Town of Rutland v. City of Rutland
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Town of Rutland v. City of Rutland (97-430); 170 Vt. 87; 743 A.2d 585
[Filed 22-Oct-1999]
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
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No. 97-430
Town of Rutland Supreme Court
On Appeal from
v. Rutland Superior Court
City of Rutland April Term, 1999
East Mountain Land Company and
John A. Russell Corp.
Alden T. Bryan, J.
Mark L. Sperry and Kevin E. Brown of Langrock Sperry & Wool,
Middlebury, for Plaintiff-Appellee.
Paul S. Kulig and Katherine G. Bulchanan (On the Brief) of Keyser,
Crowley, Carroll, George & Meub, P.C., Rutland, for Defendants-Appellants.
PRESENT: Amestoy, C.J., Dooley, Morse, Johnson and Skoglund, JJ.
JOHNSON, J. Defendants East Mountain Company and John A. Russell
Corporation appeal the superior court's ruling that a water line under
Gleason Road in the Town of Rutland is the property of the Town. John A.
Russell Corp. (Russell) was the general contractor for a development owned
by East Mountain Company and installed the water line at issue. After a
dispute with the Town over whether it would compensate Russell/East
Mountain for the line, East Mountain agreed to sell the water line to the
City of Rutland. The trial court declared the line belonged to the Town.
We affirm.
In 1985, Congregational House, Inc. began construction of ninety-nine
condominium
units on forty-four acres located in the Town, on the north side of Gleason
Road. Russell was engaged as the general contractor. Congregational
House abandoned the project in 1986. East Mountain Company, owned by the
individual John A. Russell, bought the land and continued to develop the
parcel. Russell Corp. remained the general contractor, and the development
was named Heritage Hill.
The Town of Rutland completely surrounds the City of Rutland. Gleason
Road runs east from Route 4 in the City of Rutland. It is in the City for
approximately one-quarter mile and then enters the Town. The Heritage
Hill development is in the Town. The water line that services Heritage
Hill runs along the south side of Gleason Road from Route 4 in the City and
crosses into the Town along with Gleason Road. At the entrance to Heritage
Hill, the line crosses under Gleason Road into the development. The line
carries water from the City water system.
In September 1986, Russell obtained permission from the City to
install the water line within the City's right-of-way along Route 4 and
Gleason Road. The agreement stated "the line w[ill] be built . . . and
prepared according to the plans prepared by Aronson & Olson, Inc. and will
become a City water main once it's completed." The City and Russell agreed
to transfer the line without compensation, in exchange for the permission
to install it in the City right-of-way.
This case concerns the parallel agreement made with the Town of
Rutland. No one disputes that there was an agreement to have the Town
take over the Gleason Road water line on completion. Russell, however,
maintains that the Town agreed to pay compensation for the line, and the
Town denies it. As Russell did not quitclaim the line, East Mountain chose
to
resolve the dispute in November, 1992, by signing a contract with the City
of Rutland purporting to transfer the disputed section of line (within the
Town boundaries) to the City. East Mountain received no compensation at
the time but would receive "hook-on" fees from users who tapped into the
line after the date of the contract. These fees would be paid almost
solely by Town residents.
In May 1993, the Town filed suit to have the disputed section of line
declared free of any right, title, or interest of the City and to declare
the November 1992 agreement between the City and East Mountain void. The
City counterclaimed, seeking ownership of the entire water distribution
system of the Town by condemnation. In July 1994, Rutland Superior Court
granted the Town's motion for summary judgment dismissing the City's
counterclaim. The Town's claims proceeded to trial.
After a bench trial, the court entered a decision for the Town. The
court made specific findings of fact that the Town had granted permission
for installation of the line at a warned hearing, attended by
representatives of the owners and general contractor for Heritage Hill.
The court further found that both parties expected the line to become Town
property upon completion without compensation being paid. The court
concluded, "John Russell has simply changed his mind. He later saw it to
his advantage to demand compensation." The court awarded ownership of the
Gleason Road water line within Town limits to the Town. Defendants East
Mountain Company and John A. Russell Corporation (Defendants) appeal. The
City did not appeal the court's decision.
Defendants allege that the trial court erred in deciding: (1) that
the water line in Gleason Road became the property of the Town by
operation of law; (2) that there was an agreement
between the Town and Russell and concluding that the agreement was not
barred by Vermont's Statute of Frauds; (3) that William Kollhepp,
Russell's agent, had authority to form the agreement; (4) that the dig
permit, without reservations or conditions regarding the water line, was
irrelevant to the inquiry; and (5) that the meeting at which the agreement
was made complied with Vermont's Open Meeting Law.
