Court Opinion

ID: 9654600
Source: CourtListenerOpinion
Date Created: 2023-08-23 18:43:45.223619+00
Date Added: 2024-06-11T18:13:11.602729
License: Public Domain

OPINION
SHARPE, Justice.
This appeal is from a judgment rendered in a jury trial for Lewis, Inc., appellee, plaintiff below, in the sum of $31,303.07, against Delhi Pipeline Corporation, defendant below. The parties will sometimes be referred to as “Lewis” and “Delhi”.
*297Lewis sued for damages in the amount of $25,914.76 for alleged breach of oral and written contracts, the latter having been executed on October 3, 1963, and the former having been entered into shortly thereafter, all covering pipeline projects in Victoria County, Texas; for $50,000.00 as exemplary damages and $8,000.00 for attorney’s fees. By way of cross-action, Delhi sued for $4,932.45 due to alleged breach of contract by Lewis. Lewis is in the business of constructing pipeline systems and Delhi is a gas transmission company. It is undisputed that Lewis was an independent contractor and that Delhi terminated the contracts before completion of the work by Lewis.
The jury verdict established the amount of Lewis’ damages as follows: $17,451.00 for expenses incurred prior to termination of the contracts; $7,500.00 for loss of profit; $5,000.00 for attorney’s fees; and $15,000.00 for exemplary damages. The trial court granted Delhi’s motion for judgment non obstante veredicto and to disregard the jury findings concerning exemplary damages only and denied Lewis a recovery in such respect. The judgment allowed interest on the amount of $24,951.50 from October 17, 1963 to its date of entry on September 12, 1964.
Appellant Delhi urges 37 points of error which are briefed in six groups. Appellee Lewis urges 7 reply points, similarly briefed, and one counterpoint concerning the refusal of the trial court to award exemplary damages. The points will be discussed as grouped for briefing by the parties.
Under the first group of points (1-6), relating primarily to Special Issue 1, Delhi contends that the trial court should not have rendered judgment based upon such jury finding; that there is no evidence and it is factually insufficient to raise such issue and support the answer thereto; that the trial court should have granted judgment non obstante veredicto on the entire case pursuant to Delhi’s motion; and, in any event, should have granted a new trial.
Special Issue 1, its accompanying definition and the jury answer are as follows:

“Special Issue No. 1.

