Case Name: B. SEGALL COMPANY, INC. v. J. C. TRAHAN
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1974-02-18
Citations: 290 So. 2d 854
Docket Number: No. 53583
Parties: B. SEGALL COMPANY, INC. v. J. C. TRAHAN.
Judges: SANDERS, C. J., and SUMMERS, J., dissent for the reasons assigned by MARCUS, J.
Reporter: Southern Reporter, Second Series
Volume: 290
Pages: 854–860

Head Matter:
B. SEGALL COMPANY, INC. v. J. C. TRAHAN.
No. 53583.
Supreme Court of Louisiana.
Feb. 18, 1974.
Rehearing Denied March 22, 1974.
Robert J. Donovan, Jr., Naff, Kennedy, Goodman, Donovan & Parnell, Shreveport, for plaintiff-applicant.
Clarence L. Yancey, Cook, Clark, Egan, Yancey & King, Shreveport, for defendant-respondent.

Opinion:
BARHAM, Justice.
B. Segall Company, Inc., a plumbing and air conditioning contractor, is seeking recovery of $5,576.39 against J. C. Trahan for remodeling work done on Trahan's home. The sum is claimed to be due under a written contract entered into by these parties on October 18, 1966.
The bulk of the contract Is on a standard printed form of the American Institute of Architects. The controversy arose over a typewritten addendum which had been dictated by Trahan's architect, Lester C. Haas, without the aid of an attorney, after its meaning had been explained to both parties. The addendum reads as follows:
"Revised contract proposal shall serve as the guaranteed maximum cost for the work, as modified; and the contract shall be performed on the basis of the actual cost of all labor and materials plus overhead expenses, at 15% of the cost of all materials, and profit at 10% of all labor and materials
The dispute is over the meaning- of "materials" and "labor" in computing "overhead expenses" and "profit".
Segall contends the said paragraph was a standard type of paragraph in the area with a particular meaning within the trade and industry. Segall alleges it is entitled to receive as overhead expenses 15% of the cost of materials used by it, as well as 15% of the materials and labor supplied by its subcontractors. The only expense excluded from the overhead charge would be the labor performed by the general contractor, Segall. As to the profit computations, Segall maintains it is entitled to a profit of 10% on all labor and materials and that overhead charges are included under materials.
Trahan alleges the language of the contract is clear and unambiguous, that the terms "materials" and "labor" have certain fixed meanings, and the contract should be enforced as written. He contends Segall is entitled to only 15% of the cost of all materials that went into the job, regardless of who placed them there, as overhead expenses. Profit calculations were to exclude the overhead expenses.
Judgment was rendered by the trial court in Segall's favor for the- amount sought, plus interest from judicial demand as prayed for in'its petition.
The Second Circuit Court of Appeal amended the judgment so as to reduce the amount of the award from $5,576.39 to $2,086.90, and affirmed as to the interest awarded from the date of judicial demand. The court agreed with Trahan's contentions that labor should not be included in the overhead charges, and that profit should not be calculated on overhead. 276 So.2d 340 (La.App., 1973).
We granted a writ of review on Segall's application. 279 So.2d 202 (La.1973).
Segall's basic contentions are three-fold. He first alleges that in the building industry and trade in the Shreveport area, in a "cost plus" contract the words "labor" and "materials" have certain precise meanings relative to the general contractor and as to the subcontractors which are contrary to the normal usage of a layman. Secondly, he contends the disputed provision in this litigation is ambiguous; thus the parol evidence introduced was admissible to explain the true intentions of the parties. Alternatively, he argues the contract should be reformed to show that the overhead and profit be computed in the manner contended by him since the parol evidence established mutual error or mistake.
The only witnesses called were those whose testimony was favorable to relator, Segall. Respondent contented himself with cross-examination; he did not take the stand. The only material that evidences his position at all is a letter written by his general counsel, to Segall's prior attorney, some two years before the case went to trial (Exhibit D-l). At the trial itself, Lester C. Haas, Trahan's architect, testified in great detail as to the disputed provision.
