Case Title: Ferguson v. Reed

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1991-12-31T00:00:00Z

Document:
Ferguson v. Reed1991 WY 173822 P.2d 1287Case Number: 91-127Decided: 12/31/1991Supreme Court of Wyoming
GARY L. 
FERGUSON, APPELLANT (DEFENDANT),

v.

RONALD 
A. REED, APPELLEE (PLAINTIFF).

Appeal from the District Court, 
NatronaCounty, Dan Spangler, 
J.

 James R. 
McCarty, Casper, 
for appellant.

Donald 
E. Chapin of Crowell and Chapin, P.C., Casper, for appellee.

Before URBIGKIT, C.J., and THOMAS, CARDINE, 
MACY and GOLDEN, JJ.

MACY, 
Justice.

 [¶1.]     Appellant Gary Ferguson 
appeals from the lower court's findings that Appellee Ronald Reed substantially 
complied with the parties' 1981 agreement and that Ferguson breached their 
1983 agreement by failing to make the required payments.

 [¶2.]     We 
affirm.

 [¶3.]     Ferguson raises the 
following issues:

1. 
Whether the Trial Court erred in refusing to permit the introduction of 
extrinsic evidence concerning the meaning of the June 5, 1981, Contract between 
the parties.

2. 
Whether the Trial Court erred in finding that the Appellee Reed was in 
substantial compliance with his obligations under the agreements between the 
parties.

3. 
Whether the Trial Court erred in finding that the parties modified the June 5, 
1981, Agreement in November, 1983.

4. 
Whether the Court erred in rejecting Ferguson's 
contention that the November, 1983, Note had been paid and settled when Reed 
assumed ownership of Ferguson's interest in Middle Forty Partnership 
in 1986.

 [¶4.]     This dispute stems from 
two agreements entered into by Reed and Ferguson in the early 1980's. In a 1981 
agreement, Reed agreed to convey to Ferguson Reed's one-fourth interest in Prime 
Partners, a partnership, and a one-half undivided interest in some undeveloped 
land west of Casper. Upon receiving Reed's interest in the 
land, Ferguson 
executed and delivered a $240,000 promissory note to Reed which was secured by a 
mortgage on the property. Ferguson then transferred his interest in the 
property to Prime Partners. Apparently, Ferguson mortgaged the property before he 
transferred it to Prime Partners so the promissory note would not become a 
partnership debt.

 [¶5.]     Other pertinent 
provisions of the 1981 agreement required: (1) Ferguson to convey his interest 
in Red Barns of Casper, a general partnership, to Reed, and Reed to assume any 
debts or liabilities which were derived from Ferguson's interest in the 
partnership; (2) Ferguson to convey his one hundred shares of Peaches Inc. stock 
to Reed; and (3) Reed to release his mortgage on 16.5 acres of land when 
Ferguson requested the release and provided a legal description of the specific 
acres he wanted released.

 [¶6.]     In 1983, after some 
dispute over the 1981 agreement, the parties orally agreed that Reed would 
release Ferguson's $240,000 promissory note and 
mortgage. In exchange for Reed's release, Ferguson executed a $75,000 promissory note 
which was secured by a conditional assignment to Reed of Ferguson's undivided 
one-eighth interest in the Middle Forty Partnership, a general partnership. 
Ferguson also 
conveyed his interest in various other receivables and real estate to 
Reed.

 [¶7.]     Ferguson failed to make 
any payments on the $75,000 promissory note, prompting Reed to initiate this 
suit. As a defense, Ferguson claimed that Reed took Ferguson's one-eighth 
interest in the Middle Forty Partnership to satisfy the $75,000 promissory note 
and also counterclaimed that Reed breached their 1981 agreement. The trial court 
found that Reed substantially complied with both agreements and that Ferguson breached their 
1983 agreement by failing to make payments on the $75,000 promissory 
note.

