Hamblen County v. City of Morristown

• Decision Date: 10 August 1983
• Citation: 13 Ed.LawRep. 884,656 S.W.2d 331
• Parties: 13 Ed. Law Rep. 884 HAMBLEN COUNTY, et al., Plaintiffs-Appellants-Appellees, v. CITY OF MORRISTOWN, et al., Defendants-Appellants-Appellees.
• Court: Tennessee Supreme Court

Page 331

656 S.W.2d 331

13 Ed. Law Rep. 884

HAMBLEN COUNTY, et al., Plaintiffs-Appellants-Appellees, v. CITY OF MORRISTOWN, et al., Defendants-Appellants-Appellees.

Supreme Court of Tennessee at Knoxville.

Aug. 10, 1983.

Richard C. Jessee, Morristown, for defendants-appellants-appellees.

Ernest R. Taylor, Morristown, for plaintiffs-appellants-appellees.

OPINION

BROCK, Justice.

The City of Morristown claims the power, right and authority to operate and administer the new West High School and the renovated East High School for the education of high school students residing in the City of Morristown and in the County of Hamblen outside the city limits of Morristown. The county disputes this claim of the city and initiated this litigation to seek control, wholly or partially, of the high school system. The proper resolution of this dispute depends upon our construction of a contract entered into between the parties in 1965. ¹ The Chancellor decreed that the city and the county had equal joint control of the high school system and his decree was affirmed by a majority of the Court of Appeals, Judge Franks dissenting. Both sides sought review in this Court of the judgments of the lower courts and review was granted.

I

Hamblen County operates a school system and the City of Morristown, the county seat of Hamblen County, operates a city school system and for many years prior to 1965 Hamblen County students who resided outside the city limits of Morristown had attended the Morristown High School by agreement with the city and without paying any compensation to the city for the attendance of "county" students. However, shortly prior to 1965 Morristown High School became so overcrowded that the city was faced with the threat of losing state and federal funds. Accordingly, the city set a date after which it could no longer accept county students in its high school. The city possessed adequate facilities for its own city high school students but the county did not possess adequate facilities for those high school students residing in the county but outside the city limits of Morristown. After lengthy negotiations between the city fathers and county fathers and after a referendum in which the voters of the county decided that the existing Morristown High School should be renovated and modernized and that a second high school should be constructed, the two sides, the City School Board and the Board of Mayor and Aldermen on the one hand and the County Board of Education and the legislative body of the county on the other hand entered into the 1965 contract above mentioned pursuant to T.C.A., § 49-401 et seq. ²

In accordance with the 1965 contract a new high school, known as West High School, was constructed; the existing high school, now known as East High School, and which at the time was valued at approximately $1,000,000.00, was donated by the city to the high school project and was extensively renovated; these two schools, West High School and East High School, were to serve high school students throughout the county and they have been so used since the construction and renovation, approximately 15 years ago, the Board of Education of the City of Morristown operating and administering both schools. Under the 1965 agreement the county was to finance the renovation of the existing high school of the city and to pay for the construction of the new high school. It was further provided in the 1965 contract that the new high school facility was to be leased by Hamblen County "to the town of Morristown for such time and so long as the same is used for educational purposes for city and county students." And, it was further provided that students living within the county but outside the city limits of Morristown should have the right to attend either of the two high schools, "according to a zone plan approved by Morristown school commission" and that the county would make proportionate payments to the city for the county students thus attending the schools.

The parties operated as provided in the 1965 agreement until 1976 when the county set out to gain control of the new West High School and brought the instant litigation seeking to avoid the contract.

The overriding issue presented for our decision upon this appeal is: Who has the power to control these two high schools? In their briefs the parties have stated other contentions which we have considered but found to be either without merit or to be included within the overriding issue just stated.

Although the Chancellor conducted an evidentiary hearing to receive testimony concerning the intent of the parties during the negotiations leading up to the 1965 contract, he later determined that the reception of such testimony violated the parole evidence rule. His ultimate holding was that the 1965 contract "... is not ambiguous. It is merely silent on the issue of which board controls." His decree was that the city and county should share equally in the operation of the two high schools.

