716 F.

2d 220

SUBURBAN TRANSFER SERVICE, INC., PlaintiffAppellant,

v.
BEECH HOLDINGS, INC., Defendant-Appellee.
Charles A. STANZIALE, Jr., Trustee for Suburban Aviation
Service, Inc., Plaintiff-Intervenor,
v.
BEECH HOLDINGS, INC., a Kansas corporation and
Suburban
Transfer Service, Inc., a New Jersey corporation, Defendant.
No. 82-5219.

United States Court of Appeals,

Third Circuit.
Argued April 26, 1983.
Decided Sept. 7, 1983.

Rudy B. Coleman (argued), Rosemary A. Hall, Francis X. Ferrara,

Carpenter, Bennett & Morrissey, Newark, N.J., for Suburban Transfer
Service, Inc.
Matthew Farley (argued), Glenn Pantel, Shanley & Fisher, P.C., Newark,
N.J., for Beech Holdings, Inc.
Before HUNTER, HIGGINBOTHAM, Circuit Judges, and
STAPLETON,* District Judge.OPINION OF THE COURT
JAMES HUNTER, III, Circuit Judge:

Suburban Transfer Service, Inc. ("Transfer") brought this action against Beech
Holdings, Inc. ("Beech") claiming that Beech was liable for the cost of certain
capital improvements made to facilities at the Teterboro Airport, Teterboro,
New Jersey. Transfer made its claim as a third-party beneficiary to an
agreement entered into by Suburban Aviation Service, Inc. ("Aviation"), Pan
American Airways, Inc. ("Pan Am"), and Beech. On cross-motions for

summary judgment, the district court entered summary judgment for Beech and
dismissed Transfer's complaint. We will affirm.
2

* Pan Am operates the Teterboro Airport in Teterboro, New Jersey under an

agreement with the Port Authority of New York and New Jersey. On December
1, 1974, Pan Am, Aviation, and Beech entered into a Use and Occupancy
Agreement ("Agreement") under which Pan Am granted Aviation the right to
use and occupy specified areas of the Teterboro Airport until December 31,
1999. At the time the Agreement was entered into Aviation was a retail dealer
of aircraft manufactured by Beech Aircraft Corporation, the parent corporation
of Beech. In addition to its retail operations, Aviation also serviced and stored
aircraft, provided flight instructors, and sold aircraft parts and equipment.

Under section 35 of the Agreement, Beech undertook an obligation to enter into

a new, but substantially identical, use and occupancy agreement with Pan Am
(the "New Agreement") in the event of a termination of the Agreement between
Pan Am and Aviation. App. at 67. The New Agreement was to be only for a
two-year term. At Beech's option, however, the New Agreement could be
extended for the balance of Aviation's original term through December 31,
1999. Id.

As a condition of its occupancy under the Agreement, Aviation was required to

make certain capital improvements to render the premises suitable for its
purposes and business operations. App. at 38, 73. In anticipation that Aviation
might have to obtain a loan to finance those improvements, section 34 of the
Agreement provided:

For purposes of this Agreement User's loan (hereinafter referred to as the

"Loan") shall mean borrowing of an amount not in excess of Two Hundred
Thousand Dollars ($200,000.00), the proceeds of which are to be used by the
User for the purposes of performing any construction authorized to be
performed by User under this Agreement. The Loan shall be repaid over a term
of at least ten (10) years but in no event for a period exceeding the term of this
Agreement, with equal installments covering payment of principal and interest,
provided, however, that the Loan shall be in the form of a Note and Security
Agreement as set forth in Exhibit C attached hereto and made a part hereof,
shall be made no later than December 31, 1977 and the financing entity
granting the Loan shall hereinafter be referred to as "the Lender."

