Ringer v. Graham

• Decision Date: 15 April 1987
• Docket Number: No. 1006,1006
• Citation: 293 S.C. 238,359 S.E.2d 523
• Court: South Carolina Court of Appeals
• Parties: Richard C. RINGER and Anne S. Ringer, Appellants, v. David GRAHAM; Newberry Federal Savings and Loan Association; Delph Context Company; Century Builders, Inc.; White Electric Company; Stier Supply Company; Fulmer Building Supply; Bilt Rite Corp.; The Lite House, Inc.; Chapin Concrete Corp.; Columbia Lumber Company; Whitaker Floor Coverings; Sara Stone Shealy, Executrix of the Estate of G. Russell Shealy; and John Willingham, d/b/a Willingham's Septic Tanks, of whom David Graham; The Lite House, Inc.; Columbia Lumber Company; Sara Stone Shealy, Executrix of the Estate of G. Russell Shealy; and John Willingham, d/b/a Willingham's Septic Tanks are Respondents. . Heard

Page 523

359 S.E.2d 523

293 S.C. 238

Richard C. RINGER and Anne S. Ringer, Appellants, v. David GRAHAM; Newberry Federal Savings and Loan Association; Delph Context Company; Century Builders Inc.; White Electric Company; Stier Supply Company Fulmer Building Supply; Bilt Rite Corp.; The Lite House Inc.; Chapin Concrete Corp.; Columbia Lumber Company Whitaker Floor Coverings; Sara Stone Shealy, Executrix of the Estate of G. Russell Shealy; and John Willingham, d/b/a Willingham's Septic Tanks, of whom David Graham; The Lite House, Inc.; Columbia Lumber Company; Sara Stone Shealy, Executrix of the Estate of G. Russell Shealy; and John Willingham, d/b/a Willingham's Septic Tanks are Respondents.

No. 1006.

Court of Appeals of South Carolina.

Heard April 15, 1987.

Decided Aug. 3, 1987.

Spencer Andrew Syrett, Columbia and John S. Huggins, Irmo, for appellants.

David B. Butler, Columbia and Richard M. Kenan, Eugene C. Griffith and James Spencer Verner, Newberry, for respondent.

PER CURIAM:

This action arises out of a written contract dated April 1, 1982, between the appellants Richard and Anne Ringer (Mr. and Mrs. Ringer) and respondent David Graham in which Graham agreed to construct a house on the Ringers' land according to agreed-upon plans and specifications. The Ringers obtained a construction loan from Newberry Federal Savings and Loan Association.

As the dwelling neared completion, the Ringers discovered the cost to them would exceed the cost which they believed the contract called for. Upon Graham's refusal to endorse the final construction draw check, the Ringers commenced this action. In their petition the Ringers sought (1) an order requiring Graham to permit disbursement of the funds from the final construction draw check, (2) an order permitting the Ringers to pay into court a sum equal to the alleged contract sum less those amounts already paid to or on behalf of Graham, (3) an order declaring the property free of mechanics' liens, (4) judgment against Graham for any amount in excess of the alleged contract price which the Ringers might be ordered to pay, and (5) an order requiring Graham to account for the sums expended on the construction.

Graham answered and claimed a mechanic's lien of $4,350. The record also includes answers from various suppliers, each of whom also alleged directly or indirectly entitlement to a mechanic's lien. Before the commencement of trial, the Ringers moved to dismiss all mechanics' liens for failure to file a lis pendens.

The case was initially heard November 3, 1982. The disputed issues before the trial court were the amount of the contract, the right of Graham and various suppliers to mechanics' liens, and the amounts of the liens. The trial judge granted the defendants' motions for directed verdicts, finding that the amount of the contract was, as Graham argued, $97,000, and that all respondents were entitled to recover on their claims. This court reversed and remanded, holding the Ringers presented evidence from which the fact finder could reasonably infer the contract amount was, as they contended, $85,000. We also held judgments on the counterclaims were inappropriate since none of the suppliers proved the amounts of their claims. Ringer v. Graham, 286 S.C. 14, 331 S.E.2d 373 (Ct.App.1985).

On remand, the trial judge, after hearing all the evidence, determined the contract sum to be $97,000 and awarded Graham and other suppliers judgment for damages on their counterclaims. In addition, the trial judge declined to order other relief requested by the Ringers in connection with this action. We affirm as modified.

I. CONTRACT PRICE AND GRAHAM'S COMPENSATION

The contract at issue was drafted on an American Institute of Architects (AIA) form. Mr. Ringer obtained the form from his place of business and filled in the pertinent information after discussing the project with Graham.

Article 4, the clause in contention, provides as follows:

CONTRACT SUM

The Owner shall pay the Contractor in current funds for the performance of the Work, subject to additions and deductions by Change Order as provided in the Contract Documents, the Contract Sum of EIGHTY-FIVE THOUSAND AND NO/100 DOLLARS. [The amount is handprinted.]

