Title: Lovell Land v. SHA

State: maryland

Issuer: Maryland Supreme Court

Document:

LOVELL LAND, INC. v. STATE HIGHWAY ADMINISTRATION (No. 92)
HEADNOTE
PARCEL OF LAND, INTENDED TO BE USED FOR HIGHWAY PURPOSES, WAS
ACQUIRED BY SHA FROM PETITIONER IN 1992 THROUGH A CONTRACTUAL
LAND SWAP; BECAUSE OF RELOCATION OF THE PROPOSED ROAD, THAT
PARCEL WAS NOT NEEDED FOR THE ROAD, BUT OTHER LAND, OWNED BY
HOWARD COUNTY, WAS NEEDED; IN 1996, SHA ENTERED INTO LAND SWAP
WITH THE COUNTY IN WHICH IT CONVEYED THE PARCEL ACQUIRED FROM
PETITIONER TO THE COUNTY IN RETURN FOR LAND OWNED BY THE
COUNTY NEEDED FOR THE HIGHWAY; DEED TO COUNTY CONTAINED
RIGHT OF RE-ENTRY PROVISION ALLOWING SHA TO RE-ENTER AND
RETAKE TITLE IF COUNTY FAILED TO USE LAND FOR PUBLIC PURPOSE;
ASSERTING THAT COUNTY WAS NOT USING LAND FOR PUBLIC PURPOSE,
PETITIONER CLAIMED RIGHT UNDER TRANS. ART. § 8-309 AND RE-ENTRY
PROVISION TO REACQUIRE TITLE.
HELD: PETITIONER WAS NOT A PARTY OR THIRD-PARTY BENEFICIARY TO
PUBLIC USE REQUIREMENT OR RE-ENTRY PROVISION AND HAD NO RIGHT
UNDER THE DEED OR UNDER § 8-309 TO REACQUIRE TITLE.
IN THE COURT OF APPEALS
OF MARYLAND
No. 92
September Term, 2008
                                                                   
LOVELL LAND, INC.
v.
 STATE HIGHWAY
ADMINISTRATION, et al.
                                                                  
Bell, C.J.
Harrell
Battaglia
Greene
Murphy
Raker, Irma S. (Retired, 
Specially Assigned)
Wilner, Alan M. (Retired,
Specially Assigned)
JJ.
                                                                   
Opinion by Wilner, J.
                                                                   
Filed:   April 9, 2009
This case involves a parcel of unimproved land that was acquired by the State
Highway Administration (SHA) from King’s Meade Limited Partnership (King’s Meade)
in 1992 for use in constructing an extension of Md. Route 100 in Howard County.  When,
because of a revision in the planned location of the road, it turned out that the parcel was
not needed for that purpose, SHA, in 2000, deeded it to Howard County for public use. 
In April, 2006, convinced that the county had not put the land to public use,
petitioner, Lovell Land, Inc. (Lovell), claiming to be the successor-in-interest to King’s
Meade, filed an action in the Circuit Court for Howard County seeking (1) a declaratory
judgment that, by virtue of both Maryland Code, § 8-309 of the Transportation Article
(TR) and a reverter provision in the deed from SHA to the county, the county’s title to the
land reverted to SHA and SHA is required to offer the property to petitioner, and (2) an
injunction requiring the county and SHA to implement that judgment.  
In a Memorandum Opinion, the Circuit Court opined that petitioner had no right to
the requested relief.  Instead of entering a declaratory judgment to that effect, however,
the court merely granted the motions for summary judgment filed by SHA and the county. 
Overlooking the absence of a declaratory judgment but in the belief that the Circuit Court
correctly granted the motions for summary judgment, the Court of Special Appeals
affirmed the judgment.  Lovell Land v. State Highway, 180 Md. App. 725, 952 A.2d 414
(2008).  We agree that petitioner has no right to the relief it requested, but we shall direct
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that the case be remanded to the Circuit Court for entry of a proper declaratory judgment
in conformance with this Opinion.
BACKGROUND
In contemplation of a planned five-mile extension of Md. Route 100 from
Interstate Route 95 to U.S. Route 29, SHA entered into two agreements in January 1988 –
one with Howard County, where the extension would be located, and one with BritAm
Development Group, a partnership in which King’s Meade was a general partner. 
Prompting those agreements was the fact that a number of developers were actively
proceeding with subdivision plans with respect to property lying along the proposed
Route 100 corridor, and SHA was not then in a position to acquire that property by
purchase or condemnation.  
Under the agreement with Howard County, denoted the Bi-Party Agreement, the
county, which had acquisition funds more immediately available, agreed to acquire, by
purchase or condemnation, the land that might be needed for certain parts of the project,
and SHA agreed to acquire the land needed for other parts and to reimburse the county for
its costs and expenses. The agreement with BritAm involved mostly a land swap.  It
called for SHA to deed two parcels that it owned to King’s Meade, one of 8.5 acres that
King’s Meade wished to use for its planned Brightfield subdivision (Parcel A), and one of
3.5 acres on which King’s Meade would construct certain improvements along Md. Route
103 and then reconvey to SHA (Parcel B).  In return, BritAm or King’s Meade was to
1 There is an unresolved issue of whether the parcel in dispute is 15.8 or 17.3 acres. 
Petitioner contended that the parcel was 17.3 acres, although the undisputed evidence
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convey two parcels that it owned to SHA, one of 22 acres for the planned roadway
(Parcel D) and one of 0.3 acres, to be transferred in connection with the Route 103
improvements (Parcel C).
