Berkeley County Public Service Dist. v. Vitro Corp. of America

• Decision Date: 07 May 1968
• Docket Number: No. 12704,12704
• Citation: 152 W.Va. 252,162 S.E.2d 189
• Court: West Virginia Supreme Court
• Parties: BERKELEY COUNTY PUBLIC SERVICE DISTRICT, etc. v. VITRO CORPORATION OF AMERICA, a corporation. Submited

Page 189

162 S.E.2d 189

152 W.Va. 252

BERKELEY COUNTY PUBLIC SERVICE DISTRICT, etc. v. VITRO CORPORATION OF AMERICA, a corporation.

No. 12704.

Supreme Court of Appeals of West Virginia

Submited May 7, 1968.

Decided June 25, 1968.

Syllabus by the Court

1. The mere fact that parties do not agree to the construction of a contract does not render it ambiguous. The question as to whether a contract is ambiguous is a question of law to be determined by the court.

2. Extrinsic evidence may be used to aid in the construction of a contract if the matter in controversy is not clearly expressed in the contract, and in such case the intention of the parties is always important and the court may consider parol evidence in connection therewith with regard to conditions and objections relative to the matters involved. However, where the language of a contract is clear the language cannot be construed and must be given effect and no interpretation thereof is permissible.

3. 'The rule relating to practical construction of provisions of a written instrument by the conduct of the parties thereto, like other rules of construction, may be resorted to by a court only when the parties have failed to express their intent in clear and unambiguous language; and such rule of construction can never be used to change the legal effect of clear and unambiguous language.' Pt. 4, syllablus, Cotiga Development Company v. United Fuel Gas Company, 147 W.Va. 484 (128 S.E.2d 626).

4. Contracts involving purchases of amounts 'as required', 'as necessary' and synonymous expressions are called in law 'requirement contracts', and such contracts are approved by the courts but must be administered and complied with in good faith.

5. In construing a requirement contract the test is what is the 'obviously dominant measure', and if the language of such contract clearly makes it a 'requirement' contract then the only thing for which parol evidence can be introduced is to establish what are the requirements.

6. Under a requirement contract to furnish water there is no duty on the part of the buyer to have any requirements, and when a buyer's plant is closed or his activities changed in good faith for valid business reasons there are no requirements for water; and there can be no recovery under a requirement contract for furnishing water where there is no water required and none furnished.

7. The fact that a trial judge before being elevated to the bench acted as an attorney in a related matter that had nothing to do with the issue presented in a case being tried by him would not be grounds for disqualification of the trial judge in the case being tried.

8. It is error to allow witnesses to give their interpretation or construction of a contract as this is a matter of law for the court to decide.

9. It is proper to introduce into evidence during the trial of a case matters incorporated by reference in a contract.

Rice, Hannis, Rice & Wagner, Lacy I. Rice, John M. Miller, Martinsburg, for appellant.

Martin & Seibert, Clarence E. Martin, Jr., Martinsburg, for appellee.

BERRY, President:

This is an appral by Vitro Corporation of America, a corporation, from a final judgment of the Circuit Court of Berkeley County, West Virginia, of January 13, 1967, in a declaratory judgment proceeding in which the trial court construed a contract between the plaintiff and defendant and held, among other things, that the defendant, Vitro Corporation of America, was obligated to pay to the plaintiff, Berkeley County Public Service District, the minimum sum of $275 per month for potable water for industrial and sanitary purposes, whether used or not, for a period of 40 years beginning August 1, 1959, and ending July 31, 1999, and rendered judgment against the defendant in the amount of $23,595 for said minimum payments due the plaintiff which accrued after the defendant notified the plaintiff that its plant was closed and that it no longer required any water to be furnished to it.

An appeal and supersedeas were granted by this Court on November 6, 1967, and the case was submitted for decision on arguments and briefs of both parties at the April Special Docket of the January, 1968, Regular Term.

