Washington County Farm Bureau Co-op. Ass'n v. B. & O. R. R. Corp.

• Decision Date: 09 August 1972
• Docket Number: CO-OP
• Citation: 286 N.E.2d 287,60 O.O.2d 174,31 Ohio App.2d 84
• Parties: , 60 O.O.2d 174 WASHINGTON COUNTY FARM BUR.ASSOC., Appellant, v. The B. & O. R. R. CORP., Appellee.
• Court: Ohio Court of Appeals

Page 84

31 Ohio App.2d 84

286 N.E.2d 287, 60 O.O.2d 174

WASHINGTON COUNTY FARM BUR. CO-OP. ASSOC., Appellant, v. The B. & O. R. R. CORP., Appellee.

Court of Appeals of Ohio, Fourth District, Washington County.

Aug. 9, 1972.

Syllabus by the Court

1. Where a petition is filed for specific performance of an alleged real estate agreement, and, where specific performance cannot be decreed, the inquity remains whether plaintiff has a lien on the property for the money he expended in improving it.

2. Where the trial court is considering a motion for a summary judgment and where the record requires it, the trial court must apply the doctrine of equitiable estoppel and analyze the effect of any action by a contracting party, in reliance on a promise, to the facts before it.

3. Before rendering a summary judgment, the court must be satisfied not only that there is no issue as to any material fact, but also that the moving party is entitled to a judgment as a matter of law.

Lucas, Prendergast, Albright, Gibson, Brown & Newman and Peter J. Gee, Columbus, for appellant.

Randall Metcalf, Marietta, for appellee.

GRAY, Judge.

This cause is in this court on appeal from a decision of the Court of Common Pleas of Washington County granting a motion of the defendant for a summary judgment.

Plaintiff feeling aggrieved by this result filed its notice of appeal and assigned the following errors:

'Assignment of Error I. The Court erred in finding that the statement of the plaintiff-appellant would have the right of first refusal as contained in the letter of May 8th, 1959, required consideration to support it.

'Assignment of Error II. The Court erred in granting summary judgment to the defendant-appellee based on the evidence before it, and in the absence of any evidence, by affidavit or otherwise as required by Ohio Revised Code, Section 2311.041, showing no genuine issue of fact for which trial was required.'

It appears that defendant had leased the premises in question to plaintiff for a number of years.

On May 8, 1959, the manager of the real estate department of defendant wrote the following letter:

'This refers to your Association's request that it be given the first refusal to purchase property fronting along the west side of Third Street situate north of Butler Street.

'This will advise that should the Railroad Company relocate its freight facilities from Marietta to West Marietta prior to June 1, 1969 and prior to that date place its property in Marietta on the market for sale, the Railroad Company will give to Washington County Farm Bureau Cooperative Association the first refusal to purchase so much of the premises outlined in green on attached print to which the Railroad Company has fee title. Such purchase shall be upon terms and conditions approved by the President and Directors of The Baltimore and Ohio Railroad Company and conveyance shall be subject to driveways, zoning restrictions easements and servitudes howsoever created, etc.'

On May 26, 1969 the attorney for plaintiff wrote the following letter:

'I represent Washington County Farm Bureau Cooperative Association, Inc., Marietta, Ohio, in connection with the right granted by the B & O Railroad Co. by letter of May 8, 1959 to purchase the property in Marietta on which my client's business is located. On May 29, 1968, Washington County Farm Bureau Cooperative Association, Inc. directed a letter to you in which it was stated, 'The Board of Directors has instructed me to notify you that it wishes to exercise the right granted in your letter of May 8, 1959 and purchase the land for which first refusal was given.' This is to confirm that Washinton County Farm Bureau Cooperative Association, Inc. intends to purchase the land covered by the option granted in your letter of May 8, 1959.

'There is now a binding contract for the purchase of the Marietta property, although the price is yet to be determined. Your letter of May 8, 1959 provides that the purchase shall be upon the terms and conditions approved by the President and Directors of the Baltimore and Ohio Railroad. To date there has been no indication of what terms and conditions have or would be approved by the President and Directors.

'My client is prepared to purchase the land but cannot proceed further until you state a price for which you will sell. Negotiations between the Community Improvement Corporation of Marietta and the Railroad had been carried on for some time prior to May 29, 1968. I have not been advised that a price was determined but in any event your price to Washington County Farm Bureau Cooperative Association, Inc. cannot be more than the price at which you were or are willing to sell to the Community Improvement Corporation.

