City Of Hastings v. Jerry Spady Pontiac-Cadillac, Inc.

322 N.W.2d 369 (1982)

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Nature of the Case

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Facts

Duane Stromer was city attorney for P, and during said period was also the attorney for D. D developed a comprehensive plan where F Street would be extended along property owned by the Missouri Pacific Railroad Company, but no longer used as a railroad right-of-way. It would provide P with its only major thoroughfare crossing the city from east to west in the south part of town. Stromer in his capacity as attorney knew of the details and knew of the importance of D acquiring the land from the Railroad. Stromer maintains his first contact with the Railroad was on April 2, 1977, when he made an inquiry on his own behalf. P officials were unaware of these activities and had never authorized Stromer to negotiate for the purchase of the property. P's director had made contact and expressed P's interest in obtaining the abandoned right-of-way for street purposes. In August of 1977, Stromer made a written offer to purchase the property for $6,890, which was rejected. Stromer advised the Railroad that P was not interested in purchasing the property because a decision had been made not to put a street through in that area. This was a deliberate falsehood, for at the very same time P was obtaining appraisals so as to submit an offer of purchase. On September 21, 1977, by letter, Stromer agreed to pay $10,900 for the property. Stromer informed the committee that he had acquired the property and that he would be willing to transfer the property for $20,000. Stromer wrote a letter withdrawing from the Railroad transaction but called and stated that the deal was still on and he wanted the deed to be issued to the Bonnavilla Plaza Corporation. This corporation was wholly owned by D. P, ignorant of what was going on, had agreed to offer the Railroad $18,000. On January 9, 1978, the motion to offer the $18,000 was passed. On that date, Stromer obtained a check from D in the amount of $10,900 and forwarded the check requesting that the property be deeded to D. The deed was mailed to Stromer on February 8, 1978. P learned of the sale on March 6, 1978. Stromer resigned as city attorney on April 8, 1978. Jerry Spady, president of D, denied knowing that P was interested in the property. Stromer contends that his interest was for personal investment and the possibility of building duplexes on the property. Spady indicates that Stromer approached him some 2 or 3 months before he purchased the property and informed him that P was no longer interested in the property and proposed that he and Spady purchase the property on an equal share basis as an investment. Thereafter, Stromer could not afford to financially participate and Spady undertook the purchase on his own. Jerry Spady in negotiations with P indicated that the property now had a value of $80,000. P brought an action in equity to impress a constructive trust and the court found for P. D appealed.