Opinion
No. 192.
Argued March 30, 1970. —
Decided April 28, 1970.
APPEAL from a judgment of the circuit court for Milwaukee county: LEANDER J. FOLEY, JR., Circuit Judge. Affirmed.
For the appellant there were briefs by John J. Fleming, city attorney, and Richard F. Maruszewski and Maurice L. Markey, assistant city attorneys, and oral argument by Mr. Maruszewski and Mr. Markey.
For the respondent there was a brief by Whyte, Hirschboeck, Minahan, Harding Harland, and Reginald W. Nelson, all of Milwaukee, and oral argument by Mr. Nelson.
Action commenced by the Chicago Title Insurance Company (not a party in this appeal) on May 25, 1967, as the escrowee of a deed and check to determine its obligation as the escrowee.
On August 1, 1963, the Milwaukee Common Council passed Resolution No. 63-1650, directing the department of city development to request bids for the purchase and lease of certain city-owned land located on East Wells Street between North Broadway and North Milwaukee Street. Under this resolution bidders were required inter alia to:
(1) State the total price in dollars that he or it offers to pay for the described real estate;
(2) Offer tentative plans and specifications covering the development proposed to be erected on said land (such plans to include parking space for at least 400 passenger automobiles for the use of the general public);
(3) Furnish the minimum estimated cost of the development proposed for construction on the described land; and
(4) Deposit $25,000 as evidence of good faith.
In addition, the successful bidder was required to have construction drawings based upon the approved tentative plans and specifications prepared and to commence actual construction not later than two hundred ten days after notification that the plans submitted had been approved and that the required change in the existing zoning, together with the vacation of part or all of the abutting alley, had been completed. The city upon payment of the purchase price was to convey the described land by warranty deed. However, such deed was to contain a restriction whereby the title to the land was to revert to the city upon failure to perform.
The city's request for bids was published in The Daily Reporter on September 25, 26, and 27, 1963. In compliance with these advertised requests, Milwaukee Civic Developments, Inc. (hereinafter MCDI) submitted a bid which was accepted on May 1, 1964, by the Milwaukee Common Council's Resolution No. 63-1650-a. Such acceptance was upon the terms and conditions enumerated in Common Council Resolution No. 63-1650.
Apparently certain difficulties arose concerning performance of the agreement, for on May 28, 1965, the Common Council adopted Resolution No. 65-747, authorizing the city real estate agent to execute a modification of the original agreement. The agreement, as modified, established April 19, 1965, as the date from which to measure the two hundred ten days allowed for commencement of construction. It further provided that the two hundred ten-day period could be tolled during any administrative delay and extended for the length of such delay.
On October 15, 1965, the city notified MCDI that the two hundred ten-day period would expire on the 15th day of November. MCDI replied by indicating several administrative delays had occurred in that certain applications were still pending with the Federal Aviation Agency and the State Aeronautics Commission. MCDI thus claimed the two hundred ten-day period was extended and would not expire on November 15th.
When a disagreement arose, the parties entered into a "Supplemental Agreement," dated December 30, 1965. This "Supplemental Agreement" was authorized by Common Council Resolution No. 65-747-a and provided that the previous two hundred ten-day provision and its modification be ". . . stricken in its entirety and it be specifically understood and agreed that construction shall commence without any conditions on or before June 1, 1966." Since the city had previously deeded the land to MCDI, the "Supplemental Agreement" also provided:
"2. That Milwaukee Civic Developments, Inc., execute and deposit with the Chicago Title Insurance Company Escrow Department a warranty deed to be delivered to the city of Milwaukee if said construction has not been commenced on or before June 1, 1966.
"3. That the city of Milwaukee deposit with the Chicago Title Insurance Company Escrow Department the amount of $11,111.11 to be delivered to Milwaukee Civic Developments, Inc., on June 1, 1966, should construction not have been commenced on that date.
"4. That the Chicago Title Insurance Company Escrow Department is mutually agreed upon as a depository for these documents.
