Case Name: Dorman STRAHAN, d/b/a Strahan Painting Company v. LANDIS CONSTRUCTION COMPANY, INC. and United States Fidelity and Guaranty Company
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 1986-11-25
Citations: 499 So. 2d 417
Docket Number: No. CA-5011
Parties: Dorman STRAHAN, d/b/a Strahan Painting Company v. LANDIS CONSTRUCTION COMPANY, INC. and United States Fidelity and Guaranty Company.
Judges: Before SCHOTT, GARRISON, BARRY, WILLIAMS and ARMSTRONG, JJ.
Reporter: Southern Reporter, Second Series
Volume: 499
Pages: 417–426

Head Matter:
Dorman STRAHAN, d/b/a Strahan Painting Company v. LANDIS CONSTRUCTION COMPANY, INC. and United States Fidelity and Guaranty Company.
No. CA-5011.
Court of Appeal of Louisiana, Fourth Circuit.
Nov. 25, 1986.
Writ Granted Jan. 23, 1987.
William E. Wright, Jr., James P. Magee, Baldwin & Haspel, New Orleans, for plaintiffs-appellee.
Gerald J. Gallinghouse, Porteous, Haink-el, Johnson & Sarpy, New Orleans, for defendants-appellants.
William W. Messersmith, III, Terrence L. Brennan, Deutsch, Kerrigan & Stiles, Donald A. Meyer, Shushan, Meyer, Jackson, McPherson & Herzog, William S. Marshall, Jr., Kinney and Marshall, H. Bruce Shreves, Simon, Peragine, Smith, & Red-fearn, New Orleans, for amicus.
Before SCHOTT, GARRISON, BARRY, WILLIAMS and ARMSTRONG, JJ.

Opinion:
SCHOTT, Judge.
Defendant, Landis Construction Company, Inc., entered into a building contract with the Louisiana World Exposition (LWE) and subcontracted with plaintiff, Dorman Strahan d/b/a Strahan Painting Company, to perform a portion of the work. Plaintiff performed the work it undertook and brought this suit for the balance of the subcontract price. Defendant, relying on provisions in the subcontract which provided for payments to be made when payments were made to the general contractor by LWE, refused to pay plaintiff because it had not been paid by LWE. The trial court granted summary judgment to plaintiff against defendant and its surety U.S.F. & G. and they have appealed. The principal issue is whether the pay-when-paid provisions are enforceable as written or are susceptible to some other interpretation. Plaintiff has also raised the issue that the surety has an absolute obligation to pay in accordance with the Louisiana Private Works Act (LSA-RS. 9:4801-4842) irrespective of the contractor's liability.
The payment provisions of the subcontract are as follows:
IN CONSIDERATION WHEREOF, The said Contractor agrees that he will pay to the said Sub-Contractor the sum of Five Thousand Nine Hundred Thirty-Six Dollars ($5,936.00) for such materials and work, said amount to be paid as follows: Ninety per cent (90%) of the value of the work completed and accepted each month for which payment has been made by said Owner to said Contractor to be paid on or about the twentieth of the following month, except that final payment will be made by said Contractor to said SubContractor immediately following final completion and acceptance of such materials and work by the Architect, and final payment received by said Contractor, and after satisfactory evidence has been furnished to said Contractor by said SubContractor that all labor and material accounts for use on this particular work have been paid in full.
There is no dispute about the fact that defendant, Landis, has not been paid the balance due it by LWE, and we may assume that this balance will never be paid.
In granting plaintiffs motion for summary judgment the trial court referred to Miller v. Housing Authority of New Orleans, 175 So.2d 326 (La.App. 4th Cir.1965); Pelican Construction Co. v. Sewerage and Water Bd., 240 So.2d 556 (La.App. 4th Cir. 1970); and Chartres Corp. v. Charles Carter & Co., Inc., 346 So.2d 796, (La.App. 1st Cir.1977) and recognized that the Miller case supported defendants' position while the other two cases supported plaintiff's. The court concluded as follows:
Since the contract at issue was drafted by defendant, Landis, and signed by the parties on October 6, 1983, the Court relies on the later expressions of judicial authority. The Court thus finds, as a matter of law, that the "prior payment clause" (before the 1984 enactment of R.S. 9:2784 A and B) was an unconditional promise to pay, when work was performed properly, payment being due within a reasonable time regardless of whether the owner has paid the general contractor.
The trial court's decision to interpret the contract against the party who prepared it was in accord with C.C. art. 1958 (this reference and all others herein are to codal articles as numbered prior to Act 331 of 1984); but under the circumstances prevailing here that article has no application. Art. 1957 provides for interpretation against the party who contracted the obligation "In a doubtful case." and Art. 1958 continues with its rule of interpretation against the party who drafted the contract only if "doubt or obscurity" exists in the first place.
The general rules are that courts are bound to enforce contracts according to the intent of the parties, and such intent is to be determined by the words of the contract when they are clear and lead to no absurd consequences. Art. 1945. Furthermore, the words of a contract are to be understood in the common and usual signification according to general and popular use. Art. 1946.
