Court Opinion

ID: 6477814
Source: CourtListenerOpinion
Date Created: 2022-06-26 22:46:06.508749+00
Date Added: 2024-06-11T15:54:02.612159
License: Public Domain

GRANT, Judge
dissenting:
I respectfully dissent. The purchase order was a contract. The defendants are estopped from denying the contract with the plaintiff and are estopped from relying on the condition of performance.
“The vital principle of equitable estoppel is that a person who by his language or conduct leads another to do what he would not otherwise have done may not subject such person to loss or injury by disappointing the expectations on which he acted.” Bartholomew v. Superior Court, 4 Ariz. App. 50, 52, 417 P.2d 563, 565 (1966) quoting 31 C.J.S. Estoppel § 63 (1964). The essential elements of equitable estoppel are a concurrence of the following:
(1) Conduct by the party to be es-topped by which he intentionally or through culpable negligence induces another to believe and have confidence in certain material facts;
(2) Action by the parties so induced in reliance, justifiably taken, upon the apparent state of the facts; and
(3) Injury to the party so induced which is caused by his reliance.
Joy Enterprises, Inc. v. Reppel, 112 Ariz. 42, 45, 537 P.2d 591, 594 (1975), citing Builders Supply Corp. v. Marshall, 88 Ariz. 89, 352 P.2d 982 (1960).
Mecham appears to be arguing that this purchase order was simply an “agreement to agree.” However, a review of the entire document leads to the conclusion that this document created a binding contract before conditions 1, 2 and 3 (set forth ante at 52, 730 P.2d at 229) occurred. It contains the necessary terms to establish the respective duties of the parties to the contract. Although the language indicates that the order is “not binding” until certain conditions come into being, this language is not the equivalent of stating that there is no contract.
Restatement (Second) of Contracts § 224 (1981) provides:
A condition is an event, not certain to occur, which must occur, unless its nonoccurrence is excused, before performance under a contract becomes due.
Comment c and Illustration 7 elaborate on the principle of § 224:
c. Necessity of a contract. In order for an event to be a condition, it must qualify a duty under an existing contract. Events which are part of the process of formation of a contract, such as offer and acceptance, are therefore excluded under the definition in this section. It is not customary to call such events conditions. But cf. § 36(2) (“condition of acceptance”). For the most part, they are required by law and may not be dispensed with by the parties, while conditions are the result of, or at least subject to, agreement. Where, however, an offer has become an option contract, e.g., by the payment of a dollar (§ 87), the acceptance is a condition under the definition in this section.1
*567. A and B contract to merge their corporate holdings into a single new company. It is agreed that the project is not to be operative unless the parties raise $600,000 additional capital. The raising of the additional capital is a condition of the duties of both A and B. If it is not raised, neither A’s nor B’s performance becomes due.
Thus, under the Restatement position, only absence of an essential element of a contract i.e., offer, acceptance or capacity, would preclude contract formation. Applying this to the previously quoted provision in the purchase order, ante at p. 52, 730 P.2d at 229, only the absence of acceptance by the dealer would preclude the existence of a contract. It is undisputed that Mecham Pontiac accepted the purchase order as evidenced by the signature of its authorized agent. Thus, a contract was formed. The credit approval, finance charge disclosures and security agreement are conditions of performance.
The trial court correctly interpreted the financing requirement as a condition of performance which was to occur after the making of a valid contract. See generally 3A Corbin on Contracts § 628 at 16 (1960). While no Arizona cases appear directly on point, it is well established that a person can be estopped to assert the nonperformance of a condition precedent. See, e.g., Barton v. Chemical Bank, 577 F.2d 1329 (5th Cir.1978) (party estopped from asserting the necessity of a written agreement as a condition to the creation of a security interest); Hartford Electric Applicators, Inc. v. Alden, 169 Conn. 177, 363 A.2d 135 (1975) (party estopped from demanding architect’s certificate as a eondition precedent to payment); Beck v. Strong, 572 S.W.2d 484 (Mo.App.1978) (party estopped to require exercise of an option within a five-year period as a condition precedent to purchase of property). See generally 3A Corbin on Contracts § 752 at 481. Therefore the jury instruction given by the court was a proper statement of the law.
The retail installment sales contract of December 31, 1982 incorporated the terms of the purchase contract with modifications as to an additional down payment of $500.00. This contract is a GMAC form provided by Mecham Pontiac and is signed by Heltzel and Maher. The creditor’s signature line contains the printed name “Mecham AMC—Renault—Subaru.” Evan Mecham testified that this was simply a computer printout which was not an acceptance by Mecham until signed by an authorized person. However, this document was used as the basis for getting Heltzel’s additional down payment and promissory notes. Heltzel was not informed at the time she signed that she would have to return for an additional signature. Further, as previously discussed, a contract had already been formed by reason of executing the purchase order. I believe that the facts which are implicit in the jury’s finding that Mecham was estoppéd from asserting failure of the financing condition would also estop it from denying, its acceptance of this modification of the contract terms.