In March 1990, in a completely separate transaction, the State sold to the county,
for approximately $800,000, a 28.5-acre parcel owned by the University of Maryland
System, on which the county intended to build some government facilities.  That land was
immediately adjacent to a 69-acre parcel that included the land subject to the January
1988 agreement between SHA and BritAm –  the 22.3 acres to be conveyed to SHA and
the 12 acres to be transferred to King’s Meade.  Two years later, in April, 1992, the 1988
agreement between SHA and BritAm was implemented through an exchange of deeds,
although the acreage exchanged was less than that provided for in the agreement.  The
State, through SHA and the Board of Public Works (BPW), conveyed approximately 8.2
acres and paid $139,600 to King’s Meade, and King’s Meade conveyed 19.982 acres to
the State, for the use of SHA.  
At some point after those various transfers took place, the planned alignment of
Route 100 shifted to the south.  As a result of that shift, SHA needed 12.4 acres of the
University of Maryland property the State had sold to Howard County in 1990, but part of
the 19.982-acre parcel that SHA had acquired from King’s Meade in 1992, which we
shall assume was 17.3 acres, was no longer needed for the project.1  In November, 1996,
seems to be that only 15.8 acres of the property conveyed to the county had been acquired
by SHA from King’s Meade.  Because the trial court, for summary judgment purposes,
assumed that the parcel contained 17.3 acres, the Court of Special Appeals did not resolve
that issue, although it did note that  “there can be no dispute that King’s Meade was the
former owner to only 15.849 of the 17.337 acres.”  Lovell Land v. State Highway, supra,
180 Md. App. at 732, n.2 , 925 A.2d at 419, n.2.  As our decision is not affected by which
is the correct number, we shall refer to the parcel as containing 17.3 acres, but, on
remand, the trial court will need to make a specific finding.
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in light of that new circumstance, SHA and the county entered into a Supplemental
Agreement intended to supplement the 1988 Bi-Party Agreement.  The Supplemental
Agreement also involved a land swap.  The county agreed to transfer to SHA nine parcels
of land totaling 47 acres, and SHA agreed to transfer to the county three parcels totaling
52.5 acres and pay the county $1.6 million.  Included in the transfer to the county was the
17.3-acre portion of the 19.9 acre parcel that SHA had obtained in the swap with King’s
Meade, and included in the transfer to SHA was the 12.4-acre portion of the former
University of Maryland land that the State had sold to the county in March 1990.
The Supplemental Agreement expressly limited the use that could be made of the
parcels being transferred to the county to a transportation purpose.  The county agreed
that it would not use any of that property for any non-transportation related purpose, that
the State could enter the property to assure compliance with that restriction, and that, if
any portion of the property was used for a non-transportation purpose, the State had the
right to re-enter, take possession of the property, and terminate all right, title, and interest
of the county.  The land would then revert to the State, for the use of SHA.  Although the
Supplemental Agreement was signed in November 1996, the transfers contemplated in it
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did not take place until the spring of 2000.
To understand the context of what occurred next, a brief detour to TR § 8-309 is
necessary.  As a prelude to that detour, it is to be noted that the Route 100 extension was
constructed and is in operation.  It is therefore a completed, rather than an abandoned,
project.  Title 8 of the Transportation Article deals with highways; Subtitle 3 of Title 8
deals with the acquisition and disposition of property; and § 8-309, which is part of
Subtitle 3, deals with the sale of land not needed for public purposes.  The general
purpose of the section, as set forth in TR § 8-309(a), is either to return to the tax rolls of
the county land acquired by SHA but later found to be unneeded by it or to make it
available for use by a county or municipality for a transportation-related purpose.  TR §
8-309(b), which is the more particular mandate and is somewhat broader in scope,
provides that if land acquired under the subtitle is not needed for any present or future
State, county, or municipal transportation purpose “or other public purpose,” SHA shall
dispose of the land as soon as practicable after completion or abandonment of the project
for which the land was acquired.
The statute then sets out the various ways in which that disposition may be
accomplished.  For purposes of this case, which involves a completed project, subsections
(c), (e), (f), and (g) are particularly applicable. 
Subsection (c), upon which Lovell principally relies, requires SHA, within 30 days
after determining that land from a completed project is not needed by SHA, to inform the
person from whom the land was acquired, or that person’s successor in interest, that the
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land is not needed and is available for reacquisition.  That person then has eight months to
reacquire the land at a price determined in accordance with the statute.  If the right of
reacquisition is not exercised within eight months, SHA is directed to sell the land at
public auction. 
Subsection (e) permits SHA to exchange land from a completed project for
privately or publicly owned land “of substantially equal value” when the land to be
acquired is needed for a current State highway purpose that has been identified in the
current consolidated transportation program approved by the General Assembly or that
has otherwise received legislative approval for planning.  Although there is no
requirement that the exchange be with a county or municipality or that the land traded by
SHA be used for a public purpose, any exchange is subject to a right of first refusal by the
person from whom the land was acquired to reacquire the property.  That right must be
exercised within 90 days after SHA gives notice of the proposed exchange.
Subsection (f)(1)(i) permits SHA to convey any of its surplus land to an adjacent
property owner “[a]s all or part of the consideration for right-of-way transaction” or under
certain other circumstances.  There is no requirement that the land be used for a public
purpose, and the transfer is not subject to a right of first refusal in the former owner. 
Finally, subsection (g) permits SHA, with the approval of BPW, to convey surplus land to
any State or local agency that needs it for a public purpose and pays SHA the lesser of the
appraised value of the land or the amount SHA paid for it, plus interest.  Although a
transfer under subsection (g) is not subject to a right of first refusal in the former owner,
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the law does require that the grantee need the land for a public purpose.
