Miner-Dederick Construction Corp. v. Mid-County Rental Service, Inc.

603 S.W.2d 193, 23 Tex. Sup. Ct. J. 475, 1980 Tex. LEXIS 359

• Court: Texas Supreme Court
• Decided: July 2, 1980
• Docket: B-8466
• Status: Published

Opinions

McGEE, Justice.

This suit was initiated by a subcontractor against a general contractor for amounts owed in connection with three subcontracts. The general contractor counterclaimed for damages for breach of the subcontracts. The trial court rendered a judgment in favor of the general contractor, but the court of civil appeals reversed and awarded damages to the subcontractor. 583 S.W.2d 428. We reverse the judgment of the court of civil appeals and remand the cause to that court.

Miner-Dederick Construction Corporation was the general contractor for the construction of a library building for Lamar University in Beaumont, Texas. Because the contract was for public works, statutory general contractors’ bonds were required to be given by Miner-Dederick. See Tex.Rev.Civ.Stat.Ann. art. 5160 (Vernon 1971 & Supp. 1979). Miner-Dederick entered into three subcontracts with Mid-County Rental Services, Inc., and Alton M. Stewart, a joint venture (Mid-County). The terms of each subcontract were similar; they differed with respect to the contract amount and the nature of the work to be performed. Contract 1 was for $94,948 for excavation and backfill, Contract 2 was for $57,402 for site cleaning and a parking lot, and Contract 3 was for $30,000 for street paving. In connection with each subcontract, Miner-De-derick required subcontractors’ bonds to be given by Mid-County with United States Fidelity & Guaranty (USFG) as surety.

In 1973, Mid-County began work under the subcontracts, but Miner-Dederick became displeased with the performance. In 1975, Miner-Dederick sent notice of termination. Mid-County brought suit against Miner-Dederick alleging that it had performed the work under the subcontracts and claiming the balance due on the contract prices. In addition, Mid-County alleged that it had performed “extra work” at Miner-Dederick’s request. It claimed the value of this extra work and attorney’s fees.

Miner-Dederick counterclaimed, alleging that Mid-County had not completed the contracts and seeking costs of completion damages. According to Miner-Dederick, its costs of completion offset any recovery to which Mid-County might be entitled and required an award in Miner-Dederick’s favor. Miner-Dederick also sought recovery for amounts it had paid or was obligated to pay to Mid-County’s suppliers.

Special issues were submitted to a jury. The jury found that Mid-County had breached the subcontracts, causing damage to Miner-Dederick. With respect to the opposing damages claims, however, damages were determined to be “NONE” for each contract. In another issue, the jury found that Mid-County was entitled to $2790.64 for extra work and attorney’s fees. The jury also found that Miner-Dederick had paid or was obligated to pay $10,000 to Mid-County’s suppliers. The trial court rendered judgment on this verdict, awarding Miner-Dederick $7203.36 against Mid-County and USFG.¹

Mid-County appealed. The court of civil appeals held that Miner-Dederick was not entitled to recover the $10,000 for suppliers’ claims. It also held that in addition to the jury’s award of $2790.64, Mid-County was entitled to two more items of damages that had been admitted by Miner-Dederick: $19,936.45 as the balance due under Contract 3 and $4141.23 for extra work done in connection with Contract 1. We granted Miner-Dederick’s application for writ of error to consider 1) whether Miner-Dederick is required to pay the additional damages awarded by the court of civil appeals, and 2) whether Miner-Dederick is entitled to $10,000 representing suppliers’ claims.