The majority relies on Cavazos v. Holmes Tuttle Broadway Ford, 104 Ariz. 540, 456 P.2d 910 (1969), in agreeing with Mecham that “even if the retail installment contract had been signed by a Mecham *57agent, the result would still be the same because they have to be construed together as part of the same deal.” Ante at 52, 730 P.2d at 229. Construing the purchase order and installment sales contract together does yield the same result: a contract was formed with a condition of performance which Mecham is estopped from relying upon.
Mecham also argues that Heltzel failed to establish one of the essential elements of estoppel, i.e. justifiable reliance. It claims that there is no evidence in the record to support the existence of justifiable reliance. I disagree.
Mecham argues that Heltzel admitted that she knew that her application for credit was to be submitted to GMAC and that neither Evan Mecham nor her sales person had authority to approve loans. It contends that she knew that neither Evan Mecham nor any other agent of Mecham Pontiac was in a position to speak for GMAC. Thus, it argues that any reliance which she may have placed on their statements was unjustified. Mecham Pontiac also argues that Arizona law imposes a duty to return a motor vehicle to the dealership when a prospective purchaser takes a vehicle and is later turned down on his or her application for financing, citing Cavazos.
The record in the instant case reflects that although Mecham Pontiac was not a GMAC agent, all of Heltzel’s dealings with GMAC were through Mecham Pontiac and Mecham Pontiac provided her with GMAC forms. She was asked to sign a retail installment sales contract prepared by Mecham Pontiac indicating that financing had been approved and indicating the payments due on that financing. Mecham accepted Heltzel’s $300.00 down payment and two checks for $250.00. There was evidence that Mecham Pontiac advertised financing through GMAC and was routinely the contact between its customers and GMAC as the financing institution. Finally, Mecham Pontiac gave possession of the Trans Am to Heltzel and accepted her Volkswagen as a trade-in. In light of all these circumstances, I find that Heltzel’s reliance on Mecham Pontiac’s actions including statements that her GMAC loan had been approved to be more than justifiable.
Cavazos v. Holmes Tuttle Broadway Ford does not support Mecham’s contention that Heltzel was required as a matter of law to return the Trans Am when her financing was disapproved. In Cavazos, the prospective automobile purchaser was given possession of a new car prior to obtaining financing. A provision of the written contract specifically was that “[pjurchaser acknowledges that credit purchase is subject to Finance Company or Bank approval. If rejected, car must be returned to seller on demand.” No such statements were made when Heltzel obtained possession of the Trans Am. Cavazos is not controlling in the instant case.
I believe this case is controlled by Darner Motor Sales v. Universal Underwriters Ins. Co., 140 Ariz. 383, 682 P.2d 388 (1984), in which the supreme court applied the doctrine of equitable estoppel to an insurance policy contract. The court held that the doctrine was available to enforce higher limits of coverage which had been agreed upon orally by the parties but were not in the written policy. The holding of Darner was to the effect that standardized, boilerplate contracts should not be allowed to undercut the “dickered deal.” 140 Ariz. at 395, 682 P.2d at 400. Such a holding seems particularly appropriate when applied to used car sales where the “dickered deal” is a practiced art form by the salesperson.
I would affirm the judgment of the trial court.

. The Reporter's Note to Comment c to this section states in part:
When an event that is not normally part of the process of formation of contract is made an event upon which the performance of the *56contract is dependent, courts often describe it as a condition that must be performed before the contract comes into existence. [Citations omitted.] Similarly, inartistically drafted contracts may contain language such as: “this contract shall not come into existence until Event A occurs.” As Illustration 7 suggests, it is better to view a contract as already in existence, but with the parties’ respective performances subject to the specified event, which is a condition to their respective performances. However, there is no great substantive disparity between the terminology used in this Comment and descriptions of such events as conditions to the existence of the contract. This Comment excludes from the definition of condition only the elements of contracts such as offer, acceptance and capacity, not specific events triggering performance simply because of the agreement of the parties. These latter, properly called conditions to the parties’ performance, are what are often called conditions to the existence of the contract. Both this Comment and the case law agree that they are conditions.