J. Gordon S. HARRIS, Petitioner, v. John D. ROWE, Respondent, 593 S.W.2d 303

CAMPBELL, Justice. This is a suit by John D. Rowe for damages for breach of a construction contract. The trial court instructed a verdict in favor of J. Gordon S. Harris and rendered judgment that Rowe take nothing. The Court of Civil Appeals reversed the trial court judgment and remanded the cause for retrial. 576 S.W.2d 172. We reverse the judgment of the Court of Civil Appeals and affirm the judgment of the trial court. Harris, by written contract dated February 26, 1976, agreed to construct Rowe a house for $96,760.

The house was to be completed by September 8, at which time the transaction was to be closed and Harris was to convey the completed house and lot to Rowe. At Rowe’s request, an earlier closing date of July 7 was arranged. On this date some construction items were not completed, but Harris and Rowe continued with the closing with the understanding that Harris would complete the construction within 30 days.

On July 7 at closing, the property was conveyed by a general warranty deed, and Harris and Rowe executed the following written agreement pertaining to the incom-pleted work: “ESCROW AGREEMENT “It is agreed by the undersigned parties to this transaction that the sum of $775.00 will be held in escrow by said Southwest Land Title Co., and the remainder of the proceeds, if any, are to be disbursed at this time.

The funds es-crowed hereunder are to be held in the amounts and until the following has been accomplished, to-wit: $500.00 for items included on the attached list 200.00 for repair of the fireplace mantel 75.00 for repair of front door $775.00 Total “Southwest Land Title Co. is authorized to hold said deposit in escrow until the purpose of this agreement has been complied with at which time the deposit will be paid to J. Gordon S.

Harris provided said Southwest Land Title Co. has received written approval of such payment from all parties to this agreement. “In the event said written approval has not been received on or before 30 days from this date, then, a representative of Southwest Land Title Co. shall have access to said property to make inspection of same, and will be authorized to make disbursement after the above mentioned work has been completed. “No liability or expense shall accrue against Southwest Land Title Co. by virtue of said company acting as escrow agent." Attached to this agreement was another page in Rowe’s handwriting, and initialed by both Harris and Rowe.

This instrument, executed simultaneously with the Escrow Agreement, provided: “The amount of $500.00 will be put in escrow and remain for 30 days for following work to be completed. At end of 30 days any work not completed to owner’s satisfaction will be considered not completed and payment allocated for those items will be paid to John D. Rowe. $150.00 1. Complete all paint, patching, touch-up finishing of cabinets, shelves, cleaning of F/place, brushing all cedar. $150.00 2.

Install vents, replace all cedar stripping under doors, repair facer board over family room, replace ft. door knob, patio knob, replace board on said patio. $100.00 3. Complete yard work. $100.00 4. Repair driveway. $500.00 $200.00 5. Repair or replace mantel. $ 75.00 6. Repair or replace ft. door trim & paint. $775.00 Total. John R. C. R. J. H.” Rowe paid $775.00 to Southwest Land Title Co. pursuant to the Escrow Agreement. Harris was paid the contract price less the $775.00. Harris did not and has not completed the work.

Rowe requested Southwest Land Title Co. to pay him the $775.00 held in escrow; however, the Title Company took no action and still holds the money. At the completion of the evidence Harris made a conditional tender of the $775.00 provided that Rowe did not recover judgment against Harris. Southwest Land Title Co. is not a party to this suit. . Rowe sued for damages for breach of the February 25 contract, and for treble damages and attorney’s fees under the Deceptive Trade Practices Act.

Harris pleaded by way of defense that Rowe and Harris had reached an accord and satisfaction concerning the complaints made by Rowe, and also that the original contract had merged into the warranty deed executed and delivered by Harris to Rowe on July 7. Trial was to a jury. After both sides had rested, the court instructed a verdict for Harris and rendered judgment that Rowe take nothing. Rowe, appellant in the Court of Civil Appeals, contended that the evidence raised material fact issues which should have been submitted to the jury on (1) the doctrine of accord and satisfaction and (2) merger.

The Court of Civil Appeals, in ruling on the defensive plea of accord and satisfaction, considered this question: “Does the Escrow Agreement, without the payment of the $775.00 in question, constitute an accord and satisfaction as a matter of law.” The court held that accord and satisfaction, being dependent upon agreement, only occurs when the parties mutually assent to it and this presents a fact question; that there is nothing in the language of the Escrow Agreement which provides the agreement constitutes an accord and therefore it is the duty of the trial court to determine the intent of the parties.

The court also held the Escrow Agreement was ambiguous because (1) on the first page it provides $775.00 is to be held in escrow but the second page provides only $500.00 is to be held in escrow; (2) the first page provides $775.00 is to be paid to Harris if the work is completed within 30 days to Rowe’s satisfaction, but makes no mention of what would happen if the work was not satisfactorily completed within 30 days; and (3) the second page provides $500.00 will be held in escrow, but then $775.00 in work is totaled, making it impossible to tell which $500.00 worth of work is referred to.