App. at 67 (emphasis added). The Agreement further provided in section 35.4

that if Pan Am terminated its agreement with Aviation, Beech would pay the

monthly installments on Aviation's loan for the two-year period covered by the
New Agreement Beech was required to enter into with Pan Am. App. at 68. In
the event Beech elected to extend its occupancy until 1999, it was required
under section 35.5 of the Agreement either to pay off the loan or to assume and
pay the regular equal installments covering principal and interest on the loan
for the remainder of the loan's term. Id.
7

Aviation began occupying the Teterboro Airport in December of 1974. By July

of 1975, however, it still had not obtained a loan to cover the cost of the capital
improvements it was required to make under the Agreement. Apparently unable
to obtain funds from other sources, Aviation began to borrow funds from an
affiliate corporation, Transfer, sometime in late 1975. Transfer advanced the
funds through a common fund controlled by Industrial Leasing Corporation, the
parent company of both Aviation and Transfer. At no time, however, did
Aviation and Transfer execute the Note and Security Agreement ("Note")
referred to in section 34 of the Agreement. App. at 180.

On October 10, 1975, a vice-president of Beech wrote to Aviation and

requested information concerning Aviation's plans for borrowing funds and
improving the facilities under the Agreement. On October 23, 1975, Richard
Brown of Aviation responded, stating in pertinent part: "For the time being, we
are borrowing all our money from Suburban Transfer Service, Inc., an affiliated
company which is temporarily to be considered as the secured party. I will
forward you more plans on our long term borrowing when I am able to get back
to work on a full time basis." App. at 162.

Aviation allegedly continued its efforts to find a commercial lender but was
unsuccessful. Transfer continued to advance its funds, however, and
construction of the improvements at the airport progressed. Following internal
discussions by Transfer concerning its status under the Agreement, see app. at
199, 201, on September 23, 1976, counsel for Aviation wrote a letter to the Port
Authority of New York and New Jersey, with a copy to Beech, stating: "[We]
do hereby advise that 'the Lender' to be inserted in the Note and Security
Agreement referred to as Exhibit 'C' in the referred to Use and Occupancy
Agreement is Suburban Transfer Service, Inc." App. at 163. Despite that letter,
however, Aviation and Transfer never formally executed, nor demanded that
Beech or Pan Am endorse, the Note referred to in section 34.

10

On March 1, 1980, Pan Am terminated Aviation's right to use and occupy the
premises because of Aviation's insolvency.1 On March 2, 1980, Beech assumed
the use and occupancy of the facilities pursuant to section 35 of the Agreement.
Transfer thereafter sought repayment from Beech of the monies it had advanced

Aviation. Beech denied any liability.2

11

On November 17, 1980, Transfer filed an amended complaint in the United

States District Court for the District of New Jersey3 in which it sought recovery
from Beech as a third-party beneficiary to the Agreement among Pan Am,
Aviation, and Beech. It also sought relief on grounds of unjust enrichment and
estoppel. On the same date the district court granted a motion to intervene filed
by the Trustee in Bankruptcy for Aviation ("Trustee"). On December 15, 1980,
the Trustee filed a complaint seeking repayment by Beech for the capital
improvements made by Aviation at Teterboro, and seeking a declaratory
judgment that Transfer was not a lender under the Agreement.

12

On January 6, 1982, Beech filed a motion for summary judgment and dismissal
of all claims against it brought by Transfer and the Trustee. On February 11,
1982, Transfer filed a cross-motion for partial summary judgment. After
hearing arguments on both motions, the district court orally granted summary
judgment for Beech and denied partial summary judgment for Transfer. The
district court held that proper execution of the Note referred to in section 34
was a condition precedent to Beech's obligation to pay back any loan under the
Agreement. Because Aviation and Transfer had never properly executed the
Note, Beech was not liable under the Agreement for money advanced to
Aviation by Transfer. On February 24, 1981, the district court entered formal
orders granting Beech's motions for summary judgment against Transfer and
the Trustee.4 Transfer appeals.5

