Court Opinion

ID: 9629723
Source: CourtListenerOpinion
Date Created: 2023-08-22 09:47:51.338023+00
Date Added: 2024-06-11T18:07:22.726155
License: Public Domain

EASLEY, Justice, dissenting: The implications of the rule contained in the majority opinion extend far beyond this dispute. It will have a statewide impact on present practices in banking, contracting and other businesses. The Coachman letter to ABC simply said “funds * * * will be paid to Sunland * * * per subcontract agreement dated March 4,1976 * * * by checks * * * to Sunland * * * and American Bank * * * This assignment of funds is made at the request of Wayne H. Gribble, President of Sunland * * * ” (Emphasis added.) Does this mean that only when the funds become due to Sunland, under the terms of the contract, they are assigned to ABC? If so, under U.C.C. § 50A-9-318, N.M.S.A. 1953, ABC’s right to the funds is subject to the defenses asserted by Coachman against his defaulting subcontractor. Or, is this an “independent contract” whereby Coachman agreed to pay $138,-727.02 to ABC, regardless of contract obligations and whether or not Sunland did any work at all? In substance, the majority answers this question in the affirmative. We disagree. Coachman plainly agreed to assign the funds to ABC “per” contract, which means “by, through, or by means of” the Sunland contract. Black’s Law Dictionary, Fourth Ed., Rev’d (1968). The phrase “per charter party” has been held to effect an incorporation by reference of a charter party agreement into a later writing. Lowery & Co. v. S.S. Le Moyne D’Iberville, 253 F.Supp. 396 (S.D.N.Y.1966); Lea v. Helgerson, 228 S.W. 992 (Tex.Civ.App.1921). The subcontract specified that the final payment would be due Sunland when the work was completed in accordance with the contract; that Sunland would pay for all materials and labor; that, if Sunland failed, Coachman would make good the deficiencies and deduct the cost from the payments. Where a writing refers to a separate agreement, that agreement or so much as is referred to should be considered as part of the writing. Turner v. Wexler, 14 Wash.App. 143, 538 P.2d 877 (1975). All writings forming a part of a transaction are interpreted as a harmonious whole. McDonald v. Journey, 81 N.M. 141, 464 P.2d 560 (Ct.App.1970). Thus, the letter, together with the subcontract, constitute a conditional promise to pay. The arrangement indicated by the letter, which undoubtedly occurs many times daily in New Mexico, was a simple device to insure the bank of receiving money owed to Sunland by Coachman when the amounts came due. The total content of the letter meant: “I’ll put your name on the check when I pay Sunland what is owed.” The letter did not guarantee payment of Sun-land’s debts. The terms of the letter are not ambiguous, although the case was tried on the theory of ambiguity. If it be construed that there is ambiguity, then, we must look to the record for evidence showing the intentions of the parties. In re Will of Carson, 87 N.M. 43, 529 P.2d 269 (1974). This intent is to be ascertained from the language and conduct of the parties and the surrounding circumstances; parol testimony is admissible. Sierra Blanca Sales Co., Inc. v. Newco Industries, Inc., 84 N.M. 524, 505 P.2d 867 (Ct.App.1972). In this regard, the testimony of ABC’s Mr. Vogl made it clear no less than six different times that it was understood that the payments of money to ABC were to be made by Coachman only if Sunland performed under its contract with Coachman and became entitled to payment. Both writings concern the same subject matter and were executed at about the same time. Present values were to accrue at about the same time. It is not the province of the court to amend or alter a contract by construction. It must interpret and enforce the contract which the parties made for themselves. Owen v. Burn Const. Co., 90 N.M. 297, 563 P.2d 91 (1977). In effect the agreement here, as understood by both parties, is being changed by the majority opinion to mean something entirely different. Farmers & Merchants State Bank v. Snodgrass & Sons Const. Co., 209 Kan. 119, 495 P.2d 985 (1972) is the sole case relied upon to support the holding that the letter here constitutes an “independent contract.” We respectfully suggest that this reliance is unfounded. That case is inapposite for the reason that the agreement between the contractor and the bank did not specify “per” the subcontract, as here. It stated that the contractor held an amount in retainage and that when all work was completed he would pay the entire amount retained by making a check to the subcontractor and the bank. The court noted in Snodgrass that the agreement did not even refer to the subcontract. Id. 495 P.2d at 990. The contracts in Snodgrass were not executed at or about the same time, as here. The bank in that case was not aware that the phrase “work is completed” had a special meaning in the construction industry which required the subcontractor to pay for all labor and materials provided. In our case ABC knew that Sunland was to pay for these items before final payment would be due. Although our majority cites Snodgrass in support of an “independent contract” theory, Snodgrass did not turn on that principle, but was decided on the theory of “reliance” or promissory estoppel. Id. 495 P.2d at 989. There is no evidence that ABC relied on receiving the total amount even if there was a failure of performance by Sunland. The key difference is that Snodgrass involves an unconditional promise to pay the bank, while in our case payment is to be made “per” contract, thus creating a conditional promise to pay. There is no substantial evidence to support the findings of fact and conclusions of law entered by the trial court and relied upon for its holding that there was an unconditional contract to pay to ABC the entire amount mentioned in the letter. The cause should be reversed and judgment ordered for Coachman on this issue. We agree with the disposition made by the majority on the second issue. SOSA, J., concurs.