With that background, we return to the ensuing course of events, commencing with
an exchange of letters between King’s Meade or Lovell, on the one hand, and SHA or the
Attorney General’s Office, on the other.  On August 3, 1999, Lovell, on behalf of King’s
Meade, wrote to SHA to “start the procedure for us to reacquire the surplus land” that was
conveyed by King’s Meade to SHA for the Route 100 Project, noting that the land was
not used for the road due to a shift in alignment.  In November, SHA responded that the
land in question was to be conveyed to Howard County and sent Lovell a copy of the
Supplemental Agreement.  In January 2000, counsel for King’s Meade wrote to the
Assistant Attorney General who represented SHA, noting the covenant in the
Supplemental Agreement that the land could not be used for a non-transportation-related
purpose and inquiring as to the use the county intended to make of the land.  Citing TR §
8-309, the letter advised that, if the property was not to be used for a transportation-
related purpose, it must be offered to King’s Meade and may not be deeded to the county. 
The Attorney General then shifted course, twice.  On March 30, 2000, the assistant
attorney general responded that SHA and the county were in the process of amending the
Supplemental Agreement to permit the county to use the property for a “public purpose,”
and that the conveyance would be made pursuant to TR § 8-309(g).  That produced a
response on April 12, in which counsel for King’s Meade argued that the land could not
be deeded to the county under subsection (g) because Howard County was neither a State
nor a local agency and because, in any event, the county had not yet determined how the
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land would be used.  The attorney asserted that any conveyance to the county would be
“illegal and invalid” and demanded that SHA offer the property to King’s Meade
pursuant to TR § 8-309(c).
The assistant attorney general responded the next day, advising that she had
“conducted additional research” and concluded that the transaction met the requirement
of TR § 8-309(f)(1)(i), i.e., conveyance of surplus land to an adjacent property owner as
all or part of the consideration for a right-of-way transaction.  She noted that the county
owned land adjacent to the unneeded parcel, that the land to be conveyed to the county
was in exchange for land that SHA acquired from the county for the project, and that it
therefore constituted “consideration for the right-of-way transactions” with the county. 
She concluded that, because the conveyance was being made pursuant to TR § 8-
309(f)(1)(i), King’s Meade had no right of first refusal and “no rights which impact on
SHA’s ability to convey this property,” and she therefore did not need to address the use
the county intended to make of the property.  She did note, however, that the county had
advised SHA “that the property will be used for a public purpose.” 
King’s Meade was not persuaded.  In a letter of April 18, 2000, it asserted that the
land was never actually “taken” by SHA and therefore did not belong to SHA.  That
peculiar conclusion was based on § 12-102 of the Real Property Article, which deals with
“quick-take” condemnation and provides that property is deemed to be “taken” for that
purpose if the plaintiff (1) is authorized to take property before trial, (2) has actually taken
possession of it, and (3) has lawfully appropriated it to the public purposes of the
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plaintiff.  Although urging that, because the property did not properly belong to SHA, the
agency had no authority to convey the land to the county, it insisted that SHA convey the
land it allegedly did not own to King’s Meade.
Also on April 18, but in advance of its receipt of Lovell’s letter, SHA and Howard
County entered in an amendment to the 1996 Supplemental Agreement that struck the
requirement that the county not use the property for a non-transportation-related purpose
and substituted a requirement that the county use the property for “a public purpose.” 
The amendment reflected a shift back to § 8-309(g).  In the “Whereas” clauses, which the
amendment incorporated into the agreement, SHA averred that restricting the county to a
transportation related use was not required under TR § 8-309 and that, under § 8-309(g),
SHA may convey the land to the county, with the approval of BPW, provided that the
county’s use was restricted to “a public purpose.”
In point of fact, the deed implementing the conveyance to the county had been
signed by both SHA and the county before the amendment to the Supplemental
Agreement was executed and before SHA had actually received the April 12 and 18
letters from King’s Meade.  The deed had been presented to and accepted by Howard
County on April 7, 2000 and was signed and acknowledged by SHA on April 12.  It was
presented to and approved by BPW on April 26, 2000 and was signed by the Board on
May 3, 2000, which is when, subject to recording, it actually took effect.  The deed
contained a re-entry provision that we shall discuss further but which provided for a
reversion of title to SHA in the event the SHA determined that the county was using the
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property for a non-public purpose and SHA chose to re-enter and retake the property.
On May 1, 2000, the assistant attorney general responded to the April 18 letter,
rejecting as “misguided” King’s Meade’s construction of Real Property Article § 12-102
and observing that SHA acquired the land pursuant to a land exchange agreement with
King’s Meade and not by condemnation.  The letter noted, as a “bottom line,” that the
county had represented that it would use the property for a public purpose and that SHA
had relied on that representation, “just as it would rely on such a representation from any
public entity,” that the deed to the county contained a provision allowing the property to
revert to SHA if the land is not used for a public purpose, and, if that occurred, “SHA will
deal with the reversion in an appropriate manner at that time.”  The reverter language, it
said, “is the standard method by which SHA ensures that the land it sells will be used for
a legitimate public purpose.”
King’s Meade made no further protest until November 16, 2001, when it learned
that the county was marketing the property for sale to a private party.  It threatened SHA
with a $ 1 million lawsuit if the agency did not exercise its rights under the reverter
provision and offer the property to King’s Meade.  When alerted to that demand, the
county informed SHA that the property had been mistakenly forwarded to the county’s
marketing team after being rejected for use as part of a school site, that the county council
had not considered disposition of the property, and that it would remain under the
county’s control and use.  Based on that response, which was forwarded to King’s Meade,
the assistant attorney general, on December 7, 2001, informed King’s Meade that SHA
2 Although SHA and the county raised a question about Lovell’s standing as a
successor-in-interest to King’s Meade, that issue was not resolved and need not be
resolved in this appeal.