APPLICATION OF MINER-DEDERICK

Jurisdictional Predicate

Subsequent to the court of civil appeals’ decision, both Miner-Dederick and Mid-County filed motions for rehearing. Mid-County urged that it was entitled to interest on its damages. The court modified its judgment by awarding prejudgment interest. Mid-County now argues that under the rule stated in Oil Field Haulers Association v. Railroad Commission, Miner-Dederick’s first motion became “functus of-ficio” and its second motion is insufficient to preserve the points of error presented in its application to this court. See Oil Field Haulers Association v. Railroad Commission, 381 S.W.2d 183, 189-90 (Tex.1964). That case is not controlling here. In the Oil Field Haulers case the second motion for rehearing contained the statement that “[ajppellees hereby incorporate and reurge each of their Points of Error previously urged.” In this case Miner-Dederick’s second motion for rehearing met the requirement that the assignments of error be “distinctly specified.” See Tex.R.Civ.P. 458.

Interpretation of the Jury Findings

Under Mid-County’s theory of damages, payments made by Miner-Dederick were subtracted from the contract prices. The contract prices and the amount of payments were not disputed at trial and were broken down by contract on Miner-Deder-ick’s exhibits. Under the theory of damages used by Miner-Dederick, its liability to Mid-County for the contract prices was offset against payments and costs of completion. In connection with Contract 1, Miner-Dederick admitted that it owed $4141.23 to Mid-County for unpaid, “approved” extra work. In connection with Contract 3, Miner-Dederiek acknowledged that it owed $19,936.45. Toward the end of the trial, a chart displaying Miner-Dederick’s claims and liabilities was introduced as a summary of other documents in evidence. A portion of this chart appeared substantially as follows:

Contract 1 Contract 2 Contract 3

Total Cost to Miner-Dederick $117,143.22 $ 92,778.71 $ 10,063.55

Less: Contract Amounts 101,505.23 ² 57,402.00 30,000.00

TOTAL $ 15,637.99 $ 35,376.71 [$ 19,936.45]

Damage issues were submitted and answered in the following form:

SPECIAL ISSUE NO. 8

Do you find from a preponderance of the evidence that Miner-Dederick Construction Company was damaged because of the breach of contract, if any, inquired about in Special Issue No. 6.

Answer “We do” or “We do not” regarding each contract:

Answer

Contract No. 1 We do

Contract No. 2 We do

Contract No. 3 We do

If you have answered the foregoing Special Issue No. 8 “We do,” and only in that event, then answer the following:

SPECIAL ISSUE NO. 9

Find from a preponderance of the evidence the difference in money, if any, between the contract price and the fair and reasonable sum of money (including the money paid to Mid-County Rental Service, Inc.) required by an ordinary prudent contractor, situated as was Miner-Dederick Construction Company, to complete the contracts under the same or similar circumstances.

ANSWER in dollars and cents, if any.

Contract No. 1 $ NONE

Contract No. 2 • $ NONE

Contract No. 3 $ NONE

Miner-Dederick’s first contention is that the trial court’s judgment on the verdict, which awarded no damages for Contracts 1, 2, or 3 to either party, was a correct interpretation of these jury findings. According to Miner-Dederick, the jury treated the contracts as one and offset all of Miner-Dederick’s liabilities against Mid-County’s liabilities. Miner-Dederick concludes that the jury intended a “washout” for the contracts, finding that the total costs of completion exactly equalled the total balance due for the contract prices. Miner-Dederick argues that this case is controlled by Davis v. Campbell, 572 S.W.2d 660 (Tex.1978). In Davis v. Campbell, Davis sued for lost profits for breach of contract. He acknowledged owing certain rents to Campbell and credited them when computing his damages. Campbell pleaded the rents as an offset. The jury was shown a chart, which listed the opposing claims and a net balance. The jury’s damage award was close to that net balance. This court held that the jury’s award included the offset for rents: “Although the mental processes of the jury are unknown, the constraints of the theory upon which the case was tried by the parties required the jury to offset the rent arrearages in favor of Campbell in determining Davis’ profit.” Thus, Campbell was not entitled to a second offset. Id. at 662.