II
13

* On appeal Transfer argues that the district court erred as a matter of law in
holding that Beech was not liable to Transfer under section 35 of the Use and
Occupancy Agreement. It asserts that it loaned money to Aviation in full
accordance with the requirements of section 34 of the Agreement and thus that
it qualifies as a "Lender" as defined in that section. It contends that it is a thirdparty beneficiary to Beech's obligation under the Agreement to pay to a Lender,
upon termination of Aviation's occupancy by Pan Am, the installments on the
loan obtained by Aviation for improvements at Teterboro Airport. See
Broadway Maintenance Corp. v. Rutgers, 90 N.J. 253, 447 A.2d 906 (1982).
Transfer argues that the "provided, however" language in section 34, cited by
the district court as creating a condition precedent to Beech's obligation, merely
establishes "guidelines, limitations and parameters of the Loan," and therefore
the lack of a properly executed Note does not prevent Transfer from asserting
its rights under the Agreement. Accordingly, it contends that the district court
erred in granting summary judgment in favor of Beech.6

14

We can not agree. The language in section 34 stating "[t]he Loan shall be
repaid over a term of at least ten (10) years but in no event for a period
exceeding the term of this Agreement, with equal installments covering
payment of principal and interest, provided, however, that the Loan shall be in
the form of a Note and Security Agreement as set forth in Exhibit C," clearly
establishes a condition precedent7 to the creation of a valid loan as defined in
the Agreement. See app. at 67 (emphasis added). The words "provided,
however," have been historically read by courts as establishing conditional
clauses in written agreements. Hohenberg Brothers Co. v. George E. Gibbons &
Co., 537 S.W.2d 1, 3 (Tex.1976); 3A A. Corbin, Corbin on Contracts Sec. 639
(1951); see State v. Anonymous, 34 Conn.Sup. 679, 682, 388 A.2d 840, 842
(Super.Ct.1978); cf. Lehigh Valley Railroad v. Chapman, 35 N.J. 177, 183, 171
A.2d 653, 657, cert. denied, 368 U.S. 928, 82 S.Ct. 364, 7 L.Ed.2d 192 (1961)
(one of the classic words creating an estate on condition is "provided"). The
language used in section 34 does more than set "guidelines" for the loan; it
establishes the requirements which must be met for the loan to be properly
created at all. See United National Indemnity Co. v. Sangiuliano, 38 N.J.Super.
400, 405, 119 A.2d 35, 38 (1955) (notice required as a condition precedent to
insurer's obligation); 5 S. Williston, A Treatise on the Law of Contracts Sec.
671 (1961). Absent execution of the Note, no valid loan under section 34 exists,
and Beech's obligations under section 35.4 and 35.5 simply do not accrue.

15

Construing the execution of a valid Note as a condition precedent to Beech's

obligation under section 35 is also consistent with the structure of the
Agreement as a whole. The Agreement sets out the general obligations of
Aviation, Pan Am, and Beech concerning the use and occupancy of the airport
facilities. Attached to the Agreement are exhibits which detail and limit the
obligations set out in the body of the Agreement.8 Exhibit C details in very
specific terms the type of loan that Aviation was required to obtain, the terms
of any security interest to be granted the lender, the covenants agreed to by
Aviation, its obligations on default, and the required endorsements of Beech
and Pan Am. App. at 75. In section 3.6 of the Note, the respective rights and
responsibilities of the Lender, Aviation, and Beech concerning the loan are
specified in the event Beech occupies the airport facility. As Beech argues,
failure to construe the execution of the Note identified in Exhibit C as a
condition to Beech's obligation under section 35.4 and 35.5 of the Agreement
would make Beech liable as a guarantor of Aviation's indebtedness on any
terms that Aviation chose to agree to with a third party. See Restatement
(Second) of Contracts Sec. 227(1) (1981).