Extrinsic 
Evidence

 [¶8.]     Ferguson contends that the 
lower court erred in not permitting the admission of extrinsic evidence to 
interpret paragraph 1 of the 1981 agreement. Paragraph 1 read as 
follows:

1. Reed 
is the owner of a one-fourth interest in Prime Partners, a partnership 
consisting of Keith Spencer, Gary L. Ferguson, and Ronald A. Reed, owning 
certain real property, a one-half undivided interest to which is to be conveyed 
to Ferguson and then to Prime Partners, said real estate is described on Exhibit 
"A", attached which is included herein by reference as though set forth in full. 
During the time that Ferguson has title, free of all liens and encumb[ ]rances 
thereto, except for the mortgages to the First Wyoming Bank of Casper, dated in 
March, 1980, Ferguson promises and agrees to execute a promis[s]ory note secured 
by a mortgage to Reed in the face amount of Two hundred and fo[ ]rty thousand 
dollars, ($240,000.00) with interest thereon at the rate of 10% per annum on the 
unpaid balance, computed from June 1st, 1981, until paid. The principal and 
interest shall be paid to Reed, at the rate of Two thousand three hundred and 
sixteen dollars and five cents, ($2,316.05) per month, beginning July 1st, 1981, 
until all of the principal and interest shall have been paid and if not 
completely paid by June 1st, 2001, the unpaid balance shall become due and 
payable. Ferguson takes title to the land and the 
partnership of Prime Partners from Reed, subject to all debts and obligations 
after the aforesaid mortgage has been filed, Ferguson agrees to convey the one-half 
undivided interest that has vested in him, to Prime 
Partners.

 [¶9.]     When reviewing 
Ferguson's 
contention, we are governed by our familiar rules of contract construction. 
Extrinsic evidence will not be admitted to contradict the plain meaning of an 
unambiguous agreement. Klutznick v. 
Thulin, 814 P.2d 1267 (Wyo. 1991). If a contract is ambiguous, the 
parties' intent may be determined by the use of extrinsic evidence. Cliff & Co., Ltd. v. Anderson, 777 P.2d 595 (Wyo. 1989). An ambiguous contract is one which 
is obscure in its meaning because of indefiniteness of expression or because it 
contains a double meaning. Id. Whether a 
contract is ambiguous is a question of law; thus, this Court is at liberty to 
make an independent determination as to the existence of an ambiguity. Amoco Production Company v. Stauffer 
Chemical Company of Wyoming, 612 P.2d 463 
(Wyo. 
1980).

 [¶10.]  Ferguson lists five clauses1 from paragraph 1 of the 1981 
agreement and merely asserts the language was ambiguous. That mere assertion 
does not make the agreement ambiguous, and we are unable to detect any 
ambiguity. We, therefore, hold the trial court was correct in excluding 
extrinsic evidence to explain the terms of the agreement.

Substantial 
Performance

 [¶11.]  Ferguson next disputes the trial court's 
finding that Reed substantially complied2 with his obligations under the 
agreements. Ferguson lists three duties which he alleges 
Reed failed to substantially perform. First, Ferguson argues that Reed failed to discharge Ferguson's debts and 
liabilities relating to Red Barns of Casper. As was pointed out at trial, 
however, the 1981 agreement required Reed only to assume, not to discharge, the 
liabilities. Ferguson also testified that he had never been 
contacted to pay any of the debts nor had he been told any of the debts were 
delinquent. Second, Reed never released 16.5 acres of land when Ferguson requested that he 
do so. Reed testified that he did not release the land because Ferguson defaulted on the $240,000 promissory note and the 
requested acres were not within the acreage he transferred to Ferguson. Finally, 
Ferguson claims 
that Reed failed to convey the property free of encumbrances other than those 
mentioned in the 1981 agreement. The trial court heard testimony that, under the 
terms of the deed conveying the mortgaged property, Ferguson took the property 
subject to all encumbrances of record.

 [¶12.]  Whether or not Reed substantially 
performed under the agreements is a question of fact. See Saunders v. Sharp, 793 P.2d 927 
(Utah App.), cert. granted, 804 P.2d 1232 (Utah 
1990), and remanded, 806 P.2d 198 
(1991); and All Seasons Water Users 
Association, Inc. v. Northern Improvement Company, 399 N.W.2d 278 (N.D. 
1987), after remand, 417 N.W.2d 831 
(1988). When this Court is reviewing a trial court's finding of fact, we will 
reverse only if the finding is clearly erroneous or contrary to the great weight 
of the evidence. Eddy v. First Wyoming 
Bank, N.A.-Lander, 750 P.2d 294 (Wyo. 1988).

