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Nappi, p.r. v. Nappi Distributors
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MAINE SUPREME JUDICIAL COURT					Reporter of Decisions
Decision: 1997 ME 54 
Docket:  Cum-96-169
Argued January 8, 1997
Decided March 31, 1997

Panel:ROBERTS, GLASSMAN, RUDMAN, DANA, and LIPEZ, JJ.
JEAN M. NAPPI, Personal Representative of the Estate of Nicholas M. Nappi v. NAPPI DISTRIBUTORS

ROBERTS, J.

	[¶1]  Jean M. Nappi, personal representative of the estate of Nicholas
M. Nappi, appeals from the judgment entered in the Superior Court
(Cumberland County, Bradford, J.) following a nonjury trial finding that
Nappi Distributors was entitled to a setoff of $71,074.08 against the estate's
claim pursuant to the doctrine of equitable subrogation. Jean contends that
the doctrine of equitable subrogation is not applicable in this case.  We
affirm the judgment.  
	[¶2]  Nappi Distributors, a Maine corporation, is a wholesale
distributor of beer and wine.  Nicholas Nappi, a co-founder, was its
president and chief executive officer and a major shareholder.  After
Nicholas died in October 1993, his wife, Jean, was appointed the personal
representative of his estate.  
	[¶3]  Nappi Distributors had executed two demand notes as evidence
of loans Nicholas had made to the corporation.  After his death, Jean became
aware that Nappi Distributors was paying for some construction work
Nicholas had authorized at a house on Summit Street in Portland.  By letter
dated November 16, 1993, Jean stated that she had not authorized further
work, requested that no additional payments be made, and warned that any
such payment would be at the company's risk.  Nevertheless, in December
the company made two payments for the completion of the work on the
Summit Street property.  In her capacity as personal representative of the
estate, Jean demanded repayment of the loans.  
	[¶4]  Approximately six months later, Nappi Distributors made a
partial payment to Nicholas's estate.  The company contended, however,
that it was entitled to a setoff for the remaining amount because of various
payments, including the cost of completing the addition on the Summit
Street house.  Jean disputed that the setoff was justified, and in March
1994, she sued Nappi Distributors for the balance due on the notes.  
	[¶5]  At the nonjury trial, Elmer Alcott, the vice president and
controller of Nappi Distributors, testified that the company had not entered
into any formal contract to pay for the construction work.  He testified,
however, that Nicholas had agreed to forego collection on a promissory note
from his brother Philip, the general contractor, in exchange for his help in
putting the job together.  Alcott testified that Nicholas talked with him every
day about the addition and that he intended to finish it.  Alcott testified that
the corporation expended funds to complete the addition after Nicholas's
death, believing that Nicholas had established a legitimate contract to pay
for the addition.  
	[¶6]  Susan Hezlep testified that she currently lives in the Summit
Street house that is owned by her sister and brother-in-law, Nancy and
Edmund Beaulieu.  She testified she had known Nicholas for twenty years,
that they were very good friends, but that they did not have a sexual
relationship.  In 1983, she was diagnosed with multiple sclerosis and was
assisted from that point on by Nicholas.  She testified that Nicholas was like
a father to her and that he had promised to pay for the addition.  Edmund
Beaulieu testified that he purchased the property on Summit Street in 1989
to accommodate Hezlep because of her illness.  He testified that neither he
nor Hezlep provided any consideration for Nicholas's promise to build the
addition, and that without Nicholas's encouragement no addition would have
been built.  Nancy Beaulieu testified that Nicholas told her he was going to
pay for the addition and he "assured [her that] there was nothing to worry
about."  After the trial, the court determined that Nappi Distributors was
entitled to a setoff by equitable subrogation for the payments made for the
addition.  This appeal followed.  
	[¶7]  Jean contends that the court's application of the doctrine of
equitable subrogation in this case was erroneous.  She argues that Nicholas
had made an unenforceable oral promise to build the addition that was not
supported by consideration and that Nappi Distributors is not entitled to
equitable subrogation because it is essentially a stranger to Nicholas's alleged
obligation to Susan Hezlep and the Beaulieus.  We review the record to
determine whether there is competent evidence to support the court's
equitable determinations.  United Carolina Bank v. Beesley, 663 A.2d 574,
576 (Me. 1995) (equitable subrogation); cf. Aladdin Elec. Assocs. v. Town of
Old Orchard Beach, 645 A.2d 1142, 1144 (Me. 1994) (unjust enrichment).  
	[¶8]  Equitable subrogation is "a device adopted by equity to compel
the ultimate discharge of an obligation by him who in good conscience ought
to pay it."  United Carolina Bank, 663 A.2d at 576 (citation omitted).  It is "a
concept derived from principles of restitution and unjust enrichment." 
North East Ins. Co. v. Concord Gen. Mut. Ins. Co., 433 A.2d 715, 719 (Me.
1981).{1}  The Vermont Supreme Court has stated, "Equity should not,
however, encourage a person to intrude upon the affairs of another.  Persons
should be able to deal with whom they choose.  There is no reason to force a
person to deal with someone he has not chosen simply because that
someone intrudes and undertakes a duty of the first person."  Norfolk &
Dedham Fire Ins. Co. v. Aetna Casualty & Sur. Co., 318 A.2d 659, 661 (Vt.
1974).  In North East we stated that a party is not entitled to subrogation
when "he voluntarily or officiously satisfies another's obligation, under no
legal or moral obligation to do so or with no interest of his own to protect." 
433 A.2d at 719 (citations omitted).  We concluded, however, that the term
"volunteer" "should be narrowly and strictly interpreted to allow liberal
application of the doctrine of subrogation, and that any doubt as to the
applicability of the exception should be resolved against the existence of
volunteer status."  Id. (citations omitted).  In addition, we reasoned that one
is not a volunteer if he pays "under a mistaken belief that he had an
obligation to pay or interest to protect."  Id.
	[¶9]  We conclude that Nicholas was primarily liable on the debt
incurred to finish the addition on the Summit Street house.  Although the
parties focused exclusively on whether consideration existed to support an
oral contract, Nicholas, had he remained alive, would have been estopped to
argue the lack of consideration under the principles of promissory estoppel. 
See June Roberts Agency, Inc. v. Venture Properties, Inc., 676 A.2d 46, 49
(Me. 1996) (citing Chapman v. Bomann, 381 A.2d 1123, 1127 (Me. 1978)). 
Restatement (Second) of Contracts § 90 (1981) provides: 
 