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believed that the property was being used for a public purpose and that the reverter
provision “has not been activated.”
King’s Meade and Lovell acquiesced in that response for more than four years,
until April 25, 2006, when it filed its complaint for declaratory and injunctive relief. 
During that interim, the county proposed to use the property for two public projects – a
central maintenance facility and a fire station.  Evidence was presented that the county
included those projects in its 2007 capital budget and that, at least by September 2005,
Lovell was aware of those proposed uses.
In its complaint, Lovell claimed to be the successor to all of King’s Meade’s
property, including its interest in the 17.3-acre parcel at issue here, and to be as well a
third-party beneficiary of the reverter provision in the deed from SHA to the county.2  It
recited some of the facts noted above, averred that the county had not used the property
for any public purpose, and asserted that, as a result, title to the property is required to
revert to SHA and that, upon such a reversion, SHA is required to offer the property to
Lovell.  In Count I, it sought a declaratory judgment to that effect, and in Count II it
sought an injunction requiring the county to convey the property to SHA and requiring
SHA, within 30 days, to offer the property to Lovell at no more than its current market
value.
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SHA and the county answered the complaint and filed motions for summary
judgment on the grounds that (1) Lovell was not a third-party beneficiary of any statutory
or contractual provision concerning the property and therefore had no cognizable interest
in the public use requirement or the reverter provision or any right to enforce them, (2)
Lovell’s claims were barred by limitations, and (3) the property had been designated for
public use.  At the hearing on the motion, it was conceded that the third issue, of whether
the property had been put to public use, would require some discovery and was not ripe
for summary judgment.  The defendants did press the first two grounds, however.  The
county insisted that the conveyance was pursuant to TR § 8-309(f)(1)(i), not § 8-309(g),
as contended by Lovell, and that no right of first refusal exists under subsection (f)(1)(i). 
Lovell responded that the conveyance was pursuant to subsection (g) but that, in light of
the reverter provision in the deed, it did not matter.
In August 2007, the court filed a memorandum opinion and order granting the
motions for summary judgment.  The court concluded that, even though BPW appeared to
approve the transfer to Howard County pursuant to TR § 8-309(f), the Supplemental
Agreement and the deed indicated that the transfer was actually made pursuant to § 8-
309(g).  Relying on Mackubin v. Curtiss-Wright Corp., 190 Md. 52, 57 A.2d 318 (1948),
however, the court concluded that Lovell was not a third-party beneficiary of the reverter
provision and had no standing to enforce it.  In light of that conclusion, which was
dispositive, the court did not address the limitations defense.  
Cross appeals were noted, Lovell asserting that it was a third-party beneficiary of
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the reverter provision and was entitled to enforce it, and the defendants seeking to sustain
the summary judgment on the ground that the transfer was pursuant to TR § 8-
309(f)(1)(i), which did not require a public purpose, and that the action was barred by
limitations.  As noted, the Court of Special Appeals affirmed the summary judgments,
principally for the reasons stated by the Circuit Court.  It agreed that the transfer was
made pursuant to TR § 8-309(g) but agreed as well that Lovell was not a third-party
beneficiary of the reverter provision.  Like the Circuit Court, it found no need to address
the limitations issue.  Lovell Land v. State Highway, supra, 180 Md. App. 725, 952 A.2d
414.  We granted Lovell’s petition for certiorari to consider whether the lower courts
erred in declining to accord Lovell or King’s Meade third-party beneficiary status.  No
cross-petitions were filed, so the limitations issue is not before us.
DISCUSSION
Before discussing the pivotal issue presented in the case – whether Lovell enjoys
the status of third-party beneficiary with respect to the public use requirement and the
applicable “reverter” clause – there are some preliminary issues that must be addressed.
First, we need to deal with the fact that, although this was predominantly a
declaratory judgment action, the Circuit Court did not enter such a judgment but instead
merely granted the defendants’ motions for summary judgment.  As we pointed out in
Megonnell v. United Services, 368 Md. 633, 642, 796 A.2d 758, 764 (2002), “[w]hile it is
permissible for trial courts to resolve matters of law by summary judgment in declaratory
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judgment actions, the trial court must still declare the rights of the parties.”  See also
Beale v. Risk Retention Group, 379 Md. 643, 650, n.4, 843 A.2d 78, 83, n.4 (2004).  
This proceeds from the more general rule that, when a declaratory judgment action
is brought and the controversy is appropriate for resolution by declaratory judgment, “the
court must enter a declaratory judgment, defining the rights and obligations of the parties
or the status of the thing in controversy,” and that judgment must be in writing and in a
separate document.  Allstate v. State Farm, 363 Md. 107, 117, n.1, 767 A.2d 831, 837, n.1
(2001); Union United Methodist v. Burton, 404 Md. 542, 550, 948 A.2d 1, 10 (2008). 
That requirement is applicable even if the action is not decided in favor of the party
seeking the declaratory judgment.  Ashton v. Brown, 339 Md. 70, 87, 660 A.2d 447, 455
(1995).  The failure to enter a proper declaratory judgment is not a jurisdictional defect,
however.  This Court, in its discretion, may “review the merits of the controversy and
remand for entry of an appropriate declaratory judgment by the circuit court.”  Bushey v.
Northern Assurance, 362 Md. 626, 651, 766 A.2d 598, 611 (2001).  That is what we shall
do.
 Second, there is the question of whether the transfer of the 17.3-acre parcel to the
county was pursuant to TR § 8-309(f)(1)(i) or (g).  As noted, if the conveyance was
pursuant to subsection (f)(1)(i), as consideration for a right-of-way transaction, the former
owner has no right of first refusal and there is no requirement that the grantee use the
property for a public purpose.  A conveyance under subsection (g) also is not subject to a
right of first refusal, but the law does require that the property be used by the grantee for a
3 TR § 8-309(h) gives the former owner a right to be offered a lease of unimproved
property that is not to be used for any other public purpose.  Lovell has not sought relief
under that subsection.
