County of Ellis, Through its Ellis County Commissioners Court v. Gordon W. Wilson, Architect and Planners, Inc.--Appeal from 40th District Court of Ellis County

IN THE

TENTH COURT OF APPEALS

No. 10-93-021-CV

COUNTY OF ELLIS, THROUGH ITS ELLIS

COUNTY COMMISSIONERS COURT,

Appellant

v.

GORDON W. WILSON, ARCHITECT AND PLANNERS, INC.,

Appellee

From the 40th District Court

Ellis County, Texas

Trial Court # 43,088

OPINION ON APPELLANT'S MOTION FOR REHEARING

On original submission we held that Ellis County waived its complaints, except with regard to the trial court's award of prejudgment interest, by filing a motion for judgment based on the jury's finding of actual damages. On motion for rehearing, the county now argues that, because the trial court's judgment directly and adversely affects the interest of the public generally as that interest is declared in the Texas Constitution, the error in the trial court's award of actual damages against the county is fundamental and cannot be waived. // Assuming, without deciding, that the complaint involves fundamental error, we will consider the first point raised by the county on original submission. //

The county contends that the court erred in denying its motion for instructed verdict and its motion for judgment notwithstanding the verdict, arguing that, as a matter of law, the contract was void. The county's argument is based on the following ambiguous provision of the Texas Constitution:

Sec. 7. All counties and cities bordering on the coast of the Gulf of Mexico are hereby authorized upon a vote of the majority of the resident property taxpayers voting thereon at an election called for such purposes to levy and collect such tax for construction of sea walls, breakwaters, or sanitary purposes, as may now or may hereafter be authorized by law, and may create a debt for such works and issue bonds in evidence thereof. But no debt for any purpose shall ever be incurred in any manner by any city or county unless provision is made, at the time of creating the same, for levying and collecting a sufficient tax to pay the interest thereon and provide at least two per cent (2%) as a sinking fund; and the condemnation of the right of way for the erection of such works shall be fully provided for. //

Wilson argues that, by its placement in a section dealing with public works along the Gulf Coast, the sinking-fund provision does not apply to its contract with Ellis County. Regardless of whether the sinking-fund provision is read in the context of section seven or as an independent constitutional limitation on the county's ability to contract, the applicability of that provision to this case depends on the meaning of the term debt. The Texas Supreme Court has held that the term debt, as used in article eleven, sections five and seven, of the Texas Constitution, "means any pecuniary obligation imposed by contract, except such as were, at the date of the contract, within the lawful and reasonable contemplation of the parties, to be satisfied out of the current revenues for the year, or out of some fund then within the immediate control of the corporation." //

In this case, a typewritten addendum to the pre-printed American Institute of Architects Standard Form of Agreement Between Owner and Architect provides evidence that the parties contemplated satisfaction out of the county's general revenue fund, at least for the Program and Preliminary phase and the Schematic Design Phase of the contract. Article 15 of the agreement provides:

Initial program and first preliminary is included as part of the basic service.

This contract is contingent upon issuance of a Certificate of Obligation or successful passage of a Bond Issue.

If the issuance of a Certificate of Obligation is not successful or the Bond Issue is not successful, The architect shall be paid the percentage allocated through the Schematic Design Phase or reimbursed for the hourly time and expenses incurred, whichever is less.

Upon completion of the jail, said jail shall be certified by the Texas Commission on Jail Standards, based on plans approved by the County.

The preliminary program fee shall not exceed $15,000.

(Emphasis added).

On December 1, 1986, the county paid the preliminary program fee of $15,000 out of its general revenue fund. Wilson continued work on the Schematic Design Phase of the contract until it was terminated by the county on April 23, 1987. Even though the remainder of the project was contingent upon a successful bond issue or certificate of obligation, the county agreed to pay for work done through the Schematic Design Phase, obviously contemplating payment for that phase with general revenue funds. We hold that the pecuniary obligation imposed by the contract for architectural services through the Schematic Design Phase is not a debt within the meaning of article eleven, section seven, of the Texas Constitution. // Accordingly, we overrule point of error one.

We deny the county's motion for rehearing.

BOBBY L. CUMMINGS

Justice

Before Chief Justice Thomas,

Justice Cummings, and

Justice Vance

Denied

Opinion delivered and filed August 31, 1993

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