Trinity Universal Ins. Co. v. Ponsford Brothers

• Decision Date: 17 January 1968
• Docket Number: No. B--297,B--297
• Parties: TRINITY UNIVERSAL INSURANCE COMPANY, a Corporation, Petitioner, v. PONSFORD BROTHERS, a Co-partnership, Respondent.
• Court: Texas Supreme Court

Page 571

423 S.W.2d 571

TRINITY UNIVERSAL INSURANCE COMPANY, a Corporation, Petitioner, v. PONSFORD BROTHERS, a Co-partnership, Respondent.

No. B--297.

Supreme Court of Texas.

Jan. 17, 1968.

Kemp, Smith, White, Duncan & Hammond, William J. Derrick and Tad R. Smith, El Paso, for petitioner.

Scott, Hulse, Marshall & Feuille, Schuyler B. Marshall and George W. Finger, El Paso, for respondent.

POPE, Justice.

Ponsford Brothers, a partnership, sued Trinity Universal Insurance Company to recover the funds Ponsford advanced to a subcontractor to enable the subcontractor to complete its contract for the excavation and dirt moving work incident to the construction of the Sun Bowl Stadium. Ponsford sued upon a contract it had with Trinity. The trial court, upon the basis of jury findings, rendered judgment for Ponsford in the sum of $111,792.93 and $7,500.00 attorney fees, and the court of civil appeals affirmed the judgment. 414 S.W.2d 16. Trinity urges a number of points, but most of them are satisfactorily treated by the opinion of the intermediate court. Decisive of the case will be our discussion of Trinity's points that the trial court erred in (1) treating the contract between Ponsford and Trinity as ambiguous, (2) admitting parol evidence of the surrounding circumstances to remove the ambiguity, (3) submitting a question of law to the jury, and (4) allowing attorney fees. We affirm the judgment below except for the allowance of attorney fees.

During 1961, Dallas Building Inc. made a general contract with El Paso County for the construction of the Sun Bowl Stadium. The County on April 5, 1962 declared that firm in default. Trinity was surety for the defaulting contractor upon its performance and payment bonds, and was then faced with the necessity of making prompt arrangements to complete the stadium without further losses. It hurriedly solicited bids from other general contractors. Trinity wanted to retain the original subcontractors and materialmen because they had partially performed, their contracts were for the most part satisfactory, and Trinity wanted to avoid possible claims or suits by them. The defaulting contractor had developed a schedule showing the contract price agreed upon by each of the subcontractors and suppliers, the percentage of their work completed and material supplied, and the balances left in the contracts which were unearned and unpaid. The balances were computed as of March 31, 1962. Trinity supplied each new bidder with copies of the schedule and the plans and specifications for the project. It advised all bidders to submit their bids by April 20, which was only fifteen days after the default by the original contractor. Everyone concerned knew that time was too short for bidders to make a careful estimate of completion costs, so Trinity also advised the bidders that they could condition their bids upon the completion of the work by the existing subcontractors for the sums shown by the March 31 schedule. It was at this point that four new contracts were made.

Ponsford and Trinity entered into the first contract. It is the basis of Ponsford's suit and recovery against Trinity. Ponsford submitted its bid on April 20, 1962 agreeing to complete the Sun Bowl Stadium for the sum of $1,224,000.00 based upon a number of conditions including the one in paragraph 5 of its letter bid.

'5. We are to be protected by Trinity Universal Insurance Company for amounts in excess of the balance due on contract (dated March 31, 1962) because of re-negotiations or replacement of existing subcontractors or material suppliers.'

Trinity accepted Ponsford's bid on April 25 by a letter which both parties signed. By the letter contract, Trinity and Ponsford agreed upon a number of matters not contained in any of the other documents. Trinity agreed to pay for Ponsford's performance and payment bonds, to hold Ponsford harmless as to claims which might be asserted by the original defaulting contractor, to make adjustments of the allowance to which Ponsford might be entitled for materials on hand at the job site, and to pay Ponsford six per cent interest on any funds held by the County by reason of any action of the former defaulting contractor. Paragraph 5 of the letter was similar to paragraph 5 of Ponsford's bid. It is this paragraph 5 which Ponsford alleged was ambiguous. The paragraph is:

'5. You will attempt to negotiate similar contracts with all of Dallas Building, Inc.'s subcontractors and suppliers. Trinity will reimburse you for any amounts in excess of the balances shown on the schedule prepared by Dallas Building, Inc., dated as of March 31, 1962, resulting from such negotiations.'

The second contract was the new general contract that Ponsford made with El Paso County to complete the Sun Bowl Stadium for the sum of $1,224,000.00. It is not significant in this particular suit.

The third contract was one which Trinity made with Montgomery and Knight on May 7. Montgomery and Knight had the subcontract for the excavation and dirt moving at the time the original general contractor defaulted. Ponsford, as it did with all of the other subcontractors and materialmen, undertook to make a new contract with Montgomery and Knight. Ponsford failed to make a new contract only in the instance of Montgomery and Knight, who proved to be so financially unstable that they could not provide a performance bond. That firm also refused to make a new contract until it received $27,987.00 which had been retained by the defaulting general contractor. Only $46,680.00 remained unpaid under the original dirt moving contract and that amount was known to be wholly insufficient to complete the excavation and dirt moving for the Sun Bowl construction. Ponsford reported its inability to contract with Montgomery and Knight, and Trinity then solicited bids from others for the dirt moving. The lowest bid received for completion of the dirt work was $108,000.00. Trinity then resumed negotiations with Montgomery and Knight and made a contract with that firm. The contract provided for partial payment to Montgomery and Knight of the sum retained by the original contractor, and Trinity agreed to pay $60,651.98 instead of $46,680.00 for that firm's completion of the dirt work. The letter contract also required Montgomery and Knight to make a new subcontract with Ponsford in these words:

'This will evidence in writing the agreement between Trinity Universal Insurance Company (Trinity) and Montgomery and Knight Co. relative to your completing the grading, excavating and other dirt work on the Sun Bowl Stadium.

'1. You will execute a sub-contract with Ponsford Brothers, which sub-contract will be substantially the same as your original sub-contract with Dallas Building, Inc., dated August 16, 1961, except that the total consideration will be $60,651.98. You will commence work under such sub-contract Tuesday morning, May 8, 1962, and complete same in a good and workmanlike manner in accordance with said sub-contract.'

The fourth contract was the subcontract executed by Ponsford and Montgomery and Knight. It was made on May 8 and consisted of Ponsford's form subcontract with a copy of the Trinity-Montgomery and Knight letter contract attached. The contract with Ponsford was made after Montgomery and Knight had commenced work pursuant to its contract with Trinity.

Montgomery and Knight were unable to complete the dirt work for the $60,651.98 which Trinity had negotiated. Ponsford and Trinity then agreed that Ponsford would advance the funds...