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COURT OF APPEALS DECISION DATED AND RELEASED June 20, 1995 |
NOTICE |
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A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 94-1961
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT I
ROBERT KREUTER and
ROBERT YUNKER,
Plaintiffs-Appellants,
v.
CITY OF FRANKLIN and
SCOTTSDALE INSURANCE
COMPANY,
Defendants-Respondents.
APPEAL from a judgment
of the circuit court for Milwaukee County:
GEORGE A. BURNS, JR., Judge. Affirmed.
Before Wedemeyer, P.J.,
Sullivan and Fine, JJ.
PER CURIAM. Robert Kreuter and Robert Yunker, the City
of Franklin, and the Estate of Helen Datka executed a well agreement in
1979. The well agreement established
the respective rights and duties of the parties with regard to a water system
to be constructed by Kreuter and Yunker.
In the present litigation, Kreuter and Yunker sought to recover the costs
associated with oversizing the water system to serve the Datka Estate land and
other unidentified lands. The trial
court granted the City's motion for declaratory judgment and barred the
recovery of any costs associated with oversizing the water system for the
unidentified lands. Kreuter and Yunker
appeal from the judgment, contending that the circuit court misconstrued the
well agreement. We reject their claim
and affirm the judgment.[1]
Kreuter and Yunker owned
property that they developed as the Whitnall Edge subdivision. The City required them to construct, at
their expense and subject to the City's standards, a water system to serve the
proposed subdivision and adjacent land owned by the Datka Estate. Kreuter and Yunker claim that the City also
required a system capacity that exceeded the needs of the identified
lands. By affidavit, William C.
Frazier, the engineer who supervised construction of the well for Kreuter and
Yunker, stated that the excess capacity of the water system was 350 residential
units. Frazier also indicated that
because of the size of pipes required by the City, the excess capacity could be
increased to 1,200 residential units by simply increasing the pump size.
At issue in this appeal
is whether Kreuter and Yunker are entitled to reimbursement for the costs of
building excess capacity into the water system beyond that necessary to satisfy
the needs of their land and the Datka Estate's land. They base their claim on paragraphs 6(c) and 7 of the well
agreement. The following portions of
those paragraphs are relevant to this issue:
6. Connection
Fees, Reimbursement
(c) In the event that [Kreuter and Yunker] and [the Datka Estate]
construct the Water System with a capacity in excess of that necessary to
satisfy the water requirements of the properties described in Paragraph 3, the
City shall charge a water connection fee based on the [equivalent multi-family
persons] described herein for each property, other than those described in
Paragraph 3, and except as provided herein, which connects to the Water System,
including extension thereof, of not less than the following amounts, which
amounts shall be paid by the City to [Kreuter and Yunker], or [the Datka
Estate] as the case may be, upon the City's collection thereof, and which
collection shall be made prior to the connection to the Water System.
....
7. (a) Reimbursement Formula
The total reimbursement to [Kreuter and Yunker] and [the Datka
Estate], pursuant to Paragraph 6 shall not exceed the reimbursement amount as
determined by the following formula:
A - B x
Costs + 8% per annum = Reimbursement Amount;
A
where "A" is the actual
water capacity of the Water System as determined by test, "B" is the
amount of water capacity required by the properties described in Paragraph 3,
and "Costs" includes [Kreuter and Yunker's] and [the Datka Estate's]
total costs (including labor, materials, engineering and supervision) of the
Water Syste[m], less the cost of the water main....
(b) The
reimbursement shall be for a period of ten (10) years from the date of transfer
of title and after ten (10) years from the date of the transfer, no reimbursement
shall be made by the City.
Paragraph
3 provided as follows:
3. Properties
Involved:In City of Franklin, Milwaukee County Wisconsin (See annexed
exhibit)
Such
other properties as the City Engineer shall agree in writing to include in the
system upon written application therefore from [Kreuter and Yunker] and [the
Datka Estate]. No additional properties
shall be included under this agreement after the City assumes ownership of the
water system.
No
exhibits are attached to the copies of the agreement contained in the
record. The parties agree, however,
that the agreement covered lands owned by Kreuter and Yunker and by the Datka
Estate.
Citing the above provisions,
Kreuter and Yunker argue that their right to reimbursement from water
connection fees was triggered when the water system was constructed "with
a capacity in excess of that necessary to satisfy the water requirements of the
properties described in [p]aragraph 3," i.e., Kreuter and Yunker's
property and the Datka Estate's land.
