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Westpark Inc. v. Seaton Land Co.

Decided: June 9, 1961.


Appeal from the Circuit Court of Baltimore City (SODARO, J.).

The cause was argued before Brune, C. J., and Prescott, Horney, Marbury and Sybert, JJ.


SYBERT, J., delivered the opinion of the Court.

In this appeal we are called upon to determine which of two development corporations has the paramount right to purchase certain land in Baltimore City from the owners, Joseph P. Cook and Herman F. Cook, Jr., and their wives, appellees. The appellant, Westpark, Inc., claims on the basis of its exercise of a right of first refusal contained in an agreement executed by the Cooks in 1954, while Seaton Land Company, one of the appellees, claims under a contract of sale

signed by the Cooks in 1958. The Circuit Court of Baltimore City decreed specific enforcement of the Seaton contract and dismissed Westpark's cross bill seeking similar relief, or, in the alternative, money damages. Westpark appealed.

The Cooks owned several parcels of land on Cooks Lane, near Edmondson Avenue, in the western section of the city. Joseph Cook and his wife live at 703 Cooks Lane, a lot 120 feet square, which they own. Herman Cook and his wife own and live at 713 Cooks Lane, containing one acre. Joseph and Herman are brothers. Their maiden aunt, Belle Cook, owned and lived on 5.2 acres, known as 709 Cooks Lane, located between the brothers' lots. Those three properties are the subject of these proceedings. In addition, Joseph and Herman, in 1954, owned 12.04 acres of undeveloped land on Cooks Lane north of and adjoining the other properties.

The involved factual situation leading to the present litigation originated with an agreement on April 8, 1954, between the Cooks and George J. Miller, Jr., Builder, Inc., concerned primarily with the 12.04 acre tract. This tract had been in the hands of a real estate broker for sale for some time, without success. Its topography was difficult and rocky, with an open stream at the bottom of a deep ravine, making the feasibility of development problematical. George J. Miller, Jr., an officer of the corporation bearing his name, became interested in the tract and discussed it a number of times with the Cook brothers. Realizing that a considerable expenditure of money and effort would be necessary to determine whether development was practicable, the parties worked out an option agreement under which the Miller company was to have 90 days in which to purchase the 12.04 acres at a price ranging from $37,000 to $40,000, depending upon the number of houses that could be built thereon. In consideration of the option, the Miller company agreed to pay the costs of a topographical survey and an engineering study, with the condition that if the option was not exercised, the results of the survey and study would be delivered to the Cooks upon reimbursement to the Miller company for the cost of the survey alone, not to exceed $600.

Miller was also interested in Belle Cook's adjoining 5.2 acres. This land was closer to Edmondson Avenue, a main traffic artery, was free of topographical difficulties, and would be relatively inexpensive to develop. However, Miss Cook, then 76 years of age, desired to end her days there, so it could not be developed as long as she lived on it. On the other hand, Miller foresaw the possibility that his company would develop the more difficult and expensive 12.04 acres, but that some late comer might take over the 5.2 acre tract, whose value would be enhanced and development facilitated by his company's improvement of the 12.04 acres.

During negotiations for the option on the brothers' 12.04 acres, Miller requested an option on Belle Cook's 5.2 acres. In discussion between the Cook brothers, their attorney, and Miller, it was pointed out that an option at a fixed price would be unfair if the value of the land should increase, as seemed likely. Finally, the parties agreed to include in the option agreement relating to the 12.04 acres, a right of first refusal as to the 5.2 acres, under which the Miller company would for five years have the right to meet any price and terms acceptable to the Cooks should they decide to sell the property. The right of refusal provision became paragraph 10 of the April 8, 1954 agreement and read as follows:

"10. The parties hereto hereby now agree that the Buyer shall have the 'right of refusal' with respect to the following described property, to wit: -- All other land presently owned by the signatories hereto between Cooks Lane and the west side of Hunting Ridge and Edmondson Avenue, exclusive of the residence of Joseph P. Cook and Herman F. Cook, this 'right of refusal' herewith given the Buyer shall be construed to mean that if the owners of the afore-described property shall at any time within five (5) years from the date of this Option Agreement decide to sell the property hereinabove described in this paragraph, they shall, before selling it to any other party or person, give the Buyer herein written notice of their intention to so sell the property and

of the price for which they intend to sell it, and the terms thereof, the Buyer herein shall have seven (7) days from the receipt of such written notice to accept such offer."

