Title: Town Bank v. City Real Estate Development, LLC

State: wisconsin

Issuer: Wisconsin Supreme Court

Document:

2010 WI 134 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2008AP1845 
COMPLETE TITLE: 
 
Town Bank, a Wisconsin Banking Corporation, 
          Plaintiff-Appellant, 
     v. 
City Real Estate Development, LLC, 
          Defendant-Respondent-Petitioner. 
 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
2009 WI App 160 
Reported at: 322 Wis. 2d 206, 777 N.W.2d 98 
(Ct. App. 2009-Published) 
 
 
OPINION FILED: 
December 14, 2010   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
September 7, 2010 
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Waukesha   
 
JUDGE: 
Paul F. Reilly 
 
 
 
JUSTICES: 
 
 
CONCURRED: 
        
 
DISSENTED: 
BRADLEY, J. and ABRAHAMSON, C.J. dissent 
(opinion filed).   
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
For the defendant-respondent-petitioner there were briefs 
by Thad W. Jelinske, Michael J. Anderson and Mawicke & Goisman, 
S.C., Milwaukee, and oral argument by Thad W. Jelinske. 
 
For the plaintiff-appellant there was a brief by Paul R. 
Erickson, Kari H. Race and Gutglass, Erickson, Bonville & 
Larson, S.C., Milwaukee, and oral argument by Paul R. Erickson. 
 
An amicus curiae brief was filed by John E. Knight, James 
E. Bartzen, Kirsten E. Spira and Boardman, Suhr, Curry & Field 
LLP for the Wisconsin Bankers Association.
 
 
2010 WI 134
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.   2008AP1845 
(L.C. No. 
2006CV61) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Town Bank, a Wisconsin Banking Corporation, 
 
          Plaintiff-Appellant, 
 
     v. 
 
City Real Estate Development, LLC, 
 
          Defendant-Respondent-Petitioner. 
 
FILED 
 
DEC 14, 2010 
 
A. John Voelker 
Acting Clerk of Supreme 
Court 
 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed.   
 
¶1 
ANNETTE KINGSLAND ZIEGLER, J.   This is a review of a 
published decision of the court of appeals, Town Bank v. City 
Real Estate Development, LLC, 2009 WI App 160, 322 Wis. 2d 206, 
777 N.W.2d 98, which reversed the orders of the Waukesha County 
Circuit Court, Judge Paul F. Reilly presiding, denying Town 
Bank's two motions for summary judgment.   
¶2 
Town Bank and City Real Estate Development, LLC (City 
Real Estate) entered into a Term Credit Agreement (the TCA), 
through which Town Bank loaned $2,500,000 to City Real Estate 
for the purpose of acquiring an office building in downtown 
Milwaukee.  Town Bank seeks a declaratory judgment that it fully 
No. 
2008AP1845   
 
2 
 
complied with the TCA and is not obligated to provide additional 
financing to City Real Estate under the terms of a previously-
issued commitment letter (the commitment letter).   
¶3 
Town Bank twice moved for summary judgment, which the 
circuit court denied.  Because those motions were denied, the 
case proceeded to a jury trial.  The jury returned a verdict in 
favor of City Real Estate.  Town Bank appealed, and the court of 
appeals reversed. 
¶4 
On appeal to this court, City Real Estate argues that 
the TCA is ambiguous, and as such, the circuit court properly 
denied summary judgment and directed the case to trial.  
According to City Real Estate, it is not clear whether the 
parties intended the TCA to be the final expression of only the 
first of two financing phases, or whether the parties intended 
the TCA to be the final expression of the parties' financing 
agreement altogether.  As evidence of the former, City Real 
Estate points to the commitment letter and various credit 
memoranda prepared by Town Bank, all of which reference a two-
phase financing arrangement.   
¶5 
We conclude that the TCA is an unambiguous, fully 
integrated agreement with which Town Bank fully complied.  
Accordingly, 
Town 
Bank 
should 
have 
been 
granted 
summary 
judgment, and the case should not have proceeded to a jury 
trial.  We agree with Town Bank that the TCA contains an 
unambiguous merger clause which precluded City Real Estate from 
introducing any evidence of prior understandings or agreements 
that may have existed between the parties, including the 
No. 
2008AP1845   
 
3 
 
commitment letter.  Even assuming, without deciding, that the 
commitment 
letter 
constitutes 
a 
separate 
and 
enforceable 
contract for financing, we conclude that Town Bank was within 
its rights to terminate the agreement.  It is undisputed that 
City Real Estate did not fulfill at least two of the conditions 
set forth in the commitment letter.  We therefore affirm the 
decision of the court of appeals. 
I. FACTUAL BACKGROUND 
¶6 
In March 2004 the managing member of City Real Estate, 
David Leszczynski (Leszczynski), approached Town Bank to secure 
financing for City Real Estate's proposed acquisition and 
renovation of a 22-story office building in downtown Milwaukee 
known as the Wisconsin Tower.  City Real Estate's development 
plan consisted of acquiring the building, demolishing and 
refurbishing its interior, and converting the space into 65 
residential condominium units. 
¶7 
On April 1, 2004, Town Bank's Vice President of 
Business Banking, Christopher Zirbes (Zirbes), prepared a loan 
write-up and recommended approval of a $9,000,000 loan to City 
Real Estate for the purpose of "purchas[ing] and construct[ing] 
retail space and condominiums in the Wisconsin Tower in downtown 
Milwaukee." 
 
