Martin v. Davis Constructors, Inc.

• Decision Date: 25 May 1977
• Docket Number: No. 15699,15699
• Citation: 552 S.W.2d 873
• Parties: Sam B. MARTIN, Appellant, v. DAVIS CONSTRUCTORS, INC., et al., Appellees.
• Court: Texas Court of Appeals

Page 873

552 S.W.2d 873

Sam B. MARTIN, Appellant, v. DAVIS CONSTRUCTORS, INC., et al., Appellees.

No. 15699.

Court of Civil Appeals of Texas, San Antonio.

May 25, 1977.

Rehearing Denied June 29, 1977.

R. L. House, House, Mercer, House, Brock & Wilson, San Antonio, for appellant.

William C. Church, Jr., Kampmann, Church & Burns, Charles P. Haymore, San Antonio, for appellees.

KLINGEMAN, Justice.

This is a suit by plaintiff, Sam B. Martin, against T. E. Davis, Davis Constructors, Inc., Ed Davis, Inc., and Dacom, Inc. for monies allegedly due under two letter agreements. Plaintiff sued for $2,186.21 under a letter agreement dated January 1, 1973 and for $85,219.32 under a letter agreement dated June 11, 1973, as amended on January 11, 1974. Trial was to a jury, and based upon the jury's findings to various special issues, judgment was rendered for plaintiff against T. E. Davis in the amount of $41,886.85, and that plaintiff take nothing against the other defendants.

In answer to the pertinent special issues here involved, the jury found:

1. Plaintiff was not entitled to any additional compensation for the Victoria Toll job.

2. It was the intention of plaintiff and defendant to deduct overhead in arriving at the percentage of net profits on the jobs under the June 11 letter agreement.

3. The jury found 33 items (out of 35) to be necessary overhead expenses in connection with the jobs covered by the June 11 agreement. The jury disallowed expenses for "bad debts" and "partnership losses."

4. The usual and customary method of computing the percentage of overhead to be charged to a job in the commercial construction business is to divide the total overhead by the total direct job cost during a given period of time.

5. The jury made findings as to the total direct job cost on all jobs during the covered period; and on each job individually, the total income and total direct cost of such job.

Prior to January 1, 1973, Sam B. Martin and T. E. Davis had an oral agreement under which they operated which was reduced to writing by a letter agreement dated January 1, 1973. This is a letter from T. E. Davis to Sam B. Martin, of which the material portions are as follows:

. . . I have agreed to furnish bonds, financing, bookkeeping, tools and equipment that I have available and any other items of material and home office labor that I would normally furnish any other job.

You have agreed to furnish estimating to obtain the job, except where I wish to estimate the job and then turn it over to you, and all general supervision to complete the job just as you would if you were doing the job as a completely independent contractor.

We will divide the profits of the job on the following basis: the first 3% will go to me, the remainder to you up to a total of 6%. Any profit over 6% will then be divided equally between us.

Any deviation from the above may be agreed upon at any time on an individual job basis.

On June 11, 1973, a changed or new letter agreement was entered into. This is also in the form of a letter by Davis addressed to Martin. The pertinent portions of this letter may be summarized as follows:

You will assume complete responsibility for all supervision of jobs.

You will be paid a salary of $20,000.00 per year and a percentage of net profits on jobs of 20%. (on jobs handled 1/11/74 TED.) ¹

Victoria Toll will continue to be handled as per our previous agreement so that the net profit accruing to Davis Constructors will not be included in the amount which you will participate in.

Jobs already completed this year will not be included.

Jobs in progress will be included according to the percentage incomplete.

You will continue to work with Jim in whatever manner we agree upon that will train him to later take over full supervision or qualify him to take a responsible job in the office.

You will provide me with a job status (economic) report as well as a progress schedule on each job each month.

To recap in general, you will build the jobs from start to finish so that I will not necessarily have to worry any about this aspect of the business and leave me free to pursue the acquisition of new business, etc.

This agreement will be subject to review and change at the end of one year or at any time we mutually agree that it is necessary.

