Butte Water Co. v. City of Butte , 48 Mont. 386 ( 1914 )

MR. JUSTICE SANNER

delivered the opinion of the court.

The pleadings in this case unfold with progressive elaboration. In all they occupy 169 pages of the transcript, and to produce them here, to present even an abstract of their essentials, would take so much space and serve such little purpose that a bare statement of the ultimate issue must suffice.

The respondent water company (plaintiff below) recovered judgment against the appellant, city of Butte, for $11,445 made up as follows: $8,464.50, with interest, for certain fire-hydrant water furnished the city in the months of July, August, September and October, 1911, under a written contract dated December 31, 1907; $1,524.85, with interest, as the reasonable value of certain water for street sprinkling, furnished the city in July, August, September, October, November and December, 1911; and $416.40, with interest, as the reasonable value of certain water furnished the city in July, August, September, October, November and December, 1911, at its corral, crematory and crematory residence; and of labor and material furnished in setting a water meter at the crematory in July, 1911, setting two hydrants in September, 1911, and laying a certain water main in October, 1911. Payment was resisted by tbe city on tbe grounds that all the items of charge, except that of fire-hydrant service, were the due of the city without other payment than the fire-hydrant rates under the contract of December 31, 1907, and that the charge for fire-hydrant service was more than offset by sums paid by the city under mistake of its officers to the company for sprinkling, corral and crematory water furnished after January 1, 1908, and before August 1, 1911.

The material paragraphs of the contract in question (which we have numbered for convenient reference) are as follows:

“(2) That the party of the first part (the water company) for and in consideration of the covenants and agreements hereinafter contained, and to be kept and performed by the said party of the second part (the city), agrees that it will furnish to the said party of the second part, all hydrant and water supply necessary for fire and general municipal purposes for a period of ten years from and after January 1, 1908, and ending on the 31st day of December, 1917.

“(3) The said party of the first part further agrees that it will furnish to the said city of Butte, during the term of this contract, and keep supplied with water four hundred and fifty-two (452) fire hydrants, as the same are now placed at different points within the city of Butte, and that it will keep at all times said fire hydrants in good repair and ready for use for fire purposes for the sum of twenty-two thousand six hundred dollars ($22,600) per year, being $50 per annum for each of said hydrants.

“(4) It is further agreed upon the part of the said first party that it will furnish to the said city of Butte, and keep supplied with water all hydrants installed by said city in excess of the said four hundred and fifty-two (452) hydrants at the rate of $50 per annum for each hydrant, and that each and all of such hydrants shall be placed and located as the fire committee and fire marshal shall direct, and that the said party of the first part will at all times keep the same in good repair ready for use for fire purposes.

“(5) It is.further agreed upon the part of the party of the first part tliat it will furnish to the said city during the term of this contract all water that shall be required by the said city for flushing the public sewers, and for the use of the public buildings in the said city free of charge, provided, however, that the said city provide outlets through which such water shall be furnished, and provided, further, that reasonable rules as to the time of sewer flushing shall be agreed upon between the city and the company, so as not to impair the efficiency of the system fojr fire protection. * * *

“ (7) The said second party, in consideration of the agreements hereinbefore contained to be kept and performed by said first party, agrees that it will pay to said first party the sum of $50 per annum per hydrant, for the period of ten years from and after January 1, 1908, in equal monthly installments, and the further sum of $50 per annum,for each hydrant which may .be added under the conditions hereinafter set forth.