The effect of the description of land in paragraph 10 was to include only Belle Cook's 5.2 acres, since Joseph's and Herman's residence lots were excluded. She executed the agreement, along with the other parties, above a notation stating that she "signed this Agreement to indicate her intention to be bound by the 'right of refusal' set forth in paragraph 10 hereof since she is presently the owner of the land described in said paragraph". Belle Cook had raised the Cook brothers after their mother's death in their early childhood, and the record shows that she did not hesitate to execute the agreement in order to facilitate the possible sale by her nephews of their 12.04 acres.

It proved impossible to complete the topographical survey and engineering study on the 12.04 acres within the 90 day limit provided in the option, and consequently the parties executed an agreement extending the option for an additional 30 days. Belle Cook signed the instrument, which contained a notation that she did so to indicate her intention to be bound by the extension and by the right of refusal set forth in paragraph 10 of the original option.

George J. Miller, Jr., Builder, Inc., assigned the option agreement on August 4, 1954, to the appellant, Westpark, Inc., of which Miller is vice-president. On the next day the Cooks and Westpark entered into a supplemental agreement substituting Westpark for the Miller company as a party to the original option agreement. Belle Cook also executed this agreement, with a notation similar to that mentioned in the preceding paragraph.

Westpark exercised the option on the Cook brothers' 12.04 acres by paying a purchase price of $40,000 and receiving a deed. From 1954 to 1957 Westpark built 15 detached, 52 semi-detached, and 15 group houses on this tract. It paid half the cost of streets and the whole cost of sanitary sewers draining the area, and dedicated them to Baltimore City, as

required by city regulations. There was testimony to the effect that the improvements and utilities installed on the 12.04 acre development by Westpark increased the value of Belle Cook's 5.2 acre tract and made it easier to develop. Miller testified that "* * * at the time we made the agreement [of April 8, 1954] we wouldn't have taken the 12-acre tract without the * * * right of refusal on the 5-acre tract and I can state that quite emphatically."

In 1956 Belle Cook conveyed the 5.2 acres to Joseph and Herman Cook as a gift. She died in 1957, and somewhat later the Cooks listed the tract with a realtor for approximately one year, with no results. Miller testified that the reason for this listing was to ascertain the market value of the property and to sell to Westpark if it met the price offered, and, if not, to sell to the offeror. In 1957, St. William's Church, part of whose property is directly across Cooks Lane from the 5.2 acres, became interested in acquiring the property and was informed by the Cooks of Westpark's right of refusal. In late 1957 and early 1958 Miller surveyed and staked the 5.2 acres and laid out a street with a view to development. Later in 1958 Miller and Herman Cook discussed a joint venture for the construction of apartments, Miller to contribute the building and Cook the land. Joseph Cook was not interested in this proposal, and Herman did not see his way clear to purchase his brother's interest in the land, but discussions between Miller and Herman continued on into September.

On September 11, 1958, the Cooks listed the 5.2 acres for sale with Russell T. Baker and Company, a corporate realtor, through Richard M. Larrick, a Baker company salesman, who was a friend of the Cooks. Miller was in the home of Herman Cook on the evening of September 11, discussing the apartment venture, when Larrick arrived to obtain the listing. Miller testified he remained only a few minutes thereafter and said nothing to Larrick concerning Westpark's right of refusal, but stated that Herman Cook told him he would disclose Westpark's interest, and that he relied on it, as on past occasions. Both Cook brothers and Larrick testified that

on that same evening the Cooks told Larrick of Westpark's right of refusal and the details thereof. Larrick discussed the right of refusal with his sales manager, and on the request of the latter the Cooks had their attorney send a copy of the 1954 option agreement to the Baker company.

Larrick advertised the 5.2 acres for sale and received a call from Robert Meyerhoff, president of appellee, Seaton. Larrick showed the property to Meyerhoff, and later to his assistant, Trivas, and Larrick and Herman Cook testified that shortly thereafter an offer of $40,000 was received from Seaton on the 5.2 acres, although Meyerhoff stated that to his recollection no offer was made on that tract alone. Mr. and Mrs. Herman Cook then decided to sell their home also, and Seaton made an offer on both properties. Thereupon Mr. and Mrs. Joseph Cook likewise determined to sell ...

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