The Contract Sum is determined as follows: (State here the base bid or other lump sum amount, accepted alternates, and unit prices, as applicable.)

[The remainder of the excerpt is handprinted.] IT IS MUTUALLY UNDERSTOOD AND AGREED THAT THE STATED ABOVE AMOUNT IS A NOT TO EXCEED AMOUNT. IT IS FURTHER UNDERSTOOD THAT CONTRACTOR WILL BE PAID A WEEKLY SALARY OF $450 PER WEEK FOR TWENTY WEEKS DURING CONSTRUCTION PERIOD, AND AT FINAL COMPLETION AND ACCEPTANCE BY THE OWNER CONTRACTOR WILL BE PAID $3,000. ALL OTHER COST WILL BE ACTUAL COST. [Emphasis ours.]

Article 5 of the AIA form allows the parties to delineate the allocation of progress payments between "labor, materials and equipment incorporated in the work" and "materials and equipment suitably stored at the site or at some other location agreed upon in writing and to specify a percentage of the contract sum that is to be paid off upon substantial completion of the entire work." None of the terms of Article 5 were completed in this case.

It has been the Ringers' position throughout this action that the quoted contract sum of $85,000 included Graham's weekly salary of $450 for twenty weeks and final bonus of $3,000. Graham, on the other hand, maintains his salary and bonus, totalling $12,000, was in addition to the contract sum of $85,000.

The trial court determined the contract was ambiguous as to whether the contract sum included stated amounts to be paid to Graham and then considered extrinsic evidence and the fact that Ringer prepared the instrument to resolve the ambiguity in Graham's favor.

Although the contract referred to Graham as "Contractor," the use of the word "salary" in the above-quoted provision covering his compensation suggests that Graham could have been working as an employee of the Ringers rather than as an independent contractor. Cf., Davis v. Satterfield Const. Co., Inc., 263 S.C. 356, 210 S.E.2d 596, 599 (1974). ("The nature of a contract ... is to be determined not by the name which the parties have given it, but by the nature of the obligation which it imposes, because the law regards substance and not form.") As an employee, Graham could reasonably expect compensation directly payable to him to be separate and apart from any sum specifically allocated to construction costs. Moreover, had Ringer desired to include Graham's salary in the $85,000 contract sum, he could have easily drafted the contract to reflect this intention. Thus, considering the contract as a whole, we agree with the trial court's implicit finding that the contract was ambiguous in that it could "fairly and reasonably be understood in more ways than one." Farr v. Duke Power Co., 265 S.C. 356, 218 S.E.2d 431, 433 (1975).

Having found, as did the trial court, that the contract was ambiguous, we also hold that the trial court correctly resolved the ambiguity in Graham's favor. See Williams v. Teran, 266 S.C. 55, 221 S.E.2d 526, 529 (1976). ("[W]here the contract is susceptible of more than one interpretation, a doubt shall be resolved against the party whose business it was to speak without ambiguity.")

Moreover, we hold the trial court did not err in considering a construction loan inspection record that the Ringers prepared for the Newberry Federal Savings and Loan Association when they applied for a loan for the house. The record was an itemized list including approximate costs of thirty-four separate items totalling exactly $85,000; however, it failed to specify a contractor's salary. Although the document was not part of the contract, its admission was proper insofar as it was necessary to clarify an ambiguous provision. See Williams v. Teran, supra 221 S.E.2d at 528. ("When the agreement is ambiguous the court may take into consideration the circumstances surrounding its execution in determining the intent.")

And we find no merit to the Ringers' argument that Graham's answer failed to put the contract amount in issue. The Ringers, as the plaintiffs in this action, had the burden of proof as to all terms essential to the creation of a contract, including price. Stanley Smith & Sons v. Limestone College, 283 S.C. 430, 322 S.E.2d 474 (Ct.App.1984). Graham's failure to allege specifically an alternate interpretation does not vitiate that burden. Furthermore, Graham did raise the issue in his answer in that he challenged the Ringers' allegation that he should receive only that portion of the remaining funds representing the difference between $85,000 and what he had been paid thus far.

Mr. Ringer and Graham gave conflicting interpretations of the term at issue. The trial court favored Graham's interpretation over Ringer's. While this court has jurisdiction to determine the facts of this case in accordance with its own view of the preponderance of the evidence, we do not disregard the findings of the trial court. Duckett v. Payne, 279 S.C. 94, 302 S.E.2d 342 (1983). Under this premise, we hold the trial court did not err in favoring Graham's version, which is also amply supported by the record.

Based on our view of the record, we also find no error in the trial court's refusal to allow the Ringers a setoff for alleged defects in Graham's performance. The Ringers' own expert witness...