16

In light of the language of section 34 of the Agreement and in light of the

Agreement's overall structure, we agree with the district court that the proper

execution of the Note was a condition precedent to Beech's obligation to pay off
the loan under section 35. That Note was never executed, thus precluding any
action by Transfer for enforcement of Beech's obligation to repay. Dikowski v.
Metropolitan Life Insurance Co., 128 N.J.L. 124, 128, 24 A.2d 173, 175
(1942); Naimo v. La Fianza, 146 N.J.Super. 362, 371-72, 369 A.2d 987, 992
(1977) (third-party beneficiary, in attempting to take advantage of a contract
made for him by another, must take it subject to all legal defenses of the
obligor). Accordingly, the district court properly entered summary judgment in
favor of Beech on the first count of Transfer's amended complaint.9
B
17

Transfer argues that even if execution of the Note was an unexcused condition
precedent to Beech's obligation to pay off the loan under the Agreement, Beech
should still be held liable under equitable principles of estoppel and unjust
enrichment. After examining the applicable legal principles of Fed.R.Civ.P. 56
and New Jersey law, we can not agree.

Equitable Estoppel
The New Jersey Supreme Court has stated:
18

Conduct amounting to a misrepresentation or concealment of material facts

known to the party allegedly estopped and unknown to the party claiming
estoppel, done with the intention or expectation that it will be acted upon by the
other party and on which the other party does in fact rely in such a manner as to
change his position for the worse gives rise to an equitable estoppel.

19

Carlsen v. Masters, Mates & Pilots Pension Plan Trust, 80 N.J. 334, 339, 403
A.2d 880, 882-83 (1979). The doctrine of equitable estoppel is designed to
prevent a party's disavowal of previous conduct if such repudiation "would not
be responsive to the demands of justice and good conscience." Id. (quoting
West Jersey Title & Guaranty Co. v. Industrial Trust Co., 27 N.J. 144, 153, 141
A.2d 782, 787 (1958)). Detrimental reliance on the part of the party asserting
the estoppel is an essential element of a claim for equitable relief. Carlsen, 80
N.J. at 339, 403 A.2d at 882-83; Highway Trailer Co. v. Donna Motor Lines,
Inc., 46 N.J. 442, 449, 217 A.2d 617, 621, cert. denied, 385 U.S. 834, 87 S.Ct.
77, 17 L.Ed.2d 68 (1966); Robbins v. City of Jersey City, 23 N.J. 229, 238, 128
A.2d 673, 678 (1957); Housing Authority v. State, 188 N.J.Super. 145, 149,
456 A.2d 534, 536 (1983); Sinclair Refining Co. v. Bergen County, 103
N.J.Super. 426, 433, 247 A.2d 484, 488 (1968).

20

Transfer claims that Beech, based on its dealings with Aviation, should be
equitably estopped from denying its obligation to repay the money advanced by
Transfer for improvements at the Teterboro Airport. Transfer has never
claimed, however, either in its complaint or in the affidavits and papers
submitted in response to Beech's motion for summary judgment, that it relied
on Beech's actions when it advanced the money to Aviation. See app. at 15859, 261, 265, 342. The only discussion of Transfer's advance of funds was in
the minutes of the Board of Directors' meetings of Industrial Leasing Corp.
Transfer points to nothing in the minutes indicating that funds were transferred
in reliance on Beech's representations.10 Absent any assertion of proof of
reliance, Transfer's claim of estoppel must fail. Carlsen, 80 N.J. at 341-42, 403
A.2d at 883-84; Housing Authority, 188 N.J.Super. at 149, 456 A.2d at 536.
Thus the district court was correct in granting summary judgment for Beech.
Reeves v. City of Jackson, 532 F.2d 491, 494 (5th Cir.1976); 6 J. Moore,
Moore's Federal Practice p 56.04 (1982).

