Bixler v. Bullard

Bixler v. Bullard (2000-137); 172 Vt. 53; 769 A.2d 690

[Filed 09-Feb--2001]


       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal  revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of  Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any  errors in order that corrections may be made before this opinion goes
  to press.


                                No. 2000-137


Thomas S. and Judy L. Bixler	                 Supreme Court

                                                 On Appeal from
     v.	                                         Addison Superior Court


James R. Bullard, et al.	                 November Term, 2000
Shorewell Ferries, et al.


Dean B. Pineles, J.

William B. Miller, Jr. and Kevin E. Brown of Langrock Sperry & Wool, LLP, 
  Middlebury, for Plaintiffs-Appellees.

James C. Foley, Jr. of Deppman & Foley, P.C. Middlebury, for 
  Defendants-Appellants Bullard and Jewett.

Norman Williams, Dennis R. Pearson and Robert F. O'Neill of Gravel and Shea, 
  Burlington, for Defendants-Appellants Leith, Floyd, 1759 Ltd. and Shorewell 
  Ferries, Inc.


PRESENT:  Amestoy, C.J., Dooley, Morse, Johnson and Skoglund, JJ.


       AMESTOY, C.J.  This appeal from a grant of summary judgment to
  plaintiffs arises from a  dispute involving the sale of a Vermont business
  which began operation when Mozart was three  years old.

       In early 1997, defendant James Bullard entered into negotiations with
  plaintiffs Thomas and  Judy Bixler for the sale of the Ft. Ticonderoga
  Ferry.  The negotiations continued for approximately 

 

  two years, during which time the parties entered into a "basic agreement"
  to execute the sale through  a charitable remainder trust.  Due to
  contentious disagreements regarding the terms of the sale, in  November
  1998, Mr. Bullard's attorney informed plaintiffs' attorney that he would no
  longer  negotiate with, nor sell the Ferry to, the Bixlers.  Defendant
  Bullard sold the Ferry to William Leith  and David Floyd. (FN1)  Plaintiffs
  sued Mr. Bullard, arguing that their agreement was an  enforceable
  contract.  Both parties moved for summary judgment.  The trial court,
  finding that Mr.  Bullard and the Bixlers had formed a binding contract as
  a matter of law, granted plaintiffs' motion  for summary judgment, and
  motion for specific performance, requiring defendants Floyd and Leith to 
  convey their title to, and interest in, the property.  We find that summary
  judgment was inappropriate  as factual disputes remain as to whether
  defendant manifested the requisite intent to be bound, and  therefore,
  reverse and remand for a trial. (FN2)

       One of Vermont's oldest businesses, the Ft. Ticonderoga Ferry
  ("Ferry") was originally  chartered in 1759.  In February 1997, Mr. Bullard
  advertised the sale of the Ferry , which he owned 

 

  "through his closely held corporation, Shorewell Ferries, Inc."  The sale
  was to include his residence,  located next to the Ferry.  Mr. Bullard
  listed the price of the Ferry and the residence at $750,000, and  stated
  that the sale would only be made for cash or a large down payment.  The
  advertisement also  indicated that "the owner desired to execute the sale
  through a charitable remainder trust, and that if  such mechanism were used
  there could be some price flexibility." 

       Plaintiffs contacted Mr. Bullard in February to express their interest
  in purchasing the Ferry.   In May 1997, Mr. Bullard sent the Bixlers a
  marine survey in order to establish the current market  value of the ferry
  business.  The survey included, and valued: the tug, the barge, two
  landings, a  marine railway, a fuel dispenser/tank, an equipment shed, a
  shop and equipment, and a pickup truck.  The parties' negotiations
  continued over the next several months.  Prior to February 15, 1998, the 
  Bixlers and the Bullards each met separately with a representative from St.
  Lawrence University to  explore the tax benefits of conducting the sale
  through a charitable remainder trust (CRT).  Both  parties were informed
  that IRS regulations forbid prior agreements pertaining to trust property
  before  a trust is funded.

       On February 15, 1998, the parties met at Bullards' residence and
  entered into a "basic  agreement" for the sale of the business, which Mr.
  Bullard outlined in "scratchy notes" as follows:

		I	600,000 at 8%
		II	Stock!
		III	House/Stock?
			Shelter?
		IV	JRB   Fall '98

		No erosion of Principal amount to taxes!

		Basically Accepted
		Sun 15 Feb.  JRB, SPB

 

       The parties continued to negotiate the remaining terms of the sale. 
  In July 1998, through  written correspondence, the parties explored making
  several changes to the proposed transaction,  including the purchase of
  corporate assets rather than stock, and selling Mr. Bullard's residence 
  outside of the CRT.  In one such letter, dated July 14, 1998, Mr. Bixler
  agreed not to have a "formal  and normal" business deal due to CRT
  requirements, and informed Mr. Bullard that the sale of the  Bixlers' car
  dealerships was to be completed by October 1, 1998, in anticipation of
  their purchase of  the Ferry.  