“Do you find from a preponderance of the evidence that under all the circumstances which existed on or prior to October 17, 1963, Plaintiff Lewis, Inc., was proceeding with due diligence on his contracts with Defendant Delhi Pipeline Corporation to install the pipelines in question ?
Answer ‘yes’ or ‘no’.
Answer: Yes.
“By the term ‘due diligence’ as used herein is meant such diligence as would be required for Plaintiff to complete the contracts in accordance with the terms and provisions of the contracts between Plaintiff and Defendant and the plans and specifications.”
Delhi’s argument under its first group of points is that Lewis had agreed to perform the work in a manner satisfactory to Delhi’s representative, Mr. C. P. Butler, and this was the real issue; that Lewis’ work was not satisfactory to Butler, and his dissatisfaction was conclusive on the question of performance and breach; that the question submitted by special issue 1 was immaterial ; that Lewis’ failure to plead, prove and secure a jury finding of bad faith on the part of Delhi’s representative is fatal to Lewis’ recovery; that, in any event, there is no evidence and it is factually insufficient to raise and support the jury finding on special issue 1 that Lewis was proceeding with due diligence. Lewis contends that the trial court correctly submitted the ultimate and controlling issue of diligent compliance with the contracts and that the jury answer is amply supported by evidence. We agree with Lewis.
Delhi 'relies upon the rule that, a contract may require that one party’s per*298formance shall be to the satisfaction of the other party or, in some instances, to that of a designated third party such as an architect or engineer. See Atlas Torpedo Co. v. United States Torpedo Co., 15 S.W.2d 150 (Tex.Civ.App.1929, n. w. h.); Dixie Oil Co. v. McBurnett, 6 S.W.2d 83 (Tex.Com.App.1928, Judg.App.); Griffith v. Thomson, 244 S.W.2d 722 (Tex.Civ.App. 1951, n. w. h.); Golden State Mutual Life Insurance Co. v. Kelley, 380 S.W.2d 139 (Tex.Civ.App.1964, wr. ref., n. r. e.); Goodrum v. State, 158 S.W.2d 81 (Tex.Civ. App.1942, wr. ref., w. m.); City of San Antonio v. McKenzie Const. Co., 136 Tex. 315, 150 S.W.2d 989 (1941); Coppinger v. Republic Natural Gas Co. (10 Cir. 1948), 171 F.2d 4; Thompson-Starrett Co. v. La Belle Iron Works, (2 Cir. 1927), 17 F.2d 536. But that rule is operative only where it appears from express terms of the contract or from plain language therein that it was the intention of the parties that the determination of the person to whom the decision is entrusted would be final and conclusive; and such a provision is not to be implied. Black v. Acers, 178 S.W.2d 152 (Tex.Civ.App.1944, wr. ref.); Eckert-Fair Construction Company v. Flabiano, 342 S.W.2d 629 (Tex.Civ.App.1960, wr. ref., n. r. e.).
The sole provision concerning termination is found in the written contracts as follows:
“Contractor agrees to commence said work within - days from the date of this contract and to complete said work with due diligence and, in the event Contractor fails to commence said work within the time above specified or, having begun said work, abandons it or for any reason suspends or refuses to continue it for a period of five days (unless Contractor is prevented from continuing by reasons beyond his control), Company shall have the right to take over said work and complete it at Contractor’s expense.”
The provisions as to satisfaction of the representative of Delhi in certain particulars are contained only in the specifications which were incorporated by reference into the contracts. We agree with appellant that in such case we must consider the agreements made by the parties in the specifications along with those contained in the job contracts. Tower Contracting Co., Inc. v. Flores, 157 Tex. 297, 302 S.W.2d 396 (1957); 17A C.J.S. Contracts § 299, pp. 136-137. However, there is no provision in the specifications or the job contracts that the determination of dissatisfaction by Delhi’s representative would be final, binding or conclusive; neither is there a provision that such dissatisfaction would furnish a basis for Delhi to terminate the contracts. None of the provisions for termination by Delhi is shown to exist.
The trial court correctly submitted the controlling issue, as hereinabove set out, and the jury found upon factually sufficient evidence that Lewis was proceeding with due diligence on his contracts with Delhi to install the pipelines in question on and prior to October 17, 1963, the date upon which Delhi refused to allow Lewis to proceed with the work and terminated the contracts. On the record here, an issue of bad faith on the part of Delhi’s representative was not required. Delhi’s first group of points (1-6) is overruled.
Under Delhi’s second group of points (7-19) relating primarily to special issues 2 and 3, the contentions are made that there is no evidence and that the evidence is factually insufficient to raise such issues and to support the answers thereto; that the court erred in awarding Lewis a judgment for all expenses (under issue 2) and for profit (under issue 3), part of which was under the oral contracts, on which no right of recovery was established; that neither issues 2 or 3 represent the proper measure of damages; and that the amounts found were excessive. Special is*299sues 2 and 3, together with the jury answers thereto, read as follows:

“SPECIAL ISSUE NO. 2.

“What amount of money do you find from a preponderance of the evidence would cover the reasonable and necessary expenses incurred by Lewis, Inc. in performance of the contracts in question before the termination of the contracts by Defendant Delhi Pipeline Corporation ?
Answer in dollars and cents.
Answer: $17,451.00”

“SPECIAL ISSUE NO. 3.