“ (8) It is further understood and agreed by and between the parties hereto that the said second party shall have the right at any time to order the water mains of the said first party extended upon any street in any part or portion of the said city, during the term of this contract, and that whenever the said .second party shall order said mains extended the said second party hereby agrees to and with the said first party to take and use of the said first party at the established rate hereinbefore mentioned, at least one fire hydrant for every city block so ordered to be laid; it being further understood and agreed that in no case shall more than three hydrants be placed for each one thousand feet of such main extensions. * * # ”

1. According to the appellant, the above contract is so clear [1] that it “conveys but one idea to the mind of the child, the professional man, the ordinary business man, the entire community,” viz., that, for the hydrant rental specified therein the water company agreed to furnish to the city “all hydrant and water supply necessary for fire and general municipal purposes for a period of ten years from and after January 1, 1908.” If this be correct—and to determine its correctness is obviously the first step in the problem before us—then the''Contract is not open to interpretation (Frank v. Butte & Boulder M. & L. Co., ante, p. 83, 135 Pac. 904; Quirk v. Rich, 40 Mont. 552, 107 Pac. 821; Harris v. Root, 28 Mont. 159, 72 Pac. 429), and the judgment, in part at least, must fall.

Whether a document is or is not ambiguous is a matter of impression rather than of definition. This is obviously so, because every provision may be as clear and definite as. language can make it, yet the result of the whole be doubtful from lack of harmony in its various parts. The language used is to be resorted to in the first instance, but the conclusion to be reached depends, not upon the verbal clarity of the particular sentences or paragraphs, but upon the view to be taken of the contract ip its entirety. (O’Brien v. Miller, 168 U. S. 287, 42 L. Ed. 469, 18 Sup. Ct. Rep. 140; Page on Contracts, sec. 1112; 9 Cye. 579.) Recognition of this may be found in all the books upon the snbject, culminating in our Code provision that “the whole of contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other.” (Rev. Codes, sec. 5030.) Can it be said, then, that, [2] taking the contract as a whole, its meaning is so clear that “he who runs may read”? We think not. Assuming that the language of paragraphs 2 and 7 clearly implies an undertaking on the part of the company to supply the city with all the water necessary for fire and for general municipal purposes in consideration of the hydrant charge, that construction cannot be applied to the contract as a whole, without ignoring the import of the paragraphs numbered 3, 4, and 5. Paragraph 3, for instance, appropriates the consideration named to the fire-hydrant service, and it is a permissible, if not a necessary, inference from the language of this paragraph that the only service agreed to be rendered for the consideration named was the fire-hydrant service; in other words, paragraph 3 may be said to limit the apparent scope of paragraph 2. (Railton v. Taylor, 20 R. I. 279, 39 L. R. A. 246, 38 Atl. 980.) Again, paragraph 5 cannot be given any meaning consistent with the idea that the hydrant charge was intended to be in payment of all water that might be supplied to the city for general municipal purposes; on the contrary, its clear implication is that at least some water within the definition of “general municipal purposes” should be free of any charge. Paragraph 5 is a material part of this contract, and it mry be reasonably viewed as an incidental or additional inducement to the city for its assent; but it is rendered valueless for this purpose because there was no need to stipulate for water “free of charge” if all the water was to be paid for by the hydrant rates. If, on the other hand, paragraph 5 is an incidental provision for free water, in the nature of an inducement to the city for its assent, then the purposes for which such water should be furnished are specifically enumerated, with the necessary inference that no other water was intended to be free.

We are not unmindful of the provision of our Code that “repugnancy in a contract must be reconciled, if possible, by such an interpretation as will give some effect to the repugnant clauses, subordinate to the general intent and purpose of the whole contract” (Rev. Codes, sec. 5041); but this itself is a rule of interpretation rather than of construction, and the general intent and purpose of the contract is the very matter that is put in doubt. “However broad may be the terms of a contract, it extends only to those things concerning which it appears that the parties intended to contract” (Rev. Codes, sec. 5037); and, granting that the contract before us may be construed so as to cover and include water for sprinkling, corral and crematory purposes, that it need not be so construed is apparent. In such a situation there is ambiguity within the meaning of the law which opens the contract to interpretation by the aid of evidence alkmde, so as to give effect to the mutual intention of the parties to it at the time it was made. (Rev. Codes, secs. 5025, 5036; Lozes v. Segura Sugar Co., 52 La. Ann. 1844, 28 South. 249; Pressed Steel Car Co. v. Eastern Ry. of Minnesota, 121 Fed. 609, 57 C. C. A. 635; Uinta Tunnel etc. Co. v. Ajax Cold Min. Co., 141 Fed. 563, 73 C. C. A. 35.).