'May I have your acknowledgement of this letter and what you propose by way of completing the sale to my client.'

On May 29, 1968 plaintiff wrote the following letter:

'We have learned that the B & O Railroad is considering selling its property at Marietta, Ohio on Third Street to the Marietta Community Improvement Corporation. Since we own buildings and conduct a business on the land which we occupy under a lease from you, we are concerned about the effect on our right to stay here if the land is sold.

'This letter is being written to remind you that by letter of May 8, 1959 you granted us the right of first refusal to the property until June 1, 1969. Copy of the letter is attached. The Board of Directors has instructed me to notify you that it wishes to exercise the right granted in your letter of May 8, 1859 and purchase the land for which first refusal was given. I will appreciate it if you will have your representative contact me so that we can work out the details of the purchase.'

Plaintiff alleges defendant fails and refuses to sell and convey the property to plaintiff. It filed a petition on December 17, 1969, praying for specific performance of a contract based upon the lease and the above correspondence. The petition alleges that plaintiff has been in possession of the land as described in the petition from October 7, 1938 and that plaintiff was and is in sole possession at the time the petition was filed and that, in reliance upon the right to purchase and the option to purchase such premises, plaintiff made substantial improvements thereon.

At this juncture, the court wishes to observe that the most that plaintiff had was the right of first refusal. From the record it appears that plaintiff wishes to buy and defendant wishes to sell. Defendant has also moved its freight yard to West Marietta an plaintiff notified defendant prior to June, 1969, that it wished to exercise the right granted in defendant's letter of May 8, 1959.

The trial court favored us with an opinion. Among other findings, the trial court made the following statement:

'This evidence being construed most strongly in favor of the Plaintiff Co-Op against whom the motion is made is considered by the Court to be nothing more than a statement of intent on May 8, 1959, of the Railroad Company. There does not appear to be any consideration whatsoever for this statement and no unilateral amount of effort on the part of the Plaintiff Co-Op to 'pull itself up by its own boot straps' could serve to convert this statement of intent into a binding contract between the paries.'

It is apparent that no selling price has been mentioned by plaintiff.

We believe that the trial court committed prejudicial error in granting a summary judgment under these circumstances. In doing so, it ignored the equitable doctrine of estopped and effect of action in reliance on a promise. This matter is treated extensively in 1A Corbin, Contracts, Sections 193-209. On pages 246 and 247, the author suggests various tests to apply to the various fact patterns.

'In determining whether action in reliance on a promise, in any particular case, is sufficient to make that promise enforceable, it may be helpful to suggest a number of questions to be answered. First, was the action in reliance actually bargained for by the promisor and given by the promisee in exchange for the promise? If the answer to this is yes, we have a case of true consideration, even as that is narrowly defined by the American Law Institute. But if the answer is no, the following additional questions are suggested:

'1. Was the action of the promisee actually induced, in part of in whole, by the promise?

',2. Was that action or forebearance substantial, constituting a material change of position by th promisee?

'3. Did the promisor desire or request it, even though not offering his promise in exchange for it?

',4. Did the promisor have reason to foresee such action or forebearance as a probable result of his promise?

'5. Was the promised performance costly or difficult?

'6. What ratio does the cost or value of the action in reliance bear to that of the promised performance?

'7. In the light of the answers to the foregoing questions, what remedy, if any, will be just and equitable? Should it be full money Damages, measured by the value of the promised performance and the foreseeable injury resulting from non-performance; or Restitution, measured by the promisor's own unjust enrichment; or Reimbursement of the expenditures and losses incurred by the promisee, or Specific Performance?'

We direct attention, also, to pages 248-250 of 1A Corbin on Contracts to the cases terein cited.

This question was passed upon by the United States Supreme Court in 1835 in King's Heirs v. Thompson, 9 Pet. 204, 34 U.S. 204, 9 L.Ed. 102. The court said that the donee took possession and made improvements costing $4000 on land worth $2500. The court, also, said that the expenditure was a valuable consideration, but refused specific performance because of the indefiniteness of terms. It decreed a lien on the premises for the value of the improvements. In fact, the amount of the lien was in excess of the existing market value of the entire...