Brief Fact Summary.
Wheeler (Plaintiff) and White (Defendant) formed a contract under which White was to borrow money for a construction project on Wheeler’s behalf, in exchange for money and a commission on rentals. Wheeler relied on White’s promise he would get the money, but White never secured the loan.
Synopsis of Rule of Law.
Where a promisee acts to his detriment in reasonable reliance upon an otherwise unenforceable promise, the promissory estoppel theory may be invoked, thereby supplying a remedy which will enable the injured party to be compensated for his foreseeable, definite and substantial reliance. The promisee is allowed to recover no more than reliance damages measured by the detriment sustained.
Wheeler owned a three-lot tract of land in Port Arthur, Texas. He entered into a written contract with White whereby White was to obtain a third-party loan on Wheeler’s behalf in order to construct a commercial building on the land. White was to be paid $5,000 for obtaining the loan (to be repaid by Wheeler), and also 5% commission on all rentals received from tenants procured by White for the building.
After the contract was signed, White assured Wheeler that he would obtain the money, and encouraged him to demolish the existing buildings on the land in order to make room for the new construction. In reliance on White’s promises, Wheeler destroyed the old building and prepared the land. Thereafter, White told him there would be no loan. Wheeler tried, but was unable, to secure a loan for himself.
Wheeler suit for damages for breach of contract, and, in the alternative, promissory estoppel. White filed special exceptions that the pleaded contract failed to provide the monthly installment and interest amounts, and that the plea of promissory estoppel was insufficient as a matter of law. The trial court sustained the special exceptions and dismissed the case, ordering that Wheeler take nothing from White. The Court of Civil Appeals affirmed.
Did the trial court err in sustaining the special exceptions?
Reversed and remanded.
The trial court did not err in sustaining the special exceptions to the sufficiency of the contract itself, but Wheeler’s pleadings on the theory of estoppel did state a cause of action.
In reliance on White’s promises and assurances, Wheeler demolished existing buildings that had a reasonable value of $58,500 and a rental value of $400 per month. White was estopped from denying the enforceability of his promise.
Promissory estoppel does not create a contract where none existed before, but only prevents a party from insisting upon his strict legal rights when it would be unjust to allow him to enforce them.View Full Point of Law
That the contract was sufficiently definite to support an action for damages would have been a sounder ground upon which to rest the court’s decision.
The binding thread in promissory estoppel cases is the existence of promises designedly made to influence the conduct of the promisee, tacitly encouraging the conduct, which conduct, although not necessarily constituting any actual performance of the contract itself, is something that must be done by the promisee before he could begin to perform, and was a fact known to the promisor. These elements were present in this case, as White not only promised Wheeler repeatedly that he would secure the funds, but also encouraged immediate demolition to the buildings.