"5. That construction shall mean actual work of a continuing nature on the site in development of the structure which shall be generally within the concept of the plans and specifications presented to the city of Milwaukee in the booklet, `Milwaukee's Diamond Tower,' which plans and specifications are accepted on this date by the city of Milwaukee.
"6. This contract shall not supersede the contract between the parties hereto, but shall be considered as a supplement thereto."
Thereafter, on March 22, 1966, an "Escrow Agreement" was entered into between the parties and the Chicago Title Insurance Company, as escrowee, which provided:
" Whereas, the parties entered into an agreement dated May 19, 2965, which was supplemented and modified by an agreement dated December 30, 1965, and
" Whereas, said agreement of May 19, 1965, as supplemented and modified provides for an escrow arrangement of a certain deed of real estate and funds, all upon the terms and conditions hereinafter provided.
" Now, therefore, in consideration of the foregoing premises and the mutual covenants herein contained, the parties agree as follows:
"1. A warranty deed substantially in the form of Exhibit A attached hereto and made a part hereof shall be delivered by second party to third party within five (5) days following the execution of this agreement.
"2. First Party shall deposit with third party in cash as a part of this escrow the sum of Eleven Thousand One Hundred Eleven and 11/100 Dollars ($11,111.11), within five (5) days following the execution of this agreement.
"(a) If construction has not been commenced (as hereinafter defined) on the premises described in Exhibit `A' on or before June 1, 1966, escrowee shall, by June 15, 1966,
"(1) Deliver to first party the deed provided for in paragraph 1 hereof, and
"(2) Deliver to second party the funds deposited under paragraph 2 hereof.
"(b) If construction has been commenced, as hereinafter defined, on or before June 1, 1966, escrowee shall by June 15, 1966,
"(1) Re-deliver to second party the deed provided for in paragraph 1 hereof, and
"(2) Deliver to first party the funds deposited under paragraph 2 hereof.
" The commencement of construction for the purposes of this agreement shall mean the presence on the premises described in Exhibit A and the operation of one or more pieces of construction equipment without substantial interruption. Construction shall mean construction of a structure which shall be generally within the concept of the plans and specifications presented to the city of Milwaukee in the booklet, `Milwaukee's Diamond Tower,' which plans and specifications were accepted by the city of Milwaukee on December 30, 1965." (Emphasis supplied.)
When both parties demanded the deed, Chicago Title Insurance Company, as escrowee, commenced an action against both the city and MCDI to determine their respective rights. Also named as defendants were the Hunzinger Construction Company, Marchese Brothers, Inc., and Rasche, Schroeder, Spransy Associates, Ltd., all of whom had filed mechanic's liens against the property in question.
By order, dated July 26, 1968, the trial court ordered both the deed and the $11,111.11 deposited with the clerk circuit court and dismissed the plaintiff-escrowee the action.
Although not raised by the city at the trial, the court, pursuant to the city's post-trial argument, concluded that the terms of the March 22, 1966, tripartite escrow agreement exceeded those authorized by Common Council Resolution No. 65-747-a in that the agreement defined "commencement of construction" to mean "the presence on the premises . . . and the operation of one or more pieces of construction equipment without substantial interruption." Since the terms of the "Supplemental Agreement" dated December 30, 1965, were specifically authorized by Resolution No. 65-747-a, the trial court applied its definition of "construction" in determining whether MCDI had sufficiently commenced construction as required by the escrow agreement.
". . . construction shall mean actual work of a continuing nature on the site in development of the structure which shall be generally within the concept of the plans and specifications presented to the city of Milwaukee in the booklet, `Milwaukee's Diamond Tower,' which plans and specifications are accepted on this date by the city of Milwaukee."
After so doing, the trial court found that construction had been satisfactorily commenced according to the terms the March 22, 1966, escrow agreement and concluded that MCDI was entitled to redelivery of the deed. The city of Milwaukee now appeals from a judgment rendered in accordance with such decision.
Other pertinent facts will be stated in the opinion.
