Nixon v. First State Bank of Corpus Christi, 1071

• Decision Date: 30 August 1976
• Docket Number: No. 1071,1071
• Citation: 540 S.W.2d 817
• Court: Texas Court of Appeals
• Parties: Alvin L. NIXON et al., Appellants, v. FIRST STATE BANK OF CORPUS CHRISTI, Appellee.

Page 817

540 S.W.2d 817

Alvin L. NIXON et al., Appellants, v. FIRST STATE BANK OF CORPUS CHRISTI, Appellee.

No. 1071.

Court of Civil Appeals of Texas Corpus Christi.

Aug. 30, 1976.

Rehearing Denied Sept. 30, 1976.

M. W. Meredith, Jr., Meredith & Donnell, Corpus Christi, for appellants.

H. Tom Hermanson, Jr., Dyer, Redford, Burnett, Wray & Woolsey, Corpus Christi, for appellee.

OPINION

NYE, Chief Justice.

This is a summary judgment case in which the appellants, all former employees of the appellee, First State Bank of Corpus Christi, are attempting to recover certain sums allegedly due and owed to them under a deferred compensation agreement and for damages for the breach of said agreement. From a judgment of the trial court granting the Bank's motion for summary judgment and denying appellants' claims, the appellants have perfected their appeal to this Court.

The appellants, Alvin Nixon, Thomas Mulligan and Jimmy Melton are all former executive officers of appellee, First State Bank of Corpus Christi. Each of the appellants had worked for the Bank in excess of 10 years prior to their voluntary resignation. Each of the appellants had entered into a separate but identical deferred compensation agreement with the Bank.

The deferred compensation agreement, which is the subject matter of this lawsuit, provided among other things, that upon reaching the age of 65 or becoming totally and permanently disabled, the Bank would pay its executive officers a deferred compensation of $5,000 per year for a period up to 20 years. When the appellants resigned from the Bank, the chairman of the board and the board of directors evidently began to question the language of the compensation agreement as to whether or not the appellants were entitled to any deferred compensation for their past services with the Bank. This question arose because of certain language contained in Section 6 of the deferred compensation agreement. The pertinent parts of Section 6 read as follows:

'Section 6.

Except as provided in Section 2 hereof, either party shall have the right to terminate and cancel this agreement at any time by giving thirty (30) days notice to the other party of such intention, subject to the following conditions:

(a) If this agreement is terminated by Employee before attaining retirement age, all benefits herein provided shall be forfeited, Except as set out in paragraph (c) of this section.

(b) In the event of termination of the services of an Employee for cause, the validity of which said cause shall be determined solely by majority vote of the Board of Directors of the Employer and shall not be subject to review by any court or otherwise, all benefits hereunder may be forfeited or the amount of such benefits redetermined by the Board of Directors of the Employer at the time of and in connection with such termination for cause.

(c) If this agreement is terminated by the Employer at any time after the Employee has rendered service for a period of ten years or more, the Employer shall make payments of the amounts to the beneficiaries and at the times specified under Sections 2, 3 and 4 hereof for a period of years corresponding to the number of full years of service rendered by the Employee to the Employer not exceeding a total of twenty years. . . .' (Emphasis supplied.)

The parties attempted to settle their differences, but when they could not agree, the Bank notified each appellant that it was terminating their rights under the deferred compensation agreement.

The appellants then filed suit against the Bank seeking to recover the present value of their deferred compensation earned and damages for anticipatory breach of the agreement. The Bank filed an answer and moved for summary judgment as did the appellants. The trial court denied appellants' motion for summary judgment and granted the Bank's motion for summary judgment. The essence of the Bank's motion was that there was no issue of fact as to the language of the agreement and that the only question before the court was one of law as to the construction of the agreement. The Bank alleged that the agreement was not ambiguous and that as a matter of law the appellants had forfeited all rights under the agreement. The trial court granted the Bank's motion for summary judgment in its entirety .

Appellants' first point of error is that the trial court erred in granting appellee's motion for summary judgment because appellee failed to prove as a matter of law that the agreement was not ambiguous. Under Rule 166--A, T.R.C.P. and the numerous decisions of the courts of this State, the movant has the burden of establishing as a matter of law that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. 'Moore' Burger, Inc. v. Phillips Petroleum Company, 492 S.W.2d 934 (Tex.Sup.1972); Gibbs v. General Motors Corporation, 450 S.W.2d 827 (Tex.Sup.1970); State v. Superior Oil Company,526 S.W.2d 581 (Tex.Civ.App.--Corpus Christi 1975, writ ref'd n.r.e.). A summary judgment for a defendant is proper only if a plaintiff cannot succeed on any theory plead by him for recovery. Marshall v. Garcia, 514 S.W.2d 513 (Tex.Civ.App.--Corpus Christi 1974, writ ref'd n.r.e.). The defendant must negate the plaintiff's possibility of recovery by offering summary judgment proof which shows that the defendant is entitled to prevail as a matter of law. In this case, the defendant must show uncontrovertedly that the plaintiff cannot win the lawsuit because the deferred compensation agreement is capable of only one meaning or interpretation and that is such that the defendant must prevail. See Glenn v. Prestegord, 456 S.W.2d 901 (Tex.Sup.1970); Beall v. Lo-Vaca Gathering Co., 532 S .W.2d 362 (Tex.Civ.App.--Corpus Christi 1975, writ ref'd n.r.e.).