Conclusions of law by the trial court will be upheld if supported by
the findings. See Abbiati v. Buttura & Sons, Inc., 161 Vt. 314, 318, 639 A.2d 988, 990 (1994). Therefore, our review of the challenged conclusions
begins with the court's findings and our determination of whether the
findings support the conclusions.
The central finding at issue in this case was that Russell agreed to
transfer the line in exchange for the Town's permission to install it in
Gleason Road. The existence of an agreement is ordinarily a question of
fact for the trier. This principle is borne out by our cases, see, e.g.,
Toys, Inc. v. F.M. Burlington Co., 155 Vt. 44, 582 A.2d 123 (1990). There,
we noted that the question of whether a contract existed depends on facts
as well as the reasonable inferences to be drawn from them, and is also
influenced by the situation of the parties and the subject matter. See
id. at 50, 582 A.2d at 126-27. Other jurisdictions have stated the general
rule more clearly, see, e.g., Simmons v. Simmons, 708 A.2d 949, 963 (Conn.
1998) (existence of contract is, at least initially, question of fact);
Fleet Bank--N.H. v. Christy's Table, Inc., 681 A.2d 646, 648 (N.H. 1996)
(whether meeting of minds occurred is factual question to be determined by
trier of fact); June Roberts Agency, Inc. v. Venture Properties, Inc., 676 A.2d 46, 48 (Me. 1996) (existence of contract is question of fact to be
determined by jury).
We turn first to whether the trial court erred in concluding that
there was an agreement
between the Town and Russell to turn over the completed water line to the
Town, without payment by the Town. Defendants do not attack the trial
court's findings, yet contend there was insufficient evidence of a meeting
of the minds and therefore argue there was no contract.
After a review of the trial court's findings of fact and the evidence
below, we conclude there is sufficient evidence to support the trial
court's finding of an agreement between the parties. The trial court
found that the Rutland Town Board of Selectmen held a meeting in late 1985
or early 1986, for which notice had been given, to hear Russell's request
for permission to install a water line in Gleason Road. Russell was
represented by William Kollhepp, its Director of Development, who had
handled the Act 250 permitting and planning commission proceedings for
Heritage Hill. After Kollhepp requested permission to install the line,
Board member Rodney Gallipo asked that the line be deeded to the Town on
completion. Kollhepp agreed to deed the line to the Town, and the Board
then voted to grant permission for the installation.
Later correspondence between the parties involved in the construction
confirms that there was an agreement to transfer the line to the Town upon
completion. Correspondence between the City and the Town demonstrates the
Town's intentions. On March 18, 1987, the Board wrote to the mayor of the
City: "The Town would like to take [the Gleason Road water line] over as a
Town line so that qualifying members of the public within the Town may use
it. It is awaiting approval under paragraph (7) of the [1972 water
supply] Agreement before doing so." The Board's letter indicates that the
only step remaining before the Town took the line over was the resolution
of a disagreement between the Town and City about the amount of water the
line could carry. The letter suggests the contract between Russell and the
Town was fully
performed: the Town granted permission to install, Russell installed and no
further performance was required. Compensation for the line was no part of
the bargain.
The court below placed particular emphasis on a letter written by Carl
Anderson, an attorney who was a Vice-President of Russell for the period
at issue and functioned as Russell's in-house counsel. Anderson wrote to
the Board on September 25, 1988, to congratulate the Town on its settling
the dispute with the City over the water line's capacity. Then he turned
to the Town's pending request for a quitclaim of title to the Gleason Road
water line.
As you may recall, in the past we have been reluctant to Quit
Claim the water line to Rutland Town because your attorney, Mark
Sperry, had opined that if the Town owned the water line it might
not be able to limit service through the water line to just Heritage
Hill. In addition since the City had approved only enough water for
the Heritage Hill development, distribution of that allocation
through that water line to other users would have jeopardized the
completion of Heritage Hill.
In anticipation of our ability now to transfer the water line to
you I request that you provide me with the following items:
1. A copy of the fully executed agreement between the Town and
the City so that I can confirm for myself that there is sufficient
water available under the agreement to accommodate the completion of
the Heritage Hill development.
2. A draft or sample of any proposed Quit Claim which you might
require in order to convey the pipeline from East Mountain Land Company
to the Town of Rutland.
3. Any other items that you might deem to be necessary or required
in connection with the transfer of the line.