We fail to discern any doubt, ambiguity, uncertainty or obscurity about the words under consideration here. Plaintiff agreed to be paid its progress payments on the basis of "90% of the value of the work completed and accepted each month for which payments have been made by said Owner." Plaintiff had to understand that unless the owner paid defendant no payments would be due plaintiff by defendant. Nothing can be clearer than the words regarding final payment which was to be made when three things occurred including "final payment received by said Contractor." There is no need to invoke the provisions of Arts. 1957 and 1958 because no doubt exists here. Plaintiff must abide by the clear provisions of the subcontract he signed.
The trial court went on to apply the Pelican and Chartres cases since these were the later expressions of judicial authority. This, too, constitutes error. As to the Chartres case, we have no hesitation about declining to follow it since it conflicts with the Miller case decided by this court. Furthermore, no rehearing was applied for in Chartres, and, thus, no application for writs was filed in the Supreme Court. However, we note that the Chartres case explicitly followed the Pelican case which was decided by this court after the Miller case so that the Pelican case and it alone must be dealt with here as "judicial authority" supporting plaintiff's petition in this case.
At the outset, we note that much of Pelican's discussion relied upon by our plaintiff was obiter dicta provided by the court after the decision had already been made to remand the case. The court was faced with an exception of no cause of action which had been sustained by the trial court because the petition contained no allegation of payment by the owner to the general contractor while the contract between the general contractor and the plaintiff-subcontractor mandated payments only within five days after payment by the owner to the general contractor. The dis-positive portion of the opinion was as follows:
Accordingly, even if we accept the prior-payment clauses as a suspensive condition, it appears to us that plaintiff should have been allowed to amend its petition, C.C.P. art. 934, so as to allege any circumstances which would show that Vul-lo-Coast-line prevented the condition's fulfillment, or would otherwise entitle plaintiff to recover notwithstanding the absence of literal fulfillment. Perhaps we should point out that nonperformance by Laguna would equally be a prevention of fulfillment of any similar provision in its contract with Vullo-Coastline (although there would remain the question whether Vullo-Coastline's consequent entitlement to immediate payment is the equivalent of receipt of payment, or may be if Vullo-Coastline "prevents" receipt by not actively demanding it, perhaps even through litigation).
The court had concluded that plaintiff was entitled to a reversal of the trial court's judgment even assuming defendant's argument based on the prior payment clauses was a good and valid one. Even though the case was over at this point the court engaged in a discussion which was in conflict with the Miller case without ever citing the case. In any event, the Pelican court found that the language of the contract there, to wit, that plaintiff "agrees to receive payments earned and due him at such time payments are received by the Sewerage and Water Board of New Orleans" was inconsistent with the notion that payment by the Board was a suspen-sive condition to take place before the payments would become due. This inconsistency enabled the court to apply Arts. 1957 and 1958 with their rules for interpretation against the obligors and drafters when there is doubt about a contract's meaning. In the instant case we have no language like the "earned and due" language of Pelican.
Art. ,2027 provides as follows:
Whether the parties intended to create a condition or only to modify the obligation without making its existence depend on the event, must be determined, in doubtful cases, by applying the rules herein-before established for the interpretation of obligations, (emphasis added).
Since the court had reasoned that this was a "doubtful" case because of the "earned and due" language it could find that the parties intended to "modify the obligation" by fixing a reasonable time frame for payment pursuant to art. 2050 rather than to create the condition that payment would not be due the subcontractor unless the general contractor was paid. Because the contract here under consideration is clear, this case is not doubtful, and no justification exists for the court to disregard the intent of the parties to create a condition, namely, payment by the owner prior to payment to the subcontractor.
We have thus far concluded that Miller and not Pelican is the law of this circuit and must be followed in this case. However, plaintiff contends that Miller is not controlling because there the final payments were recognized to be due to contractor as a result of the decision in Pittman Construction Company v. Housing Authority of New Orleans, 169 So.2d 122 (La.App. 4th Cir.1964), writs refused 247 La. 343, 344, 346, 347, 348, 170 So.2d 865, 866; and the money was available for payment; whereas, in the instant case, LWE is insolvent so that the contractor will never be paid. We are unable to reconcile this argument with the following language from the Miller case which envisioned the very situation which came about here:
This provision was obviously intended to prevent the prime contractor from being compelled to assume the obligation of financing the construction of the Project in the event of default by the owner. Therefore, we must give effect to the clear intention of the parties as agreed to, and we, as usual refrain from placing the contract upon the judicial anvil and hammering it into an unexpected shape.
We conclude that this case is controlled by Miller v. Housing Authority of New Orleans, supra, and the trial court erred in failing to follow it.
Plaintiff contends that he is entitled to a judgment against U.S.F. & G., the surety, even if he cannot recover from Landis. He relies on provisions of the Louisiana Private Works Act, R.S. 9:4801-4842 to support his position. U.S.F. & G. contends that its obligation is accessory to that of Landis and refers to the terms of the bond. The record does not contain a copy of the bond. From the reasons given by the trial court it seems clear that this issue of U.S.F. & G.'s separate or independent liability was never considered below. We are convinced that it played no part in the trial court's summary judgment, and we decline to consider the issue on appeal under these circumstances. Plaintiff is not precluded from raising the issue in the trial court in the future.
Accordingly, the judgment of the trial court is reversed and set aside, plaintiffs motion for summary judgment is denied, and the case is remanded to the trial court for further proceedings. The costs of this appeal are assessed against plaintiff. Other costs are to await the outcome of the case.
REVERSED AND REMANDED.
BARRY, J., dissents.