Universal C. I. T. Credit Corp. v. Daniel

• Decision Date: 31 October 1951
• Docket Number: No. A-3211,A-3211
• Citation: 243 S.W.2d 154,150 Tex. 513
• Parties: UNIVERSAL C. I. T. CREDIT CORP. v. DANIEL.
• Court: Texas Supreme Court

Page 154

243 S.W.2d 154

150 Tex. 513

UNIVERSAL C. I. T. CREDIT CORP. v. DANIEL.

No. A-3211.

Supreme Court of Texas.

Oct. 31, 1951.

Forrester Hancock, Waxahachie, Dan Moody, Austin, J. C. Lazar, New York City, for petitioner.

Lynn Griffith, Waxahachie, for respondent.

CALVERT, Justice.

Under date of October 21, 1948, respondent, J. B. Daniel, then doing business as an automobile dealer in Waxahachie, Texas, entered into a written contract with petitioner, Universal C.I.T. Credit Corporation, under the terms of which respondent agreed to sell to petitioner acceptable paper covering new and used cars.

The contract is headed 'Retail Protection Agreement For Automobile Dealers' and is set out in full as a footnote to the opinion of the Court of Civil Appeals. The parties seem to agree that only paragraphs 1, 2 and 3 and part of paragraph 7 have any pertinency here. These sections read as follows:

'1. You propose to buy from us, on the basis stated in this agreement, paper acceptable to you covering new and used cars; except as provided in this agreement said paper will be assigned to you without recourse as to the customer's obligation of payment, except that paper covering commercial cars used for long distance hauling, commercial cars of more than two tons capacity, busses, cars used for taxi, jitney, or 'drive-yourself' service, cars sold to relatives or employees, or where otherwise specifically agreed upon, will bear our full recourse endorsement; in such cases you may make any necessary correction in our endorsement and paragraphs 2 and 3 shall not apply.

'2. We will purchase from you each repossessed or recovered car tendered at our place of business within 90 days after maturity of the earliest instalment still unpaid. The purchase price payable on demand shall be the unpaid balance due on the car, limited as stated in paragraph 3. Until paying you we will store the car at our risk and expense and as your property and will deliver it to you on demand.

'3. We shall have no responsibility as to converted or confiscated cars until they are repossessed or recovered and tendered as above. You will allow us the cost of repairing actual direct collision damage necessitating repossession; the allowance is not to exceed the unpaid balance on the car after deducting both the 'as is' value and the amount of any deferred certificate or other special holdback relating to the car. Where the resale value of the repaired car (excluding overhead and salesman's commissions) exceeds the unpaid balance, the excess will be deducted from the collision allowance.

'7. * * * We will be under full recourse liability to you on the assignment of paper covering equipment other than described in paragraph 1 above notwithstanding the language of such assignment * * *. In case we fail to purchase repossessed cars we will be responsible for any deficiency incurred by you in the resale of such repossessed cars at public or private sale held with or without notice, at which you may purchase.'

On December 21, 1948, respondent sold to one R. D. Spann a Hudson automobile, taking in part payment therefor Spann's installment note, secured by chattel mortgage. On the same day respondent sold and assigned Spann's note and mortgage to petitioner 'without recourse as to customer's obligation of payment.' Spann, having thereafter defaulted in the payment of installments due on his note, delivered the automobile to petitioner, and petitioner, after calling upon respondent to purchase the car at a price equal to the unpaid balance due on the note, with respondent refusing, sold the automobile at public auction for the sum of $1,000. Petitioner, as plaintiff, then instituted this suit to recover from respondent, as defendant, damages in a sum equal to the unpaid balance due on the note plus certain expenses, less $1,000. A trial before the court without the intervention of a jury resulted in a judgment for plaintiff. The judgment of the trial court was reversed and judgment was rendered by the Court of Civil Appeals that plaintiff take nothing. 238 S.W.2d 727.

It is the position of the petitioner that as to those cars on which the paper was sold to petitioner 'without recourse' the provisions of paragraph 2 of the written contract obligated respondent to purchase from petitioner all repossessed cars tendered to him within the 90 day period at a price equal to the unpaid balance due on the car. It is the position of respondent, fortified by the opinion of the Court of Civil Appeals, that the contract is ambiguous, and should be construed most strongly against petitioner who wrote it; that so construing it, the contract imposes on respondent no personal obligation to pay any sum to petitioner on that paper endorsed without recourse.

