Schultz & Lindsay Construction Co. v. State

494 P.2d 612, 83 N.M. 534
CourtNew Mexico Supreme Court
DecidedMarch 3, 1972
Docket9305
StatusPublished
Cited by52 cases

This text of 494 P.2d 612 (Schultz & Lindsay Construction Co. v. State) is published on Counsel Stack Legal Research, covering New Mexico Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Schultz & Lindsay Construction Co. v. State, 494 P.2d 612, 83 N.M. 534 (N.M. 1972).

Opinion

OPINION

OMAN, Justice.

This is a suit by plaintiff construction company (hereinafter called “Contractor”) against the State of New Mexico and the State Highway Department (hereinafter called “State”) on a highway construction contract to recover .the sum of $62,630.93, plus interest, allegedly due the Contractor for extra work done pursuant to the contract. The trial court found in favor of the State and entered judgment dismissing the Contractor’s complaint. The Contractor has appealed. We reverse.

The contract value of the extra work in the amount of $62,630.93 was not disputed at the trial. The State’s contentions were that the failures in the cement treated base course (hereinafter called “CTBC”), which occasioned the extra work by the Contractor, were caused by breaches of the contract on the part of the Contractor, and, thus, not compensable.

It is admitted the Contractor complied with the contract requirements in regard to the making of its claim for extra compensation. It is also admitted the claim was denied on October 16, 1969. The Contractor seeks interest at 6% per annum from this date. This is .consistent with the provisions of § 50 — 6—3, N.M.S.A.1953 (Repl. Vol. 8j pt. 1, 1962). See also Montgomery v. Cook, 76 N.M. 199, 413 P.2d 477 (1966). Coseboom v. Marshall Trust, 67 N.M. 405, 356 P.2d 117 (1960).

The contract was drafted by the State and consists of more than 400 pages. It is the function of the court to interpret and enforce the contract as made by the parties. Hopper v. Reynolds, 81 N.M. 255, 466 P.2d 101 (1970). The contract must be considered and construed as a whole, with meaning and significance given to each part’ in its proper context with all other parts, so as to ascertain the intention of the parties. Thigpen v. Rothwell, 81 N.M. 166, 464 P.2d 896 (1970); Brown v. American Bank of Commerce, 79 N.M. 222, 441 P.2d 751 (1968); Phillips Petroleum Co. v. McCormick, 211 F.2d 361 (10th Cir. 1954). The primary objective in construing a contract is to ascertain the intent of the parties. Leonard v. Barnes, 75 N.M. 331, 404 P.2d 292 (1965); Jones v. Palace Realty Co., 226 N.C. 303, 37 S.E.2d 906 (1946); 4 S. Williston, A Treatise on the Law of Contracts, § 601 (3rd Ed. W. Jaeger 1961).

It is logical to assume that the parties to a contract know best what is meant by its terms, and that whatever is done by them during the performance of the contract is consistent with their intent and the meaning of the contract terms as understood by them. Consequently, the construction of a contract adopted by the parties, as evidenced by their conduct and practices, is- entitled to great weight, if not the controlling weight, in ascertaining their intention and their understanding of the contract. Old Colony Trust Company v. City of Omaha, 230 U.S. 100, 33 S.Ct. 967, 57 L.Ed. 1410 (1913); Hinkle v. Blinn, 92 Colo. 302, 19 P.2d 1038 (1933); Jernigan v. New Amsterdam Casualty Company, 69 N.M. 336, 367 P.2d 519 (1961); James Stewart’& Co. v. Law, 149 Tex. 392, 233 S.W.2d 558 (1950); First Nat. Bank of Green River v. Ennis, 44 Wyo. 497, 14 P.2d 201 (1932); 4 S. Williston, supra, § 623; 3 A. Corbin, Corbin on Contracts, § 558 at 257-58 (1960). This is particularly true as to the resolution of ambiguities and uncertainties of meaning in the contract [Lutterloh v. Patterson, 211 Ark. 814, 202 S.W.2d 767 (1947); Johnston v. Landucci, 21 Cal.2d 63, 130 P.2d 405 (1942); Heckard v. Park, 164 Kan. 216, 188 P.2d 926 (1948); Maffett v. Emmons, 52 N.M. 115, 192 P.2d 557 (1948); Superior Oil Co. v. Stanolind Oil & Gas Co., 150 Tex. 317, 240 S.W.2d 281 (1951)], and especially so if the conduct of the parties manifesting their construction of the contract occurred prior to the development of a controversy between them. Fanderlik-Locke Co. v. United States For Use of Morgan, 285 F. 2d 939 (10th Cir. 1960), cert. denied, 365 U.S. 860, 81 S.Ct. 826, 5 L.Ed.2d 823 (1961); Hinkle v. Blinn, supra.

The trial court obviously did not consider the conduct and practice of the parties in construing the contract and in arriving at the intent of the parties, but concluded “ * * * the issues herein are determined strictly by th,e terms of the contract between the parties.” It is also apparent that the terms of the contract were construed strictly against the Contractor. The applicable rule requires the construction of ambiguities and uncertainties in a contract most strongly against the party who drafted the contract. Boswell v. Chapel, 298 F.2d 502 (10th Cir. 1961); East & West Ins. Co. of New Haven, Conn. v. Fidel, 49 F.2d 35 (10th Cir. 1931).

Since we are reversing a judgment in favor of the State, it would seem appropriate to acknowledge the only authority relied upon by it in this appeal as support for its position. The totality of this authority consists of the following sentence from 17 Am.Jur.2d, Contracts, § 253 at 646 (1961) — not at 446 as cited by appellee in its answer brief: “A contract should be construed liberally to protect the public interest where that is involved in the case.”

The only case cited in Am.Jur.2d as authority for this statement is Public Service Co. v. City and County of Denver, 153 Colo. 396, 387 P.2d 33 (1963). That case concerned the granting of a public utilities franchise, and the stated rule was clearly confined to agreements granting such franchises. Even if we were to adopt and apply this stated principle to the facts here, it would not alter the result we reach. This stated rule of liberal construction may not properly be extended to the point of excluding or overriding all other rules of construction or to the point of working an unreasonable and unjust result.

There are obvious ambiguities, inconsistencies and uncertainties in the contract before us.

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Bluebook (online)
494 P.2d 612, 83 N.M. 534, Counsel Stack Legal Research, https://law.counselstack.com/opinion/schultz-lindsay-construction-co-v-state-nm-1972.