Case Title: Mad River Boat Trips, Inc., v. Jackson Hole Whitewater, Inc.

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1990-12-21T00:00:00Z

Document:
Mad River Boat Trips, Inc., v. Jackson Hole Whitewater, Inc.1990 WY 154803 P.2d 366Case Number: 89-268Decided: 12/21/1990Supreme Court of Wyoming
MAD RIVER BOAT TRIPS, 
INC., 

Appellant 
(Defendant),

v.

JACKSON HOLE WHITEWATER, 
INC., 

Appellee 
(Plaintiff).

Appeal from the District 
Court of Teton County, D. Terry Rogers, J.

Lawrence B. 
Hartnett, Jackson, for appellant.

William R. Fix, 
Jackson, for appellee.

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

MACY, 
Justice.

[¶1]      Appellant Mad 
River Boat Trips, Inc. appeals from the district court's decision declaring that 
Appellant had a contractual obligation to sell to Appellee Jackson Hole 
Whitewater, Inc. two special use permits issued by the United States Department 
of Agriculture - Forest Service. The court ordered Appellant to deliver the use 
permits to Appellee and to pay Appellee damages for breach of the 
contract.

[¶2]      We reverse and 
remand.

[¶3]      Appellant 
presents the following issues:

1. The trial court erred 
as a matter of law in its construction and interpretation of the May 26, 1989 
contract between the parties in the following respects:

     a. The trial court 
erred by failing to construe the intention of the parties with respect to the 
purpose of the specific provisions of the Contract at issue in the action 
below.

     b. The trial court 
erred as a matter of law in finding that the consent of the U.S. Forest Service 
to the Assignment in Trust required by Article 6.01(a) of the Contract was not a 
condition precedent to the obligation of the Appellant to perform under the 
terms of the Contract and by severing Article 6.01 from the contract in 
accordance with the provisions of Article 8.09.

     c. The trial court 
erred as a matter of law in failing to give meaning and legal effect to the 
specific language contained in Article 4.03 of the contract which provided the 
Appellant the right to terminate the contract, and entering judgment finding the 
Appellant had validly terminated the Contract.

[¶4]      At the time this 
dispute arose, Appellant conducted whitewater raft trips on the Snake River. It 
maintained a right to use its rafts on the river in the Bridger-Teton National 
Forest via Forest Service special use permits. The number of such permits issued 
was limited by a moratorium, and their issuance was subject to the discretion of 
the Forest Service. On May 26, 1989, the parties entered into a sales contract 
stating that Appellant would sell two rafts and two special use permits to 
Appellee in return for Appellee's payment of $5,000 on the date the agreement 
was executed, $10,000 on the date of closing, and $60,000 plus interest to be 
paid in four equal installments. Due to the financing arrangement, Appellant 
wanted the Forest Service to consent to an assignment of trust, which would 
require the Forest Service to transfer the special use permits back to Appellant 
if Appellee defaulted in its obligation to pay its indebtedness. The contract 
referred to an assignment in trust in the following 
provision:

     As security for the 
purchase price and all other sums due from Buyer to Seller by this Agreement, 
Buyer agrees to execute an Assignment in Trust to Seller in the form attached 
hereto as Exhibit B and incorporated herein by reference, and the parties 
shall obtain consent of the U.S. Forest Service to said Assignment in Trust, 
as provided on said Exhibit B, said Assignment in Trust to be delivered to and 
held by the [Forest Service] until this Agreement is fully performed by 
Buyer.

(Emphasis 
added.) That provision was not contained in the section of the contract labeled 
"Condition Precedent." The Forest Service refused to consent to an assignment in 
trust because it would undermine the Forest Service's discretion to issue the 
permits. As a result, Appellant informed Appellee that it could not close on the 
sale without the Forest Service's consent to an assignment in trust and that it 
would return the $15,000 when Appellee returned the two 
rafts.

[¶5]      In response, 
Appellee filed a complaint seeking specific performance of the contract; a 
temporary restraining order and preliminary injunction, both of which would 
compel Appellant to tender the permits to Appellee; and damages for breach of 
contract. The district court issued an order continuing the proceedings with 
regard to the application for a temporary restraining order and set a hearing 
date for the preliminary injunction application. After the parties presented 
evidence and arguments at the hearing, the district court denied Appellee's 
request for a preliminary injunction. The court also ruled that the contract was 
unambiguous and that the dispute could be resolved without the analysis of 
additional extrinsic evidence.

[¶6]      The parties 
submitted memoranda addressing the merits of the dispute, and the district court 
ruled in favor of Appellee. The court ordered Appellant to specifically perform 
its obligations under the contract and set a date for a hearing on the issue of 
damages. In its written judgment, the court reiterated that the contract was 
unambiguous and held that, contrary to Appellant's contention, the Forest 
Service's consent to an assignment in trust was not a condition precedent to 
Appellant's obligation to deliver the special use permits to Appellee. The court 
also concluded that, because the Forest Service would not consent to an 
assignment in trust, the provision of the contract which required the execution 
of an assignment in trust was invalid and unenforceable and that, therefore, it 
was severable under the contract's severability provision.

[¶7]      The district 
court held a hearing on the issue of damages and ordered Appellant to pay to 
Appellee $8,402.07 for the net loss of profits from float trip operations, 
$1,573.33 for the net loss of retail sales, $13,515.60 for attorney's fees, 
$386.31 for the cost of bringing the suit, and post-judgment interest. This 
appeal followed.

