City of Pinehurst v. Spooner Addition Water Co.

Citation432 S.W.2d 515
Decision Date02 October 1968
Docket NumberNo. B--840,B--840
PartiesCITY OF PINEHURST, Texas, Petitioner, v. SPOONER ADDITION WATER COMPANY et al., Respondents.
CourtSupreme Court of Texas

Keith, Mehaffy & Weber, Quentin Keith, Beaumont, Milton Regan, Orange, for petitioner.

Sexton, Owens & Wingate, Paul R. Owens, Orange, for respondents.

SMITH, Justice.

The City of Pinehurst, Texas, hereinafter designated as the City, filed this suit seeking a declaratory judgment under the provisions of Article 2524--1, Vernon's Annotated Civil Statutes of Texas, against Spooner Addition Water Company et al, hereinafter designated as the Company. The City alleged that a justiciable controversy existed by virtue of the Company's failure to comply with the provisions of a certain ordinance dated October 10, 1957, offering a franchise to the Company for the distribution of water for domestic, commercial or industrial purposes in Spooner Addition No. 1, Spooner Addition No. 2, and Weaver Addition to the City of Pinehurst. The City alleged that the Company failed to perform its agreement, as provided in Section 4 of the ordinance, to improve its 'existing water system by replacing all of its existing water lines with 2 lines, * * *' and to furnish a performance bond as provided in Section 11 of the ordinance. For these reasons the City sought the judgment of the Court declaring the ordinance of no force and effect.

The Company's answer and cross action presents the contention that the ordinance of October 10, 1957, became effective immediately, and that the Company had performed all obligations in accordance with the terms of the ordinance. The Company further alleged, in the alternative, that the City had waived any alleged breach of the ordinance.

The Company further alleged that Section 10 1 of the ordinance provided that if, at any time during the period of ten (10) years from October 10, 1957, the City became engaged in the distribution of water through its own pipes in the territory described in the ordinance, 'then and in that event only said City of Pinehurst, Texas, agrees that it will purchase from J. H. Spector (Company) said Spooner Addition Water Co. at the then market value of said Co. * * *' The City did construct and place in operation a new water line in 1964, but failed to purchase the company plant in accordance with the agreement. At the same time, the City also gave notice of the termination of the Company franchise.

A jury, in answer to special issues, found that the Company had not substantially complied with the terms of the ordinance, but that substantial compliance was waived by the City; the City accepted benefits under the provisions of the franchise after it had acquired knowledge of the existence of the breach of the Company; and the market value of the Company as of September 26, 1964, was $29,000.00. The trial court entered judgment in favor of the Company for $29,000.00. The Court of Civil Appeals affirmed. 424 S.W.2d 485.

The only question for our consideration is whether the trial court properly determined the market value of the Company water line and equipment. We have concluded that it did not. Therefore, the judgments below are reversed and judgment is here rendered that the Company take nothing.

We agree with the parties that the contractual provisions contained in Section 10 of the ordinance are unambiguous. The specific question is: What did the parties intend the term 'market value' as used in the contract of sale to mean? The Company contends that it was the intention of the parties that the City was to pay the market value at the time the City placed its own water lines in operation, which was on September 26, 1964, without taking into consideration the City's new water system. The trial court adopted this view, and, in submitting the question to the jury, gave the usual definition of 'market value.' 2 However, in connection with the definition, the court instructed the jury 'that in arriving at such figure (market value), if any, that you are not to consider in any manner the construction or operation of a water works by the City of Pinehurst.' The City's objection to this special instruction was overruled. The City contended that on this issue it was entitled to an instructed verdict. Its motion for instructed verdict was overruled. The basis for the motion for instructed verdict was that the City was under no obligation to purchase from the Company until it started selling water through its own lines; in that event only, the City agreed to pay the Then market value, which according to the City, was the Then market value of the Company. Further, there was no evidence of such value. The Court of Civil Appeals has held that "then market value' relates to the time and not to the occurrence of an event.' We agree with the City.

It is elementary that if there is no ambiguity, the construction of the written instrument is a question of law for the Court. Myers v. Gulf Coast Minerals Management Corp., 361 S.W.2d 193 (Tex.Sup.1962). It is the general rule of the law of contracts that where an unambiguous writing has been entered into between the parties, the Courts will give effect to the intention of the parties as expressed or as is apparent in the writing. In the usual case, the instrument alone will be deemed to express the intention of the parties for it is objective, not subjective, intent that controls. Woods v. Sims, 154 Tex. 59, 273 S.W.2d 617, 620 (1954). See generally: 3 Williston on Contracts § 610 (1936); Restatement of the Law of Contracts § 230 (1932). Generally the parties to an instrument intend every clause to have some effect and in some measure to evidence their agreement. As said in the Restatement, § 230, supra, '(the) standard of interpretation of an integration, except where it produces an ambiguous result, or is excluded by a rule of law establishing a definite meaning, is the meaning that would be attached to the integration by a reasonably intelligent person acquainted with all operative usages and knowing all the circumstances prior to and contemporaneous with the making of the integration, other than oral statements by the parties of what they intended it to mean.' The Company argues that the fact, alone, that the parties used the term 'market value' establishes clearly that it was the intention of the parties to fix a time for the establishment of the 'then market value' rather than the occurrence of an event, which, in this case, was when and if the City became 'engaged in the distribution of water through its Own pipes.' Emphasis added. In the case of Ohio Oil Company v. Smith, 365 S.W.2d 621 (Tex.Sup.1963), § 230 of the Restatement was cited as being a proper pronouncement of the general rule of the law of contracts which should govern the Court in its effort...

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