“From a preponderance of the evidence what do you find would have been the amount of profit, if any, which Plaintiff Lewis, Inc., would have reasonably expected to derive if it had been permitted to perform its contracts with Defendant Delhi Pipeline Corporation to completion?
“In this connection, you are instructed that loss in profits is measured by the difference between the contract price and what it would have cost the contractor to carry out the contract in accordance with its provisions and the plans and specifications.
Answer in dollars and cents.
Answer: $7,500.00.”
The applicable rules may be stated as follows:
“Where the contractor is prevented by the owner from doing any work under the contract, or from completing the work after partial performance, or where he is justified in abandoning further performance because of a breach by the owner, he may recover, in addition to compensation for the work already done, any damages that he may have sustained by reason of the owner’s breach of the contract, including the profits that he would have made had he been permitted to perform, expense incurred in the performance of the contract up to the time of the breach, less any materials purchased by reason of the contract but not used, and damages sustained by his being compelled to sell at a loss material prepared for use under the contract.” 10 Tex.Jur.2d, Building Contracts, § 62, pp. 71-72.
* * * * * *
“Loss of profits that he would have derived had he been permitted to perform may be recovered by the contractor where he has been prevented by the owner from completing the contract, or where he has justifiably abandoned further performance because of a breach by the owner, if this element of damages can be proved with reasonable certainty and was shown to be within the contemplation of the parties.” 10 Tex.Jur.2d, Building Contracts, § 63, p. 74.
The above-stated rules find support in the cases of Austin Stone Industries v. Capitol Powder Company, 290 S.W.2d 689 (Tex.Civ.App.1956, wr. ref., n. r. e.) ; Texas Associates v. Joe Bland Const. Co., 222 S.W.2d 413 (Tex.Civ.App.1949, wr. ref., n. r. e.) ; Sullivan v. Dubis, 271 S.W.2d 316 (Tex.Civ.App.1954, wr. ref., n. r. e.); Kleiner v. Eubank, 358 S.W.2d 902 (Tex.Civ.App.1962, wr. ref., n. r. e.) ; Osage Oil and Refining Co. v. Lee Farm Oil Co., 230 S.W. 518 (Tex.Civ.App.1921, wr. ref.).
The trial court correctly submitted the ultimate issues concerning the damages suffered by Lewis. Wichita Falls & Oklahoma Ry. Co. v. Pepper, 134 Tex. 360, 135 S.W.2d 79 (1940). The evidence was factually sufficient to support the findings on special issues 2 and 3. Delhi’s second-group of points (7-19) is overruled.
Under its third group of points (20-30) Delhi asserts eleven contentions relating to rulings of the trial court on the pleadings, evidence and argument of counsel in connection with the subject of exemplary *300damages, all included under one statement and argument. Lewis, by its fourth reply point and counterpoint one contends that exemplary damages were properly plead and proved and that the trial court should have granted judgment for same.
Special issues 4 and 5 and the answers thereto read as follows:

"SPECIAL ISSUE NO. 4.

“Do you find from a preponderance of the evidence that the Plaintiff Lewis, Inc., is entitled to exemplary damages against the Defendant Delhi Pipeline Corporation ?
Answer ‘yes’ or ‘no’.
Answer Yes.
“You are instructed that before you can assess exemplary damages, you must believe and find from a preponderance of the evidence that Defendant Delhi Pipeline Corporation acted wilfully, maliciously and with utter disregard for the rights of the Plaintiff Lewis, Inc.
“In this connection you are also instructed that punitive damages may be assessed as punishment for a wrongful act done, if the facts warrant the same. In awarding such damages, if any, you may consider the sense of wrong and insult to the Plaintiff Lewis, Inc., and the damage to his reputation, if any as a result of the wrongful acts, if any, of the Defendant Delhi Pipeline Corporation. The amount to be fixed, if any, is in the sound discretion of the jury.
“If you have answered Special Issue No. 4, ‘Yes’, then answer Special Issue No. 5; otherwise, do not answer same.”

"SPECIAL ISSUE NO. 5.