4 The only evidence in that regard is the Department of Transportation Action
Agenda presented to BPW on April 26, 2000, noting that approval of the conveyance was
requested “in accordance with Section 8-309(F)1(ii) of the Transportation Article,
Annotated Code of Maryland.”  It is not at all clear that § 8-309(f)(1)(ii), which permits
the conveyance of surplus land to an adjacent property owner if SHA believes that a
public auction will adversely affect the value or use of the surplus land, has any
application to the matter.  It has been § 8-309(f)(1)(i) that has been asserted as the basis
for the conveyance.  The proposal was approved by BPW without discussion.
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public purpose.  Lovell’s position seems to be that the conveyance was under subsection
(g), and that, even though there is no direct right of first refusal under that subsection,
Lovell has the right to enforce the public use condition and exercise a right of refusal as a
third-party beneficiary of the “reverter” clause in the deed and under TR § 8-309(c).3
We see no reason why SHA could not have structured the conveyance of the 17.3-
acre parcel under subsection (f)(1)(i).  It was, as we have indicated, part of a swap,
through which SHA acquired from the county, an adjacent land-owner, the 12.4-acre
parcel that it needed for the Route 100 right-of-way and clearly constituted at least part of
the consideration for that acquisition.  Moreover, at least at one point, SHA, through its
assistant attorney general, asserted that the conveyance was being made pursuant to
subsection (f)(1)(i), and SHA claims that BPW approved it in that belief.4  
The relevant documents, however, indicate much more persuasively that the
ultimate conveyance was pursuant to subsection (g).  The Amendment to the
Supplemental Agreement that deleted the transportation use requirement in favor of a
5 The granting clause provides, in relevant part:
“That for and in consideration of the sum of One Dollar
($1.00), and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, so
long as the property herein conveyed is used for a public
purpose, the said parties of the first and second part [i.e., SHA
and BPW] do hereby grant, convey, and quit claim unto
HOWARD COUNTY, MARYLAND, a body corporate and
public, its successors and assigns, all right, title and interest of
the State Highway Administration and the State of Maryland,
in and to [the property thereafter described]; however, in the
event said property shall cease to be used for a public
purpose, GRANTOR, its successors and assigns, shall have
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general public use requirement expressly references TR § 8-309(g) as authority for that
substitution.  Moreover, if a conveyance under § 8-309(f)(1)(i) was intended, there would
have been no need for the public use requirement, either in the Amendment to the
Supplemental Agreement or in the deed itself, and, as a result, there would have been no
reason for the kind of “reverter” provision that was placed in the deed.  We agree with the
Circuit Court and the Court of Special Appeals, therefore, that the conveyance was made
pursuant to TR § 8-309(g).
That brings into play the nature of the “reverter” provision in the May 2000 deed
and whether Lovell has any third-party beneficiary interest in that provision and, as such,
any right to enforce it.  The deed, in fact, contains two reverter provisions, one in the
granting clause and one in the habendum – to have and to hold – clause.  Lovell, in its
brief, and the two lower courts, in their respective opinions, have focused on the second
but seem to have assumed that the first controls.5
the right to reenter and take possession of the property and
terminate all right, title and interest of GRANTEE, its
successors and assigns, in and to the said property, and all
such right, title and interest of GRANTEE shall revert to the
State of Maryland to the use of the State Highway
Administration, its successors and assigns, for no monetary
consideration.”  (Emphasis added).
That provision is followed by an express reservation to the State of “the
right to enter upon the herein described property for the purpose of making
periodic inspections to determine whether there has been compliance with
the covenants, conditions, limitations and restrictions hereinabove set
forth.”
The habendum clause provides:
“TO HAVE AND TO HOLD the land and premises,
hereinbefore described and mentioned, to the extent of the
State’s right, title and interest thereto, unto HOWARD
COUNTY, MARYLAND, a body corporate and politic, its
successors and assigns, so long as the said property shall be
used for a public purpose.  Notwithstanding anything to the
contrary contained herein, in the event said property shall
cease to be used for a public purpose, or is required at a
future date for a transportation purpose, all right. title and
interest in same shall immediately revert to the State of
Maryland to the use of the State Highway Administration of
the Department of Transportation, its successors and assigns,
free and clear of any liens and encumbrances imposed upon
the property by the GRANTEE, or any successors or assigns.”
(Emphasis added).
The habendum clause appears to be inconsistent with the granting clause with
respect to whether a reversion is automatic or is at the option of the State.  The granting
clause gives the State the right, but not the obligation, to re-enter the land and terminate
the county’s right, title, and interest.  The habendum clause appears to provide for an
automatic reversion.
Those are two different things.  The habendum clause would appear to create a
classic possibility of reverter, i.e., the conveyance of a fee simple determinable estate, in
which the estate conveyed is, itself, limited by the attached condition.  In that setting,
upon the happening of the triggering event – the failure or violation of the condition –  the
estate of the grantee automatically terminates, and ownership and the right to possession
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are returned to the grantor by operation of law.  No action by the grantor is necessary to
effect that reversion.  See Mayor of Ocean City v. Taber, 279 Md. 115, 127-29, 367 A.2d
1233, 1240 (1977); Ringgold v. Carvel, 196 Md. 262, 272, 76 A.2d 327, 331 (1950);
Rodeheaver v. State, 173 Md. App. 1, 917 A.2d 1122 (2007).  
