Title: Bailey v. Talbert

State: kansas

Issuer: Kansas Supreme Court

Document:

179 Kan. 169 (1956)
294 P.2d 220
MAURICE S. BAILEY and MARION G. BAILEY, Husband and Wife, Appellants,
v.
A.L. TALBERT and THE FIRST NATIONAL BANK OF NEODESHA, a corporation, Appellees.
No. 39,798

Supreme Court of Kansas.
Opinion filed February 29, 1956.
L.J. Bond, of El Dorado, argued the cause, and Robert M. Bond, of El Dorado, and D.H. Forbes, of Neodesha, were with him on the briefs for the appellants.
T.D. Hampson, of Fredonia, argued the cause, and P.W. Stephens, of Neodesha, was with him on the briefs for the appellee.
The opinion of the court was delivered by
ROBB, J.:
This was an appeal from a judgment of the trial court in favor of defendants. Plaintiffs brought the original action for cancellation of a contract of purchase. The trial court allowed reformation of the contract and entered judgment in favor of defendants for specific performance of the reformed contract by plaintiffs.
The First National Bank of Neodesha, one of the defendants, was only the escrow holder. Plaintiffs agree there was no issue between the bank and any of the parties and for clarity in this opinion we will hereafter refer to A.L. Talbert, the other defendant, as the appellee, and to the Baileys as the appellants.
Appellants and appellee were long time residents of Neodesha; appellants were a young couple who had had an oil and gas station after Maurice Bailey's graduation from college; since 1939 appellee, who was an elderly man, had operated a bottling plant in Neodesha during which time he had had the Pepsi Cola franchise in the district around Neodesha; for a number of years appellants had shown an interest in appellee's bottling plant, and in 1951 they entered into a preliminary contract with appellee dated June 20, 1951, to purchase appellee's plant for the price of $100,000; the provisions of this contract need not be set out in full, but it is necessary to include the following:
A second provision necessary to a full understanding of the agreement is as follows:
Other pertinent provisions of the contract are:
A memorandum was signed by the parties which amended the agreement as follows:
It was evident from the record that the contract of June 20, 1951 was a preliminary agreement and was to be supplemented by a later contract. The record reflects many facts and circumstances which transpired between June 20, 1951, the time of the execution of the first agreement, and June 30, 1951, the time of the execution of the second agreement, but no purpose will be served by setting them out here. It was mutually admitted and testified to by all parties that the plant was of no value without the Pepsi Cola franchise covering the counties of the district around Neodesha. The second and final agreement contained much of the same language as the preliminary agreement. The purchase price was again set at $100,000. The following parts of the second agreement are of particular concern here:
At all times pertinent to the execution of the entire transaction both parties had present and were represented by counsel.
Many additional facts and incidents which took place after the execution of the final agreement were shown by the record, but the one of primary and controlling interest was that the Pepsi Cola franchise was never transferred to appellants and it finally became apparent that it never would be. On or about June 30, 1952, appellants closed the plant and filed suit to cancel and rescind the contracts and for other relief.
This action proceeded to trial and an abundance of evidence and testimony was introduced. Appellee demurred to appellants' evidence, which demurrer was argued to the trial court and overruled. It is not necessary for disposition of this appeal to set out all the pleadings, all the evidence, and the stipulations of counsel. The same is true of the findings of fact except for the following:
"6.
"7.
"8.
*173 "9.
Only the first conclusion of law is pertinent:
The necessary part of the trial court's journal entry of judgment touching on the proposition here under consideration was:
There were eight specifications of error, but we are concerned with only the one to the effect that the court erred in its findings of fact and conclusions of law.
It is suffice to say the record was completely silent as to any evidence showing mistake, lack of understanding or knowledge on the part of the appellee as to the provisions of the contracts in case there was failure on the part of appellee to effect a transfer of his Pepsi Cola franchise to appellants. The other findings of fact of the trial court summarily showed all conditions, circumstances and requirements surrounding that provision of the contracts were well known to all parties, the parties were well represented by counsel, and the contracts were entered into.
