Criswell v. European Crossroads Shopping Center, Ltd. ( 1990 )

ON MOTION FOR REHEARING

HIGHTOWER, Justice.

Respondents’ motion for rehearing is granted in part and denied in part. The opinion and judgment of February 21, 1990 are withdrawn and the following is substituted.

This case involves an alleged breach of a contract for services. Harold W. Criswell, a professional engineer, entered into an agreement with R.M. Ginsberg, as general partner for European Crossroads Shopping Center, Ltd. (hereafter referred to as “Crossroads”), to prepare plans to convert a shopping center into condominium units. The agreement provided that Criswell’s fee would be one percent (1%) of the proceeds from the sale of the center on a condominium basis or as a whole project. It is the latter phrase, “or as a whole project,” that forms the basis of this dispute. After sale of the shopping center under a contract for deed, Ginsberg and Crossroads refused to pay Criswell. Criswell sued both Ginsberg and Crossroads for breach of contract and attorney’s fees. The trial court granted Crossroads’ motion for directed verdict and rendered judgment in favor of Crossroads. The trial court determined that the center must have been sold as a condominium project (i.e., a condition precedent) to entitle Criswell to payment. The court of appeals affirmed. The issue before this court is whether the agreement contained a condition precedent that the shopping center be sold on a condominium basis to entitle Criswell to payment for his services. For the reasons explained herein, we reverse the judgments of the trial court and the court of appeals, and remand to the trial court for further proceedings.

Criswell is a registered engineer and surveyor. Ginsberg was general partner for Crossroads, a Texas limited partnership formed for the purpose of building a shopping center. Criswell was hired by Crossroads in 1970 to do the structural engineering for the center. After the center was built, it became clear that the venture was a financial failure. In 1979, Ginsberg approached Criswell to assist him in preparing the project for sale. Ginsberg’s idea was to divide the center into condominium units. In 1980, Criswell agreed to prepare the plans and drafted an agreement which stated:

I will compile and prepare all information necessary for real estate agents to show and sell the above property on a condominium basis; i.e. to be able to sell each individual building (Building # 1 through Building #9) as a separate item with necessary information to form an association to accommodate maintenance, taxes, necessary exterior utilities and any other community expenses; or as a whole project.

I will also prepare and have available any and all necessary information that a proposed owner or owners would deem pertinent or desirable and/or prepare the information that he may desire at his request.

For the above services, the European Crossroads will compensate to [sic] me at my office, presently in suite # 141, 2829 W. Northwest Highway, Dallas, Texas, a fee of one percent (1%) of the total sales price of each building, buildings, or entire project at the time of closing.

(Emphases added.) Ginsberg signed the agreement on behalf of the limited partnership.

Over the next four months, Criswell compiled data on the shopping center. His primary task was to determine exactly how many square feet were in each unit since various tenants had relocated interior walls over the years. This data was printed in a book at Criswell’s expense and several copies were delivered to Ginsberg.

Soon thereafter, Ginsberg asked the center’s mortgagee, Clevetrust, for permission to sell the project on a condominium basis. Clevetrust refused, and Ginsberg relayed this information to Criswell. Criswell received no further communications from Ginsberg regarding payment for the book or his services. In 1981, Crossroads sold the entire shopping center under a contract for deed for $12,850,000. It was not until 10 months later that Criswell learned of the transfer. Crossroads refused to pay Cris-well his 1% fee.

Subsequently, Criswell sued Ginsberg and Crossroads for breach of contract and attorney’s fees. Criswell asserted that the agreement was enforceable, whether the center was transferred as a number of separate units of a condominium project, or undivided “as a whole project.” Furthermore, Criswell contends that the information he provided was useful and could have been used to sell the center either as individual condominium units or as a whole project. Crossroads responded that the agreement became unenforceable once the center was transferred as a whole unit and that they had no use for Criswell’s data if the center was not sold as condominium units. Criswell and Crossroads agreed that the letter agreement was not ambiguous. At the conclusion of Criswell’s casein-chief, the trial court granted Crossroads’ motion for directed verdict and rendered judgment in favor of Crossroads. The trial court determined that a condition precedent existed which required that the center be sold as condominiums (either individually or as a condominium complex) in order for Criswell to receive payment. The court of appeals affirmed, finding that the condition precedent was not satisfied, and therefore, Criswell was precluded from any recovery. In his Application for Writ of Error, Cris-well argues that the letter agreement did not require a sale of the shopping center on a condominium basis as a condition precedent to his right to receive compensation. We agree.