The water contract involved in this case grew out of a projected and actual industrial development in Arden District in Berkeley County, West Virginia, near the City of Martinsburg. In 1952, Thieblot Aircraft Corporation built a plant at or near the Martinsburg Airport worth about $800,000, which was served by water obtained from a well. However, this water was corrosive and not satisfactory for the use of the defendant and a better water supply was desired. In 1956 the Thieblot plant became a division of Vitro Corporation of America and Armand Thieblot, president of Thieblot, became the head of the Thieblot division of the Vitro Corporation when they merged. Around 1954, efforts were made to establish a water service district in the area outside the City of Martinsburg where the municipal airport was located, and where the Thieblot plant had been built. An adequate unutilized supply of good water from a private source was located a few miles from this area, and the City of Martinsburg did not desire to serve the area through its municipal water works. Consequently, action was taken to obtain the output of this private water supply known as LeFevre Springs, which was owned by the descendants of one of the early settlers in that area. Other plants were also located in this area, such as the C. H. Musselman Company dealing in apple products, which were potential customers of the water service district.

Negotiations of water contracts with Thieblot and other companies and the organization of a water service district were made and undertaken at about the same time. The evidence indicates that the public service district was initially motivated by the prospect of a long-term water contract with Thieblot as well as others and would not have come into being if this prospect had not existed. The plaintiff claims that the resulting contract binds the defendant to pay for water used by it since it ceased operation of its plant in that area in 1960.

The contract which was introduced in the evidence is dated November 18, 1958, was executed by the Vitro Corporation of America on that date and executed by the Berkeley County Public Service District on November 20, 1958, was substituted for a prior contract dated May 1, 1958, which was cancelled by the November 18, 1958, contract, and provided that not later than May 31, 1959, at least some of the water provided for in said contract would be furnished. However, the evidence is uncontradicted that water was not furnished under the contract in question until August 1, 1959. The contract in question contains two conditions upon which charges under the contract were to be made: (1) Available water for fire protection at the rate of $400 per month, and, (2) water which Vitro 'shall require' for industrial and drinking purposes at rates to be fixed by the Public Service Commission of West Virginia. Both the water services for fire and industrial and drinking purposes were to continue for a period of 40 years but the charge for the available water for fire protection purposes was subject to an adjustment at the end of ten years from the date of the contract, and every five years thereafter. The water for industrial and drinking purposes was to be furnished to Vitro as it Shall require at the rates from time to time approved by and on file with the Public Service Commission of West Virginia. The evidence indicates that Vitro understood its was to pay a minimum charge for available water for fire protection purposes with such water to be furnished at 50 pounds pressure, with immediate availability of 1000 gallons a minute; but as to the clause concerning payments for industrial and drinking water the evidence indicates that Vitro did not understand that it was bound to pay for forty years at a minimum rate, whether water was used or not and regardless of whether or not it remained connected as a customer to the public utility. The contract appears to have been negotiated at Martinsburg by both local and non-resident negotiators, after which it was forwarded to other offices for approval. Considerable evidence as to what the parties intended was introduced to both the plaintiff and the defendant, and each claimed it was entitled to introduce the evidence to settle an incorrect interpretation insisted upon by the other, or that the evidence so introduced was not an interpretation but was merely establishing a collateral fact which caused the contract to be negotiated and executed.

An unusual situation exists in which each party insists that the contract is not ambiguous but is clear, although they came to opposite conclusions as to how to charge under the contract. The trial court judge stated that if the parties were unable to agree as to the conditions of the contract he would consider it ambiguous. This, no doubt, accounts for the numerous objections made throughout the trial by each party to the introduction of evidence by the other touching in any manner on the negotiations of the contract.

The case was tried by the judge in lieu of a jury and the plaintiff introduced considerable evidence showing that after the contract was negotiated a loan was approved by the United States of America housing and Home Financing Agency to establish the district and that an investment banker sold bonds of the public service district; that neither of these acts would have taken place according to the testimony and documents of the agency and banker except that they, after examination of the contract, concluded that it bound Vitro to pay $400 a month for fire protection and $275 a month for industrial and sanitary water, making a total of $8100 a year to last for 40 years. This evidence was objected to by the defendant on the ground that it was...