2. The reply alleges in effect that the contract in question was a continuation or renewal of relations which had existed since January, 1893, under successive contracts of the same general character, and containing substantially the same provisions as the one at bar, and that it was formulated and entered into with the understanding and in view of the construction which both parties alike had attached to these prior contracts; that these contracts had never been understood by either the company or the city to require the furnishing of any work, labor or material whatsoever, or any water free of charge except for flushing sewers and for use in the public buildings of the city, but were all understood, construed and acted upon by both the company and the city so as to leave subject to independent arrangement the furnishing of water for sprinkling, corral and crematory purposes and the furnishing of labor and material of the character set forth in the complaint; that during such period separate and independent arrangements did in fact exist, under which the company furnished, and the city voluntarily paid for, all such labor and material and all the water used for sprinkling, corral and crematory purposes; and that from June 1, 1908, up to and including the month of June, 1911, the contract at bar was by both the city and the company understood and acted upon to similar effect. Doubt may be entertained whether the conduct of the parties under the prior contracts could aid in the interpretation of the contract at bar, since they were completed and past transactions; but, in view of the similarity of language employed, it does not seem unreasonable to say that, in the absence of an indication to the contrary, the meaning the parties put upon the language used in the prior contracts was the meaning they attached to it when they used it in the present contract. In any event, the evidence, which is both documentary and oral, establishes .without contradiction that the parties did put a common practical interpretation not only upon the prior contracts but also the one at bar for the first three and one-half years of its existence; and the manner in which they interpreted it sustains the conclusion that the intention of the parties when it was made was to provide for a supply of water for fire protection to be paid for as stipulated, to furnish free water for flushing sewers and for the public buildings, and that water required for other purposes was not deemed within the purview of the contract. It [3] is an ancient and elementary rule that, where parties to a contract of doubtful or ambiguous meaning have placed a practical interpretation upon it, said interpretation is one of the best indications of their true intent. (Uinta Tunnel etc. Co. v. Ajax Gold Min. Co., supra; Thomas v. Cincinnati, N. O. & T. P. Ry. Co. (C. C.), 81 Fed. 911; Chicago v. Sheldon, 9 Wall. (U. S.) 50, 19 L. Ed. 594; City of Vincennes v. Citizens’ Gas Light & Coke Co., 132 Ind. 114, 16 L. R. A. 485, 31 N. E. 573; Hill v. City of Duluth, 57 Minn. 231, 58 N. W. 992; Animas Con. Ditch Co. v. Smallwood, 22 Colo. App. 476, 125 Pac. 594.) Hence error cannot be imputed to the trial court in so far as the findings and judgment at bar effectuate the intent thus established.

3. But the contract is not subject to interpretation by the parties or by anyone else concerning any matter upon which it clearly speaks. We think this principle was infringed in the [4] award to the respondent of the whole of its fifth cause of action. Included in this cause of action are certain items, to-wit: “Material and labor furnished in setting two-inch hydrant on comer of Montana and Granite streets, of the reasonable value of $71; material and labor furnished in setting hydrant at corner Broadway and Granite streets, of the reasonable value of $58.29; material and labor furnished in laying two-inch water main on Oregon avenue, 225 feet north of Gallatin street, to south side of Irvine street, of the reasonable value of $128.60. ” As we construe the contract, it is clear, unambiguous and not subject to interpretation touching the duty of the company to furnish fire hydrants and install water mains. In our judgment, paragraphs 4 and 8 clearly impose this duty upon the company. That these items were not of that character or were incurred in aid of purposes not covered by the contract we find nothing in the record to show. We must therefore assume them "to have been within the duty imposed upon the company by paragraphs 4 and 8 of the contract, and no recovery can be had. The total amount, including interest, represented by these items is $282, and the judgment should be reduced accordingly.

The cause is remanded to the district court, with directions to correct the judgment as above suggested; the judgment when so corrected to stand affirmed.

Mr. Justice Brantly and Mr. Justice Holloway concur.