The majority of the Court of Appeals agreed with the result reached by the Chancellor but concluded that regardless of the intent of the parties as expressed by their testimony, there was never any agreement respecting control of the high schools:

"We reach this conclusion because a fair reading of the proof shows that it was the intent of the various witnesses that the city should operate--as some witnesses termed it--or administer--according to others--the high school system. This intent was never carried to fruition either by making it a part of the written contract or by an agreement in parole. It seems to us that it is one thing to intend that things should be done, and another to agree that it should."

Judge Franks dissented, reasoning that the cardinal rule of contract interpretation is to determine the intention of the parties and that in this case it was evident from the four corners of the contract itself that the parties intended that the city should retain control of both high schools. We are persuaded that the rationale and conclusion of the dissent is correct.

The overriding purpose of the Court in interpreting the contract is to ascertain the intention of the parties and to give effect to that intention, consistent with legal principles. Pearsall Motors, Inc v. Regal Chrysler-Plymouth, Inc., Tenn., 521 S.W.2d 578 (1975); Walker v. Tennessee Farmers Mut. Ins. Co., Tenn.App., 568 S.W.2d 103, 105 (1977); 17 Am.Jur.2d Contracts § 244 (1964). Another fundamental principle which is applicable here is stated in the Restatement of Contracts, § 236(b), as follows:

"The principal apparent purpose of the parties is given great weight in determining the meaning to be given to manifestations of intention or to any part thereof."

Also applicable here is a principle which has been aptly stated as follows:

"The court in interpreting words or other acts of the parties puts itself in the position which they occupied at the time the contract was made. In applying the appropriate standard of interpretation even to an agreement that on its face is free from ambiguity it is permissible to consider the situation of the parties and the accompanying circumstances at the time it was entered into--not for the purpose of modifying or enlarging or curtailing its terms, but to aid in determining the meaning to be given to the agreement." Restatement of Contracts, § 235(d) and Comment.

Particularly pertinent here is the following principle:

"Intention or meaning in a contract may be manifested or conveyed either expressly or impliedly, and it is fundamental that that which is plainly or necessarily implied in the language of a contract is as much a part of it as that which is expressed. If it can be plainly seen from all the provisions of the instrument taken together that the obligation in question was within the contemplation of the parties when making their contract or is necessary to carry their intention into effect, the law will imply the obligation and enforce it." 17 Am.Jur.2d Contracts § 255 (1964) at 649.

This principle was applied in this State by the Court of Appeals in E.O. Bailey & Co. v. Union Planters Title Guaranty Co., 33 Tenn.App. 439, 232 S.W.2d 309, 316 (1949), the court stating:

"[A]n unexpressed obligation will be implied when it is clear that it was intended."

Applying the foregoing principle to this case, we conclude, as did Judge Franks, that certain language of the 1965 contract necessarily implies that the parties intended to vest control of these two high schools in the city and its school board.

The contract provided that the county would sell a bond issue to provide the funds necessary for building the new West High School and for renovating the old East High School and:

"The Hamblen County Board of Education shall acquire by purchase or condemnation the additional land necessary for the aforesaid second high school title to which land shall be made to Hamblen County. And the said land shall be leased to the Town of Morristown for such time and so long as the same is used for educational purposes for city and county students."

Clearly, it would be necessary for the county to lease the new facility to the city only if it were the intent of the parties that the city should control, administer and operate both high schools. Thus, paragraph V of the contract gave the power to supervise and direct the construction of the new school and renovation of the old school to the city.

Finally, we reach paragraph VI of the contract which would appear to dispel any doubt concerning the intention of the parties respecting control of the two high schools in question. That paragraph provides:

"Beginning with the school year 1966-67 and thereafter the high school students residing in that portion of Hamblen County lying outside the corporate limits of the Town of Morristown shall have the right to attend either high school, according to a zone plan approved by Morristown...