In contrast, the granting clause may be construed as conveying an estate in fee
simple absolute, subject to a condition of public use, to which is attached a right of re-
entry.  In that setting, the failure of the condition does not result in an automatic reversion
of the estate, but merely gives the grantor a right to re-enter, eject the grantee, and retake
the land.  Rockville v. Walker, 86 Md. App. 691, 697, 587 A.2d 1179, 1182 (1991).  The
grantee’s estate does not terminate until the grantor has exercised its right of re-entry.  See
1 AMERICAN LAW OF PROPERTY § 4.12:
“The possibility of reverter is distinguished from the right of
entry for condition broken in that it takes effect in possession
automatically on the happening of the condition or event
named in the creating instrument.  But in the case of the right
of entry, the grantor must elect to forfeit before the granted
interest is terminated.”
See also 2 Herbert Thorndike Tiffany, THE LAW OF REAL PROPERTY, 3d ed, § 314, at 11.  
In a line of cases dating back to 1845, this Court, based on even more ancient
English precedent, has made clear that, if there is an inconsistency between the granting
clause and the habendum clause as to the nature of the estate conveyed, the granting
clause prevails.  See Budd v. Brooke, 3 Gill 235 (1845); Farquharson v. Eichelberger, 15
Md. 63, 72 (1860); Winter v. Gorsuch, 51 Md. 180, 183-84 (1879); Marshall v. Safe
Deposit Co., 101 Md. 1, 13, 60 A. 476 (1905); Pritchett v. Jackson, 103 Md. 696, 698
(1906); Link v. MacNabb, 111 Md. 641, 647-48, 74 A. 825, 828 (1909); Callaway v.
Forest Park Co., 113 Md. 1, 7, 77 A. 141, 143 (1910); and cf. Literski v. Literski, 166
Md. 641, 644, 171 A. 874, 875-76 (1934).
Although citing only to the habendum clause, Lovell at least tacitly recognizes that
there has been no automatic reversion of the property to the State, notwithstanding the
alleged failure of the public use condition.  The relief requested is that SHA be required
to exercise its right of re-entry which, if the habendum clause were to control, would be
unnecessary.  Accordingly, for purposes of this case, we shall assume that there has been
no automatic reversion and that the only effect of the reverter provisions is to give the
State the right to re-enter the property, oust the county, and retake both title and
possession.  We do observe that, in both clauses, the reverter is for the benefit of the
State, for the use of SHA, not SHA itself, and that the State itself is not a defendant – only
SHA and the Secretary of Transportation.  Respondents have made no issue of that; nor
shall we.
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Lovell’s position, in a nutshell, is that the public use requirement and the
“reverter” provision in the 2000 deed to the county were inserted solely to ensure that
SHA could comply with TR § 8-309(c) and thus “to confer a benefit that only one party
[King’s Meade] can enjoy under the terms of the statute . . .”  Lovell regards itself and
King’s Meade as “the only conceivable beneficiaries of the Reverter Clause.”  That
argument, in turn, is premised to a large extent on the 1999-2001 correspondence between
King’s Meade and SHA, which Lovell regards as the impetus for inclusion of the public
use and re-entry provisions and “overwhelming and uncontradicted evidence” that it was
an intended beneficiary of those provisions.
In Mackubin v. Curtiss-Wright Corp., 190 Md. 52, 57 A.2d 318 (1948), this Court
set forth the circumstances under which a person who was not a party to a contract could
nonetheless sue to enforce a promise made in the contract.  The Court explained that the
original common law rule was that “privity” between the plaintiff and the defendant was
necessary to maintain an action on a contract, which meant that one had to be a party to
the contract in order to enforce it, even if the contract was for the benefit of a third
person.  The Court noted, however, that there had been a relaxation of that rigid rule and
observed that “[t]he Courts now generally recognize the right of a third-party beneficiary
to sue on a contract made expressly for the benefit of either a donee beneficiary or a
creditor beneficiary.”  Id. at 56, 57 A.2d at 320-21.  (Emphasis added).  Adopting the
approach of what was then 1 Restatement of Contracts, § 133, the Court defined:
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(1) a donee beneficiary as one “where it appears that the purpose of the promisee
in obtaining the promise of the performance thereof is to make a gift to the beneficiary or
to confer upon him a right against the promisor to some performance neither due nor
supposed or asserted to be due from the promisee to the beneficiary” and
(2) a creditor beneficiary as one “where no purpose to make a gift appears and
performance of the promise will satisfy an actual or supposed or asserted duty of the
promisee, or a right of he beneficiary against the promisee which has been barred by the
Statute of Limitations, or by a discharge in bankruptcy, or which is unenforceable
because of the Statute of Frauds.”  Id. at 56, 57, 57 A.2d at 321.
Those two categories, the Court concluded, comprised the larger category of
intended beneficiaries and held that “before a stranger to a contract can avail himself of
the exceptional privilege of suing for a breach thereof, he must at least show that it was
intended for his direct benefit.”  Id.  The Court distinguished these “intended
beneficiaries” from merely “incidental beneficiaries” and very clearly limited the right of
a non-party to the contract to enforce a contractual promise or condition to the former
category:
“An incidental beneficiary acquires by virtue of the promise
no right against the promisor or the promisee [citation
omitted].  In order to recover it is essential that the beneficiary
shall be the real promisee; i.e., that the promise shall be made
to him in fact, though not in form.  It is not enough that the
contract may operate to his benefit.  It must clearly appear
that the parties intend to recognize him as the primary party
in interest and as privy to the promise.”
-21-
Id., at 58, 57 A.2d at 321 (Emphasis added).