Quasi-contract/Unjust Enrichment
21

Under New Jersey law, "[t]he constructive or quasi -contract is the formula by
which enforcement is had of a public duty raised to prevent unjust enrichment
or unconscionable benefit or advantage." West Caldwell v. Caldwell, 26 N.J. 9,
29, 138 A.2d 402, 412 (1958); see St. Paul Fire & Marine Insurance Co. v.
Indemnity Insurance Co., 32 N.J. 17, 22, 158 A.2d 825, 827-28 (1960); Bergen
County Sewer Authority v. Borough of Bergenfield, 142 N.J.Super. 438, 45456, 361 A.2d 621, 629-30 (1976); Callano v. Oakwood Park Homes Corp., 91
N.J.Super. 105, 219 A.2d 332 (1966). Quasi-contractual obligations are
imposed by the law for the purpose of bringing about justice. St. Paul Fire &
Marine Insurance, 32 N.J. at 22, 158 A.2d at 827. Quasi-contract liability will
not be imposed, however, if an express contract exists concerning the identical
subject matter. The parties are bound by their agreement, and there is no
ground for implying a promise as long as a valid unrescinded contract governs
the rights of the parties. Van Orman v. American Insurance Co., 680 F.2d 301,
310-11 (3d Cir.1982); C.B. Snyder Realty Co. v. National Newark & Essex
Banking Co., 14 N.J. 146, 162-63, 101 A.2d 544, 553 (1953); Moser v. Milner
Hotels, Inc., 6 N.J. 278, 280, 78 A.2d 393, 394 (1951). But see Power-Matics,
Inc. v. Ligotti, 79 N.J.Super. 294, 306, 191 A.2d 483, 490 (1963).

22

Under those principles Transfer's claim for quasi-contractual liability based on

unjust enrichment must fail as a matter of law. The Agreement entered into by
Aviation, Beech, and Pan Am, under which Transfer has claimed rights as a
third-party beneficiary, is a valid unrescinded contract which sets out the
relative rights and responsibilities of the parties. Under section 35 of the

Agreement, Beech is obligated to pay installments on a validly created loan as

defined in section 34. Because a condition precedent to creation of that loan
never occurred, we have held that Beech has no obligation under the
Agreement to pay Transfer for the funds it advanced to Aviation. Accordingly,
Beech has not received any benefit it was not entitled to under the terms of the
agreement. Thus the "essential requirement of unjust enrichment of defendant
does not appear.... [F]rom defendant's point of view, it cannot be said that it
accepted a benefit which enriched it beyond its contractual right. Therefore,
there could be no recovery in quasi -contract." Van Orman, 680 F.2d at 311
(quoting St. Paul Fire & Marine Insurance, 32 N.J. at 22, 158 A.2d at 828);
accord C.B. Snyder Realty Co., 14 N.J. at 162-63, 101 A.2d at 553; Moser, 6
N.J. at 280, 78 A.2d at 394. Accordingly the district court did not err in
granting summary judgment on Transfer's claim in quasi-contract based on
unjust enrichment.
III
23

The district court's February 24, 1982 order granting Beech's motion for
summary judgment against Transfer and denying Transfer's cross-motion for
summary judgment will be affirmed.

Honorable Walter K. Stapleton, United States District Judge for the District of
Delaware, sitting by designation

On March 13, 1980, a group of creditors filed a petition for involuntary

bankruptcy against Aviation. App. at 210-11

Transfer alleges that it loaned a total of $167,384.68 to Aviation for

improvements at Teterboro Airport, $143,160.66 of which was advanced prior
to December 31, 1977. App. at 155, 157

Transfer had filed an original complaint in this action on May 12, 1980. On
July 1, 1980, Beech filed a motion to dismiss for, inter alia, failure to state a
claim upon which relief could be granted. On July 31, 1980, the district court
granted Beech's motion to dismiss and granted leave to Transfer to file an
amended complaint

After the district court had orally granted Beech's motion but prior to its filing
of its order, Transfer filed a motion for re-argument pursuant to D.Ct.N.J.R.
12(I). Following the district court's entry of a final order on February 24,
Transfer then filed a notice of appeal despite the fact that its motion for reargument was still outstanding. Because Transfer's Rule 12(I) motion was

submitted prior to the filing of the district court's order, however, it was
premature and thus ineffective. See Merrell-National Laboratories, Inc. v.
Zenith Laboratories, Inc., 579 F.2d 786, 790 (3d Cir.1978); Skill v. Martinez,
91 F.R.D. 498, 516 (D.N.J.1981), aff'd on other grounds, 677 F.2d 368 (3d
Cir.1981). Accordingly, Transfer's notice of appeal is timely under the
principles of Griggs v. Provident Consumer Discount Co., --- U.S. ----, 103
S.Ct. 400, 74 L.Ed.2d 225 (1982)
5

