Davco Realty Co. v. Picnic Foods, Inc.

Full title: DAVCO REALTY COMPANY, A MINNESOTA PARTNERSHIP, APPELLANT, v. PICNIC FOODS…

Court: Supreme Court of Nebraska

Date published: Apr 6, 1977

198 Neb. 193 (Neb. 1977)

252 N.W.2d 142

Opinion

No. 40836.

Filed April 6, 1977.

1. Contracts. It is a fundamental rule that in order to be binding, an agreement must be definite and certain as to the terms and requirements. It must identify the subject matter and spell out the essential commitments and agreements with respect thereto. 2. ___. Absolute certainty in the terms of an agreement is not required, only reasonable certainty is necessary. A contract is not subject to the objection that it is indefinite so long as the parties can tell when it has been performed, and it is enough if, when that time arrives, there is in existence some standard by which performance can be tested. 3. ___. In building and construction contracts, in the absence of an express agreement to the contrary, it is implied that the structure will be erected in a reasonably good and workmanlike manner and will be reasonably fit for the intended purpose. 4. Contracts: Time. In the absence of a stated time for performance, the law will imply a time of performance within a reasonable time under the circumstances. 5. Contracts: Abandonment. The abandonment of a contract is a matter of intention to be ascertained from the facts and circumstances surrounding the transaction from which the abandonment is claimed to have resulted. An abandonment of a contract need not be express but may be inferred from the conduct of the parties and the attendant circumstances. 6. Contracts: Rescission. Where a contract has been rescinded by mutual consent, the parties are, as a general rule, restored to their original rights with relation to the subject matter, and they are entitled to be placed in status quo so far as possible. All rights under the rescinded contract are terminated, and the parties are discharged from their obligations thereunder.

Appeal from the District Court for Douglas County: JAMES A. BUCKLEY, Judge. Affirmed.

John C. Brownrigg and J. Patrick Green of Eisenstatt, Higgins, Kinnamon, Okun Stern, for appellant.

Michael G. Helms of Schmid, Ford, Mooney, Frederick Caporale, for appellees.

Heard before WHITE, C. J., SPENCER, BOSLAUGH, McCOWN, CLINTON, BRODKEY, and WHITE, JJ.

WHITE, C. J.

This is an appeal from an action brought by the plaintiff, Davco Realty Company (hereinafter referred to as "Davco"), seeking to have a constructive trust imposed upon the assets of the defendant, Picnic Foods, Inc., (hereinafter referred to as "Picnic"), to the extent necessary to satisfy its claim of damages.

Initially, we note that, while this action is equitable in form in that the relief sought is the imposition of a constructive trust, in substance this is a law action with Davco seeking damages for an alleged breach of contract and will be so treated on appeal.

The District Court held that the agreement entered into between the parties was too indefinite and uncertain in its terms, with regard to the construction of asphaltic paving, and thus was unenforceable. The District Court further held that the purposes for which easements were mutually conveyed by the parties were abandoned and that they should be extinguished as a matter of law. The District Court directed the parties to execute appropriate releases of the easements. We affirm the judgment of the District Court.

The facts giving rise to this dispute are as follows: The plaintiff is a Minnesota partnership, consisting of Abraham and Miriam Davidson. The defendant Picnic is a Nebraska corporation which was dissolved by the Secretary of State on August 2, 1972, for the nonpayment of occupation taxes. Defendants Burden, Devaney, and Steffen were officers and directors of Picnic at that time. The defendant, Star Stations, Inc., provided all Picnic's capital and was the intended sole stockholder of Picnic.

The parties to this suit own adjacent properties in the City of Omaha, Nebraska. Picnic's property at the time of the agreement was undeveloped. On the Davco property, a building occupied by Davidson Furniture Company was located. Davidson Furniture Company's president, Arthur Davidson, is the son of Abraham and Miriam Davidson. In the winter of 1968 or spring of 1969, Joseph Wilkerson, then an officer of Picnic, approached Arthur Davidson about obtaining for Picnic an easement across Davco's property. This easement was desired so that Picnic could have ingress and egress to its property from U.S. Highway No. 30A, known as West Dodge Road. Picnic was intending to develop several business concerns on its property and needed the easement to get customers on its property to and from West Dodge Road.

At the direction of his parents, Arthur Davidson acted as agent for Davco during these negotiations. Davco had contemplated expanding the building on its property. If, however, the contemplated addition was to be built, there would be very little remaining area on Davco's lot for customer parking. Davco thus entered into an agreement with the idea and purpose of obtaining access to additional parking area, which would enable it to construct the addition.

