Funger v. Mayor and Council of Town of Somerset

• Decision Date: 12 October 1966
• Docket Number: No. 216,216
• Citation: 244 Md. 141,223 A.2d 168
• Parties: Morton FUNGER et al. v. MAYOR AND COUNCIL OF the TOWN OF SOMERSET et al.
• Court: Maryland Court of Appeals

Page 141

244 Md. 141

223 A.2d 168

Morton FUNGER et al. v. MAYOR AND COUNCIL OF the TOWN OF SOMERSET et al.

No. 216.

Court of Appeals of Maryland.

Oct. 12, 1966.

Norman M. Glasgow, Washington, D. C. (George H. Clark, Whayne S. Quin and Wilkes & Artis, Washington, D. C., and William A. Linthicum, Jr., Rockville, on the brief), for appellants.

Alfred L. Scanlan, Washington, D. C. (Shea & Gardner, Washington, D. C., on the brief), for appellees.

Before HAMMOND, C. J., and HORNEY, OPPENHEIMER, BARNES and McWILLIAMS, JJ.

HAMMOND, Chief Judge.

The five appellants sought to construct a high-rise apartment house on part of a tract of some thirty acres they own in the Town of Somerset, a municipal corporation in Montgomery County close to the District of Columbia line. The Town had misgivings and in 1963 appellants agreed to give it a scenic easement on several acres, to convey to it in fee simple twelve acres of the thirty acres, and to execute a covenant as to the use of the site if the Town would not oppose rezoning ¹ by Montgomery County from R-60 to R-H (multi-family, high-rise, residential), and would not oppose any use permitted by the R-H classification under the then Montgomery County Zoning Ordinance. After the Town had recommended and Montgomery County had granted R-H zoning and also a building permit for a twenty-four story apartment building, the Town, claiming appellants had agreed to build only a fourteen-story building, passed an ordinance purporting to limit the height of high-rise buildings within its limits to seventeen stories or 160 feet.

The appellants filed a bill of complaint seeking (1) a declaration that the ordinance is null and void as discriminatory, unreasonable, arbitrary and capricious and without substantial relation to the public health, welfare and safety, and (2) an injunction against its enforcement. The Town answered, suggesting inter alia that appellants had breached their contract with the Town to build only a fourteen-story apartment house and to convey to it the twelve acres and were claiming title to said twelve acres, and counter-claimed, seeking specific enforcement of the agreement to convey the twelve acres or, alternatively, damages, and an injunction against the building of an apartment house higher than fourteen stories or 140 feet or, alternatively, damages.

Appellants answered the Town's counterclaim, denying an agreement to limit the height of the apartment house to fourteen stories and a binding obligation to convey the twelve acres, and filed a counter-claim in three counts. Count I alleged that about May 1, 1963, appellants and the Town agreed that (a) the Town would recommend to the Montgomery County Council that it grant appellant's application for the rezoning of the 18.1906 acres of land in the Town (Parcel A) from R-60 to R-H and would not oppose use of the land in any manner then permitted by the Montgomery County zoning ordinance if (b) appellants would grant the Town a scenic and conservation easement of 2.1906 acres (on a strip of land some 85 feet wide along the western boundary of Parcel A) and would grant the Town a twenty-year covenant running with the land to limit development of Parcel A to density and uses permitted for sixteen acres, and further would grant the Town an option to buy a two-acre tract at a price of $125,000 an acre. About a year later the agreement was mutually modified, appellants promising to convey the two acres without cost and the Town agreeing to permit development of Parcel A under R-H zoning for 18.1906 acres. It was then alleged that appellants on June 29, 1964, executed and recorded a deed to the Town granting the scenic and conservation easement in 2.1906 acres as agreed, and on the same day delivered to an escrow agent under an agreement executed by the parties a deed to the two acres. Appellants then proceeded with the planning and design of the proposed apartment building and received a building permit from Montgomery County for a structure twenty-four stories and 210 feet high. The Town thereupon, in breach of its agreements, opposed the erection of the building by public statements of the Mayor, employment of counsel to prevent the construction, appropriation of funds for legal expenses in connection with its opposition, efforts to have Montgomery County limit the height of R-H buildings or to deny the building permit, and adoption of an ordinance to limit the height of buildings in the Town to seventeen stories or 160 feet, all of which 'constitute continuing substantial and material breaches of the agreement between the parties,' amounting to 'a repudiation of said agreement' and a 'substantial failure of the consideration.' The relief asked was rescission of the agreement between the parties, reconveyance of the easement, nullification of the declaration of covenant by enjoining the enforcement of rights under it, return of the deed to the two acres or, alternatively, damages of $1,500,000.