The Trustee has not appealed the district court's order granting summary
judgment against it in favor of Beech

Transfer argues in passing that the district court also erred in granting summary
judgment because it improperly resolved a material issue of fact concerning the
intention of the parties to the agreement. Under New Jersey law the
construction of a written document is ordinarily a matter of law for the court
unless the meaning is uncertain or ambiguous. Bedrock Foundations v. Geo. H.
Brewster & Sons, Inc., 31 N.J. 124, 133, 155 A.2d 536, 541 (1959); Michaels
v. Brookchester, Inc., 26 N.J. 379, 387, 140 A.2d 199, 204 (1958); Trucking
Employees of N.J. Welfare Fund, Inc. v. Vrablick, 177 N.J.Super. 142, 148,
425 A.2d 1068, 1071 (1980); see Barco Urban Renewal Corp. v. Housing
Author., 674 F.2d 1001, 1007-08 (3d Cir.1982). Because, in our view, the
language of section 34 is not ambiguous, no question of fact requiring
introduction of parol evidence existed, and thus it was proper for the court to
decide as a matter of law the proper construction of the contract

"A condition precedent is a fact or event occurring subsequently to the making

of a valid contract which must exist or occur before there is a right to immediate
performance, before there is a breach of contract duty or before the usual
judicial remedies are available." Moorestown Management, Inc. v. Moorestown
Bookshop, Inc., 104 N.J.Super. 250, 262, 249 A.2d 623, 630 (1969); State
Farm Mut. Auto. Ins. Co. v. Anderson, 70 N.J.Super. 520, 527, 176 A.2d 23,
27 (1961); see Harry's Village, Inc. v. Egg Harbor Township, 89 N.J. 576, 585,
446 A.2d 862, 866 (1982); 3A A. Corbin, Corbin on Contracts Sec. 628 (1951)

Exhibit B, app. at 73, specifies the construction required to be done by Aviation

under section 3 of the Agreement. Exhibit D, app. at 84, specifies the terms of
the performance bond required by section 32 of the Agreement

Transfer also argues that, even assuming the execution of the Note was a
condition precedent, that condition should be excused "because the forfeiture
resulting from its enforcement is disproportionate to the importance of the
conditioned performance." Brief for Plaintiff-Appellant at 30. In support it cites
Sec. 229 of the Restatement:

To the extent that the non-occurrence of a condition would cause

disproportionate forfeiture, a court may excuse the non-occurrence of that
condition unless its occurrence was a material part of the agreed exchange.
Restatement (Second) of Contracts Sec. 229 (1981). See generally Harker v.
McKissock, 7 N.J. 323, 332, 81 A.2d 480, 484 (1951). Because we think,
however, that the execution of the Note was a material part of the agreed
exchange between Aviation, Pan Am, and Beech, Sec. 229 can not be read as
supporting Transfer's position. Cf. Harker, 7 N.J. at 333, 81 A.2d at 485
("Equitable interposition with the freedom of contract is not justifiable ... unless
the agreement works an unconscionable hardship or contravenes natural
justice.").
10

Transfer contends in its brief that Beech's silence after being put on notice that
Transfer was advancing funds to Aviation supports a finding of estoppel. Brief
for Plaintiff-Appellant at 28-30. It specifically points to the two letters sent by
Aviation stating that it was receiving funds from Transfer. App. at 162, 163.
Under New Jersey law, "[e]stoppel may arise by silence or omission where one
is under a duty to speak or act." Carlsen, 80 N.J. at 341, 403 A.2d at 883
(emphasis added). We note that Transfer has not claimed before us that Beech
was under an affirmative duty to respond to Aviation's correspondence