As a result of negotiations between their respective agents, Wilkerson and Arthur Davidson, the parties entered into an agreement on January 7, 1970. According to this agreement, Picnic agreed to pave the areas covered by the easements and, in addition, certain areas on the Davco property with asphaltic concrete. Executed simultaneously with the paving agreement was an agreement providing for the exchange of easements across the parties' respective properties. The easement agreement was specifically mentioned in the recitals of the paving agreement and was incorporated by reference therein. It was further stated that the paving agreement was given as partial consideration for the easement agreement. The easement agreement was also dated January 7, 1970.

The record thus reveals an agreement between two adjacent property owners to mutually develop their respective properties for the benefit of both. Picnic agreed to do certain paving and granted Davco an easement across its property. In return Davco granted Picnic an easement across its property. Picnic thus would obtain ingress and egress to its property from West Dodge Road. Davco would obtain access to additional parking space enabling it to add onto the building on its property.

The first issue confronting us on appeal is whether the agreement was too indefinite and uncertain to be enforceable. The District Court found the agreement indefinite and uncertain specifically in regard to: The nature of the paving material to be used; the depth and thickness of the paving; the foundation work and site preparation work required; and the time within which Picnic was required to perform. The agreement provided that Picnic was to pave the areas covered by the easements in addition to certain areas on Davco's property. Some of the areas to be paved were unimproved, others had concrete paving which was not to be covered. All paving was to be "asphaltic concrete." Additionally, the agreement stated, "All of the said paving (including foundation work and site preparation) shall be done in conformity with the specifications of the City of Omaha with respect to such pavement."

It is a fundamental rule that in order to be binding, an agreement must be definite and certain, as to the terms and requirements. It must identify the subject matter and spell out the essential commitments and agreements with respect thereto. See 17 Am. Jur. 2d, Contracts, 75, pp. 413, 414.

In support of their contention that the District Court was correct in holding the paving agreement unenforceable for lack of definiteness, the defendants cite testimony to the effect that the composition of "asphaltic concrete" can vary, and that the depth of asphalt parking lots can vary. The agreement provided that paving would be done in conformity with the specifications of the City of Omaha with respect to such pavement. However, the defendants point out the City of Omaha has no specifications relating to parking lot construction. The only City of Omaha specifications dealing with asphaltic concrete relate to street construction. The defendants also argue that the terms "foundation work and site preparation" are vague, and that the agreement does provide a time for performance.

We disagree with the District Court's conclusion that the paving agreement failed for want of definiteness and certainty. We believe that despite the ambiguities present in the agreement, it was sufficiently definite to be an enforceable contract.

While the City of Omaha has no specifications for "asphaltic concrete" parking lots, it does have specifications for "asphlatic concrete" street construction. There is nothing in the record to suggest that the specifications given for asphaltic concrete street construction would not be appropriate for the construction of a parking lot, which essentially bears the same burden as a street. The term in the contract relating to compliance with appropriate specifications of the City of Omaha is no doubt one of those clauses typically placed in a contract, requiring, as a contractual matter, compliance by the parties with the appropriate local government regulations and specifications dealing with the subject matter of the contract, should there be any.

"[T]he subject matter of the agreement must be expressed in such terms that it can be ascertained with reasonable certainty." 17 Am. Jur. 2d, Contracts, 76, p. 416. "Absolute certainty is not required, however, only reasonable certainty is necessary. A contract is not subject to the objection that it is indefinite so long as the parties can tell when it has been performed, and it is enough if, when that time arrives, there is in existence some standard by which performance can be tested." Id. at 417.

In Henggeler v. Jindra, 191 Neb. 317, 214 N.W.2d 925 (1774), we stated: "In building and construction contracts, in the absence of an express agreement to the contrary, it is implied that the building will be erected in a reasonably good and workmanlike manner and will be reasonably fit for the intended purpose." (Emphasis supplied.)

We believe that this is an appropriate standard by which Picnic's obligation under the agreement could be tested. Picnic was called upon to have certain areas paved with "asphaltic concrete," commonly known as "blacktop." Some of the areas to be covered had concrete paving on them, others were unimproved. The areas to be paved were to be used for parking and related vehicular traffic. Picnic was required to do the necessary site preparation and foundation work, and to lay asphaltic concrete of a type and thickness reasonably suited or adequate for the purposes to which these paved areas were to be put. This minimum requirement of fitness for the intended purpose cures any ambiguity otherwise inherent in the agreement. This standard provides an adequate basis for determining what was required under the contract.

