Opinion ID: 2169699
Heading Depth: 1
Heading Rank: 4

Heading: The Enforceability of Princess Builders's Contracts

Text: Alternatively, Ms. Knight argues that the Circuit Court's decision should be reversed because there was no enforceable contract between the Estate and Princess Builders after August 31, 2003, because Princess Builders failed to satisfy the following contingency contained in the contract: This Contract is contingent on buyer obtaining a building permit for house of buyers choice [b]y August 31, 2003 or this contract is declared null and void and of no further effect with deposit being declared null and void and refunded as well. Thus, any Backup Contract could then become primary. Time being of the essence for Settlement date of Sept 9, 2003. According to Ms. Knight, this clause created a self-operative, terminating clause that resulted in the termination of the agreements on September 1, 2003. Therefore, Ms. Knight argues that there was no effective contract between the Estate and Princess Builders at the time of the proceedings before the Orphans' Court or the Circuit Court. We determine that because the contingency was not included for Ms. Knight's benefit, she may not use it to annul the agreement. In support of her position, Ms. Knight relies upon two decisions by this Court wherein the contingency at issue in the case benefitted the party who sought to avoid the agreement due to the other party's failure to satisfy the terms of the contingency. In Metz v. Heflin, 235 Md. 550, 201 A.2d 802 (1964), Ernest and Mabel Heflin entered into a written agreement with Nathan Metz to sell four and a half acres of land in Montgomery County. As part of the terms of the contract, Mr. Metz agreed to apply for rezoning and the Heflins agreed to take back a first deed of trust for $70,000. Id. at 552, 201 A.2d at 802. It further provided that in the event that the rezoning did not occur by April 30, 1963, the contract would be void. Id. The rezoning benefitted both Mr. Metz, who sought to develop the land, and the Heflins because it would have increased the worth of the property. Mr. Metz was unable to secure rezoning until May 7 and three days later, demanded settlement. Id. at 552, 201 A.2d at 802-03. The Heflins informed Mr. Metz that the contract provided that it would expire and become void if zoning did not take place by April 30, 1963, and since zoning had not taken place by that date `the contract has expired and is now void and of no legal effect.' Id., 201 A.2d at 803. Mr. Metz filed suit for specific performance of the contract, which the trial court denied. He subsequently filed an appeal with this Court. Having concluded that the contingency inured to the Heflins' benefit as holders of a security interest in the property, we reasoned that as benefitting parties, nonperformance of the contingency had to be excused or waived by both Mr. Metz and the Heflins. Id. at 552-54, 201 A.2d at 803. Therefore, we affirmed the decision of the trial court. In Jones v. Saah, 261 Md. 340, 275 A.2d 165 (1971), the Saahs entered into contracts for the sale of real property with Mr. Jones and Mr. Ray, the appellants, which provided that Mr. Jones and Mr. Ray would sell the lots to the Saahs and take back a first deed of trust to finance the purchases. The contracts provided the following contingency: In the event said zoning is not secured by May 30, 1968, this contract shall become Null and Void and both parties shall be relieved of any further liability, and in that event the deposit of Two Thousand Dollars ($2,000.00) shall be returned to purchaser without further question. Id. at 341-42, 275 A.2d at 165. When the Saahs informed Mr. Jones and Mr. Ray that they intended to move forward with settlement, Mr. Jones and Mr. Ray failed to appear and informed the broker that the contract were null and void and that the deposit should be returned to the Saahs. The Saah's filed suit seeking specific performance of the contracts and argued that because the contingency inured to their benefit, they could waive its performance. The Circuit Court for Montgomery County granted the Saahs specific performance and Mr. Jones and Mr. Ray appealed. Relying upon our reasoning in Metz, we noted that the fact that the sellers were to take back a deed of trust which gave [them] a substantial interest in the property. . . any change in the zoning to a greater density (to a commercial use in our case) would benefit the sellers as much as the purchasers. Id. at 344, 275 A.2d at 166-67. Therefore, we concluded that because the sellers benefitted from the contingency as well as the purchasers, the purchasers could not unilaterally waive the condition and the agreements were void. Id. at 344, 275 A.2d at 167. These cases differ fundamentally from the case at bar. The contingency at issue patently was not made for Ms. Knight's benefit, but rather, solely benefitted Princess Builders as evidenced by the fact that it was included at the company's behest and that neither the Estate nor the Personal Representative would have an interest in whether Princess Builders was able to construct a house on the property. Moreover, Ms. Knight was not prejudiced by the enforcement of the agreements between Princess Builders and the Personal Representative because she did not act in reliance on the contract being voided. Therefore, because the contingency did not benefit Ms. Knight and she was not prejudiced by Princess Builders's failure to fulfill the condition, she may not use the nonperformance of its terms to render the contract void.