Moore Burger, Inc. v. Phillips Petroleum Co.

• Decision Date: 04 October 1972
• Docket Number: No. B--3011,B--3011
• Citation: 492 S.W.2d 934
• Parties: 'MOORE' BURGER, INC., Petitioner, v. PHILLIPS PETROLEUM COMPANY et al., Respondents.
• Court: Texas Supreme Court

Page 934

492 S.W.2d 934

'MOORE' BURGER, INC., Petitioner, v. PHILLIPS PETROLEUM COMPANY et al., Respondents.

No. B--3011.

Supreme Court of Texas.

Oct. 4, 1972.

Rehearing Denied Mar. 7, 1973.

Phillip W. Gilbert, Austin, for petitioner.

Stayton, Maloney, Black, Hearne & Babb, John W. Stayton, Coleman Gay, Austin, for respondents.

CALVERT, Chief Justice.

This suit is by 'Moore' Burger, Inc. against C. Milton Dowd, Albert Craus and Phillips Petroleum Company for compensatory and exemplary damages for breach of a contract to lease two tracts of land to the plaintiff, or, alternatively, for specific performance of the contract. Each of the defendants filed general denials and pleaded the statute of frauds as an affirmative defense. Phillips also filed a cross action by which it sought to recover $3,666.67 from 'Moore' Burger as rental on a part of the property. Each defendant moved for summary judgment that the plaintiff take nothing, and Phillips sought, in addition, summary judgment for the rentals for which it had sued. All three motions were granted and judgment was rendered that 'Moore' Burger take nothing and that Phillips recover the sum of $3,500.00 from 'Moore' Burger. The court of civil appeals affirmed. 470 S.W.2d 762.

The contract to lease on which 'Moore' Burger's suit is predicated was in writing and was attached to its petition as an exhibit. It purports on its face to be a contract between William F. Kemp, Trustee (shown by summary judgment proof to be trustee for Dowd and Craus), as lessor, and 'Moore' Burger, as lessee, and contains an agreement to lease First Tract, to be purchased from the City of Austin, for one year with automatic renewals for nine additional years, and to lease Second Tract, to be purchased from the Ing heirs, and on which lessors agreed to build a building, for a primary term of twenty years, with options for renewal for an additional ten years. It is signed by W. D. Scallon, Jr., President of 'Moore' Burger, but it is not signed by Dowd or Craus or by anyone in their behalf.

None of the motions for summary judgment state the grounds or disclose the legal theory on which judgment was sought and obtained. 'Moore' Burger's own petition with its attached exhibit establishes the defendants' affirmative defenses of the statute of frauds as a matter of law. Although 'Moore' Burger pleaded facts in great detail in the petition on which it went to trial, it did not at any point in its petition, or in summary judgment pleadings, disclose the legal theory on which it sought to avoid the statute of frauds defenses. In other words, the transcript of the proceedings in the trial court leave the issues tried and decided by the trial court in complete darkness.

In the presentation of its case in the court of civil appeals, 'Moore' Burger contended that the summary judgment proofs supported two legal theories by which the bar of the statute of frauds was avoided, viz: (1) its right to the imposition of a constructive trust to enforce the agreement to build and to lease, and (2) such part performance on its part as is necessary to meet the requirements of the rule of Hooks v. Bridgewater, 111 Tex. 122, 229 S.W. 1114 (1921). The court of civil appeals rejected both theories. We agree with that court's conclusion that, on the basis of the summary judgment evidence, neither theory presents a sound basis for reversing the trial court's judgment.

'Moore' Burger asserts in this court that its pleading and the summary judgment evidence will avoid the statute of frauds defense of Dowd and Craus on the legal theory of promissory estoppel, thus entitling it to enforcement of its contract as to those respondents, and that the obligations of the contract are enforceable against Phillips as covenants running with the land or because Phillips purchased the property with actual or constructive notice of the terms of the contract.

The defendants insist that 'Moore' Burger cannot raise the question of promissory estoppel because it was neither pleaded in the trial court nor presented in the court of civil appeals. We disagree. It is true that the plaintiff did not use the words 'estoppel' or 'promissory estoppel' in its trial pleadings, but it pleaded facts which, if true, would give rise to the legal concept, and, as with the issue of waiver in Womack v. Allstate Insurance Company, 156 Tex. 467, 296 S.W.2d 233 (1956), this court has jurisdiction to determine the applicability of the theory in an appeal from a summary judgment. Our question, then, is whether the summary judgments were authorized and proper when controlling rules of procedure and substantive law are applied in considering the summary judgment evidence.