The major, and ultimately decisive, distinction was thus between intended and
incidental beneficiaries, the donee and creditor categories simply defining the persons
who could be regarded as intended beneficiaries.  The Mackubin case illustrated the
distinction.  The plaintiff owned stock in the defendant corporation, whose shares were
listed on the New York Stock Exchange; she had also placed a continuing order to
purchase additional shares at a set price.  In the listing agreement with the stock
exchange, the corporation promised to publish prompt notice to its stockholders of any
action respecting dividends.  The litigation arose when the corporation suspended a
quarterly dividend but failed to publish prompt notice of that action.  In the absence of
such notice, the stock price rose to the point where the plaintiff’s purchase order was
activated but then dropped when the dividend suspension became known, and the plaintiff
sued to recover her loss on the newly purchased stock.  The Court concluded that,
although the plaintiff, as an existing stockholder, may have been an intended beneficiary
of the agreement with the stock exchange, she was not an intended beneficiary in her
status as potential stockholder, and, as the breach affected her only in that “potential”
capacity, she had no right to enforce the obligation.
In Spates v. Spates, 267 Md. 72, 296 A.2d 581(1972), the Court observed, in a
footnote, that, in a tentative draft of the Restatement (Second) of Contracts, the distinction
between donee and creditor beneficiaries had been abandoned, but the Court gave no
indication that it intended to follow that approach.  See id. at 77, n.3, 296 A.2d at 504,
6 Section 302 of the Restatement (Second) provides:
“(1) unless otherwise agreed between promisor and promisee,
a beneficiary of a promise is an intended beneficiary if
recognition of a right to performance in the beneficiary is
appropriate to effectuate the intention of the parties and either
(a) the performance of the promise will satisfy an
obligation of the promisee to pay money to the beneficiary; or 
(b) the circumstances indicate that the promisee
intends to give the beneficiary the benefit of the promised
performance.
 (2) An incidental beneficiary is a beneficiary who is not an
intended beneficiary.”
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n.3. See also Addressograph-Multigraph v. Zink, 273 Md. 277, 280, 329 A.2d 28, 31   
(1974).  Indeed, the final version of the Restatement (Second) did abandon at least the
donee/creditor terminology, as carrying “overtones of obsolete doctrinal difficulties.”  It
clearly maintained, however, the more critical distinction between intended and incidental
beneficiaries and maintained as well, within the comprehension of “intended
beneficiaries,” the substance of the donee and creditor categories.  See Restatement
(Second) of Contracts, Introductory Note to Ch. 14, § 302, and Reporter’s Note to § 302.6
Notwithstanding the Restatement (Second), most courts seem to have retained the
donee/creditor terminology.  The current version of Williston’s treatise on the law of
contracts observes that elimination of the donee/creditor categories and the lumping of
protected beneficiaries into one broad class has “not been well received by the courts, in
part because of their familiarity with the traditional phraseology and in part because of its
helpful, descriptive qualities.”  13 Samuel Williston, A TREATISE ON THE LAW OF
CONTRACTS, § 37.7 at 32-33 (4th ed. by Richard A. Lord 2000).  Lord (Williston)
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continues:
“Regardless of the reasons for the courts’ reluctance to
embrace the terminology of the Restatement (Second) of
Contracts, the fact is that the vast majority of courts continue
to speak of third party creditor and third party donee
beneficiaries when considering protected beneficiaries, and of
incidental beneficiaries when discussing those beneficiaries
who may not recover.”
Id. at 33.  The latest reprint of 9 Arthur Linton Corbin, CORBIN ON CONTRACTS, § 774
(Interim Edition 2000 and 2006 Supplement) maintains the donee/creditor categorization
and terminology.  Compare 3 E. Allan Farnsworth, FARNSWORTH ON CONTRACTS, § 10.3
(3rd ed. 2004), but note that Professor Farnsworth was the Reporter for the Restatement
(Second).
It appears that the change made in Restatement (Second) was not one of substance,
but only of terminology.  The change does, however, create a problem for one seeking
status as a creditor beneficiary, for, as noted, it limits what formerly was regarded as
creditor beneficiary contracts to those in which performance of the promise will satisfy
the promisee’s obligation to pay money to the beneficiary.  The current 4th ed. version of
Williston notes that limitation – that Restatement (Second) “views creditor beneficiary
contracts as those primarily involving the payment of money” or the delivery of
commodities “easily convertible into money.”  13 Samuel Williston (4th ed.), supra, §
37.12 at 98; see also § 37.13.  Under that view, Lovell clearly would not qualify as a
creditor beneficiary.  To achieve third-party beneficiary status under the Restatement
(Second) approach, Lovell would need to establish the criterion set forth in § 302(1)(b) –
that “the circumstances indicate that the promisee intends to give the beneficiary the
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benefit of the promised performance.”  See 13 Williston, supra, § 37.12 at 98: “Less
liquid obligations are left to Subsection (1)(b).”
For good reason, Lovell does not suggest that King’s Meade was a donee
beneficiary of the public use and re-entry provisions.  Apparently unaware of the change
made by Restatement (Second) and the 2000 edition of Williston, neither of which it cites,
Lovell claims creditor beneficiary status under the approach of the first Restatement, as
explained in the outdated 1959 (3rd) edition of Williston’s treatise, § 356.   The status it
actually seeks, however, is that described in § 302(1)(b) of the Restatement (Second),
Lovell’s point being that SHA had a duty under TR § 8-309(b), (c), and (g) to offer the
property to it if the public use condition was not met, and that the public use and re-entry
provisions were inserted in the deed solely to implement that obligation.  It regards the
1999-2000 correspondence between King’s Meade and SHA as proof of that fact.  In
making that argument, however, Lovell focuses primarily on King’s Meade’s own beliefs,
demands, and threats and dismisses as largely irrelevant, at least for summary judgment
purposes, SHA’s consistent rejection of those beliefs, demands, and threats.  
