Cengage Advantage Books: Fundamentals of Business Law 9th Edition by Roger LeRoy Miller

Exercise 15

Harvey v. Dow
Supreme Judicial Court of Maine, 11 A.3d 303, 2011 ME 4 (2011).
FACTS Jeffrey and Kathryn Dow own 125 acres of land in Corinth, Maine. The Dows saw the land as their children's heritage, and the subject of the children's living on the land was often discussed within the family. With the Dows' permission, their daughter Teresa installed a mobile home and built a garage on the land. After Teresa married Jarrod Harvey, the Dows agreed to finance the construction of a house on the land for the couple. When Jarrod died in a motorcycle accident, however, Teresa financed the house with life insurance proceeds. The construction cost about $200,000. Jeffrey performed a substantial amount of work on the house, including general carpentry, much of the foundation work, and helping to install the underground electrical lines. Teresa then asked her parents for a deed to the property so that she could obtain a mortgage. They refused. Teresa filed a suit in a Maine state court against her parents. The court rejected the claim that she was entitled to a judgment on a theory of promissory estoppel. Teresa appealed.
ISSUE Did Teresa detrimentally rely on her parents' promise to convey the land to her when she and her husband built a house on it?
DECISION Yes. The Supreme Judicial Court of Maine vacated the lower court's judgment and remanded the case for the entry of a judgment in Teresa's favor. The state's highest court held that the Dows showed a present commitment to transfer land to their daughter or to forgo a challenge to her ownership of it.
REASON The court reasoned that the Dows' support and encouragement of their daughter's construction of a house on the land "conclusively demonstrated" their intent. For years, they had made general promises to convey the land to their children, including Teresa. In addition, Jeffrey had approved the site for the house, obtained the building permit, and built much of the house himself. The court explained, "Statements or conduct representing a present commitment to do or refrain from doing something in the future reasonably can be expected to induce reliance and the promisee's reliance on such statements is reasonable."
FOR CRITICAL ANALYSIS-Legal Consideration On remand, the lower court was ordered to determine the appropriate remedy. Should Teresa be awarded specific performance to compel a transfer of the land? Or should she obtain damages? Discuss.