After concluding the Escrow Agreement is ambiguous, the court held a fact question existed as to the intent of the parties. On the defense of merger the Court of Civil Appeals held the application of this doctrine depends upon the intention of the parties, and this presents another fact question. Therefore, the court stated it could not as a matter of law hold the doctrine of merger bars Rowe’s cause of action under the original contract. We disagree with the holdings of the Court of Civil Appeals. The burden is upon Harris to establish the affirmative defense of accord and satisfaction.

This defense rests upon a new contract, express or implied, in which the parties agree to the discharge of an existing obligation in a manner otherwise than originally agreed. The tender of the alternate satisfaction is upon the condition that the acceptance will constitute a discharge of the underlying obligation. Jenkins v. Henry C. Beck Co., 449 S.W.2d 454 (Tex.1969). An “accord” is in essence a contract or agreement, and “accord and satisfaction” is founded on and dependent on, and results from a contract, express or implied between the parties. Ortiz Oil Co. v. Geyer, 138 Tex. 373, 159 S.W.2d 494 (1942).

We do not agree a fact question is presented in the construction of the escrow agreement.

Interpretation of a contract becomes a fact issue to be resolved by extrinsic evidence only when application of pertinent rules of construction leaves a genuine uncertainty as to which of two meanings is proper. Universal C.I.T. Credit Corp. v. Daniel, 150 Tex. 513, 243 S.W.2d 154 (1951). Where a question relating to the construction of a contract is presented to this Court, we will consider the wording of the instrument, in the light of surrounding circumstances, apply the appropriate rules of construction and settle the meaning of the contract. See: City of Pinehurst v.

Spooner Addition Water Company, 432 S.W.2d 515 (Tex.1968). After applying these rules of construction we find the escrow agreement to be certain in its meaning. The primary object of courts in construing written contracts is to arrive at the intention of its parties. Skelly Oil Co. v. Archer, 163 Tex. 336, 356 S.W.2d 774 (1962). Separate instruments contemporaneously executed as a part of the same transaction and relating to the same subject matter may be construed together as a single instrument. Rudes v. Field, 146 Tex. 133, 204 S.W.2d 5 (1947). No principle of

interpretation of contracts is more firmly established than that great, if not controlling, weight should be given by the court to the

interpretation placed upon a contract of uncertain meaning by the parties themselves. Courts rightfully assume that parties to a contract are in the best position to know what was intended by the language employed. James Stewart & Co. v. Law, 149 Tex. 392, 233 S.W.2d 558 (1950). The court should adopt the construction of the instrument as placed upon it by the parties unless there is clear language in the instrument indicating an intention to the contrary. Col-Tex Refining Co. v. Coffield & Guthrie, Inc., 264 S.W.2d 462 (Tex.Civ.App.—Eastland 1954, writ ref’d).

If a contract is susceptible of two constructions, one of which would render it valid and the other invalid, construction validating it must prevail. Dahlberg v. Holden, 150 Tex. 179, 238 S.W.2d 699 (1951). After applying the above rules of construction, we find Harris and Rowe intended that $775.00 be placed in escrow because this is the amount that Rowe, without objection, deposited with Southwest Land Title Co. We also find, by construing the two instruments together, the Title Company was to pay this money to Rowe if Harris did not complete the work within 30 days.

We find the agreement of July 7 constituted an accord and satisfaction and is a bar to a suit for damages on the February 25 contract for any items included in the agreement. An accord and satisfaction constitutes a bar to any action on the original contract. Ensley v. Spickard, 232 S.W.2d 780 (Tex.Civ.App.—Dallas 1950, writ ref’d). Rowe may recover only the $775.00 held by the Title Company pursuant to the agreement. The doctrine of merger is not applicable in this case.

While it is a general rule that a deed made in full execution of a contract of sale of land merges the provisions of the contract, there are exceptions to this rule. A deed which constitutes only partial performance of the preceding contract does not merge other distinct and unperformed provisions of the contract. A contract of sale which provides for the performance of acts other than the conveyance remains in full force and effect as to such other acts. Sanchez v. Dickinson, 551 S.W.2d 481 (Tex.Civ.App.—San Antonio 1977, no writ).

A contract for the sale of land which creates rights collateral to and independent of the conveyance, such as completion of construction or escrow agreements pending construction, to that extent survives a deed that is silent in respect to the construction or escrow agreement. In this case the recitals in the deed pertained only to the conveyance. The execution of the escrow agreement contemporaneously with the execution of the deed plainly shows Harris and Rowe did not intend to merge the conditions of the agreement into the deed.

The judgment of the Court of Civil Appeals is reversed and the judgment of the trial court is affirmed. SPEARS, J., dissenting.