Wheeler v. White

• Decision Date: 10 November 1965
• Docket Number: No. A-10598,A-10598
• Citation: 398 S.W.2d 93
• Parties: Ellis D. WHEELER, Petitioner, v. S. E. WHITE, Respondent.
• Court: Texas Supreme Court

Page 93

398 S.W.2d 93

Ellis D. WHEELER, Petitioner, v. S. E. WHITE, Respondent.

No. A-10598.

Supreme Court of Texas.

Nov. 10, 1965.

Rehearing Denied Feb. 2, 1966.

Adams & Browne, Beaumont, for petitioner.

Keith, Mehaffy & Weber, Beaumont, for responent.

SMITH, Justice.

This is a suit for damages brought by petitioner, Ellis D. Wheeler, against respondent, S. E. White. Wheeler alleged that White had breached a contract ¹ to secure cure a loan or furnish the money to finance the construction of improvements upon land owned by Wheeler. Wheeler further pleaded, in the alternative, that if the contract itself was not sufficiently definite, then nevertheless White was estopped from asserting such insufficiency. White filed special exceptions to all of Wheeler's Third Amended Original Petition. The special exceptions asserted that the pleaded contract did not contain essential elements to its enforceability in that it failed to provide the amount of monthly installments, the amount of interest due upon the obligation, how such interest would be computed, when such interest would be paid, and that the alternative plea of estoppel was, as a matter of law, insufficient to establish any ground of recovery. All special exceptions were sustained, and upon Wheeler's declination to amend his pleadings, the trial court entered its judgment dismissing the case and ordered that Wheeler take nothing from White by reason of his suit. The Court of Civil Appeals has affirmed the judgment of the trial court. 385 S.W.2d 619. We have concluded that the trial court did not err in sustaining the special exceptions directed at the sufficiency of the contract itself, but that Wheeler's pleadings on the theory of estoppel state a cause of action. Accordingly, we reverse the judgments of the trial court and the Court of Civil Appeals and remand the cause for trial.

Since the trial court sustained White's special exceptions to wheeler's petition, we necessarily must assume that all the alleged material facts are true. Wheeler alleged that as the owner of a three-lot tract of land in Port Arthur, Texas, he desired to construct a commercial building or shopping center thereon. He and White entered into an agreement, embodied in the written contract involved here, whereby White was to obtain the necessary loan for Wheeler from a third party or provide it himself on or before six months from the date of the contract. The loan as described in the contract, was to be '* * * in the sum of SEVENTY THOUSAND AND 00/100 ($70,000.00) DOLLARS and to be payable in monthly installments over a term of fifteen (15) years and bear interest at a rate of not more than six (6%) per cent per annum.' Additionally, under the contract White was to be paid $5,000.00 for obtaining the loan and a five per cent commission on all rentals received from any tenants procured by White for the building. Wheeler alleged that he has been ready and willing to comply with his part of the agreement at all times since the contract was made.

After the contract had been signed by both parites, White assured Wheeler that the money would be available and urged him to proceed with the necessary task of demolishing the buildings presently on the site so as to make way for construction of the new building. The buildings on the site had a reasonable value of $58,500.00 and a rental value of $400.00 per month. By way of reassurance, White stressed the fact that in the event the money was unobtainable elsewhere, he would make the loan himself. Pursuant to such promises Wheeler proceeded to raze the old building and otherwise prepare the land for the new structure; thereafter, he was told by White that there would be no loan. After White's refusal to perform, Wheeler made reasonable efforts to obtain the loan himself but was unsuccessful. In the pleadings ² Wheeler pleaded the necessary elements of inducement and reliance which entitle him to recover if he can prove the facts alleged.

Where a promisee acts to his detriment in reasonable reliance upon an otherwise unenforceable promise, courts in other jurisdictions have recognized that the disappointed party may have a substantial and compelling claim for relief. The Restatement, Contracts, § 90, says:

'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.'

According to Dean Hildebrand's Texas Annotation to the Restatement, Texas follows Section 90, supra. See Ferguson v. Getzendaner, 98 Tex. 310, 83 S.W. 374 (1904); Morris v. Gaines, 82 Tex. 255, 17 S.W. 538 (1891); and others. These early cases do not speak of the doctrine of promissory estoppel in specific terms since those cases were written before the compilation of the Restatement, but, while many of them dealt with subscription transactions or transactions within the statute of frauds, it is readily apparent that the equities involved in those cases are applicable to the instant case. See also: Rouff v. Washington & Lee University, 48 S.W.2d 483 (Tex.Civ.App.1932, error ref.); Thompson v. McAllen Federated Woman's Bldg. Corp., 273 S.W.2d 105, 108 (Tex.Civ.App.1954, writ dis'm); Allegheny College v. National Chataqua County Bank, 246 N.Y. 369, 159 N.E. 173, 57 L.R.A. 980 (1927); Greiner v. Greiner, 131 Kan. 760, 293 P. 759 (1930); Ricketts v. Scothorn, 57 Neb. 51, 77 N.W. 365, 42 L.R.A. 794 (1898); 1 Corbin, Contracts, §§ 193-209 (950); Boyer, Promissory Estoppel: Principle from Precedents, 50 Mich.L.Rev. 639, 874 (1952); and Boyer, Promissory Estoppel: Requirements and Limitations, 98 U.Pa.L.Rev. 459 (1950).

The binding thread which runs through the cases applying promissory estoppel is the existence of promises designedly made to influence the conduct of the promisee, tacitly encouraging the conduct, which conduct, although not necessarily constituting any actual performance of the contract itself, is something that must be done by the promisee before he could begin to perform, and was a fact known to the promisor. As to the argument that no new cause of action may be created by such a promise regardless of its established applicability as a defense, it has been answered that where one party has by his words or conduct made to the other a promise or assurance which was intended to affect the legal relations between them and to be acted on accordingly, then, once the other party has taken him at his word and acted on it, the party who gave the promise cannot afterward be allowed to revert to the previous relationship as if no such promise had been made. This 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. See 1 Williston, Contracts, §§ 139-40 (Rev.ed.1936); and 48 A.L.R.2d 1069 (1956).

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. It was said in the case of Dickerson v. Colgrove, 100 U.S. 578, 580, 25 L.Ed. 618, that:

'The vital principle is that he who by his language or conduct leads another to do what he would not otherwise have done, shall not subject such person to loss or injury by disappointing the expectations upon which he acted. Such a change of position is sternly forbidden * * *. This remedy is always so applied as to promote the ends of justice.'

In the case of Goodman v. Dicker, 83 U.S. App.D.C. 353, 169 F.2d 684 (1948), the trial court held that a contract had not been proven but that '* * * appellants were estopped from denying the same by reason of their statements and conduct upon which appellees relied to their detriment.' In that case, Dicker relied upon a promise by Goodman that a franchise to sell radios would be granted and radios would be supplied. In reliance upon the promise, Dicker incurred expenses in making preparations to engage in the business of selling radios. The franchise was not granted and Goodman failed to deliver the radios. The appellate court in holding that Dicker was entitled to damages for moneys expended in preparing to do business, said:

'We are dealing with a promise by appellants that a franchise would be granted and radios supplied, on the faith of which appellees with the knowledge and encouragement of appellants incurred expenses in making preparations to do business. Under these circumstances we think that appellants cannot now advance any defense inconsistent with their assurance that the franchise would be granted. Justice and fair dealing require that one who acts to his detriment on the faith of conduct of the kind revealed here should be protected by estopping the party who has brought about the situation from alleging anything in opposition to the natural consequences of his own course of conduct. * * *'

The Court, having so held, rendered its...