       In an undated letter sent that July, Mr. Bullard responded to Mr.
  Bixler's letter, detailing the  terms of their "basic agreement" at the
  February 15, 1998 meeting.  The letter states, "This, according  to my
  scratchy notes, is the basic agreement to which you and I agreed last
  February.  On this basis I  have ceased negotiations with other buyers and
  stopped marketing."  In the letter, Mr. Bullard  outlined four key aspects
  of the transaction, including the purchase price, the allocation of the 
  purchase price between stock and assets, that the sale would proceed
  through a charitable remainder  trust, and that Mr. Bullard would operate
  the Ferry during the 1998 season.  Mr. Bullard's letter also  stated, "In
  sum, I do not propose any changes to what I understand to be our basic
  handshake of 15  February. . . . Shirley and I will not consider any shift
  or change that would impinge negatively on  our agreement." 

       On October 1, 1998, the Bixlers sold their automobile dealerships.  On
  October 15, the  Bullards funded the CRT with company stock, and Mr.
  Bullard and his attorney, Willem Jewett,  were named as its co-trustees. 
  On October 19, the Bixlers received a copy of draft contracts from 
  attorney Jewett, which did not include reference to the pickup truck or
  inspection provisions.  The  parties met on October 21 to discuss whether
  the pickup truck was to be included as an asset of the 

 

  business, who would pay an employee's salary through the off-season, and
  inspections.  

       The meeting was "contentious."  The Bullards "perceived a statement by
  Mr. Bixler as a  challenge to find another buyer."  According to Mr.
  Bixler, however, the parties "felt all of [the]  items were addressed and
  resolved at our meeting and we left having shaken hands again and 
  apologizing for any misunderstanding, feeling that all was fine."

       On October 28, defendants Leith and Floyd made a written offer to
  purchase the company  stock from the CRT and the residence from Mr.
  Bullard.  On October 29, attorney Jewett sent revised  contract drafts to
  Bullard as an "offer" from the Bixlers, to reflect the parties' most recent 
  discussions.  Attorney Jewett also informed the Bixlers that they were to
  no longer deal with Bullard  directly, that Bullard had found another
  acceptable buyer and that the Bixlers needed to make their  intentions
  clear by the following week.  Mr. Bixler contacted attorney Jewett that
  same day and  stated that he and his wife accepted the draft contracts. 
  Attorney Jewett informed him that the draft  contracts remained
  unacceptable to Bullard.  According to Mr. Bixler, he agreed to all the
  revisions  requested by Mr. Bullard, and made changes to the documents by
  hand, initialled them and sent them  to attorney Jewett.

       On November 2, 1998, attorney Jewett informed the Bixlers through
  their attorney that   Bullard would no longer negotiate with them, nor sell
  them the Ferry.  Also on November 2, Mr.  Bullard and attorney Jewett, as
  CRT trustees, accepted and signed an agreement to sell the CRT  stock and
  residence to Mr. Leith and Mr. Floyd.

       Plaintiffs promptly brought suit in Addison County Superior Court
  which granted their  motion for summary judgment, finding that the parties
  entered into an enforceable agreement at their  February 15, 1998 meeting,
  as "the essential elements of the contract were agreed upon."  The trial 

 

  court further found that as of their February meeting, both parties,
  including Mr. Bullard, intended to  be bound.  The court denied the Floyd
  defendants' motion to reconsider, and finding that "all of the  equities
  favor the Bixlers," granted plaintiffs' motion for specific performance,
  compelling  defendants to convey the property to them.  The trial court
  refused the Floyd defendants' subsequent  motion for a stay of the court's
  order for specific performance.  This Court granted a stay in May  2000.

                            I.  Summary Judgment

       Summary judgment is appropriate only if there is "no genuine issue as
  to any material fact,"  and the moving party is entitled to judgment as a
  matter of law.   V.R.C.P. 56(c).  "Thus, if we find  genuine issues of
  material fact, within the meaning of V.R.C.P. 56(c), we must reverse the
  decision  granting summary judgment."  Messier v. Metropolitan Life Ins.
  Co., 154 Vt. 406, 409, 578 A.2d 98,  99 (1990).  "We apply the same
  standard as the trial court in ruling on a motion for summary  judgment." 
  Garneau v. Curtis & Bedell, Inc., 158 Vt. 363, 366, 610 A.2d 132, 133
  (1992).  In this  case, both parties moved for summary judgment at the
  trial level, and thus both were entitled to the  benefit of all reasonable
  doubts and inferences when the opposing party's motion was being judged. 
  Toys, Inc. v. F.M. Burlington Co., 155 Vt. 44, 48, 582 A.2d 123, 125
  (1990).  