We are unable to accept the interpretation urged by Miner-Dederick because its necessary implication is that the jury did not answer the issues in harmony with the manner in which they were submitted.- We cannot agree that the jury treated the three subcontracts as one contract. It is true, as pointed out by Miner-Dederick, that its pleadings treated the contracts as one, by claiming an aggregate total under all contracts as well as separate amounts for each contract. Similarly, an aggregate total as well as separate amounts was shown on exhibits. Nevertheless, the “constraints of the theory upon which the case was tried” did not direct the jury to calculate its findings in the manner urged by Miner-Deder-ick. Despite Miner-Dederick’s contention that the contracts were treated as one, Miner-Dederick’s own conduct at trial indicated that they could also be separately treated. Throughout trial the contracts were designated as “Contract 1,” “Contract 2,” and “Contract 3.” Miner-Dederick’s alleged costs were broken down by contract. On exhibits introduced as summaries toward the end of trial, Miner-Dederick’s $4141.23 liability for extras was acknowledged in connection with Contract 1, and its $19,-936.45 liability was acknowledged as owing under Contract 3. Because of the manner in which the issues were submitted, the jury was not entitled to treat the contracts as one. All pertinent issues directed it to make separate findings for each contract. Issue No. 9, the damages issue, did not ask the jury to calculate an aggregate balance; to the contrary, three issues were submitted, one for each contract. This method of submitting the issues did not suggest to the jury that liabilities referable to one subcontract, i. e., the $19,936.45 owed for Contract 3, should be offset against claims arising from another subcontract, i. e., the costs of completing Contracts 1 or 2. Unlike the jury in Davis v. Campbell, the jury in this case was not given a single issue encompassing all claims and liabilities. Furthermore, unlike the jury finding in Davis v. Campbell, the jury’s findings, resulting in a net balance of zero, do not mirror the net amount of Miner-Dederick’s claims, which was approximately $31,000.

The jury was instructed in Issue No. 9 to consider the contract price, Miner-Dederick’s payments, and Miner-Dederick’s costs of completing the contracts. It found that the difference was “NONE” for each contract. The effect of its findings for Contracts 1 and 2 is that Miner-Dederick was relieved of paying the balance due on the contract price. Thus, the jury found that neither party owed the other for Contracts 1 and 2, which implies that it found Miner-Dederick’s costs of completing Contract 1 to be equal to the balance due on the contract price and found Miner-Dederick’s costs of completing Contract 2 to be equal to the balance due on that contract price. However, the jury could not do the same thing for Contract 3 because Miner-Dederick had established only $2413.55 as costs of completing Contract 3 and had paid only $7650 of the contract price, resulting in a net liability of $19,936.45. Miner-Dederick does not contend that any less was owed for Contract 3. If it is assumed that the jury offset Miner-Dederick’s costs under Contract 3 against the contract price thereby obtaining a balance of zero, the effect is to allow damages to Miner-Dederick greatly in excess of the amount pleaded or proved. There is no evidence to support a finding that Miner-Dederick’s liability under Contract 3 was any less than $19,936.45. Having admitted it owed $19,936.45 for Contract 3, Miner-Dederick is liable to Mid-County for this amount.

To the extent that the court of civil appeals interpreted Issue No. 9 as not encompassing Miner-Dederick’s liability for Contract 3, we agree with that court’s holding. We disagree, however, with its holding that the $4141.23 owed by Miner-Deder-ick for extras in connection with Contract 1 was not included in the answer of “NONE” for damages for Contract 1. The jury was entitled to consider the extras as an element of contract price when computing damages for Contract 1; at trial, exhibits such as the one reproduced above and testimony suggested that the price of Contract 1 included these extras.

Evidence to Support Issue No. 9

As appellee in the court of civil appeals, Miner-Dederick presented a cross-point, urging that “in the alternative” the jury’s answers to Issue No. 9 were against the great weight of the evidence. Miner-Dederick contends that the court of civil appeals erred in overruling this cross-point. It argues that when its interpretation of the jury findings was rejected by the court of civil appeals, the weight of the evidence to support the findings as interpreted by that court should have been considered.