Count II alleged that in May 1963, after announcement by the Maryland-National Capital Park and Planning Commission that a park area should be established on a portion of the 30.1906 acres of land of which Parcel A was a part, the appellants, in discharge of a public responsibility to Montgomery County and the Town, offered to make a gift of ten acres to the Town 'with the specific understanding and stipulation and on condition that the Town receive and accept the land so offered as a gift with no consideration flowing therefrom' to appellants. The Town 'represented * * * that it would accept the aforesaid offer as a gift * * *.' Appellants, in reliance on this representation, executed a series of five deeds each granting the Town two acres, said deeds being dated June 9, 1963, August 4, 1964, August 4, 1964, August 4, 1964, and August 4, 1964. The deed of June 9, 1963, and one of the August 4, 1964 deeds were delivered. The remaining three were deposited in escrow with a title company under an escrow agreement dated June 29, 1964, one deed to be delivered annually thereafter by the escrow agent, all lots conveyed to be free of liens and encumbrances at the time of delivery. On June 9, 1965, the agent delivered to the Town one of the deeds and retained in its possession the other two. Appellants would not have deeded any of the ten acres to the Town but for the representations of the Town that it intended to accept the lands as a gift.

The final allegation is that the Town's misrepresentations were substantial, deliberate and wilful and designed to deceive the appellants and constituted a fraud on appellants. The relief prayed was that the Town be ordered to reconvey the six acres for which deeds had been delivered, that the Town be enjoined from exercising any rights under the deeds still in escrow or, alternatively, judgment for $2,500,000 compensatory and $2,500,000 punitive damages.

Count III repeated allegations of Count I as to Parcel A and its rezoning, as to the easement, the covenant limiting development, the option on and the subsequent conveyance of the two acres, and then alleged a further promise by appellants to convey ten additional acres, two acres immediately with the remaining eight acres to be conveyed in four annual instalments of two acres each. It then was alleged that Parcel A was rezoned after the favorable recommendation of the Town, and that two deeds for two acres each were delivered, three others going into escrow, one of which was thereafter delivered on June 9, 1965. The planning and design of the apartment building and the issuance of the building permit were then alleged and finally appellants set out the breach of the agreement by the Town and its opposition to the erection of the building, all as evidenced by the actions detailed in Count I. The relief prayed was rescission of the agreement between the parties, the reconveyance of the easement, the enjoining of the exercise of rights under the covenant, the enjoining of the exercise of any rights under the deeds in escrow and the reconveyance of the six acres heretofore conveyed to the Town or, alternatively, damages in the amount of $4,000,000.

The Town demurred to the three counts of the appellants' counter-claim and Judge Moorman sustained the demurrer, treating the three counts together and ruling (a) that since the appellants could not put the Town in the same position it was before the agreements between the parties were reached ('a legal impossibility in that the property is now zoned R-H (high-rise) and only a Resolution by the County Council can rezone the subject property back to R-60 (family dwellings)'), a suit for rescission could not be maintained, and (b) that appellants 'have not stated a cause of action for rescission in that they have failed to make an election between (1) rescission of the contract or (2) affirming the contract and suing for damages.'

Appellants contend that (a) the trial judge erred in treating Count II as a claim in contract and that the count clearly states a valid cause of action for fraudulent misrepresentations inducing a gift, and (b) erred in holding that a return to the R-60 zoning must be effectuated by the appellants before they can have rescission because where the equities of the situation strongly require it and restoration cannot be made under the circumstances, one seeking rescission need not offer to return or return the consideration received in order to maintain his action, and (c) appellants asked only for rescission of the contracts in Counts I and III and the return either of the properties they had conveyed or their money value and that this is both permissible and appropriate.

The Town defends the position of the trial court on Counts I and III and on the necessity for election. It concedes that if the claim under Count II is for rescission of a gift for misrepresentations the demurrer should have been overruled, but it urges that the claim was in contract...