                           II. Intent to be Bound

       Defendants first contend that Mr. Bullard did not intend to be bound
  by his preliminary  negotiations with the Bixlers for the sale of the
  Ferry.  As the court noted in Teachers Ins. & Annuity  Assoc. v. Tribune
  Co., 670 F. Supp. 491, 497 (S.D.N.Y. 1987), preliminary agreements: 

    cover a broad scope ranging in innumerable forms and variations 
    from letters of intent which presuppose that no binding
    obligations  will be placed upon any party until final contract
    documents have 
				
 

    been signed, to firm binding commitments which, notwithstanding a 
    need for a more detailed documentation of agreement, can bind the 
    parties to adhere in good faith to the deal that has been agreed.  

  See also Reprosystem, B.V. v. SCM Corp., 727 F.2d 257, 261 (2d Cir. 1984). 

       What distinguishes one form of preliminary agreement from another is
  "the intentions of the  parties and . . . their manifestations of intent."
  Teachers, 670 F. Supp.  At 497.  Like Teachers, this  case turns on "whether
  a manifestation of preliminary assent amounted to a legally binding 
  agreement." Id.  Intent to be bound is a question of fact to be determined
  at trial. See Wilder v. Cody  Country Chamber of Commerce, 868 P.2d 211,
  218 (Wyo. 1994);  Reprosystem, 727 F.2d  at 261;  see also Bachli v. Holt,
  124 Vt. 159, 162, 200 A.2d 263, 266 (1964) (where intent to be bound was 
  decided by jury). "To discern that intent a court must look to the words
  and deeds [of the parties]  which constitute objective signs in a given set
  of circumstances."  Winston v. Mediafare Entm't  Corp., 777 F.2d 78, 80 (2d
  Cir. 1986) (alteration in original) (internal quotations omitted). 

       As this Court has noted: 

    In determining what one party intended and the other ought to have 
    understood, regard must be had to the situation and purpose of the 
    parties, the subject matter and course of the negotiations.   The
    question whether there was a contract between the parties  does
    not depend alone upon specified facts found but also upon 
    reasonable inferences to be drawn from them.


  Toys, Inc., 155 Vt. at 50, 582 A.2d at126-7 (quoting Ackerman v. Carpenter,
  113 Vt 77, 81, 29 A.2d 922, 924-25 (1943)).  The specific facts as well as
  any inferences to be drawn from the circumstances  surrounding each
  individual case "may be shown by 'oral testimony or by correspondence or
  other  preliminary or partially complete writings.'" Winston, 777 F.2d  at
  81 (citing Restatement (Second) of  Contracts § 27 cmt. c (1981)). 

 

       In this case, defendants claim that Mr. Bullard clearly expressed his
  intent not to be bound  until after the CRT was funded, and that Mr. Bixler
  knew that Mr. Bullard did not intend to be bound  until after the CRT was
  funded.  To support their claim, defendants point to several statements in
  Mr.  Bullard's deposition and affidavits in which he stated that he "had no
  intention of entering into a  binding contract with the Bixlers . . . at
  any time prior to the donation of stock to a charitable  remainder trust, a
  point the Bixlers well understood;" both he and the Bixlers were informed
  by  representatives of St. Lawrence University that no agreements could  be
  made regarding the sale of  the trust property; and, Mr. Bullard himself
  also told Mr. Bixler that they "could not establish a  binding contract . .
  . before  [the] stock was actually donated." 

       Defendants also cite Mr. Bixler's letter, dated July 14, 1998, in
  which he acknowledges, "you  and the recipients of the trust have made it
  clear that we are unable to have a formal and normal  business deal and we
  agreed that we are able to live by those rules."  According to defendants,
  both  parties "knew that no contract for purchase of the CRT assets could
  be established in the face of the  IRS regulations governing establishment
  of a charitable remainder trust." 

       The Bixlers claim, to the contrary, that both parties manifested the
  requisite intent to be  bound at their meeting on February 15, 1998.  The
  Bixlers contend that Mr. Bullard memorialized  their agreement in his
  "scratchy notes" and  subsequent letter, which outlines the "basic
  agreement,"  and indicates that he has "ceased negotiations with other
  buyers and stopped marketing."  Plaintiffs  assert that their intent to
  enter into a contract was evident in their correspondence with Bullard. 
  One  such letter reads, "we are selling our entire personal and business
  asset base on a handshake to  purchase 'our ferry' and lake home, but we
  are unable to consult with anyone as this is to be a secret  transaction
  until the trust donation."  Similarly, in Mr. Bixler's deposition he stated
  his intent "to

 

  have an agreement with Mr. Bullard."  