In overruling the cross-point, the court of civil appeals stated, “Having filed a motion for judgment (as was clearly shown by the court’s order), appellee is in no position to question the sufficiency of the evidence. A motion for judgment on the verdict is an affirmation that the findings of the jury are supported by competent evidence.” Because of the dispute between the parties on the correct interpretation of the jury findings, we cannot agree with this holding. The authorities cited by the court of civil appeals based their holdings on the notion that a party should not be able to take inconsistent positions. That rationale is inapplicable in this case. Miner-Dederick’s motion for judgment was made on the assumption that its interpretation would be accepted by the trial court. The trial court accepted this interpretation, but an adverse interpretation was argued by Mid-County on appeal. There is no inconsistency between Miner-Dederick’s motion for judgment based on one interpretation and its challenge to the weight of the evidence under an adverse interpretation. Miner-Dederick was entitled to complain for the first time on appeal that the findings were against the preponderance of the evidence. See Tex.R.Civ.P. 324.

We conclude therefore that Miner-Deder-ick’s motion for judgment did not prevent a challenge on appeal to the weight of the evidence to support an adverse interpretation. Accordingly, we remand the cause to the court of civil appeals to consider whether the jury’s answers to Issue No. 9 are contrary to the preponderance of the evidence.

Liability of Mid-County for Suppliers’ Claims

In its cross-action against Mid-County, Miner-Dederick alleged that several suppliers had furnished labor and materials for the work done by Mid-County on the subcontracts, but Mid-County had failed to pay them. Invoices for these claims were received by Miner-Dederick, which paid or made assurances to pay claims in an amount exceeding $10,000. Miner-Dederick alleged that it paid or became liable to pay the suppliers and sought to recover amounts representing their claims. Recovery was sought on the basis of Mid-County’s subcontracts and on subcontractors’ bonds executed by Mid-County with USFG as surety. The jury found in answer to Issue No. 10 that Miner-Dederick paid or became obligated to pay $10,000 to suppliers who furnished labor or materials for use by Mid-County on the subcontracts. Judgment was rendered by the trial court against Mid-County and USFG, but the court of civil appeals reversed, holding that Miner-Deder-ick had not become “legally obligated” to pay the claims.

The defense of Mid-County and its surety to liability on their bonds was based on the contention that certain contractual conditions set out in the bonds were not met. Each of the bonds contains the following provision:

“PROVIDED, HOWEVER, that this bond is executed pursuant to the provisions of article 5160 of the Revised Civil Statutes . . . and all liabilities on the bond shall be determined in accordance with the provisions of said article to the same extent as if it were copied at length herein.”

The suppliers’ failure to give Miner-Dederick notice of their claims in accordance with article 5160 is not disputed. See Tex.Rev.Civ.Stat.Ann. art. 5160, § B (Vernon 1971). According to Mid-County, because Miner-Dederick did not require the suppliers to give statutory notice of their claims, Miner-Dederick did not comply with the bonds and is- therefore not entitled to recover on them.