The sole issue presented on this appeal is whether the trial court erred in determining that MCDI had complied with the escrow agreement and was therefore entitled to the return of its deed. Only the right of possession of the deed is before the court. Other actions to determine title to the land and the city's right to damages for alleged breach of contract are apparently still pending at the trial level.
It is the position of the city on this appeal that the definition of construction, as set forth in the "Supplemental Agreement" and incorporated into the escrow agreement, must be interpreted to mean that the deed was not to be returned to MCDI unless and until MCDI had completed all of the contemplated construction. This position, however, appears to be an afterthought, for throughout the pleadings and the trial the question before the trial court was whether construction, as that term was defined in the agreement, had been commenced. It appears that only after the trial court found against the city did the city shift its argument and maintain that completion was required.
In support of this belated position the city relies upon language in the "Supplemental Agreement" which suggests the intention of the parties was to provide a definite terminal date. However, the same provision in the "Supplemental Agreement" upon which the city relies also reveals that the intent of the parties was to provide for the prompt commencement of construction.
" Whereas, the parties hereto now desire to change the provisions of this paragraph [dealing with the 210-day period in which to commence construction] and to provide a definite terminal date; now, therefore, in consideration of the mutual benefits accruing . . . ." (Emphasis supplied.)
The city also contends that were this court to interpret the escrow agreement so as to require only commencement of construction, the agreement would not be a sound business instrument because the city would in effect be selling an extremely valuable piece of land for only $11,111.11, plus the bare promise to merely commence (not finish) construction. This argument erroneously assumes that title to the property is here being decided and ignores the fact that the city had deeded the land to MCDI before it ever entered into the escrow arrangement. MCDI already had the deed. In its request for bids and in its initial agreement with MCDI, the city had agreed to deed the land prior to completion of construction. In other words, the city had already done exactly what it now claims the escrow agreement should not be interpreted as doing.
"The bidder agrees to pay the balance of the purchase price . . . and the city of Milwaukee upon such payment agrees to convey the described lands by warranty deed . . . ."
MCDI is correct in its position (1) that the incidents leading to the "Supplemental Agreement" as well as its very terms indicate its purpose was to provide for prompt commencement of construction, and (2) that the escrow agreement was merely to provide the mechanics for enforcing such agreement.
Such analysis is consistent with the position taken by the city immediately after trial when it objected to:
". . . the conclusions of law in that they do not determine that the supplemental agreement was a binding contract with respect to the subject matter of the instrument and that the escrow instrument was merely a procedure set up by the parties in furtherance and by way of implementation of the supplemental agreement of December 30, 1965, which provided through an escrow a conveyancing device solely designed to carry out the terms of the supplemental agreement."
Since this case merely determines the right to possession of the deed and does not determine title to the property or foreclose the city from seeking damages for any breach of its initial contract, we think the judgment of the trial court must be affirmed. Such judgment could be overturned only by this court's determination that the efforts extended by MCDI were insufficient to constitute commencement of construction as defined by the "Supplemental Agreement." The city, however, has not chosen to attack the trial court's finding that construction had been satisfactorily commenced according to the escrow agreement, nor does the record support such an attack.
On the contrary, the record indicates significant construction by MCDI's subcontractors, such as Marchese Brothers, Inc., who brought a mechanical shovel and number of dump trucks to the property and commenced operating such equipment in excavating land from the property. Marchese completed the excavation for the footings on the Monday of the week of July 2, 1966, having excavated 9,024 cubic yards of earth.
Another subcontractor, the Hunzinger Construction Company, constructed four 16 by 16 foot square footings within this excavation, the easterly ones at elevations of 28 feet. In addition, forms were placed in the approximate center of this excavation for an elongated rectangular footing 276 by 14 feet in which steel reinforcing was placed. Elevations for this elongated footing ranged from 24.30 to 22.60 feet.
We conclude there is no merit to the city's contention that MCDI, under the terms of the "Supplemental Agreement," was required to continue construction until completion before being entitled to redelivery of the deed under the escrow agreement.
The record supports the trial court's findings of fact and conclusions of law.
By the Court. — Judgment affirmed.