Washington County Farm Bur. Co-Op. Assoc. v. B. & O. R. R. , 31 Ohio App. 2d 84 ( 1972 )

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 Washington 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, 1959 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 and 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 parties."

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 estoppel and the 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 or in whole, by the promise?

"2. Was that action or forebearance substantial, constituting a material change of position by the 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 therein cited.

This question was passed upon by the United States Supreme Court in 1835 in King's Heirs v. Thompson, 34 U.S. 204. 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 property.

The theory expressed by the United States Supreme Court inKing's Heirs v. Thompson, supra, was followed by the Ohio Supreme Court in Preston v. Brown, 35 Ohio St. 18, 28, 29.

Our dissenting colleague devotes much of his opinion to the argument that specific performance cannot be granted because no price was fixed by the parties. We concede that plaintiff has not shown a cause of action entitling him to specific performance. We make the point that the trial court committed prejudicial error in granting a motion for a summary judgment on the state of this record. Conceding that specific performance cannot be granted, we then are compelled to decide whether other equitable principles are involved. We believe that plaintiff has the right to present to the trial court for determination the equitable doctrine of estoppel and the effect of action by plaintiff in making improvements on the land in question in reliance on the promise of defendant. Plaintiff was denied the right to present this facet of the case to the trial court and therein lies the prejudicial error in this case. The Supreme Court of Ohio recognized this equitable doctrine and right inPreston v. Brown, supra. Such right was previously recognized by the Supreme Court of the United States in the King's Heirs case,supra.

The salutary purpose of Rule 56, of the Rules of Civil Procedure is to permit the speedy and expeditious disposal of cases where the pleadings do not as a matter of fact present any substantial question for determination. Flimsy or transparent charges or allegations are insufficient to sustain a justiciable controversy requiring the submission thereof for trial. The purpose of the rule is to permit the trier to pierce formal allegations of facts in pleadings and grant relief by summary judgment when it appears from uncontroverted facts set forth in affidavits, depositions, or admissions on file that there are, as a matter of fact no genuine issues for trial. See, also,Sabin v. Home Owners' Loan Corp. (C.C.A. 10), 151 F.2d 541;Brooks v. Utah Power Light Co. (C.C.A. 10), 151 F.2d 514. But, it is not the purpose of the rule to deprive litigants of their right to a full hearing on the merits if any real issue of fact is tendered. Sartor v. Arkansas Natural Gas Corp.,321 U.S. 620 at page 627. The power to pierce the flimsy and transparent factual veil should be temperately and cautiously used lest abuse reap nullification. See Doehler Metal Furn. Co. v.United States (C.C.A. 2), 149 F.2d 130, and cases cited in footnote 6.

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 judgmentas a matter of law." Palmer v. Chamberlin (C.C.A. 5),191 F.2d 532, 27 A. L. R. 2d 416. The second requisite of Rule 56 (c) of the Federal Rules of Civil Procedure does not automatically follow from the first requisite. Shahid v. Gulf Power Co. (C. C. A. 5), 291 F.2d 422.

Whether the requisites of Rule 56 (federal rule) are met, "isreally to be measured by whether no evidence could be offered tosupport the plaintiff's theory." Demandre v. Liberty Mut. Ins.Co. (C.C.A. 5), 264 F.2d 70, 72. (Emphasis added.) See, also, Rule 54 C, Rules of Civil Procedure.

While a party may not avoid a summary judgment merely by denying an opponent's allegations (Erickson v. United States (C. C. A. 5), 340 F.2d 512), it "should be granted only * * * where it is quite clear what the truth is." National Screen ServiceCorp. v. Poster Exchange, Inc. (C.C.A. 5), 305 F.2d 647, 651. If the court must rely "upon an inquiry into the surrounding facts and circumstances, the court should refuse to grant a motion for a summary judgment until the facts and circumstances have been sufficiently developed to enable the court to be reasonably certain that it is making a correct determination of the question of law."Palmer v. Chamberlin (C.C.A. 5), 191 F.2d 532, 540, 27 A.L.R. 2d 416. Indeed, summary judgment may be improper even where "the historic facts" are free of controversy:

"It is often the case that although the basic facts are not in dispute, the parties nevertheless disagree as to the inferences which may properly be drawn. Under such circumstances the case is not one to be decided on a motion for summary judgment."

Keating v. Jones Development of Missouri, Inc. (C.C.A. 5),398 F.2d 1011, 1013, citing American Fid. Cas. Co. v.London Edinburgh Ins. Co. (C.C.A. 4), 354 F.2d 214, 216.