In this listing of the paperwork necessary to tie up the transfer,
Russell's in-house lawyer, Anderson, makes no mention of compensation nor
suggests in any way that compensation was part of the agreement. Like the
letter from the Town to the City, this letter evidences the parties'
understanding that the agreement was performed by both sides and only the
technicality of transferring the line remained.
Although this evidence is pieced together from a number of different
and indirect
sources, no other explanation presents itself. The documents demonstrate
that both parties expected the Town to take over the line; Russell would
not have installed the line without permission from the Town, and the Town
had a practical need to control its streets as well as to provide water to
other residents, motivating its request that the line be deeded to it. The
only reasonable inference is the one made by the trial court: there was a
simple quid pro quo agreement whereby the Town permitted installation and
Russell agreed to deed the line to the Town. While one might wish the
trial court's findings had been more direct, there was no other conclusion
to reach from the facts before the court. (FN1)
Defendants offered no contradictory evidence. In fact, defendants
Russell Corp. and the City elected not to question John Russell when he
was called as plaintiff's witness below, and therefore failed to provide
an alternative explanation of how permission to install the line was
obtained and on what terms. Defendants called only two witnesses, neither
of whom rebutted the account given by plaintiff's witness of the meeting
at which the agreement was reached. Defendants' witnesses testified
primarily about the absence of the minutes of the Board meeting, an issue
irrelevant to the central question of whether an agreement was reached at
that meeting. Because defendants provided no other account of how the line
came to placed in the Town's right-of-way along Gleason Road, the only
reasonable inference that could be drawn from the evidence was that
plaintiff's account was correct.
Defendants cite only two cases in support of their proposition that
there was no meeting of the minds between the Town and Russell. These
cases are inapposite. Bell v. Town of Grafton, 133 Vt. 1, 3-4, 328 A.2d 408, 409 (1974) held there was no meeting of the minds where, in
negotiating a contract to sell land, the proposed deed was rejected by one
party and no later agreement was reached. That is not the case we have
here; the one fact beyond dispute is that all parties expected the Town to
take over the line on completion. Defendants suggest we should import an
additional term, payment to Russell, into that contract, but the evidence
before the trial court does not support such a reading. Reynolds v.
Sullivan, 136 Vt. 1, 3-4, 383 A.2d 609, 611 (1978) concerned a preliminary
option agreement that did not provide terms for payment, interest or
security and we therefore deemed it too vague to be enforced. The credible
evidence presented by the Town does not show a vague, preliminary
agreement. Defendants have offered no evidence of obtaining permission at
any time other than the late 1985/early 1986 Board meeting; therefore it
is only reasonable to assume they did obtain permission at that time and
the Board did insist that the line be deeded to the Town on completion. No
other explanation for the course of events set out below makes sense.
Next, we respond to defendants' assertion that Kollhepp, Russell's
agent, lacked the authority to contract on behalf of Russell and that
therefore East Mountain took without notice of the condition created by
the contract with the Town. Defendants would apparently have us believe
Kollhepp lacked authority to do any of the things he quite evidently did,
such as represent Russell at Act 250 hearings and Town Planning Commission
proceedings. If it were true that Kollhepp lacked the authority to
contract on behalf of Russell, it is hard to imagine how this project ever
got built. Kollhepp was found by the lower court to have been in charge of
marketing and development for Russell. He was also found to have appeared
at all Act 250 and other meetings to obtain permits for Heritage Hill. He
plainly succeeded at these endeavors. Defendants, however, would have us
believe he was somehow limited in his appearance as Russell's agent before
the Town Board of Selectmen. It is impossible to find a basis for such a
limitation. Kollhepp was a Vice-President of Russell during the year in
question; he had the title Director of Development. He was known to other
parties in the construction as the person in charge of permitting and
construction. Defendants do not contend that the line was installed
without permission; therefore someone was getting permission and
contracting with Russell's approval. Again, defendants offered no
evidence to contradict the inference of authority created by plaintiff's
evidence; they even declined to question John Russell, who presumably would
have been in the best position to know the scope of Kollhepp's authority.
There can be no other conclusion but that Kollhepp had at least
apparent authority to contract with the Town to exchange the water line
for permission to install it in the place most advantageous for Russell -
the Town's Gleason Road right-of-way. See, e.g., New England Educational
Training Service, Inc. v. Silver Street Partnership, 148 Vt. 99, 105, 528 A.2d 1117, 1120 (1987) (under doctrine of apparent authority, agent binds
principal when third-party reasonably relies on representations that agent
acting within scope of authority).
