Les-Bil, Inc. v. General Waterworks Corp.

Decision Date08 July 1974
Docket NumberLES-BI,INC,No. 74--39,74--39
Citation256 Ark. 905,511 S.W.2d 166
Parties, Appellant, v. GENERAL WATERWORKS CORPORATION, Appellee.
CourtArkansas Supreme Court

E. W. Brockman, Jr., Brockman, Brockman & Gunti, Pine Bluff, for appellant.

Bridges, Young, Matthews & Davis, Pine Bluff, for appellee.

FOGLEMAN, Justice.

Appellant seeks reversal of an adverse decree in a suit by appellant seeking an accounting for funds allegedly due it under the refund provisions of a water main construction contract entered into by appellant and Pine Bluff Water Co., Inc., to which appellee is the successor. The only question on appeal is whether the chancellor erred in his construction of paragraphs (4) and (5) of the contract.

Les-Bil, Inc. is a corporation organized to develop the Friendswood Addition in Pine Bluff. In order to obtain water service for the subdivision, appellant, in 1957, contract with the Pine Bluff Water Co. to pay the actual costs incurred by the water company in extending an existing 10-inch water main from 36th Avenue and Olive Street southward along Olive to Friendwood Drive which is located south of 46th Avenue and Olive. A refund provision provided a formula whereby appellant could recover up to the full amount of the expenditure. The contract contained an estimated cost figure of $19,500 but the actual cost paid by Les-Bil was $16,905. At the time of the filing of this action, appellant had received less than $1,600 in refunds.

The sections of the contract pertinent to this appeal are as follows:

(4) Said actual cost will be refunded by First Party, its successors or assigns, to Second Party, its successors or assigns, on the basis of twenty-five per cent (25%) of the annual gross revenues received from water consumers located adjacent to and receiving water service from said 10 inch water main referred to herein. First Party agrees to refund twenty-five per cent (25%) of said gross revenues for a period of fifteen (15) years, but no refunds will be made after said fifteen (15) year period. In the event the actual cost referred to herein is entirely refunded on the basis of twenty-five (25%) of the annual gross revenues before the fifteen (15) year period has expired, then, in that event no further refunds will be made.

(5) In consideration of the above mentioned contribution First Party agrees to install, operate, and maintain the water mains above mentioned. The water mains and facilities which First Party agrees to construct shall be its separate property and shall be owned, maintained, and operated by it. First Party reserves the right to make extensions from said water mains to serve other customers, and in serving other customers from said extension no part of the income received from these customers is subject to the refund set forth in Paragraph (4).

Since 1957 two housing developments, Westbridge Condominium and Greenbriar Condominium, have been erected on two parcels of real estate which border the west side of Olive Street and extend west-ward between 41st and 46th Avenues. Each of these complexes consists of a number of condominium units under one roof. Water service to Greenbriar is provided by a 6-inch line which runs from the Olive Street 10-inch main to the complex with each individual unit being connected to the 6-inch line by service lines. 1 A similar situation exists at Westridge where a 3-inch line and a 6-inch line, each running from the Olive Street main, bring water to the complex, with service lines to each condominium. The appellee took the position that service to these complexes was provided from an extension, and, in reliance upon paragraph (5), did not pay any refunds to appellant from the revenues collected for furnishing water to these developments.

Appellant contends that these two developments are '. . . adjacent to and receiving water service from said 10-inch main. . . .' and therefore it is entitled to refunds based on water furnished to all units of both complexes. It also alleges that 'extension' as used in this contract refers only to an additional lengthening of the 10-inch main on Olive Street and that only a strained construction of 'extension' could allow appellee to escape the payment of any refunds since no water actually flows from the 10-inch line directly into the homes of the consumers, but rather all users are connected to the 10-inch line by smaller lines. Appellant states that the meaning ascribed to the word 'extension' is determinative of the issue in this case.

The chancellor, in a well-reasoned opinion, ruled that the term 'extension' as used in the water service industry meant a distribution or transmission main intended to distribute water throughout an area as distinguished from distribution of water to a single customer by use of a service line. He also found that the parties intended that the revenue collected from any water consumer abutting on Olive Street be subject to the refund provision of paragraph (4) since such property could be served by service lines coming directly from the 10-inch main on Olive. Based on these findings he ordered appellee to pay refunds only on water provided to units number 1, 21, and 22 in Westridge and 408 West 41st and 513 Greenbriar, each of which had an exterior wall abutting Olive with no other unit between the wall and the street.

Appellant contends there was no evidentiary support for this construction of 'extension'; that doubtful language of a contract should be most strongly construed against the drafter, appellee; and that even if 'extension' did have a technical meaning, Dr. Bill Owen, who signed the contract, as President and one of two principal stockholders in Les-Bil, was not conversant with the language of the water industry and would therefore not have known the term had such a meaning.

Appellant admits that the definition relied upon by it is not the only one accorded to the word in dictionaries but argues that the most common use of the word is in the sense of an elongation or lengthening. Yet, we find that the word, in common parlance, has other definitions which include:

Any part added to or extended from a main structure to form an addition; prolongation; an extension to a hospital. The American Heritage Dictionary of the English language.

A part that is extended from or attached to a main body or section as a supplement or enlargement. Webster's Third New International Dictionary.

A part constituting an addition or enlargement, as an annex. Webster's New International Dictionary 2d Ed.

Our cases clearly recognize that when a technical term is used in a sense other than the ordinary meaning of the word testimony is admissible to explain the meaning of the term and the question may be submitted to the trier of fact to determine in what sense the term was used. Paepcke-Leicht Lbr. Co. v. Talley, 106 Ark. 400, 153 S.W. 833; Wilkes v. Stacy, 113 Ark. 556, 169 S.W. 796. See also 17 Am.Jur.2d 643, Contracts § 251.

Evidentiary support for the chancellor's determination of the meaning of 'extension' was provided by the testimony of George Flegal, Vice President and Division Manager of appelle...

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