We come then to an interpretation of the contract. Paragraph 2 of the contract is plain, clear and unambigous. By its terms respondent agreed unequivocally to purchase from petitioner all repossessed or recovered cars at a price equal to the unpaid balance due thereon. However, paragraph 1 specifically provides that paragraph 2 shall not apply in certain cases. What are the cases in which paragraph 2 shall not apply? It is here that the language of the contract is of doubtful meaning. It must be conceded that there is an absence of artistry in the grammatical construction and punctuation of paragraph 1 of the contract, but is its meaning when properly read and interpreted so dubious as to subject the contract to the charge of ambiguity, thereby justifying the court in calling into play the rule of strong construction against the author of an instrument? We think not.

In the law texts and court decisions will be found a plethora of definitions of the words 'ambiguous' and 'ambiguity' and of tests for determining whether instruments are ambiguous. See Webster's Dictionary; 3 Words & Phrases; Black's Law Dictionary; 17 C.J.S., Contracts, § 294, page 685 and 12 American Jurisprudence 751. Some examples from Texas courts may be seen in Tom v. Roberson, Tex.Civ.App., 182 S.W. 698, writ ref.; San Antonio Life Ins. Co. v. Griffith, Tex.Civ.App., 185 S.W. 335; Jarecki Mfg. Co. v. Hinds, Tex.Civ.App., 295 S.W. 274, writ dism.; Id., Tex.Com.App., 6 S.W.2d 343; City Investment & Loan Co. v. Wichita Hardware Co., Tex.Civ.App., 57 S.W.2d 222, reversed 127 Tex. 44, 91 S.W.2d 683. The words are often used to denote a simple lack of clarity in language but that is not the sense in which we use them here.

In a fairly recent case this court said that 'if a written contract is so worded that it can be given a certain or definite legal meaning or interpretation, it is not ambiguous.' Lewis v. East Texas Finance Co., 136 Tex. 149, 146 S.W.2d 977, 980. To the same effect, see Remington Rand, Inc., v. Sugarland Industries, 137 Tex. 409, 153 S.W.2d 477, 483 and Rachford v. Stewart Title Guaranty Co., Tex.Civ.App., 160 S.W.2d 985, 987, writ ref. w. o. m. The converse of this is that a contract is ambiguous only when the application of pertinent rules of interpretation to the face of the instrument leaves it genuinely uncertain which one of two or more meanings is the proper meaning. For this very statement of the rule, see the Kansas cases of Roxana Petroleum Corp. v. Jarvis, 127 Kan. 365, 273 P. 661, 665 and Barker v. Lashbrook, 128 Kan. 595, 279 P. 12, 13. In other words, if after applying established rules of interpretation to the contract it remains reasonably susceptible to more than one meaning it is ambiguous, but if only one reasonable meaning clearly emerges it is not ambiguous. In the latter event the contract will be enforced as written and parol evidence will not be received for the purpose of creating an ambiguity or to give the contract a meaning different from that which its language imports. Lewis v. East Texas Finance Co., supra; 10 Tex.Jur. 279, § 163. Neither in this latter event may the rule of strong construction against the author be invoked. That rule is applied only where a contract is open to two reasonable constructions. Amory Mfg. Co. v. Gulf, C. & S. F. Ry. Co., 89 Tex. 419, 37 S.W. 856, 857. In 12 Amer.Juris., at page 796 it is said: 'The rule that expressions will be interpreted against the person using them applies only where, after the ordinary rules of interpretation have been applied, the agreement is still ambiguous.'

In the interpretation of contracts, whether they be ambiguous in the sense that that term is here defined or simply contain language of doubtful meaning, the primary concern of the courts is to ascertain and to give effect to the true intention of the parties. To achieve this object the courts will examine and consider the entire writing, seeking as best they can to harmonize and to give effect to all the provisions of the contract so that none will be rendered meaningless. With these rules of interpretation in mine let us examine the contract before us.

It is apparent from paragraph 1 that the agreement for the purchase by petitioner of paper covering new and used cars contemplated the purchase of two types or classes of paper, that to be assigned to petitioner by respondent 'without recourse as to the customer's obligation of payment' and that to be...