A promise which the promisor should reasonably expect to
induce action or forbearance on the part of the promisee or a
third person and which does induce such action or forbearance
is binding if injustice can be avoided only by enforcement of the
promise.  The remedy granted for breach may be limited as
justice requires.  

The "promise need not be express but may be implied from a party's
conduct."  Martin v. Scott Paper Co., 511 A.2d 1048, 1050 (Me. 1986).  In
the context of the transfer of land, when the donee has made substantial
improvements to the land in "reliance upon the promise to convey the land,
courts will enforce the promise to convey."  Tozier v. Tozier, 437 A.2d 645,
648 (Me. 1981).  In this case there was testimony that Nicholas had
promised Hezlep and the Beaulieus that the addition would be completed. 
They testified that Nicholas was the moving force behind the construction of
the addition for Hezlep and they permitted the project to proceed in
reliance on Nicholas's promise.  Based on equitable principles, Nicholas's
promise was enforceable in spite of the absence of consideration and he
would have been liable to pay for the completion of the addition.  
	[¶10]  Moreover, Nappi Distributors did not act in a voluntary or
officious manner in making the payments to finish construction of the
project and then setting off the amounts against money that it owed to
Nicholas.  Although at the trial the focus was on whether Nappi Distributors
was legally or morally obligated to pay for the project, we conclude that the
company's payment of the cost of the addition, in an attempt to support its
own reputation and interest, was sufficient to entitle it to be equitably
subrogated in this case.  
	[¶11]  We have said that a person satisfying the debt of another is not
acting voluntarily or officiously if he has an interest to protect.  North East
Ins. Co., 433 A.2d at 719.  Although the majority of cases involve persons or
entities who are directly connected to the debt, some cases involve more
tangential interests, such as defendants involved in litigation.  See, e.g.,
Chenery v. Agri-Lines Corp., 766 P.2d 751, 755-56 (Idaho 1988) (pump
repairer being sued by lessee and owner).  Courts also have held that an
economic interest may be sufficient.  See, e.g., Springham v. Kordek, 462
A.2d 567, 569-70 (Md. Ct. App. 1983) (potential heirs to property who had
uncertain and contingent interest).  Finally, an interest in one's reputation
may suffice to satisfy the standard for equitable subrogation.  See, e.g.,
Certain-Teed Products Corp. v. Goslee Roofing & Sheet Metal, Inc., 339 A.2d
302, 316 (Md. Ct. App. 1975) (subcontractor who reroofed building and
sued supplier of roofing material was concerned "that its good business
name be upheld in the area").  "The extent or quantity of the subrogee's
interest which is in jeopardy is not material.  If he has any palpable interest
which will be protected by the extinguishment of the debt, he may pay the
debt and be entitled to hold and enforce it just as the creditor could."  73
Am. Jur. 2d Subrogation § 25, at 615 (1974).  
	[¶12]  In this case, Nappi Distributors argues that it would have
reflected badly on the business if the project were not completed.  The
company also argued that there was a threat of litigation against it for debt
collection by creditors because the company's name was on some of the
contractors' bills.  Nappi Distributors cannot reasonably be considered a
stranger in the circumstances of this case because it was protecting its well-
being.  The court did not err in applying the doctrine of equitable
subrogation.  
	The entry is: 
				Judgment affirmed.
                
Attorneys for plaintiff: E. Stephen Murray, Esq. (orally) Michael D. Traister, Esq. Murray, Plumb & Murray P O Box 9785 Portland, ME 04104-5085 Attorneys for defendant: Thomas F. Monaghan, Esq. (orally) Thomas G. Leahy, Esq. John J. Wall, III, Esq. Monaghan, Leahy, Hochadel & Libby P O Box 7046 Portland, ME 04112-7046
FOOTNOTES******************************** {1}. Restatement of Restitution § 162 (1937) provides: Where property of one person is used in discharging an obligation owed by another ... under such circumstances that the other would be unjustly enriched by the retention of the benefit thus conferred, the former is entitled to be subrogated to the position of the obligee or lien-holder. Comment b states in part: On the other hand, where the plaintiff is not officious, and he uses his property or his property is used in discharging the obligation of another ... he is entitled to reimbursement and is entitled to the remedy of subrogation to obtain reimbursement. The plaintiff is not officious where he makes a payment under a mistake .... He is not officious where he was under a duty to make the payment .... He is not officious where he makes the payment to protect an interest of his own....