The easement agreement was specifically mentioned in the recitals of the paving agreement and was incorporated by reference therein. It was further stated that the paving agreement was given as partial consideration for the easement agreement. The easement agreement was also dated January 7, 1970.

The record thus reveals an agreement between two adjacent property owners to mutually develop their respective properties for the benefit of both. Picnic agreed to do certain paving and granted Davco an easement across its property. In return Davco granted Picnic an easement across its property. Picnic thus would obtain ingress and egress to its property from West Dodge Road. Davco would obtain access to additional parking space enabling it to add onto the building on its property.

The first issue confronting us on appeal is whether the agreement was too indefinite and uncertain to be enforceable. The District Court found the agreement indefinite and uncertain specifically in regard to: The nature of the paving material to be used; the depth and thickness of the paving; the foundation work and site preparation work required; and the time within which Picnic was required to perform. The agreement provided that Picnic was to pave the areas covered by the easements in addition to certain areas on Davco's property. Some of the areas to be paved were unimproved, others had concrete paving which was not to be covered. All paving was to be "asphaltic concrete." Additionally, the agreement stated, "All of the said paving (including foundation work and site preparation) shall be done in conformity with the specifications of the City of Omaha with respect to such pavement."

It is a fundamental rule that in order to be binding, an agreement must be definite and certain, as to the terms and requirements. It must identify the subject matter and spell out the essential commitments and agreements with respect thereto. See 17 Am.Jur.2d, Contracts, § 75, pp. 413, 414.

In support of their contention that the District Court was correct in holding the paving agreement unenforceable for lack of definiteness, the defendants cite testimony to the effect that the composition of "asphaltic concrete" can vary, and that the depth of asphalt parking lots can vary. The agreement provided that paving would be done in conformity with the specifications of the City of Omaha with respect to such pavement. However, the defendants point out the City of Omaha has no specifications relating to parking lot construction. The only City of Omaha specifications dealing with asphaltic concrete relate to street construction. The defendants also argue that the terms "foundation work and site preparation" are vague, and that the agreement does provide a time for performance.

We disagree with the District Court's conclusion that the paving agreement failed for want of definiteness and certainty. We believe that despite the ambiguities present in the agreement, it was sufficiently definite to be an enforceable contract.

While the City of Omaha has no specifications for "asphaltic concrete" parking lots, it does have specifications for "asphaltic concrete" street construction. There is nothing in the record to suggest that the specifications given for asphaltic concrete street construction would not be appropriate for the construction of a parking lot, which essentially bears the same burden as a street. The term in the contract relating to compliance with appropriate specifications of the City of Omaha is no doubt one of those clauses typically placed in a contract, requiring, as a contractual matter, compliance by the parties with the appropriate local government regulations and specifications dealing with the subject matter of the contract, should there be any.

"[T]he subject matter of the agreement must be expressed in such terms that it can be ascertained with reasonable certainty." 17 Am.Jur.2d, Contracts, § 76, p. 416. "Absolute certainty is not required, however, only reasonable certainty is necessary. A contract is not subject to the objection that it is indefinite so long as the parties can tell when it has been performed, and it is enough if, when that time arrives, there is in existence some standard by which performance can be tested." Id. at 417.

In Henggeler v. Jindra, 191 Neb. 317, 214 N.W.2d 925 (1974), we stated: "In building and construction contracts, in the absence of...