Coastal Plains Development Corp. v. Tech-Con Corp.

• Citation: 531 S.W.2d 143
• Decision Date: 06 November 1975
• Docket Number: No. 16511,TECH-CON,16511
• Court: Texas Court of Appeals
• Parties: COASTAL PLAINS DEVELOPMENT CORPORATION et al., Appellants, v.CORPORATION, Appellee. (1st Dist.)

Page 143

531 S.W.2d 143

COASTAL PLAINS DEVELOPMENT CORPORATION et al., Appellants, v. TECH-CON CORPORATION, Appellee.

No. 16511.

Court of Civil Appeals of Texas Houston (1st Dist.).

Nov. 6, 1975.

Rehearing Denied Dec. 4, 1975.

Leland B. Kee, Angleton, for appellants.

Jon Mercer, Houston, for appellee.

EVANS, Justice.

Coastal Plains Development Corporation, the developer of a tract of land in Brazoria County, Texas, known as Cedar Lake Estates, entered into an agreement with Tech-Con Corporation dated September 4, 1970, under which Tech-Con was to construct certain roadways, a lake and other improvements on the land. By supplemental contract dated September 30, 1970 the parties agreed that immediately upon the funding of a pending loan transaction, Coastal Plains would pay the cash sum of $24,853.00 to Tech-Con for work completed to that date and would execute a six months note for $20,000.00, for the balance due for work completed, including extra work, to such date. This supplemental contract also provided that Tech-Con agreed to complete the shell surfacing of the roadways in accordance with the specifications of the original agreement and for this work it was to be paid from a '$10,000.00 balance of the available funds' upon submission of approved invoices as the work progressed. In connection with such future work Coastal Plains agreed to furnish materials and also make 'other financial arrangements suitable to' Tech-Con for the value of the difference between said sum of $10,000.00 and the original contract price.

Pursuant to the supplemental contract, Coastal Plains delivered its promissory note to Tech-Con in the principal amount of $20,000.00, which was secured by certain lots in Cedar Lake Estates, a subdivision in Brazoria County, Texas. An escrow account was established in the First State Bank of Brazoria for the fund which was to be used for future work payments, and it appears that this account was funded with the total sum of $9,180.36.

Subsequent to the execution of the supplemental contract dated September 30, 1970, Coastal Plains issued three checks to Tech-Con drawn on an account established in the First State Bank of Brazoria. The first of these checks is dated November 3, 1970, for the amount of $6,300.00; the second is dated November 19, 1970, for the amount of $3,000.00, and the third is dated December 9, 1970, for the amount of $2,800.00. The $3,000.00 check was returned marked 'insufficient funds.' Both the $6,300.00 check and the $3,000.00 check bear notations making reference to: 'Cedar Lakes Contract' but the $2,800.00 check does not bear such notation.

After execution of the September 30, 1970, supplemental contract, Tech-Con submitted only one invoice to Coastal Plains concerning the Cedar Lakes work. This invoice is dated November 24, 1970, and sets forth the following typed statement:

'To invoice you for road work completed on the referenced project as follows:

'Shell base 7200 LF .$2.80 per LF 50% Complete $10,080.00'

The basic contract between the parties provided that Tech-Con would be paid on the basis of.$2.80 per lineal foot for roadways constructed with a sand-shell base. It also provided that Tech-Con would be paid within five days of receipt of each invoice, which invoices were to be submitted on the first and fifteenth days of each month for work completed to that date.

It is Tech-Con's contention that the $6,300.00 check was properly applied by it to an outstanding invoice which had been owed by Coastal Plains since August, 1970, for an entirely different project in Waller County, Texas. Tech-Con asserts that the sum of $2,800.00 represented by the December 9, 1970, check, is the only proper payment credit to be applied against said invoice and that after the $2,800.00 payment, there was a balance due and owing by Coastal Plains in the amount of $7,280.00, which it failed to pay. It is the contention of Coastal Plains that Tech-Con was actually overpaid with respect to said invoice; that the $6,300.00 check should have been applied to the Cedar Lake Estates work and, additionally, that the invoice should have reflected credits of $1,352.00 for shell which it furnished to the Cedar Lake Estates work and of $6,268.30 for an invoice due Parker Brothers & Co., Inc., which it had guaranteed and ultimately paid.

The supplemental contract dated September 30, 1970, provided that Tech-Con agreed 'to no more than to continue work on the shell surfacing for so long as the payment schedule of the original agreement between the parties is met.' Tech-Con contends that since it was not paid the balance which it claims was due on the $10,080.00 invoice within the time specified in the contract, it had the right to withdraw from the work.

The trial court found that the $6,300.00 payment was for work performed by Tech-Con with respect to the Waller County project and that the language on the face of the check indicating that it was applicable to the Cedar Lake work was 'of no force and effect.' It further found that the balance due Tech-Con from Coastal Plains for work completed on the Cedar Lake Estates project prior to December 15, 1970, was in the amount of $7,280.00 but that Coastal Plains was entitled to credits in the amount of $1,352.00 representing the value of the shell furnished to the project and in the amount of $6,268.00 for the payments made by Coastal Plains to Parker Brothers. The court awarded Tech-Con judgment against Coastal Plains in the amount of $29,581.00 representing the principal and interest due on the $20,000.00 note through October 31, 1974, together with attorney's fees thereon, and also awarded judgment against Coastal Plains in the amount of $7,280.00 representing the balance due and owing to Tech-Con for work completed to December 15, 1970. It awarded Coastal Plains judgment against Tech-Con in the amount of $1,352.00 and $6,268.31 for the credits for which it found Coastal Plains entitled. It denied Tech-Con's claim for lost profits allegedly resulting from its inability to complete the work and also denied Coastal Plains recovery on its cross-action seeking damages for loss allegedly resulting from Tech-Con's failure to complete the work. Both parties have appealed, Tech-Con's appeal being limited to that part of the judgment refusing to award it recovery for alleged lost profits.

Under its first two points of error, Coastal Plains argues that the trial court erred in concluding that the notation 'Cedar Lakes Contract--Coastal Plains Development' on the face of the $6,300.00 check was of 'no force and effect' and in finding that such check represented payment for work performed on another project in Waller County, Texas.

The face of the check in question appears as follows:

NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

Tech-Con accepted the $6,300.00 check as written; it endorsed the check and retained the proceeds. Having accepted the benefits of such payment, it is deemed to have agreed to any conditions which are clearly shown by the draft to have constituted part of the agreement between the parties. Tech-Con was not authorized, without Coastal Plains' approval, to allocate such payment to any purpose other than that which may have been designated on the face of the draft. Stetson-Preston Co. v. H. S. Dodson & Co., 103 S.W. 685 (Tex.Civ.App., 1907, no writ). If the written terms of the draft expressly designated the purpose for which the payment was made, such designation, upon acceptance of the draft, became an integral part of the parties' agreement. Peavy-Moore Lumber Co., Inc. v. First Nat. Bank of Beaumont, 133 Tex. 467, 128 S.W.2d 1158 (Tex.Com.App., 1939); 11 Am.Jur.2d, § 69, p. 93.

The trial court permitted Tech-Con to offer evidence tending to show that the $6,300.00 payment was made and accepted in payment of an outstanding invoice on another...