Clow Corp. v. J. D. Mullican, Inc., 50060

• Decision Date: 22 March 1978
• Docket Number: No. 50060,50060
• Citation: 356 So.2d 579
• Parties: CLOW CORPORATION et al. v. J. D. MULLICAN, INC., et al.
• Court: Mississippi Supreme Court

Page 579

356 So.2d 579

CLOW CORPORATION et al. v. J. D. MULLICAN, INC., et al.

No. 50060.

Supreme Court of Mississippi.

March 22, 1978.

Watkins, Pyle, Ludlam, Winter & Stennis, Walker W. Jones, III, Ross F. Bass, Jr., Betty A. Morgan, Jackson, for appellants.

Overstreet & Kuykendall, N. W. Overstreet, Jr., Daniel, Coker, Horton, Bell & Dukes, John B. Clark, Jackson, for appellees.

Before SMITH, ROBERTSON and LEE, JJ.

LEE, Justice, for the Court:

J. D. Mullican, Inc. (Mullican) filed suit in the Chancery Court, First Judicial District of Hinds County, against Clow Corporation (Clow) and Impar Enterprises (Impar) alleging that they breached their subcontract in failing to complete same, and against Insurance Company of North America (INA) for the amount of its performance bond covering Clow and Impar. Decree was entered in favor of Mullican against Clow and Impar in the sum of thirty-six thousand eight hundred nineteen dollars thirty-five cents ($36,819.35) and against INA in the sum of thirty-four thousand three hundred eighty dollars ($34,380). Clow appeals. Judgment was entered for INA against Clow in the sum of thirty-four thousand three hundred eighty dollars ($34,380), the amount of its bond, together with three thousand dollars ($3,000) attorneys' fees. Clow appeals and INA cross-appeals, claiming that the attorneys' fees were not reasonable. Mullican cross-appeals because attorneys' fees were not allowed it.

The assigned errors are interrelated and the following may be discussed together:

(1) The trial court erred in holding that Burrows had apparent authority to execute the subcontract and performance bond.

(2) Burrows did not have apparent authority to bind Clow Corporation on the performance bond.

(3) The trial court erred in overruling objections of Clow Corporation to the admission of certain documents in violation of the parol evidence rule.

(4) The court erred in not directing a verdict for Clow Corporation against J. D. Mullican and Insurance Company of North America.

In April, 1973, Mullican was the prime contractor on a subdivision known as Forest Woods Estates situated in Hinds County. The project called for installation of sewage treatment facilities and on April 24, 1973, Mullican entered into a subcontract with Impar and Clow to install the plant for thirty-four thousand three hundred eighty dollars ($34,380). Previous to that contract, Mullican had negotiated with Clow, who manufactured the sewage system, for the purchase and erection of the facilities at a cost of one hundred thousand dollars ($100,000), but Clow never actually signed the contract. Subsequently, Clow and Impar divided the contract. Clow received sixty-five thousand six hundred twenty dollars ($65,620) for the plant itself, and the April 24, 1973 subcontract was for $34,380.00 for the erection of same. Those figures aggregated the total sum of $100,000 aforementioned.

Impar applied to INA for a performance bond in the amount of the contract price ($34,380). INA declined to issue the bond unless Clow joined in the application and bond. The subcontract of April 24, 1973, was executed by Impar through its officer, William C. McLain, and by Clow through William C. Burrows, District Sales Manager. In the negotiations over the subcontract and bond, Jacky Dorsey was present much of the time, advising with burrows. Dorsey was Regional Manager for Clow covering twelve (12) states, he and Burrows occupied the same office in Jackson, Mississippi, and each was cognizant of what the other was doing.

Clow and Impar had transacted approximately seven (7) such business deals previous to the Mullican subcontract. One was for a housing project known as Vickers-Bright at Pascagoula, in which Paul Pullen, agent for INA, went to the Clow office in Jackson in response to a telephone call from Burrows. Present at the meeting were Burrows and Dorsey who advised Pullen that they need a bond for the Vickers-Bright project. INA declined to insure Impar without Clow, and William C. Burrows, designated as District Manager for Clow, executed the application and the bond. The amount of that bond, dated April 11, 1973, was seventy-three thousand twenty-one dollars eighty-five cents ($73,021.85). Subsequently, the same procedure was followed in obtaining the bond on the Mullican subcontract. The following circumstances were considered by the court in finding that burrows had apparent authority to execute the subcontract and the performance bond on behalf of Clow:

(1) Dorsey was Regional Manager for Clow with authority in twelve states and burrows was District Manager for Clow.

(2) Burrows and Dorsey had, and distributed, professional cards, stationery and business forms with the Clow letterhead or insignia on them.

(3) Telephone directories and business directories indicated Jacky G. Dorsey and William C. Burrows were representatives of Clow in the State of Mississippi.

(4) Clow manufactured sewage disposal plants, was interested in selling them to customers, and wanted the erection of same completed in that time satisfactory to its customers.

(5) Clow was doing business with Impar in the erection of the plants and had worked with Impar on about seven such projects over a two-and-a-half-year period.

(6) Impar usually dealt with Burrows or Dorsey on the erection projects rather than the prime contractor, and, on most of the projects, was first advised of the existence of the work by either Dorsey or Burrows.

(7) On the project in suit, McLain, Executive Officer of Impar, never met any individual from Mullican (prime contractor) prior to the signing of the subcontract or the beginning of construction.

(8) After the bond was written, based on the Clow-Impar application, Burrows sent the executed original of the bond to Mullican with a memorandum stating, "We are looking forward to starting construction as soon as possible," and it was signed, "William C. Burrows, District Sales Manager."

(9) Prior to execution of the bond, these people were indicating to all parties that Clow was really in charge of erection of these projects.

(10) On March 7, 1973, Jacky Dorsey, Regional Manager, who was present and advised Burrows to execute the bond, wrote one Gary Miller in Clow's home office (Kentucky) and referred to "Impar Enterprises, our erection sub (contractor) on this job."

(11) April 2, 1973, on the Vickers-Bright project, Dorsey wrote a letter to McLain of Impar stating, "This is to confirm that the Clow Corporation will consign the first draw of ten percent (10%) to you on the above project.

(12) On May 1, Burrows wrote Kantor, engineer on the Mullican project, sending copies of the letter to representatives of the owner, stating, "It is our intention to provide this unit ready to be used by the end of July, 1973. This, of course, provided we are not delayed by unseen conditions beyond our control."

(13) On May 18, 1973, Burrows had a telephone conversation with Pitmon, executive officer of Mullican, and made a notation on Clow's file, "He gave O.K. to install Bright homes plant first."

(14) On or about April, 1974, McLain of Impar wrote Clow a memorandum regarding material shortages stating, "Whatever part of all this Bob wants me to do I will be glad to do." The memo was directed to R. Murphy, the Clow Corporation representative at the trial, who was Clow's Field Services Manager. "Bob" was Bob Steerman, a Clow employee from the Kentucky office who had visited and "trouble shot" the Vickers-Bright job Impar and Clow had erected.

(15) On May 29, 1974, Ross Murphy of Clow Corporation in Kentucky and Delaney of that office, together with Jacky Dorsey, prepared an estimate of the cost to complete the project. On page 2 of that estimate, the term "SSP...