Promissory estoppel is a defensive plea; it is a plea in confession and avoidance. We so held in Wheeler v. White, 398 S.W.2d 93, 96 (Tex.1965), when we said:

'This (promissory estoppel) does not create a contract where none existed before, but only prevents a party from insisting upon his strict legal rights when it would be unjust to allow him to enforce them. . . . The function of the doctrine of promissory estoppel is, under our view, defensive in that it estops a promisor from denying the enforceability of the promise.

The plea is being used in this case in an effort to avoid the statute of frauds defense which is established as a matter of law. A defendant who seeks a summary judgment on the theory that the plaintiff's suit is without merit has the burden of establishing as a matter of law that there is no genuine issue of fact as to at least one essential element of the plaintiff's cause of action. Gibbs v. General Motors Corporation, 450 S.W.2d 827 (Tex.1970). This, however, is not that type of case; here, the summary judgment evidence establishes the affirmative defense as a matter of law. In this situation we hold that the Gibbs rule did not impose the burden on the defendants to negative 'Moore' Burger's defensive plea; rather, the burden was on 'Moore' Burger, if it wished to avoid the granting of summary judgment against it, to adduce evidence raising a fact issue concerning its promissory estoppel defense. Cf. Gulf, Colorado & Santa Fe Railway Co. v. McBride, 159 Tex. 442, 322 S.W.2d 492 (1958).

The doctrine of promissory estoppel as applied in Wheeler v. White, Supra, is expressed in the Restatement, Contracts, § 90, in these words:

'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.'

Professor Corbin finds the phrase, promissory estoppel, 'objectionable,' Corbin on Contracts, § 204, but he recognizes the soundness of the principle of the Restatement rule under the title, 'Reliance on a Promise.' Corbin, Supra, §§ 193--209 (1963). The Restatement expressly recognizes in § 178, comment f, that the doctrine may operate to preclude a defense based on the statute of frauds, in these words:

'Though there has been no satisfaction of the Statute, an estoppel may preclude objection on that ground in the same way that objection to the non-existence of other facts essential for the establishment of a right or a defence may be precluded. A misrepresentation that there has been such satisfaction if substantial action is taken in reliance on the representation, precludes proof by the party who made the representation that it was false; And a promise to make a memorandum, if similarily relied on, may give rise to an effective promissory estoppel if the Statute would otherwise operate to defraud.' ¹

With the foregoing rules of procedure and substantive law in mind, we here summarize the summary judgment evidence which 'Moore' Burger contends raises the necessary fact issues.

In 1959, 'Moore' Burger, as lessee, and the City of Austin, as lessor, entered into a five-year lease of a small tract of land on Guadalupe Street in Austin, the tenancy to begin on the 1st day of July, 1959, and to end on the 30th day of June, 1964, with an option in the lessee to renew the lease for an additional five-year term. 'Moore' Burger built a small restaurant on the property and began to do business there.

Dowd and Craus were in the real estate business. Part of their business was to buy property and sell it to oil companies for service station sites. They learned that Phillips Petroleum Company was interested in securing a site on Guadalupe Street. The Ing Estate owned a small tract of land which adjoined the City tract. In 1967, Dowd and Craus obtained an option from the Ing heirs to purchase their property. During this period, the City of Austin became interested in selling the tract it had leased to 'Moore' Burger. Representatives of the City contacted. W. D. Scallon, Jr., President of 'Moore' Burger, to let him know the City wished to sell and that the fact that 'Moore' Burger had a going business on the property would be considered if it wished to bid. Scallon secured potential commitments to finance the purchase. In the meantime, Dowd and Craus learned of the possible sale of the City tract and of 'Moore' Burger's interest in the purchase of the land. Scallon testified in his deposition that Craus approached him to negotiate regarding the possibility of 'Moore' Burger leasing from Dowd and Craus if they purchased the City tract. The plan was that if 'Moore' Burger would refrain from bidding on the property, Dowd and Craus would purchase the City tract and the adjoining Ing tract and would then build a new building on the Ing tract and would lease it to 'Moore' Burger for a term of twenty years. Craus and Scallon went to Craus' attorney who drew up an agreement to lease and a lease. Then Scallon took the lease to his attorney who made some changes. Scallon signed the agreements and took them to Craus, who said that he and his associates accepted the...