Some time after the initial letter agreement was entered into, some areas of disagreement arose between Martin and Davis, and on June 11, 1973, the second letter agreement was entered into. Thereafter, some disagreement still continued, with Martin contending that he was not being properly paid and that he wasn't getting certain information he wanted from Davis, and Davis contending that Martin failed to perform his duties properly, as provided for in the June 11 agreement. On or about May 5, 1975, Davis told Martin he wanted to terminate the agreement and Martin asked for an accounting. No agreement as to the amount allegedly due Martin was reached and thereafter this suit was filed by Martin.

Plaintiff asserts 48 points of error which encompass the following general areas: ²

1. As a matter of law, no overhead should have been charged on the jobs supervised by Martin in determining the amount due him.

2. In any event, the overhead charges found by the jury were incorrect. (Some 33 points of error complain of particular items of overhead expenses found by the jury.)

3. The trial court erred in submitting 35 items to the jury to determine what items, if any, were to be considered overhead expenses.

4. The two letter agreements must be read and construed together.

5. The interpretation and construction of such letter agreements is a matter for determination by the court and not by the jury.

6. Certain testimony should have been excluded from the evidence.

7. The jury erred in finding plaintiff was not entitled to any additional compensation on the Victoria Toll job.

8. The trial court erred in entering judgment against T. E. Davis alone and in not also entering judgment against Davis Constructors, Inc. and Ed Davis, Inc.

The testimony is detailed and comprehensive. Both parties testified as to the circumstances surrounding the making of such agreement, their intent, the construction placed upon the contract by them, and the discussion with regard to overhead. There was also testimony both by the parties and other witnesses as to whether or not the parties agreed that a deduction would be made for overhead in computing the amount Martin was entitled to, how the overhead was computed and allocated to the various jobs, areas of disagreement between the parties, testimony by accountants and contractors as to the meaning of the term "net profits" in the industry, and testimony as to the normal and customary methods of determining profits on particular construction jobs. ³

We will consider all of plaintiff's complaints together.

I

We first consider plaintiff's contention that: (a) the two letters must be read and construed together; and (b) the interpretation and construction of such letter agreements was for the court and not a jury.

In support of his contentions that the two letter agreements must be read and construed together, plaintiff relies on that line of cases holding that where several instruments executed contemporaneously or at different times pertain to the same transaction, they will be read together, even though they do not expressly refer to each other. Board of Ins. Com'rs v. Great Southern Life Ins. Co., 150 Tex. 258, 239 S.W.2d 803 (1951); McLean v. Hillman, 352 S.W.2d 310 (Tex.Civ.App. Amarillo 1961, no writ). We have no disagreement with these cases; however, where the instruments are separate, distinct, and completely different, the first contract is not considered in construing the second.

In any event, we reach the same result herein, whether we read the two letters together or consider them separately. It is clear that the second letter materially changed the agreement and the relationship between the parties. The first letter does not provide for any salary. It sets up certain specific duties and obligations of each of the parties and provides that Martin will handle jobs supervised by him just as if he was an independent contractor; it does not refer to or mention "net profits," but provides for a percentage of profits. The second letter provides for an annual salary and changes the relationship from that of an independent contractor type of relationship to that of an employee-employer type of relationship. The second letter provides that the additional compensation be based upon a percentage of net profits which is much less than the percentage of profits called for in the first letter. It also makes a differentiation between jobs already completed, those in progress, and future jobs. Even if we construe the two letter agreements together, it is clear that there has been a modification of the terms of the first contract by the parties. ⁴

We have concluded that the computation of net profits as to the jobs involved was correctly based upon the modified terms of the second letter agreement.

Plaintiff next contends that the construction and interpretation of such contracts was for the court and not the jury because there were no pleadings of fraud or ambiguity, and that no question of fact was presented for the jury.

It is true that the construction of the legal effect of an instrument is for the court and not the jury, and if the agreement is unambiguous, the meaning thereof is determined as a matter of law by the language used therein. Trinity Universal Ins. Co. v. Ponsford Brothers, 423 S.W.2d 571 (Tex.1968); Tower Contracting Co. v. Flores, 157 Tex. 297, 302 S.W.2d 396 (1957). However, the jury may resolve an ambiguous intent. Trinity Universal Ins. Co. v. Ponsford Brothers, supra. While plaintiff asserts that there are no pleadings of ambiguity, plaintiff did plead in the alternative that the June 11 letter agreement was ambiguous and...