“What amount of money, if any, if paid now in cash, would compensate Plaintiff Lewis, Inc., for its exemplary damages, if any.
Answer in dollars and cents, if any.
Answer $15,000.00”
Lewis filed motion for judgment in the total amount of $46,199.10, which included $15,000.00 for exemplary damages. Delhi filed motion for judgment non obstante veredicto and to disregard certain special issue findings, including those on special issues 4 and 5. The trial court granted Lewis’ motion only to the extent of the amounts found by the jury in answer to special issues 2, 3 and 6, aggregating $29,-951.00, plus interest, and granted Delhi’s motion for judgment non obstante vere-dicto and to disregard the jury answers to special issues 4 and 5, the effect of which was to deny Lewis a recovery for exemplary damages in the amount of $15,-000.00.
We agree with the trial court and appellant on the points here involved. The rule in this State is that exemplary damages cannot be recovered for a simple breach of contract, where the breach is not accompanied by a tort, even though the breach is brought about capriciously and with malice. A. L. Carter Lumber Co. v. Saide, 140 Tex. 523, 168 S.W.2d 629 (1943); Houston & T. C. R. R. Co. v. Shirley, 54 Tex. 125 (1880); Hooks v. Fitzenrieter, 76 Tex. 277, 13 S.W. 230 (1890). The rules applicable to recovery of exemplary damages against a corporation are aptly stated in the case of Chronister Lumber Co. v. Williams, 116 Tex. 207, 288 S.W. 402 (1926), as follows:
“ ‘It is now the settled law of this state, that, to make a corporation liable for exemplary damages, the “fraud, malice, gross negligence, or oppression” which must authorize and justify the same, must have been committed by the corporation itself, or by some superior officer representing it in its corporate capacity; or, if committed by a subordinate servant or agent, the act must have been either previously authorized, or subsequently ratified or approved by the company or such *301superior officer, after knowledge of the facts.’ ”
In King v. McGuff, 149 Tex. 432, 234 S.W.2d 403, 405 (1950), the Court also said:
“While the bulk of our decisions on this subject of the master’s liability in exemplary damages for the gross negligence of the servant are those involving corporate masters and large enterprises, and indeed the only authority cited below, Chronister Lumber Co. v. Williams, 116 Tex. 207, 288 S.W. 402, opinion adopted by this court, is just such a case, the general rule prevailing in Texas may, for the purposes of this suit, be stated the same as in the Restatement, Torts, § 909, as follows:
‘Punitive damages can properly be awarded against a master or other principal because of an act by an agent if, but only if,
‘(a) the principal authorized the doing and the manner of the act, or
‘(b) the agent was unfit and the principal was reckless in employing him, or
‘(c) the agent was employed in a managerial capacity and was acting in the scope of employment, or
‘(d) the employer or a manager of the employer ratified or approved the act.’
“See Ft. Worth Elevators Co. v. Russell, 123 Tex. 128, 70 S.W.2d 397; Morton Salt Co. v. Wells, 123 Tex. 151, 70 S.W.2d 409; Southwestern Gas & Electric Co. v. Stanley, 123 Tex. 157, 70 S.W.2d 413. Our decisions on the analogous subject of charging a master or principal with exemplary damages for the malicious misconduct of a servant or agent involve both individual and corporate defendants and follow the same general principles applied in cases of gross negligence. See Commonwealth of Massachusetts v. Davis, 140 Tex. 398, 168 S.W.2d 216, and cases cited at page 225 of the latter report.”
Although Lewis’ pleadings were sufficient in the absence of special exceptions to allege a cause of action for exemplary damages, the jury findings on special issues 4 and 5 would not authorize judgment in such respect for Lewis in the absence of other essential findings. Lewis did not request submission of issues concerning tortuous acts on the part of officers representing the corporation in its corporate capacity nor by lesser representatives of Delhi; nor as to whether the conduct of the latter had been authorized or ratified by the corporation. Counsel for Delhi clearly pointed out the absence of such findings in its motions filed after verdict and the trial court correctly sustained Delhi’s motion for judgment non obstante veredicto. There is no jury finding in this case which would establish liability against the Delhi Corporation within the Rules announced in the authorities above cited; neither does the evidence conclusively establish such liability.
Affirmance of the judgment denying exemplary damages to Lewis removes that question from the case, and our remaining consideration is to determine if errors were committed by the trial court which affected the remainder of the verdict or the judgment. We do not believe that such error is reflected by appellant’s third group of points (20-30), and, in any event the errors, if any, would be harmless under Rule 434> Texas Rules of Civil Procedure. Appellant’s third group of points (20-30) and appellee’s counterpoint one are overruled.
Under appellant’s fourth group of points (31-33), relating to special issue 6, the contentions are made that there is no evidence and that the evidence is factually insufficient to raise and support an award of $5,000.00 for Lewis’ attorney’s fees; that such amount is excessive; and that attorney’s fees cannot be recovered under Art. 2226, Vernon’s Ann.Civ.St, where the suit is for breach of contract.
We hold that Lewis’ claim for recovery of attorney’s fees falls within the provisions *302of Art. 2226, V.A.C.S. The jury finding on special issue 2 establishes reasonable and necessary expenses by Lewis in performance of the contracts amounting to $17,451.50, of which $9,471.58 was expended for labor. Delhi’s superintendent-inspector testified that labor was the larger part of the expense of such project. Contracts for labor done and materials clearly are within the provisions of Art. 2226, V.A.C.S., and a corporation may recover reasonable attorney’s fees in connection with those items. Ginther v. Southwest Workover ’’Company, 286 S.W.2d 291, 295 (Tex.Civ. App., 1956, n. w. h.) ; Nolen v. Rig Time, Inc., 392 S.W.2d 754 (Tex.Civ.App., 1965, wr.ref., n. r. e.); Wyche v. Wichita Engineering Company, 374 S.W.2d 728 (Tex.Civ.App., 1964, n. w. h.); and see United States of America for the use and benefit of Caldwell Foundry and Machine Company, Inc., v. Texas Construction Company, 237 F.2d 705 (5 Cir. 1955); Lone Star Producing Company v. Gulf Oil Corporation, 208 F.Supp. 85, 93 (U.S.D.C., Eastern Dist.Tex.1962).
Delhi relies upon Van Zandt v. Fort Worth Press, 359 S.W.2d 893 Tex. (1962), which involved suit by a newspaper corporation for classified and display advertising. The Supreme Court held that the claim was neither-upon a sworn account nor for personal services rendered, and that attorney’s fees were not recoverable under Art. 2226, V.A.C.S. However, the Court also made statements favorable to Lewis’ position herein, in part, as follows:
“In quoting from Levitt v. Faber [20 Cal.App.2d Supp. 758, 64 P.2d 498] we are not to be understood as holding that services will lose their character as personal services within the meaning of Art. 2226 because in the performance of the services the claimant uses the material, implements, tools or equipment essential to the service. To perform personal services the lawyer must use his books, the doctor his diagnostic or surgical instruments, the carpenter his tools. We would thus agree with the Supreme Court of New Hampshire which held in Hale v. Brown, 59 N.H. 551, 558, that ‘the personal services of the lumberman include the use and earnings of his oxen, chain, canthook, and his own team and sled, if these are actually used by him and are essential to the service rendered’.”
The trial in this case lasted for a week before the jury. The statement of facts contains 594 pages and numerous exhibits. It reflects the taking of numerous depositions which were referred to or used, consultations by Lewis’ attorneys with him and the officials of Delhi, and other preparations for the trial. Opinion evidence was offered by an experienced trial attorney that a reasonable attorney’s fee would be $8,000.00. There was evidence to support the award of $5,000.00 as attorney’s fees and it is not so against the great weight and preponderance of the evidence as to be manifestly wrong or unjust; neither is it excessive. Delhi’s fourth group of points (31-33) is overruled.
Delhi’s fifth group of points (34-36), relates to special issue 7, reading as follows:

“SPECIAL ISSUE NO. 7.

“What do you find from a preponderance of the evidence to be the reasonable and necessary costs, if any, to Defendant Delhi Pipeline Corporation to complete the contracts with Plaintiff Lewis, Inc., to install the pipelines in question?
Answer in dollars and cents.
Answer $ none”
Delhi contends that there is no evidence to support such issue; that the uncontradicted evidence showed that the necessary and reasonable cost to Delhi of completing the work under the written contract was $61,932.45; that the trial court should have set aside the answer to such issue and entered judgment for Delhi upon its counter claim, in the amount of $4,932.45, representing the difference between the contract price and the amount paid by Delhi *303to complete the work; that the said answer was so excessive as to demonstrate prejudice, bias or sympathy on the part of the jury and a new trial should have been granted. The last-mentioned contention is not briefed.
The finding of the jury on special issue 7 was immaterial in view of the jury findings on special issues 1 through 6, which established Lewis’ right of recovery and for attorney’s fees. Issue 7 was submitted in connection with Delhi’s cross-action upon which liability was not established against Lewis. Since no right or recovery in favor of Delhi was established,' the amounts expended by it to complete the contract would be immaterial and eliminated from consideration. Southern Pine Lumber Co. v. Andrade, 132 Tex. 372, 124 S.W.2d 334 (1939). As the issue was framed and argued, it could be understood to inquire concerning the “reasonable and necessary costs, if any” of completing the contract over and above the amount of Lewis’ contract for a turnkey job, and, under that view, could properly have been answered “none”. Delhi’s fifth group of points (34-36) is overruled.
Delhi’s point 37 asserts that “In view of the cumulative effect of the many errors committed by the trial court, Appellant was deprived of its right to a fair trial, and the trial court erred in not granting a new trial for this reason.” The statement under the point reads as follows: “No statement need be given as an introduction to this Point because the same is based upon the numerous errors committed during the course of the trial, including the argument to the jury.” There is no reference to any specific jury argument or alleged error, and the point is not sufficiently briefed to require consideration. Saldana v. Garcia, 155 Tex. 242, 285 S.W.2d 197 (1956). Nevertheless, under the instant point we have considered each of Delhi’s remaining points of error and argument made thereunder and we have held that error or reversible error has not been established by them. If errors were committed by the trial court, they were harmless, and their cumulative effect would not present reversible error so as to authorize a new trial. Rule 434, T.R.C.P. Delhi’s point 37 is overruled.
The judgment of the trial court is affirmed.