We now turn to the argument that the Statute of Frauds bars
enforcement of the agreement between the Town and Russell because there is
no written agreement. The court below found that an oral agreement was
made when the Town granted permission to install the line and Russell
promised to deed the line to the Town without payment. The Statute of
Frauds requires several types of agreements to be written in order to be
enforced. Defendants point to
12 V.S.A. § 181(5), which provides that a contract for the sale of lands,
tenements or hereditaments must be in writing.
Assuming, arguendo, that the installation agreement could be construed
as a sale of lands, this case would fall within the rule established by
Nutting v. Freda, 153 Vt. 501, 502, 572 A.2d 896, 897 (1990). There, the
trial court's findings supported the conclusion that the plaintiff had
altered his position in reasonable reliance on the defendant's oral promise
and therefore injustice could be avoided only by specific enforcement.
This Court held that the defendant's oral promise to convey real property
fell under an exception to the Statute of Frauds. See id. (citing
Restatement (Second) of Contracts § 129 (1981)). In the instant case, the
Town undertook a substantial forbearance, permitting Russell to install a
ten-inch water main in Gleason Road, and did so in reasonable reliance on
the agreement made at the meeting with William Kollhepp that the line
would become part of the Town's water system upon completion. See
Restatement (Second) of Contracts § 139(2) (FN2) (factors supporting
enforcement of promise). This performance by the Town of its part of the
bargain has altered the positions of the parties and enforcement of the
agreement is needed to prevent injustice.
Defendants further claim that because they failed to obtain a dig
permit, which under statutory authority should have included conditions
such as the transfer of the line, there was no agreement that the line be
transferred. This argument is meritless. The trial court concluded:
"If Russell failed to apply for a required permit, this in no way limits
the Town's rights or impairs its ownership. We find the lack of the
permit is not relevant to this controversy."
We agree with the trial court. Under 19 V.S.A. § 1524 (now superseded
by 19 V.S.A. § 1111), persons proposing to install pipes and wires in
highways must obtain a permit and the issuing entity must include any
conditions imposed. The burden is on the developer to apply for and
obtain permits. See id. at § 1524(a) ("Permits must be obtained by anyone
or any corporation wishing to use as defined in this section any part of
the highway right-of-way either in the state or town system."). The trial
court correctly concluded that the absence of the dig permit was due to
Russell's oversight and has no bearing on whether Russell and the Town
agreed the line was to be transferred without compensation.
Lastly, we look at the defendants' contention that Vermont's Open
Meeting Law bars enforcement of this contract. Defendants argue that
because plaintiff has not produced the minutes of the Board meeting at
which the contract was formed, that meeting did not comply with Vermont's
Open Meeting Law. See 1 V.S.A. § 312(b) (requiring minutes to be taken of
all meetings of public bodies). Therefore, defendants assert that the
meeting was illegal and that an action taken by the Board at the meeting
is void.
Defendants' argument has no merit. First, the trial court found that
the meeting was duly warned and therefore open to the public. The
uncontroverted testimony detailed that minutes were taken by one of two
people and filed according to custom. Thus, the trial court did not find
that minutes had not been taken at the meeting, but only that no copies of
the minutes can presently be found. We decline to adopt a rule that
invalidates decisions of public bodies because the minutes of a meeting
have been lost. See Valley Realty & Dev., Inc. v. Town of
Hartford, 165 Vt. 463, 467, 685 A.2d 292, 295 (1996) ("Invalidation of
public action is often an 'extreme remedy' that may be inappropriate for
the underlying violation."). The intent of the Open Meeting Law was "to
give public exposure to governmental decision-making. The purpose is not
to create 'vehicles for individuals displeased with governmental action to
obtain reversals of substantive decisions.'" Id. at 467-68, 685 A.2d at
295 (internal citations omitted).
Affirmed.
FOR THE COURT:
_______________________________________
Associate Justice
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Footnotes
FN1. The trial court also provided an alternative ground for its decision,
concluding that the water line became the property of the Town by
operation of law. Defendants have challenged this conclusion but because
we affirm the trial court's holding that an agreement was reached for
transferring the line without further compensation, we need not reach the
alternative ground. We note only that such a holding would not be
inconsistent with the language of 19 V.S.A. § 1102, prohibiting anyone
from obtaining a right or interest in a public highway.
FN2. Section 129 of the Restatement (Second) of Contracts concerns the
enforcement of oral promises with respect to the transfer of an interest
in land. Section 139 of the Restatement (Second) of Contracts reiterates
the same rules as general principles for the enforcement of contracts
governed by the Statute of Frauds. See Restatement (Second) of Contracts §
139 (1981). The factors supporting enforcement are listed under § 139, but
the rule is the same as that in § 129.
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