The main question for our determination is whether or not the deferred compensation agreement shows that the appellants are not entitled to collect their deferred compensation as a matter of law.

In construing contracts the cardinal rule of construction is to ascertain the intention of the parties as expressed in the instrument. It is the intent of the parties which must control. Citizens Nat. Bank In Abilene v. Texas & P. Ry. Co., 136 Tex. 333, 150 S.W.2d 1003 (1941); Republic National Bank of Dallas v. National Bankers Life Insurance Company, 427 S.W.2d 76 (Tex.Civ.App.--Dallas 1968, writ ref'd n.r.e.); Davis v. Andrews, 361 S.W.2d 419 (Tex.Civ.App.--Dallas 1962, writ ref'd n.r.e.). Contracts must be construed in their entirety and each part must be considered with every other part to determine the effect of one part on another part . Southland Royalty Company v. Pan American Petroleum Corporation, 378 S.W.2d 50 (Tex.Sup.1964); Steeger v. Beard Drilling, Inc., 371 S .W.2d 684 (Tex.Sup.1963); Citizen Nat. Bank In Abilene v. Texas & P. Ry. Co., supra; Piper, Stiles & Ladd v. Fidelity And Deposit Company of Maryland, 435 S.W.2d 934 (Tex.Civ.App.--Houston (1st Dist.) 1968, writ ref'd n.r.e.); Weaver v. Weaver, 171 S.W.2d 898 (Tex.Civ.App.--Fort Worth 1943, writ ref'd w.o.m.).

The question of what constitutes an ambiguous contract has been variously stated by many courts. The Texas Supreme Court has stated:

'. . . a contract is ambiguous only when the application of pertinent rules of interpretation to the face of the instrument leaves it genuinely uncertain which one of two or more meanings is the proper meaning.'

Universal C.I.T. Credit Corp. v. Daniel, 150 Tex. 513, 243 S.W.2d 154 (1951). See Skelly Oil Company v. Archer, 163 Tex. 336, 356 S.W .2d 774 (1961); Walter E. Heller & Company v. Allen, 412 S.W.2d 712 (Tex.Civ.App.--Corpus Christi 1967, writ ref'd n.r.e.); Stowers v. Harper, 376 S.W.2d 34 (Tex.Civ.App.--Tyler 1964, writ ref'd n.r.e.).

'. . . if after applying established rules of interpretation to the contract It remains reasonably susceptible to more than one meaning it is ambiguous, . . .' Universal C.I.T. Credit Corp. v. Daniel, supra. (Emphasis supplied.)

The question of whether or not a contract is ambiguous is one of law to be determined by the court. Vermillion Construction Company v. Fidelity & Deposit Company of Maryland, 526 S.W.2d 744 (Tex.Civ.App.--Corpus Christi 1975, no writ); Louisiana-Pacific Corp. v. Cain, 519 S.W.2d 528 (Tex.Civ.App.--Beaumont 1974, writ ref'd n.r.e.); Davis v. Andrews, 361 S.W.2d 419 (Tex.Civ.App.--Dallas 1962, writ ref'd n.r.e.). The interpretation of a contract becomes a fact question only, when after application of pertinent rules of construction, there remains a genuine uncertainty as to which of two meanings is proper. Universal C.I.T. Credit Corp. v. Daniel, supra; Lewis v. East Texas Finance Co., supra; Sale v. Contran Corporation, 486 S.W.2d 161 (Tex.Civ.App.--Dallas 1972, writ ref'd n.r.e.).

When a contract contains an ambiguity which can only be resolved by reference to extrinsic evidence or where there is doubt as to the true meaning of an ambiguous instrument, the granting of a motion for summary judgment is improper. Thompson v. Hamrick, 508 S.W.2d 949 (Tex.Civ.App.--Dallas 1974, writ ref'd n.r.e.); Robert v. E. C. Milstead Ranching, Inc., 469 S.W.2d 429 (Tex.Civ.App.--Beaumont 1971, writ ref'd n.r.e.); Chapa v. Benavides Mill & Gin Company, 420 S.W.2d 464 (Tex.Civ.App.--San Antonio 1967, writ ref'd n.r.e.); Tinnin v. Crook, 333 S.W.2d 617 (Tex.Civ.App.--El Paso 1960, writ ref'd n.r.e.).

Under the rules of law established in the above cited authorities, we must now look first to the document in question without consideration of any extrinsic evidence to determine if an ambiguity exists within the contract. As earlier stated, the alleged ambiguity is said to exist in Section 6 of the agreement.

First, Section 6 states that either party may cancel the agreement upon 30 days' notice subject to certain conditions.

The first condition is that if the agreement is terminated by the employee all benefits are forfeited except as set...