[¶8]      To resolve the 
issues raised, we must apply our well established rules of contract 
interpretation:

The determination of the 
parties' intent is our prime focus in construing or interpreting a contract. "If 
an agreement is in writing and the language is clear and unambiguous, the 
intention is to be secured from the words of the agreement." Nelson v. Nelson, 
740 P.2d 939, 940 (Wyo. 1987). When the language is clear and unambiguous, the 
writing as a whole should be considered, taking into account relationships 
between various parts. Contract construction and interpretation are done by the 
court as a matter of law.

True Oil Company 
v. Sinclair Oil Corporation, 771 P.2d 781, 790 (Wyo. 1989) (citations omitted). 
See also St. Paul Fire and Marine Insurance Co. v. Albany County School District 
No. 1, 763 P.2d 1255 (Wyo. 1988). We also attempt "to give each provision 
meaning in light of the parties' purpose and intent." State v. Moncrief, 720 P.2d 470, 474 (Wyo. 1986).

[¶9]      Appellant 
contends that the Forest Service's consent to an assignment in trust was a 
condition precedent to Appellant's obligation to perform under the terms of the 
contract. Appellant argues that, since the Forest Service refused to consent to 
an assignment in trust, Appellant did not have a duty to transfer the special 
use permits to Appellee. A condition precedent is defined as "`an act or event, 
other than a lapse of time, which must exist or occur before a duty of immediate 
performance of a promise arises.'" Robert W. Anderson Housewrecking and 
Excavating, Inc. v. Board of Trustees, School District No. 25, Fremont County, 
Wyoming, 681 P.2d 1326, 1331 (Wyo. 1984) (quoting Calamari & Perillo, The 
Law of Contracts § 11-3 (1977)).

[¶10]   We agree with Appellant and hold 
the requirement that the parties obtain the Forest Service's consent to an 
assignment in trust was an event which must have occurred before Appellant had 
an obligation to effectuate the transfer of the special use permits. The 
language of the provision dictating that the parties execute an assignment in 
trust and obtain the Forest Service's consent to such a security arrangement is 
clear and mandatory. In addition, the language of the contract's default 
provisions indicates that the parties' intent and purpose was to secure the 
transaction by creating an assignment in trust. The contract also states that, 
upon Appellee's payment of the principal, Appellant shall execute a release of 
an assignment in trust. Reading those provisions together, we conclude that the 
parties intended for the transfer of the permits to be contingent upon the 
Forest Service's consent to an assignment in trust.

[¶11]   Appellee asserts that the district 
court was correct when it determined the contract's severability clause 
nullified the requirement that the contract be secured by an assignment in 
trust. The severability clause provided:

     In the event any one 
or more of the provisions contained in this Agreement or in any other instrument 
referred to herein shall, for any reason, be held to be invalid, illegal, or 
unenforceable, such illegality, invalidity or unenforceability shall not affect 
any other provision of this Agreement.

Appellee's 
position is premised on the district court's determination that the consent 
requirement was invalid and unenforceable. In its written judgment, the district 
court simply stated that the consent requirement was not a condition precedent 
or condition subsequent and that, therefore, "the Assignment in Trust, being 
invalid and unenforceable, is severable from the 
Contract."

[¶12]   The parties intended to create a 
condition precedent which had to be satisfied before the terms of the contract 
became effective. A severability clause cannot operate to effectuate a result 
which is contrary to the intent of the parties. Therefore, we hold the 
severability clause did not nullify the consent 
requirement.

[¶13]   Reversed and remanded to the 
district court with instructions to enter an order directing Appellee to take 
all actions necessary to have the rights to the special use permits transferred 
back to Appellant.

CARDINE, 
J., 
filed a dissenting opinion.

CARDINE, Justice, 
dissenting.

[¶14]   This contract is unambiguous when 
read as a whole. I find it clear from the language of the contract that the 
parties did not intend the Assignment in Trust provision to be a condition 
precedent, but instead a severable provision. I dissent and would uphold the 
decision of the district court.

[¶15]   Conditions precedent are not a 
favorite of the law and will not be read into a contract by implication. Lewis 
v. Roper, 579 P.2d 434, 439 (Wyo. 1978). For that proposition in Lewis, we 
relied upon 17 Am.Jur.2d Contracts § 321 at 752 (1964) which states that "courts 
will not construe stipulations to be [conditions precedent] unless required to 
do so by plain, unambiguous language * * *." No such language exists 
here.

[¶16]   The contract did contain a section 
labeled "Condition Precedent." The Assignment in Trust provision was not 
contained in this section. The contract did not indicate that it would become 
void in the event the Assignment in Trust provision was unenforceable. Cf. 
Cheyenne Dodge, Inc. v. Reynolds and Reynolds Co., 613 P.2d 1234 (Wyo. 1980). 
Instead the contract provided for such possibility. The contract's severability 
provision stated:

"In the event any one or 
more of the provisions contained in this Agreement or in any other instrument 
referred to herein shall, for any reason, be held to be invalid, illegal, or 
unenforceable, such illegality, invalidity or unenforceability shall not affect 
any other provision of this Agreement."

This language is 
clear, unambiguous, and reflects the intention of the parties to perform the 
contract even if later events reveal that a part of the contract may not be 
enforceable.

[¶17]   The district court correctly 
ordered specific performance of the contract, and I would affirm.