We do not find it necessary to decide the question of liability on the bonds and hold that Mid-County is liable for suppliers’ claims on the basis of indemnity provisions in its subcontracts. Although the subcontractors’ bonds expressly limit recovery for suppliers’ claims to only those claims established in compliance with article 5160, indemnity agreements between Miner-Dederick and Mid-County in the subcontracts contain no such limitation. The subcontracts obligate Mid-County “to furnish all labor, material and equipment . . . .” and provide that Mid-County “shall protect, indemnify and save [Miner-Dederick and the Owner] harmless from any and all claims, suits and actions of any kind or description . .” Miner-Dederick argues that it became liable to the suppliers because of article 5160. It argues that it waived the statutory notice requirements and thus incurred a legal obligation to pay the suppliers. Miner-Dederick relies on cases holding that strict compliance with the notice provisions of article 5160, enacted for the protection of the general contractor, may be waived by it. See Texarkana Construction Co. v. Alpine Construction Specialties, Inc., 489 S.W.2d 941, 944 (Tex.Civ.App.-Texarkana 1972, writ ref’d n. r. e.); General Insurance Co. v. Smith & Wardroup, Inc., 388 S.W.2d 262 (Tex.Civ.App.-Amarillo 1965, writ ref’d n. r. e.). We agree. The suppliers’ failure to give timely statutory notice of their claims does not preclude Miner-Dederick’s right to indemnity from Mid-County. Mid-County’s subcontracts do not limit Miner-Dederick’s right to indemnity to claims perfected in accordance with the notice provisions of articlé 5160. These notice requirements could be waived by Miner-Dederick without affecting its right to indemnity from Mid-County. To hold otherwise would allow a subcontractor to avoid the ultimate responsibility for debts owed to its suppliers on the basis of a statutory notice provision enacted for the general contractor’s protection.

APPLICATION OF MID-COUNTY

Mid-County contends that it is entitled to prejudgment interest at the rate of 9 percent per annum, or alternatively 6 percent, on the awards in its favor. Interest is claimed from March 6, 1976, alleged to be the date all work in connection with the subcontracts was completed, until March 14, 1978, the date of the trial court’s judgment.

Prejudgment interest is recoverable as a matter of right when an ascertainable sum of money is determined to have been due and payable at a definite date prior to judgment. Howze v. Surety Corp., 584 S.W.2d 263, 268 (Tex.1979). In its brief to the court of civil appeals, Mid-County contended that it was undisputed that March 6, 1976, was the date the entire job was completed. The court of civil appeals noted that this statement was not challenged by Miner-Dederick. Under this state of the record, Mid-County is entitled to prejudgment interest on the $2090.64 award for extras found by the jury, from March 6, 1976, to March 14, 1978. See Black Lake Pipe Line Co. v. Union Construction Co., 538 S.W.2d 80, 95-96 (Tex.1976).

The court of civil appeals correctly-stated that the proper rate of prejudgment interest is 6 percent per annum. In Pecos County State Bank v. El Paso Livestock Auction Co., 586 S.W.2d 183 (Tex.Civ.App.-El Paso 1979, writ ref’d n. r. e.), the court stated:

“[I]n 1975 the Legislature amended Article 5069-1.05, Tex.Rev.Civ.Stat.Ann., and fixed the usual rate of interest on judgments in this State at the rate of 9% per annum while leaving Article 5069-1.03 unamended at 6%. . As we understand it, the recovery of prejudgment interest where sought at common law as an element of damages was fixed at 6% because the courts by analogy adopted the legal rate of interest fixed by the statute as the standard by which to be governed in assessing those damages for the detention of money. Watkins v. Junker, 90 Tex. 584, 40 S.W. 11 (1897). That was the statutory predecessor to Article 5069-1.03 which is still at 6%. By Article 5069-1.01(b) ‘[l]egal interest’ is still defined as that interest which is allowed by law when the parties to a contract have not agreed on any particular rate, and that is still the 6% as determined by Article 5069-1.03.”

Id. at 187.

CONCLUSION

The judgment of the court of civil appeals is reversed and the cause is remanded to that court for a determination of the merits of Miner-Dederick’s counterpoint complaining that the evidence does not support Issue No. 9, and if that point be overruled, for entry of judgment in conformance with this opinion.

Dissenting opinion by SPEARS, J., joined by GREENHILL, C. J., and STEAKLEY and POPE, JJ.

1 . This amount was apparently intended to be the difference between Miner-Dederick’s $10,-000 award for suppliers’ claims and Mid-County’s $2790.64 award for extra work and attorney’s fees.

2 . This figure includes “approved” extras in the amount of $6557.23, the sum of $4141.23 for unpaid extras and $2416 for paid extras.