Haas testified that the typewritten paragraph was a standard one in the building trade in the area, that he dictated it, that no attorney had any part in its formation, that the term "materials" included the total price charged by the subcontractors to the general contractor, Segall, (thus both labor and materials were included in the overhead charge). The only charge excluded from overhead was the labor of the general contractor, Segall, as shown on its payroll. The profit charge of 10% was to be computed on labor, materials, and the overhead charge (items of overhead became materials' costs for this computation). Haas also testified that he explained the manner of computing the overhead and profit charges to Mr. Trahan; that so far as he knew Trahan understood these calculations. Haas further testified, as did Se-gall, that on the 23 bills or estimates sent by Segall to Trahan the overhead and profit were computed in the above manner. Additionally, Haas stated that Trahan made no complaints to him during the time when the work was being done, nor as long as he was on the project, as to the manner of computations.
Ralph Segall, president of the contracting company, was the only other witness to testify as to the basic dispute. He substantiated Mr. Haas' testimony in all matters concerning the disputed provision and the calculations made thereunder. He also stated he had no disagreement with Mr. Trahan about the overhead and profit charges while the job was being done.
The testimony of relator's witnesses as to what took place before, during and after the contract formation, as to the relationships and business transactions between the parties, and as to the interpretation of the contract, stands uncontradicted. Accordingly, the rule that evidence of witnesses which stands uncontradicted must be accepted as true, must be applied in this case. Olds v. Ashley, 250 La. 935, 200 So. 2d 1, 4 (1967) and the cases cited therein. The rule as expressed in Ruthardt v. Tennant, 252 La. 1041, 215 So.2d 805 (1968) at 810 is also applicable to this case:
" For it has long been the rule in this State that when a defendant in a civil case can by his own testimony throw light upon matters at issue, necessary to his defense and peculiarly within his own knowledge, and fails to go upon the witness stand, the presumption is raised, and will be given effect, that the facts, as he would have them, do not exist. Bastrop State Bank v. Levy, 106 La. 586, 31 So. 164 (1901). The rule is founded upon fundamental and salutary principles essential to the ends of the law. Judicial tribunals are established to administer justice between litigants, and the first and most important step to that end is the ascertainment of the truth of the controversies which come before them. It is only when the truth is ascertained that the law can be applied in the just settlement of disputes. Litigants owe a duty to assist in every legitimate way to elucidate the truth of the controversy. Bastrop State Bank v. Levy, supra."
Trahan was the only party who could testify as to his understanding of the contract and its addendum. Since he did not testify, it is presumed that the facts as he asserts them do not exist. We accept Se-gall's contention that the addendum as worded in this cost plus contract had a particular meaning within the Shreveport building trade.
In view of the above findings, we are of the opinion that there is merit in relator's other contentions. As we said in Agurs v. Holt, 232 La. 1026, 95 So.2d 644 (1957), written instruments are to be reformed when such instruments, as written, do not express the true contract of the parties. See Ober v. Williams, 213 La. 568, 35 So.2d 219 (1948).
The language of the contract is ambiguous. Three provisions of the Civil Code are pertinent to this case:
"Art. 1947. Terms of art or technical phrases are to be interpreted according to their received meaning with those who profess the art or profession to which they belong."
"Art. 1950. When there is anything doubtful in agreements, we must endeav- or to ascertain what was the common intention of the parties, rather than to adhere to the literal sense of the terms."
"Art. 1957. In a doubtful case the agreement is interpreted against him who has contracted the obligation."
When these articles are applied to the case at hand, the testimony of Segall and Haas proves the true contract. Their testimony is admissible under the Agurs v. Holt rule, supra, which states the burden is on the party seeking reformation to establish the mutual error and mistake by clear and convincing proof, parol evidence being admissible for this purpose. Accordingly the un-contradicted testimony of Haas and Segall was properly admitted into evidence; that evidence is convincing as to what the parties intended.
We conclude relator has met the burden by clear and convincing proof that there was mutual error and mistake justifying reformation of the contract in his favor. The decision of the Court of Appeal is reversed. The judgment of the district court is reinstated. All costs are assessed against respondent.
SANDERS, C. J., and SUMMERS, J., dissent for the reasons assigned by MARCUS, J.
MARCUS, J., dissents with reasons.