Further, the connection fees are chargeable to non-paragraph 3 property
connected to the water system within ten years from the date title to the water
system was transferred to the City.
Kreuter and Yunker alleged that although the City had assumed operation
of the water system, actual title has not been transferred.
The City argued that the
well agreement was unambiguous and under its terms, the connection fee applied
only to units located on property added to the agreement pursuant to paragraph
3. The City also argued that the right
to add additional properties was cut off when the City assumed operations. The City assumed operation of the water
system in December 1990. Prior to that
time, no additional lands were added; consequently, no reimbursement was due.
The
trial court held that title to the system was effectively transferred to the
City when it assumed operations in 1990.
The court rejected Kreuter and Yunker's argument that the addition of
land to the well agreement was not a prerequisite to reimbursement. The court stated, "[U]nder [p]aragraph
3, the intendment of the contract is clear that no additional property serviced
by the City should be included under the formula for reimbursement after the
City assumes ownership of the water system."
Kreuter and Yunker
contend that the trial court's construction of the well agreement viewed
paragraph 3 in isolation and ignored other provisions of the agreement. In addition to arguing that they are
entitled to reimbursement based upon the language of subparagraph 6(c) and
paragraph 7, they argue that construction of excess capacity is tantamount to
adding land under paragraph 3. They
also argue that the trial court's construction negates the ten-year payout
period for reimbursement. They do not,
however, challenge the trial court's conclusion that assumption of operations
was the equivalent of transfer of title.
Construction of a
contract presents a question of law, and appellate courts need not defer to the
trial court's interpretation. Waukesha
Concrete Prods. Co. v. Capitol Indem. Corp., 127 Wis.2d 332, 339, 379
N.W.2d 333, 336 (Ct. App. 1985). The
court's objective when construing a contract is to ascertain the intent of the
parties from the contract language. Id. A basic tenet of contract construction is
that the court should select a construction that gives effect to each word or
provision of the contract. Jones
v. Jenkins, 88 Wis.2d 712, 722, 277 N.W.2d 815, 819 (1979). Similarly, the meaning of a particular
contract provision is ascertained by reference to the contract as a whole. Crown Life Ins. Co. v. LaBonte,
111 Wis.2d 26, 36, 330 N.W.2d 201, 206 (1983).
Read in isolation,
subparagraph 6(c) and paragraph 7 appear to support Kreuter and Yunker's
claim. The total potential
reimbursement amount is the cost of oversizing the water system beyond the
needs of Kreuter and Yunker's property and the Datka Estate's land. Subparagraph 7(a). The reimbursement is derived from water connection fees for
properties not described in paragraph 3, and subparagraph 6(c) does not
specifically limit the connection fees to those for land added to the well
agreement under paragraph 3.
Our review of the entire
well agreement, however, convinces us that the parties' intent was to limit
reimbursement to connection fees from land added to the well contract. Subparagraph 4(a) establishes the
construction requirements for the water system. It provides that Kreuter and Yunker would bear the expense of
constructing a system sufficient to serve the Whitnall Edge subdivision and
that the Datka Estate would be responsible for expenses necessary to oversize
the system to serve the Estate's lands.
The subparagraph also provides that "[i]f additional lands are
added to the system under paragraph c [sic] of this agreement, the system
capacity shall be increased under recognized engineering design standards to
include the additional land."
Subparagraph 4(b) sets forth the system capacity in terms of gallons per
minute for fire supply and for the domestic needs of the two identified tracts
of land. The subparagraph also provides
that "[i]f additional land is added to the service area as provided for in
paragraph 3 of this agreement, the capacities as stated above shall be
increased to reflect the added services area." Additionally, neither Kreuter and Yunker nor the Datka Estate
were guaranteed full reimbursement of their costs. Subparagraph 7(e) expressly provided that "[t]he City in
no way guarantees [Kreuter and Yunker] nor [the Datka Estate] that they will be
totally reimbursed for the cost within the ten (10) years."
As the above discussion
indicates, the requirements for the construction of the water system were
defined in paragraph 4. The capacity
was to be increased if additional land was added to the system under paragraph
3. Paragraphs 6 and 7 provided the
mechanism for reimbursement to Kreuter and Yunker if the system was oversized
for the additional land. The well agreement
did not provide a mechanism for reimbursement when the water system was
oversized for unidentified land.
Therefore, the trial court decision is affirmed.
By the Court.—Judgment
affirmed.
This opinion will not be
published. See Rule 809.23(1)(b)5, Stats.