 [¶13.]  Reed, in accord with the 1981 agreement, 
transferred his interest in Prime Partners and the undeveloped land to Ferguson, and he also 
complied with the 1983 agreement by releasing the $240,000 promissory note and 
mortgage. As to the claimed deficiencies by Reed, the trial court had before it 
evidence which controverted each alleged failing. We cannot say the trial 
judge's finding that Reed substantially performed under the agreements was 
clearly erroneous or against the great weight of the 
evidence.

Modification

 [¶14.]  Ferguson claims that the trial court erred in 
finding the parties' 1983 agreement modified the 1981 agreement. Ferguson essentially argues that insufficient evidence 
existed to find that, when Ferguson entered into the 1983 agreement, he 
intended to waive Reed's obligations under the 1981 agreement. This argument 
fails because the trial court did not find Reed's obligations under the 1981 
agreement were waived once the parties entered into the 1983 agreement. Rather, 
the trial court found that Reed was still required to perform under the 1981 
agreement. In his decision letter, the trial judge determined that Reed was in 
"substantial compliance with his obligations under the agreements." (Emphasis added.) By using 
the plural of agreement, the trial judge declared that Reed had complied with 
both the 1981 agreement and the 1983 agreement. Since the trial judge found that 
Reed substantially complied with the 1981 agreement, the trial judge could not 
also make an inconsistent finding that the 1983 agreement waived Reed's 
obligations under the 1981 agreement.

Middle 
Forty Partnership Interest

 [¶15.]  Ferguson's 
final claim is that the $75,000 promissory note was satisfied because Reed 
acquired Ferguson's one-eighth interest in the Middle 
Forty Partnership. Although not stated as such by Ferguson, the real issue is whether sufficient evidence 
existed to support the trial court's finding that Reed had not acquired 
Ferguson's 
one-eighth interest in satisfaction of the $75,000 promissory 
note.

 [¶16.]  Supporting Ferguson's position was the fact that Reed 
originally owned a one-eighth interest in the Middle Forty Partnership, but, 
starting in 1986, Reed's tax returns showed he owned a one-fourth interest. 
Ferguson also 
testified that on his own 1986 tax return he reported income in the amount of 
$75,000 for the sale of his one-eighth interest. Reed explained that he never 
asserted a one-fourth interest in the partnership assets and that he paid the 
additional taxes only to protect his security interest in the conditional 
assignment of Ferguson's one-eighth share. Additional support 
for Reed's position was Ferguson's testimony that he never informed 
Reed that he conveyed his one-eighth interest in exchange for the promissory 
note.

 [¶17.]  When the sufficiency of the evidence is 
at issue:

"[W]e 
assume the evidence of the successful party is true, leave out of consideration 
entirely evidence of the unsuccessful party in conflict therewith, and give the 
evidence of the successful party every favorable inference which may reasonably 
be drawn from it."

Huang International, Inc. v. Foose 
Construction Company, 734 P.2d 975, 979 (Wyo. 1987) (quoting DeJulio v. Foster, 715 P.2d 182, 185 
(Wyo. 1986)). 
The evidence presented at trial could lead to different conclusions. However, we 
hold sufficient evidence existed to support the trial court's finding that 
Ferguson did not 
convey his one-eighth interest to Reed in satisfaction of the $75,000 promissory 
note.

 [¶18.]  Affirmed.

FOOTNOTES

1 The clauses 
are:

(a) 
Reed is owner of one-fourth (1/4) of Prime Partners;

(b) 
That the partnership "owns certain real property";

(c) 
That a one-half (1/2) undivided interest in the real property would be deeded to 
Ferguson;

(d) 
That the property would then be deeded to Prime Partners;

(e) 
That "Ferguson takes title to the land and the partnership of Prime Partners 
from Reed, subject to all debts and obligations after the aforesaid mortgage has 
been filed, Ferguson agrees to convey the one-half (1/2) undivided interest that 
has vested in him, to Prime Partners[."]

2 We interpret Ferguson's use of the term 
"substantial compliance" to be synonymous with "substantial 
performance."