       Plaintiffs vigorously maintain that whatever reservations defendant
  Bullard might have  subjectively harbored during contract negotiations, it
  is his acts, writings and words that must be  looked to in determining
  whether he manifested an intent to be bound.  Plaintiffs correctly note
  that  it is a general rule of contract construction that the language and
  acts of a party to a contract are to  receive such construction as the
  other party was fairly justified in giving to them, and a defendant is  not
  permitted at a later time to give them a different construction in
  consequence of some mental  reservation.  Norton & Lamphere v. Blow & Cote,
  123 Vt. 130, 135, 183 A.2d 230, 234 (1962);  Right Printing Co. v. Stevens,
  107 Vt. 359, 365, 179 A. 209, 212 (1935).  This general rule is most 
  applicable where a trier of fact has determined that the evidence, and the
  inferences to be drawn from  it, fairly justifies the construction given by
  a plaintiff to the language and actions of a defendant.   Hence, the cases
  relied upon by the plaintiffs are distinguishable from this case as they
  were not  decided on summary judgment, but rather heard by a trier of fact. 
  See e.g., Bachli, 124 Vt. at 162,  200 A.2d  at 266; Norton & Lamphere, 123
  Vt. at 131, 183 A.2d  at 232; Cataldo v. Zuckerman, 482 N.E.2d 849, 853-4
  (Mass. App. Ct. 1985); North Coast Cookies, Inc. v. Sweet Temptations,
  Inc., 476 N.E.2d 388, 393-94 (Ohio 1984);  Mr. Mark Corp. v. Rush, Inc.,
  464 N.E.2d 586, 589-90 (Ohio Ct.  App. 1983).

       Here, our review of the record persuades us that even if facts central
  to this action cannot be  disputed by defendant, the same cannot be said
  for the situation and purpose of the parties and the  reasonable inferences
  to be drawn from the facts.  Toys, Inc., 155 Vt. at 50-51, 582 A.2d  at 127.  
  Although the trial court indicated that both parties manifested the
  requisite intent to be bound, the  state of the evidence renders the
  question appropriate for a trier of fact.  See Bachli, 124 Vt. at 162, 

 

  200 A.2d  at 266.  When viewed in the light most favorable to the party
  opposing summary judgment,  enough conflicting facts exist regarding the
  parties' intent to be bound to require a remand.  See  Cranbrook Investors,
  Ltd. v. Great Atlantic Mgmt. Co., 201 F.3d 435 (unpublished table
  decision),  No. 98-2631, 1999 WL 1020534, at *3-4 (4th Cir. Nov. 10, 1999);
  Wilder, 868 P.2d  at 220.  A fact  finder could certainly conclude on the
  basis of this record that defendant Bullard entered into a  contract with
  the Bixlers, but that conclusion is not commanded as a matter of law. Toys,
  Inc., 155  Vt. at 51, 582 A.2d  at 127.  Summary judgment was in error.

       Reversed and remanded.



                                       FOR THE COURT:


                                       _______________________________________
                                       Chief Justice



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                                  Footnotes


FN1.  Defendants in this appeal include: James Bullard, Shorewell Ferries,
  Inc. (Mr. Bullard's  closely held corporation), Mr. Bullard and Willem
  Jewett as trustees of the James Bullard Charitable  Remainder Unitrust,
  William Leith, David Floyd and 1759 Ltd.  Defendants Floyd, Leith and 1759 
  Ltd. (the Floyd defendants) were not defendants at the time of the trial
  court's grant of summary  judgment to plaintiffs.  The Floyd defendants
  were named in a second complaint filed on September  22, 1999.  The Floyd
  defendants moved for reconsideration of the July 16, 1999 summary judgment 
  decision, although they had not been defendants at the time it was issued. 
  On appeal, the Floyd  defendants assert that the trial court erred in
  denying their motion for reconsideration.  We need not  address this issue
  because our decision grants the relief requested by all defendants: a
  remand for  trial on the merits.  For clarity, we simply refer to defendant
  Bullard throughout the opinion, except  where the Floyd defendants'
  interests remain distinct.

FN2.  Given our disposition of this case, we need not reach defendants'
  assertions that summary  judgment was inappropriate because a material
  factual dispute exists as to whether plaintiffs  repudiated the contract,
  nor do we address defendants' assertion that summary judgment was  improper
  because the tax consequences constituted a condition precedent to the
  contract.