Summary judgment is a lethal weapon and courts must be mindful of its aims and targets and beware of overkill in its use. That we now can correct its misguided application here is no answer. This case has been in suspended animation for 2 1/2 years and it tellingly mocks the statement contained in Rule 1(B) of the Rules of Civil Procedure that:

"These rules shall be construed and applied to effect just results by eliminating delay, unnecessary expense and all other impediments to the expeditious administration of justice."

Applying these rules, we are of the opinion that plaintiff had the right to present to the trial court, on the merits, his rights as enunciated in Preston v. Brown, supra and King'sHeirs v. Thompson, supra. This right was denied it to its prejudice.

Plaintiff alleges in the fifth paragraph of its petition the following:

"* * * [P]laintiff was and is in sole possession of said land up to the present time; and that in reliance upon right to purchase and option to purchase said premises, plaintiff made substantial improvements thereon."

The prayer of the petition concludes as follows:

"* * * [and] for such other and further relief as to the court may seem just."

Rule 1B, Rules of Civil Procedure, states:

"(B) Construction. These rules shall be construed and applied to effect just results by eliminating delay, unnecessary expense and all other impediments to the expeditious administration of justice."

This is fortified by Rule 8F, which states:

"Construction of Pleadings. All pleadings shall be so construed as to do substantial justice."

In turn, the above concept is stressed by the language used in Rule 54C, which, in pertinent part, is as follows:

"* * * Except as to a party against whom a judgment is entered by default, every final judgment shall grant the relief to which the party in whose favor it is rendered is entitled * * *."

The philosophy of the Federal Rules of Civil Procedure, upon which our Rules are based, is contained in the article written by Pike and Willis, the New Federal Deposition — Discovery Procedure, 38 Colum. L. Rev. 1179. That article reads, in pertinent part, as follows:

"The new Federal Rules of Civil Procedure do not proceed upon the assumption that the function of pleading is to prepare the case for trial. It is recognized that the ``issue-pleading' of the common law does not sift out the real issues, the ``fact-pleading' of the codes the real facts. The generality of allegations contemplated by the Rules indicates the influence of the newer concept of ``notice pleading'; the object of the complaint is to indicate to the defendant which grievance is being pressed; the object of the answer is to indicate to the plaintiff which defenses are being relied upon. What have been thought to be the objects of pleading — the narrowing of issues, the revelation of facts — will be served by several devices more precisely adapted to their fulfillment: the familiar motions for certainty, the new pre-trial hearing, and the not new but completely renovated procedure for depositions and discovery."

"A complaint attacked by motion to dismiss under Fed.R.Civ.P. 12 is entitled to liberality of construction.Bound Brook Water Co. v. Jaffe, 284 F. Supp. 702, 708-709 (D. N.J. 1968). There is no requirement under the Federal Rules that the complaint either state a cause of action, Michael v.Clark Equip. Co., 380 F.2d 351, 352 (2d Cir. 1967), or allege the detailed facts which support the claims raised therein.Austin v. House of Vision, Inc., 385 F.2d 171, 172 (7th Cir. 1967). All that is required of a complaint is that it state a claim upon which relief can be granted. Michael v. Clark Equip.Co., supra." Thurston v. Setab Computer Institute (S. D. N. Y.),48 F. R. D. 134 at page 135.

The Supreme Court of the United States has spoken on this point in Conley v. Gibson, 355 U.S. 41, 45, wherein the court said:

"In appraising the sufficiency of the complaint we follow, of course, the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief."

The details are available to this defendant through the utilization of the pretrial discovery techniques — Rules 26-37 inclusive.

The petition was filed December 17, 1969, and the judgment entry from which this appeal is perfected was filed June 29, 1971. As the Rules of Civil Procedure became effective July 1, 1970, this case spanned the transition period from the statutory procedure to that governed by the rules. However, Rule 86 states that the Civil Rules govern "all further proceedings in actions then pending" excepting those where such application would not be feasible or would work an injustice. We know of no reason why the Rules should not govern this proceeding.

Our dissenting colleague has cited authority from other states to bolster his position. We think that is unnecessary and in fact prohibited when we have an Ohio case directly in point — Preston v. Brown, supra — which stands unreversed and unmodified.

We realize that it is difficult to discard old concepts, but do it we must. Rule 1B places emphasis on liberal construction rather than technical interpretation.

We desire to make the suggestion that, since plaintiff wishes to buy and defendant wishes to sell, counsel for both litigants attempt to reach a settlement satisfactory to both parties. However, if no settlement is made and the matter comes to this court again on appeal and the evidence shows that plaintiff took action in reliance on a promise wherein substantial sums were expended by plaintiff, we intend to follow the principles of equity and law enunciated in King's Heirs v. Thompson, andPreston v. Brown.

The judgment of the trial court is therefore reversed and this cause is remanded with instructions.

Judgment reversed.

ABELE, P. J., concurs.

STEPHENSON, J., dissents.