The contract did not state a time for when Picnic's performance was to take place. However, in the absence of a stated time for performance, the law will imply a time of performance within a reasonable time under the circumstances. See, e. g. 1 Corbin, Contracts, 96, pp. 411, 412; 1 Williston (3d Ed.), Contracts, 38, pp. 112 to 115.

While we hold the paving agreement sufficiently definite so as to be enforceable, and although it is admitted that Picnic has not done, or caused to have been done, any paving pursuant to the agreement, we do not believe that Davco is entitled to any recovery. In our opinion, the record reveals an intention by the parties to this agreement to abandon it.

"A contract may be rescinded or discharged by acts or conduct of the parties inconsistent with the continued existence of the contract, and mutual assent to abandon a contract may be inferred from the attendant circumstances and conduct of the parties." 17 Am. Jur. 2d, Contracts, 494, p. 967. "Ordinarily abandonment of a contract by mutual consent may take place at any stage of the performance by the parties * * *." 17A C.J.S., Contracts, 387, p. 461.

"The abandonment of a contract is a matter of intention to be ascertained from the facts and circumstances surrounding the transaction from which the abandonment is claimed to have resulted. An abandonment of a contract need not be express but may be inferred from the conduct of the parties and the attendant circumstances." 17 Am. Jur. 2d, Contracts, 484, p. 954.

"The cancellation, abandonment, or rescission of a written contract may not only be written but it may also be oral. Moreover, an implied agreement to rescind a contract may be given effect, and the assent of the parties to rescission may be shown by their acts or conduct, and the surrounding circumstances. Accordingly, in determining whether a rescission took place, the courts look not only to the language of the parties, but to all the circumstances." 17A C. J. S., Contracts, 388, PP. 462 to 464.

The parties stipulated to the fact that certain trees and stumps which existed on the real estate still existed at the date of the trial.

The record shows that Picnic abandoned its plans to develop and operate businesses on its property. Picnic conducted no operation on its property, nor did it ever make any use of the easement granted to it across Davco property. Picnic put its property up for sale in 1970, and large signs were placed on the property advertising it for sale. These signs remained on Picnic's property until some time in 1974. As was mentioned earlier, Picnic was dissolved as a corporation by the Secretary of State in 1972.

Davco has used the easement area granted it on Picnic's property only a few times in the years since the agreement was executed for parking. The proposed addition to the building on Davco's property has never been built. Arthur Davidson testified that Davco has never made a decision to proceed with the construction of this addition. He stated that in 1969, a tentative decision was made not to proceed with the building of the addition. However, he testified that there were still plans, at some indefinite date in the future, to construct this addition. No architect, contractor, or financial institution was ever contacted concerning detailed plans or information concerning the construction or financing of the proposed addition. Arthur Davidson testified that he did have some tentative plans drawn by an architect, but no final plans. He also talked to a contractor in 1969 about costs of such an addition. He also talked generally with two financial institutions about financing, the latest conversation being in 1972.

In the fall of 1974, Davco caused a demand to be made on Picnic for performance of the paving agreement. Arthur Davidson testified that at the time the demand was made he was unaware that Picnic was dissolved or out of business. He stated, however, that he was aware, at the time he made this demand, that Picnic was attempting to sell its property.

In 1974, Picnic, anticipating a sale of its property, asked Davco for a release of the easement granted to Davco across Picnic's property. Don Burden testified that prior to the time the release was requested he had not received any demand from Davco for the performance of the paving agreement. Arthur Davidson denied that the demand for performance was in response to Picnic's request for a release from the easement agreement.

Based upon our review of the record, outlined above, we believe that both parties to this agreement manifested by their conduct their intention to abandon the agreement which was aimed at the mutual development of their adjacent properties.

"Generally rescission must be exercised in toto and is applied to the contract in its entirety with the result that what has been done is wholly undone and no contract provisions remain in force to bind either of the parties." 17A C.J.S., Contracts, 387, p. 461.

"Where a contract has been rescinded by mutual consent, the parties are, as a general rule, restored to their original rights with relation to the subject matter, and they are entitled to be placed in status quo as far as possible. All rights under the rescinded contract are terminated, and the parties are discharged from their obligations thereunder." 17A C.J.S., Contracts, 392, pp. 471, 472. See, also, 17 Am. Jur. 2d, Contracts, 512, p. 994 to 996.

The District Court, in addition to denying the plaintiff's claim for damages, directed the parties to execute appropriate releases of the easements they conveyed. When this is done, each party will be in the same position it was prior to the agreement. We note that neither party has materially shifted its position as a result of this agreement.

The judgment of the District Court is correct and is affirmed.

AFFIRMED.