There are several fallacies in Lovell’s argument.  Under the standard set in
Mackubin, which is wholly consistent with the substance of the Restatement (Second)
approach, in order to enforce the public use and re-entry provisions, Lovell must show
that King’s Meade was “the real promisee”– that “it must clearly appear that the parties
intend[ed] to recognize [King’s Meade] as the primary party in interest and as privy to the
promise.”  Mackubin, supra, 190 Md. at 58, 57 A.2d at 321.  Even when viewing the
evidence in a light most favorable to Lovell, as we must do, no such showing has been
-25-
made.
There is no mention of King’s Meade in either the deed or in any of the antecedent
agreements between SHA and the county, and, although it is not necessary to the creation
of third-party beneficiary status that an intended beneficiary be specifically mentioned in
the contract (see Restatement (Second) of Contracts, § 308), the lack of acknowledgment
is certainly a factor to consider.  The crucial fact, however, is that there is no evidence in
this record that either the public use requirement or the re-entry provision was inserted
into the deed to benefit King’s Meade or because of King’s Meade’s insistence that it had
an interest in the property under TR § 8-309.  King’s Meade never asked for such
provisions.  As we have observed, the deed to the county was signed by both SHA and
the county before SHA was even aware of the April 12 and 18 letters from Lovell.  The
transaction itself – the Amendment to the Supplemental Agreement and the deeds –
reflected a direct and unmistakable negation by SHA, BPW, and the county of any
cognizable claim or interest by King’s Meade or Lovell.   
Since November 1999, when it first learned that SHA intended to convey the land
to the county, Lovell’s position consistently has been that SHA had no statutory authority
to make that conveyance because no transportation or public use had been identified. 
King’s Meade was never looking to get the land back through a reverter provision, but
rather to preclude SHA from transferring the land to the county in the first place.  Given
the fact that SHA consistently had rejected King’s Meade’s assertion of a right to
reacquire the property and ultimately acted in direct derogation of any such claim, there is
no basis for even an inference that those provisions were inserted in the deed to benefit
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King’s Meade or to satisfy “some actual or supposed or asserted duty” of SHA to King’s
Meade.  It is clear from the record and the statutory context that the public use condition
was inserted because it was required by TR § 8-309(g) and that the right of re-entry was
included solely to allow the State to enforce that condition if it chose to do so.
Telling as well on the issue of whether King’s Meade possibly could have been an
intended beneficiary is the fact that, even if SHA or the State were to exercise the right of
re-entry and retake title to the property, it would not necessarily be required to offer the
property to Lovell.  SHA is not required to dispose of the land to any private party under
TR § 8-309(b)(1), including a former owner, unless the land “is not needed for present or
future State, county, or municipal transportation purpose or other public purposes.” 
(Emphasis added).  That invokes § 5-310 of the State Finance and Procurement Art.
(SFP) and regulations of the Department of Planning promulgated pursuant to that section
and SFP § 5-203(b).
SFP §§ 5-203 and 5-310 deal with the Department of Planning.  Section 5-310
requires each unit of the State Government to notify the Department of any real property
that it does not need and for the Department then to determine whether any unit of the
State Government or any local government is interested in the property.  After notice (to
certain members and committees of the General Assembly and adjacent property owners)
and a hearing, the Department is directed to make a recommendation to BPW as to an
appropriate disposition of the property.  Regulations of the Department, adopted pursuant
to SFP § 5-203(b) and codified in COMAR 14.24.05, implement the statutory scheme. 
That process, set forth in the Code and the regulations, must be exhausted before any
-27-
offer is required to be made to the prior owner, which means that any State or local
agency that may have a public use for the property has a priority over the former owner,
who thus stands last in line.  
In light of that fact, especially when coupled with the evidence in this record, there
is no way a court may reasonably conclude that the State, SHA, BPW, or the county
intended to recognize either King’s Meade or Lovell “as the primary party in interest and
as privy to the [reverter provision]” – that either of those entities was “the real promisee”
of that provision.  At best, King’s Meade may fall within the broad category of remotely
possible incidental beneficiary of the reverter provision.
SFP § 5-310 and the implementing regulations do not constitute a “shell game,” as
Lovell suggests.  They are a consistent and legitimate part of the overall approach that the
General Assembly has chosen to govern the disposition of surplus land owned by a State
agency.  By giving an unduly narrow reading to TR § 8-309(a), (b), (c), and (g), Lovell
believes that the predominant goal of the Legislature was to return surplus land to its
former owner.  That is not the case.  The clearly predominant legislative purpose is to use
such surplus land for a public use, even if not the one for which the land was initially
acquired, and to offer the land back to its former owner only if no other State or local
agency needs it for such a use.  
We agree with the lower courts that Lovell is not a third-party beneficiary entitled
to enforce the public use or re-entry provisions of the deed and is therefore not entitled to
the relief it requested.  We shall direct that the case be remanded to the Circuit Court for
entry of a proper declaratory judgment to that effect, in conformance with this Opinion.
-28-
JUDGMENT OF COURT OF SPECIAL APPEALS
VACATED; CASE REMANDED TO THAT COURT WITH
INSTRUCTIONS TO VACATE JUDGMENT OF CIRCUIT
COURT FOR HOWARD COUNTY AND REMAND TO
THAT COURT FOR SUCH FURTHER PROCEEDINGS AS
MAY BE NECESSARY AND ENTRY OF A
DECLARATORY JUDGMENT IN CONFORMANCE
WITH THIS OPINION; COSTS IN THIS COURT AND
COURT OF SPECIAL APPEALS TO BE PAID BY
PETITIONER.