In order to determine whether a condition precedent exists, the intention of the parties must be ascertained; and that can be done only by looking at the entire contract. Hudson v. Wakefield, 645 S.W.2d 427, 430 (Tex.1983); Gallup v. St Paul Ins. Co., 515 S.W.2d 249 (Tex.1974) (strongest indication of what a contract requires is determined by what its words plainly state). In order to make performance specifically conditional, a term such as “if”, “provided that”, “on condition that”, or some similar phrase of conditional language must normally be included. Landscape Design v. Harold Thomas Excavating, 604 S.W.2d 374, 377 (Tex.Civ.App.— Dallas 1980, writ ref’d n.r.e.). If no such language is used, the terms will be construed as a covenant in order to prevent a forfeiture. While there is no requirement that such phrases be utilized, their absence is probative of the parties intention that a promise be made, rather than a condition imposed. See Hohenberg Bros. Co. v. George E. Gibbons & Co., 537 S.W.2d 1, 3 (Tex.1976).

In construing a contract, forfeiture by finding a condition precedent is to be avoided when another reasonable reading of the contract is possible. Schwarz-Jordan, Inc. v. Delisle Construction Co., 569 S.W.2d 878 (Tex.1978); Hohenberg Bros., 537 S.W.2d at 3. When the intent of the parties is doubtful or when a condition would impose an absurd or impossible result, the agreement will be interpreted as creating a covenant rather than a condition. Hohenberg Bros., 537 S.W.2d at 3. Because of their harshness in operation, conditions are not favorites of the law. Sirtex Oil Industries, Inc. v. Erigan, 403 S.W.2d 784, 787 (Tex.1966); Hohenberg Bros., 537 S.W.2d at 3.

Although it is well settled that the words contained in the instrument, and not the punctuation, should be the controlling guide in construing the instrument, there is no rule which requires courts to disregard all punctuation and look solely to the language of the instrument. Harriss v. Ritter, 154 Tex. 474, 279 S.W.2d 845, 847 (1955). Punctuation aids in construing the words used in the instrument. Id. A semicolon is used to mark a more important break in the sentence flow than that marked by a comma. THE CHICAGO MANUAL OF STYLE 147 (13th ed. 1982). “When items in a series are long and complex or involve internal punctuation, they should be separated by semicolons for the sake of clarity.” Id. The language of the agreement sets out two methods of disposing of the center: first, “on a condominium basis;” or second, “as a whole project.” Criswell’s use of semicolons in drafting the agreement indicated that each phrase set off by a semicolon was to be read as having independent significance; that is, he used a semicolon to indicate that selling the property “as a whole project” was an alternate and independent means of disposing of the center. This becomes obvious when the language between the semicolons is deleted:

I will compile and prepare all information necessary for real estate agents to show and sell the above property on a condominium basis or as a whole project.

(Emphases added.) In this case, the reasonable interpretation of the agreement is that the phrases “as a whole project” and “or entire project” were parallel expressions of alternate methods of selling the center and were not intended to explain or modify the phrase “on a condominium basis.” As a result, we hold that the letter agreement did not require a sale of the shopping center “on a condominium basis” as a condition precedent to Criswell’s right to receive compensation.

The agreement provides that Cris-well “will compile and prepare all information necessary for real estate agents to show and sell the above property ...” and that Criswell will receive “a fee of one percent (1%) of the total sales price....” (emphases added). Crossroads argues that since the center was transferred by a “contract for deed,” this does not constitute a sale and therefore Criswell was not entitled to payment. We disagree. See Bucher v. Employers Casualty Co., 409 S.W.2d 583, 584 (Tex.Civ.App. — Fort Worth 1966, no writ) (contract of sale effects change of ownership wherein purchaser becomes equitable owner of the property while all that remains in seller is bare legal title, more in the nature of security to guarantee payment than anything else).

Black’s Law Dictionary defines sale as a “contract between two parties ... by which the seller, in consideration of the payment or promise of payment of a certain price in money, transfers to the buyer the title and possession of the property.” BLACK’S LAW DICTIONARY 1200 (5th ed. 1979) (emphasis added). Transfer is defined as the “sale and every other method ... of disposing of or parting with property....” Id. at 1342 (emphasis added). Even the most basic definitions make it clear that the terms sale and transfer are synonymous. As a result, we hold that the conveyance of the center was a “sale” as contemplated by the terms of the letter agreement.

However, Criswell did not ask this court to render judgment in his favor, but rather requested that the court remand to the trial court. Additionally, Crossroads pled several defenses which it claims it was unable to present to the jury in light of the directed verdict granted in its favor at the close of Criswell’s case. Criswell’s Motion to Modify Judgment, or in the alternative, for rehearing is overruled.

For these reasons, we reverse the judgments of the trial court and the court of appeals and remand to the trial court for further proceedings.

HECHT, J., concurs with an opinion. GONZALEZ, J., dissents with an opinion joined by DOGGETT, J.