## Facts

- C. & A. Construction Co., Inc. (C&A) and Benning Construction Co. (Benning) executed a written subcontract for sewer-line installation.
- The subcontract provided that the “2nd subcontractor” (Benning) “will receive $20,000 for supervision,” to be added to “actual cost,” and that the difference between actual cost and bid price would be split 33 1/3% to Benning and 66 2/3% to C&A.
- Benning performed and was paid $517,451.11.
- Benning sued C&A alleging $55,243.20 remained due under the subcontract.
- At a bench trial, Benning introduced parol evidence of an alleged oral agreement that Benning’s president (and sole shareholder) would also receive a salary and living expenses while personally supervising the project.
- The trial court accepted the extrinsic evidence, treated the salary and living expenses as additional recoverable costs beyond the $20,000 supervision payment, and entered judgment for Benning including $18,600 for those items.
- C&A appealed only the portion of the judgment awarding the $18,600 salary and living expenses in addition to the $20,000 supervision fee.

## Issues

1. Whether the written clause awarding Benning $20,000 “for supervision” was unambiguous and exclusive compensation for supervision.
2. Whether parol evidence of an alleged oral agreement could be used to add salary and living expenses for supervisory work when the written contract fixed a $20,000 supervision amount.
3. Whether awarding both the $20,000 supervision fee and $18,600 for supervisory salary and expenses constituted an impermissible recovery inconsistent with the contract.

## Decision

- The Arkansas Supreme Court held the $20,000 “for supervision” term was clear and unambiguous.
- Because the supervision clause was unambiguous, the trial court erred by relying on parol evidence to impose an additional obligation for supervisory salary and living expenses.
- The court modified the judgment by subtracting $18,600 and otherwise affirmed the judgment as modified.

## Legal Principles

- When a written contract expresses the parties’ intent in clear and unambiguous language, courts enforce the agreement according to the plain meaning of its terms.
- Parol evidence is admissible to explain a contract term only after a court determines that the writing is ambiguous (including patent or latent ambiguity).
- The threshold determination whether an ambiguity exists is a question of law for the court; only if ambiguity is found does interpretation with extrinsic evidence become a fact question.
- A fixed contractual payment for a specified item (here, supervision) cannot be enlarged through extrinsic evidence to create additional, overlapping compensation inconsistent with the written term.

## Conclusion

The court enforced the subcontract’s unambiguous $20,000 supervision-fee provision and disallowed an additional $18,600 award for the supervising owner’s salary and living expenses, affirming the judgment only after reducing it by the improper amount.


C. & A. Constr. Co. v. Benning Constr. Co., 256 Ark. 621, 509 S.W.2d 302 (Ark. 1974)