T. A. Loving Co. v. Latham, 7315SC740

• Decision Date: 09 January 1974
• Docket Number: No. 7315SC740,7315SC740
• Citation: 201 S.E.2d 516,20 N.C.App. 318
• Parties: T. A. LOVING COMPANY, Plaintiff, v. James F. LATHAM et al., Original Defendants, and Aetna Casualty and Surety Company, Additional Defendant.
• Court: North Carolina Court of Appeals

Page 516

201 S.E.2d 516

20 N.C.App. 318

T. A. LOVING COMPANY, Plaintiff, v. James F. LATHAM et al., Original Defendants, and Aetna Casualty and Surety Company, Additional Defendant.

No. 7315SC740.

Court of Appeals of North Carolina.

Jan. 9, 1974.

Poyner, Geraghty, Hartsfield & Townsend by John J. Geraghty and Lacy H. Reaves, Raleigh, for plaintiff appellee.

Dalton & Long by W. R. Dalton, Jr., and Latham, Pickard, Cooper & Ennis by T. D. Cooper, Jr., Burlington, for defendant appellants.

PARKER, Judge.

Fourth Defense Appeal

Defendants admit that they signed and delivered to plaintiff their letter dated 19 August 1968, Exhibit B. As their Fourth Defense against enforcement of the obligations expressly assumed in that letter, defendants allege that the letter was executed and delivered by them to become effective only upon certain specified conditions, which they now assert were conditions precedent, that plaintiff failed to comply with these conditions, and that by reason thereof Exhibit B never became effective. The question presented by plaintiff's motion for a directed verdict on the first issue raised by the Fourth Defense is whether the evidence, considered in the light most favorable to defendants, was sufficient to require submission to the jury of an issue as to whether defendants did in fact execute and deliver the letter to become effective only on the conditions specified. We agree with the trial judge's conclusion that the evidence was not sufficient for that purpose.

Certainly nothing in the letter itself which appears to have been carefully drawn, suggests that the parties understood and intended that it was to be operative only upon conditions. Nor do appellants here contend that any language appears in any of the other numerous documentary exhibits introduced at the trial which supports their position. Rather, they rely upon portions of defendant Latham's testimony concerning telephone conversations which he had with two officers of plaintiff corporation, D. C. Rouse and Banks McNairy. In particular, appellants point to the following portions of defendant Latham's testimony, which relate to telephone conversations which occurred in the latter part of June 1968:

'I had conversations with Mr. Rouse and Mr. McNairy both concerning what is referred to in the letter (referring to plaintiff's letter to defendants dated 26 June 1968). Those conversations took place during the preceding approximately week or ten days. As to what discussions we had, Wachovia wanted a guaranteed maximum price, and I so advised the plaintiff of the fact. The plans were not complete. T. A. Lving was not willing to give a guaranteed maximum price on the shopping center where all the plans were not completed. The bank would not disburse without the price. T. A. Loving was willing to give the letter that Mr. Rouse wrote (again referring to plaintiff's letter to defendants of 26 June 1968 regarding the guaranteed maximum price) if in return we were willing to give Loving a letter guaranteeing them that if the price went over the five and half million dollars, we borrowed from Wachovia, that we would reimburse Loving. We were willing to give Loving this letter on condition that Loving do two things; that they have a cost control system on the job that would let them know where the money was going, where it had gone, what it was being used for, whether there was enough left to finish, and secondly, that they would let us know if anything happened that looked like it would make that cost go over the five and a half million dollars. I was in Winston-Salem on the 25th (of June 1968). I met with Wachovia and called Mr. Rouse and told him that we had to have the letter and he said, 'All right, we will give you the letter, and you will have to give us a letter to protect us.'

'I said, 'Good, we will give you that letter in return we expect you to protect us.' I said that they would have to keep a tight control on the cost of Holly Hill the things that had been discussed last month and above all, let us know if the costs get out of line and looks like it is going over. He said that he would do that. He said, 'Yes, Jim, we will.'

'As to my having more than one conversation with members of the T. A. Loving Corporation concerning the cost control system and conditions relating to this letter, I had one the following day with Mr. McNairy, the 27th, the following day. I told him about the telephone conversation. We discussed the telephone call, and I told him that D.C. said he was sending the letter and we discussed the same thing then. Mr. McNairy, the Vice President of the corporation, told me the corporation would establish its control.'

The foregoing testimony of defendant Latham all relates to conversations which occurred in June 1968. To tie this testimony in with Exhibit B, which defendants admit was executed and delivered on 19 August 1968, defendants point to the following portion of defendant Latham's testimony:

'As to the conversation I had later, I called Goldsboro on August 8th and again on August 15th, when I knew of the Wachovia commitment, those letters dated August 8th (sic). I do not remember which of the two telephone conversations it was, the 8th or the 15th, Mr. Rouse informed me that, 'we will need a new letter to protect us.' I said, 'Certainly, we will be glad to give you another letter, and remember you have to do the same thing, you promised us in the last letter in July,' and he said, 'We will,' and that was it.'

Considering the foregoing testimony in the light most favorable to defendants, the evidence falls short of any showing that the parties understood that Exhibit B was signed and delivered by defendants to become effective only upon conditions. At most the testimony indicates no more than an understanding that plaintiff would maintain an accurate cost control system and would deep defendants currently informed as the work progressed. 'Where it is doubtful whether words create a promise or an express condition, they are interpreted as creating a promise. . . .' Restatement of Law, Contratcs, § 261, quoted in Construction Co. v. Crain and Denbo, Inc., 256 N.C. 110, 123 S.E.2d 590. This rule of construction applies with particular force in the present case in which appellants attempt to construct a condition precedent not out of the contract documents themselves but from telephone conversations which occurred prior to the time Exhibit B was executed and most of which related to an earlier document which was superseded by Exhibit B.

We also find no merit in appellants' contention that other evidence, which they contend was erroneously excluded by the trial court, would have, either alone of in conjunction with the testimony above referred to, been sufficient to present a jury question on their Fourth Defense. A careful review of the record fails to disclose any excluded evidence which would lend substantial support to defendants' position.

Finally, we note that 'the Ante litem motam practical interpretation of the parties is a safe guide in the interpretation of contracts.' Jones v. Realty Co., 226 N.C. 303, 37 S.E.2d 906. In this connection the record shows that on 27 August 1969, approximately a year after Exhibit B was signed and almost a year and a half before this litigation was commenced, defendant Latham wrote a letter, introduced as Exhibit 40, to Banks McNairy, an officer of plaintiff, which contains the following sentence:

'As we have indicated on earlier occasions, and because practically everything that is being done at Holly Hill is on a cost plus basis, we hope that the closest possible supervision will be given the labor of the subcontractor.'

Again, on 5 September 1969 defendant Lathem wrote a letter, introduced as Exhibit 41, to...