Cape Fear Electric Co. v. Star News Newspapers, Inc.

PARKER, Judge. Where the language of a contract is plain and unambiguous the court rather than the jury will declare its meaning, Yates v. Brown, 275 N.C. 634, 170 S.E. 2d 477, but where the language employed by the parties is ambiguous the jury may be called upon to determine the true intent of the parties from the words employed by them to express their agreement, Lumber Co. v. Construction Co., 249 N.C. 680, 107 S.E. 2d 538. Here, the written contract failed to state clearly and expressly whether the heavier and more expensive rigid conduit or the lighter and less costly EMT was required for carrying the electrical circuits through the concrete floor slabs, and careful analysis of all of the contract documents leaves the answer in doubt. At the least, a factual question was presented for the jury to determine whether the EMT which Contractor proposed to install in the floors would be “subject to severe physical damage,” either “during installation or afterward,” and whether it was “made of a material judged suitable for the condition,” requirements made by The National Electrical Code for use of *524 EMT. Thus, if this appeal presented solely the question of which material was required by the contract, the matter would have been one for the jury to determine and directed verdict would have been improper. Such a case would have been presented had Contractor persisted in installing EMT and Owner had thereafter contended this constituted a breach of the contract. Here, however, Contractor did not install EMT but installed the more expensive conduit, and the question presented by this appeal is whether, after viewing the evidence in the light most favorable to Contractor, the Contractor has shown any right to recover from the Owner the increased cost of the more expensive material. We hold that no such showing was made and that directed verdict for Owner was therefore appropriate. In so holding, we do not base our decision on the “final billing” contained in Contractor’s letter to Owner of 4 November 1970 showing a “Total Due” of $8,636.54 and the subsequent payment and acceptance of that amount. This was one of the grounds upon which the trial judge relied in directing verdict for the Owner, but in our opinion the facts of this case distinguish it from the situation presented in Phillips v. Construction Co., 261 N.C. 767, 136 S.E. 2d 48, in that regard. Article 9 of AIA Document A201, General Conditions of the Contract for Construction, which was incorporated into the contract between Contractor and Owner, contains the following: “9.7.6 The acceptance of final payment shall constitute a waiver of all claims by the Constractor except those previously made in writing and still unsettled.” (Emphasis added.) Here, the disputed claim for $4,716.84 had been previously made in writing and was still unsettled. In addition, this very action for recovery of the extra cost of installing the more expensive conduit had already been filed and was pending in court when Contract’s letter of 4 November 1970 showing a total due of $8,636.54 was sent, Contractor had been expressely directed to omit its claim for the extra cost of the conduit from its billing to Owner, and there was no dispute that Contractor was entitled to receive the $8,636.54 as billed. Under these circumstances we do not believe that any party involved intended or understood that this lawsuit was being settled or that Contractor was waiving the claim which is the basis of this lawsuit by the billing for and the payment and acceptance of the $8,636.54. *525 In our opinion the order directing verdict dismissing Contractor’s claim was required by other provisions of the contract. Article 12 of the General Conditions of the Contract for Construction deals with changes in the work and provides that all such changes shall be authorized by Change Order. Article 12 contains the following: “12.1.2 A Change Order is a written order to the Contractor signed by the Owner and the Architect, issued after the execution of the Contract, authorizing a Change in the Work or an adjustment in the Contract Sum or the Contract Time. Alternatively, the Change Order may be signed by the Architect alone, provided he has written authority from the Owner for such procedure. The Contract Sum and the Contract Time may be changed only by Change Order. ifc % “12.2 Claims for Additional Cost or Time “12.2.1 If the Contractor wishes to make a claim for an increase in the Contract Sum or an extension in the Contract Time, he shall give the Architect written notice thereof within a reasonable time after the occurrence of the event giving rise to such claim. This notice shall be given by the Contractor before proceeding to execute the work, except in an emergency endangering life or property in which case the Contractor shall proceed in accordance with Sub-paragraph 10.3.1. No such claim shall be valid unless so made. If the Owner and the Contractor cannot agree on the amount of the adjustment in the Contract Sum or the Contract Time, it shall be determined by the Architect. Any change in the Contract Sum or Contract Time resulting from such claim shall be authorized by Change Order.” (Emphasis added.) In the present case, all of the evidence shows that no Change Order was issued changing the Contract Sum to reflect the increased cost to Contractor of installing conduit rather than EMT, and there is no evidence that Owner agreed to any modification of or waiver of its rights under the foregoing contract provisions. The case then comes down to this: If the correct interpretation of the contract specifications is as Owner, Architects and Engineers have consistently contended, and Contractor was required by these specifications to install rigid conduit rather than EMT in the floors, then when Contractor did so, *526 it did no more than it was originally obligated to do and is entitled to no extra compensation. On the other hand if the correct interpretation is as Contractor contends, and Contractor could comply with those specifications by installing the less expensive EMT, then a Change Order was required before Owner could be bound to pay for the increased cost incurred by Contractor when it installed the more expensive conduit. Although Contractor installed the conduit only at the insistence of Engineers, and there was evidence that Owner relied upon Architects who in turn relied upon Engineers to prepare and interpret the contract specifications relating to the electrical work, there was no evidence that Owner appointed Engineers its agent or in any other manner authorized Engineers to obligate Owner to any increase in the amount Owner was bound to pay Contractor for work performed under the contract: For example, had Engineers insisted that the specifications required Contractor to install conduit made of gold and had Contractor done so even though under protest, we suppose no one would contend that Owner should be bound to pay Contractor for its increased cost absent a Change Order issued in the manner and as authorized in the contract between Owner and Contractor. While the present case is not so extreme, the same principle applies. We conclude that the order directing verdict dismissing Contractor’s claim against Owner was properly entered. In addition to assigning error to entry of that order, Contractor made assignments of error to rulings of the trial judge admitting or excluding evidence. However, it is not necessary for us to discuss these, since had the judge’s ruling in each instance been as Contractor contends it should have been, directed verdict for Owner would still have been properly entered. Accordingly, the judgment appealed from is Affirmed. Judges Britt and Morris concur.