The findings of fact set out herein were based on facts and circumstances which were learned and which took place between the contract of June 20, 1951, and the contract of June 30, 1951. It is well to note that the memorandum appended to the contract of June 20, 1951, was in substance incorporated into the contract of June 30, 1951, so it cannot be said that the parties intended to leave it out. An additional indication of this intention was shown *174 when the amount of $10,000 cash in escrow in the contract of June 20, 1951, was changed to the amount of $25,000 cash to be placed in escrow according to the contract of June 30, 1951. The trial court reformed the contract of June 30, 1951, in keeping with the facts and circumstances developed in the interim between the two contracts.
In Lawrence v. Cooper Independent Theatres, 177 Kan. 125, 276 P.2d 350, in discussing the interpretation of a lease contract, this court stated that oral testimony concerning circumstances existing at the time of the execution of the lease was admissible only if the lease, when considered in its entirety, was ambiguous on its face; that the test of uncertainty or ambiguity repeatedly has been stated as follows:
In the Lawrence case it was further said:
In Maltby v. Sumner, 169 Kan. 417, 219 P.2d 395, which involved an agreement to compromise and settle all differences between the parties, it was said:
..............
Appellee was successful in getting the trial court to reform the written contracts here involved and that is also what he is trying to have this court do on appeal. In accomplishing this result the trial court varied the terms of the contracts concerning the transfer of the franchise in accordance with the oral evidence and testimony having to do with the requirements of the Pepsi Cola Company after appellee had surrendered his franchise to it and before appellants could be issued a new franchise.
In In re Estate of Koellen, 162 Kan. 395, 176 P.2d 544, the question involved an instrument which might be capable of dual interpretation and in holding it was an agreement and not a testamentary document the trial court considered oral testimony and evidence of surrounding facts and circumstances which it thought necessary to arrive at the intent of the parties. On appeal it was held this can be done only when the instrument is ambiguous on its face. The rule was there stated:
The trial court in the instant case did not actually find nor does the record affirmatively show that the contract of June 30, 1951, was ambiguous or unambiguous, but it may be inferred that the court could have been of the opinion the contract was ambiguous. Let us assume, but not decide, that the trial court did actually rule the contract ambiguous. We have the same duty the trial court had to decide whether the contract was ambiguous on its face.
*176 In Klema v. Soukup, 175 Kan. 775, 267 P.2d 501, it was said:
In Shannep v. Strong, 160 Kan. 206, 211, 160 P.2d 683, which was a will case, the elementary rule was stated that courts are required to effectuate not their own desires or notions of what the testator wisely should have done, but to give full force and effect to the testator's actual intent in the disposition of his own property. The same rule applies to the case at bar.
The above rule was stated in a little different way in State Highway Construction Contract Cases, 161 Kan. 7, 65, 166 P.2d 728, where war had impaired contractors from performance of contracts to build roads. In a quotation from 137 A.L.R. 1217, it was there said:
The above case stated a rule laid down by two authorities (Restatement of Contracts, § 455, comment 1; Williston on Contracts [Rev. ed.], pp. 5411-12) and then concluded:
We observe from the foregoing that it is not the function of courts to make contracts; their function is to enforce them as made. (See, also, the later case of Brungardt v. Smith, 178 Kan. 629, 290 P.2d 1039.)
In view of the full treatment of this subject by our own court in *177 previous opinions, it will serve no good purpose to discuss general authorities which have been cited by counsel. The case was well and capably tried by counsel, and the record was expertly presented to this court. All questions presented have not been treated for the reason that in determining the correctness of the trial court's order reforming the contract we have determined the appeal.
We conclude the trial court erred in reforming the contract so far as the agreement on the part of appellee to secure the transfer of the Pepsi Cola franchise from himself to appellants was concerned by substituting therefor a contract of the court which in effect relieved appellee of performance. As a result the trial and judgment did not determine the rights and duties of the parties under the terms of their plain and unambiguous contract but determined those rights under a contract made for them by the court. The appellants did not receive a fair trial.
The judgment of the trial court is reversed and a new trial is ordered.
HARVEY, C.J., and WERTZ, J., not participating.