The 
write-up 
indicated 
an 
initial 
draw 
of 
$2,500,000 to be put towards the building's purchase price.  In 
addition, the write-up contemplated that the "[p]rimary source 
of repayment will come from [the] sale of condominium units." 
¶8 
On May 27, 2004, Town Bank sent Leszczynski a letter 
(the commitment letter), which stated that Town Bank "is pleased 
No. 
2008AP1845   
 
4 
 
to provide [City Real Estate] with a financing commitment for a 
$9,000,000 Construction Line."1  Relevant for our purposes, the 
commitment 
letter 
outlined 
several 
terms 
and 
conditions, 
including 
a 
credit 
facility 
that 
divided 
the 
$9,000,000 
construction line into two phases: "A) $2,500,000 initial 
funding 
for 
acquisition 
of 
building 
and 
completion 
of 
demolition, engineering, asbestos removal and marketing," and 
"B) $6,500,000 additional funding for the construction of 
condominium units as pre-sales dictate."  The latter provision 
further noted that "[b]ank financing will be based on 75% of the 
pre-sold units."  As collateral for Town Bank's commitment to 
City Real Estate, Town Bank was to receive, inter alia, a "1st 
R/E mortgage on [the] Subject Property." 
¶9 
In addition, the commitment letter provided that the 
"[c]losing of [the] loan is contingent upon but not limited to" 
four conditions: 
A. Subject to satisfactory review of appraisal, title 
commitment, 
Environmental 
report, 
construction 
plans, and final review of loan documents by the 
Bank's legal counsel. 
B. Borrower agrees to contribute $900,000 in up front 
equity capital prior to closing. 
C. Borrower agrees to pay closing costs, including 
title, filing and documentation. 
D. Borrower and guarantors agree to provide annual 
personal financial statements and tax returns. 
                                                 
1 The May 27, 2004, commitment letter expressly superseded 
an earlier letter dated April 13, 2004. 
No. 
2008AP1845   
 
5 
 
¶10 Finally, the commitment letter contained the following 
clause: "In order to be effective in any regard, this letter 
must be properly executed and returned to the Bank by June 11, 
2004.  This commitment may be terminated at the sole option of 
Town Bank if the credit agreement is not executed by June 25, 
2004." 
¶11 While City Real Estate timely executed and returned 
the commitment letter, it is undisputed that a credit agreement 
between Town Bank and City Real Estate was not executed by June 
25, 2004.  However, on July 15, 2004, the parties entered into 
the TCA, and Town Bank loaned $2,500,000 to City Real Estate.  
The TCA incorporated by reference a Business Note (the Business 
Note), also dated July 15, 2004, in which City Real Estate 
promised to pay to Town Bank the sum of $2,500,000 plus interest 
by August 15, 2004.   
¶12 According to Zirbes and Jay Mack (Mack), Town Bank's 
President and Chief Executive Officer, the TCA was intended to 
fund City Real Estate's purchase of the Wisconsin Tower.  
Earlier that month, Leszczynski had represented to Town Bank 
that City Real Estate's option to buy the building was about to 
expire and that Ruth's Chris Steak House, a major commercial 
tenant with whom City Real Estate had been negotiating, refused 
to sign a letter of intent until City Real Estate owned the 
building.2 
                                                 
2 On July 14, 2004, Zirbes prepared an internal memorandum 
for Town Bank's credit file.  The memorandum stated, in relevant 
part:  
No. 
2008AP1845   
 
6 
 
¶13 The TCA is a standard form lending document sold to 
lenders by the Wisconsin Bankers Association.  The first section 
of the TCA is entitled "Term Loan" and provides that the parties 
must "[c]heck" the box of one of two options: "(a) Single Note; 
Multiple Advances," or "(b) Multiple Notes; Multiple Advances."  
In this case, the second box was checked.  By checking the 
second box, the parties gave effect to the following provision:  
If checked here, and in consideration of extensions of 
credit from Lender to Customer from time to time, 
Lender and Customer agree that sections 4 through 19 
of this Agreement shall apply to each such extension 
of credit unless evidenced by a document which states 
it is not subject to this Agreement.  The term "Loan" 
includes all such extensions of credit.  The term 
"Note" 
includes 
each 
promissory 
note 
evidencing 
Customer's obligation to repay an extension of Credit.  
This Agreement does not constitute a commitment by 
Lender to make such extensions of credit to Customer. 
¶14 Relevant to this case, section 14 of the TCA bears the 
heading "Entire Agreement" and provides:  
This Agreement, including the Exhibits attached or 
referring to it, the Note and the Security Documents, 
are intended by Customer and Lender as a final 
expression of their agreement and as a complete and 
exclusive statement of its terms, there being no 
conditions 
to 
the 
full 
effectiveness 
of 
their 
agreement except as set forth in this Agreement, the 
Note and the Security Documents.   
                                                                                                                                                             
Because of timing issues with Ruth's Chris and 
the fact that they will not sign a letter of intent to 
take 
the 
space 
until 
[Leszczynski] 
owns 
the 
building[,] Town Bank will be closing the loan to the 
[City Real Estate] LLC in two phases.  The first phase 
is closing on July 15th for $2,500,000 for the 
purchase of the building.  The loan will be a 60 day 
note funding into the $9,000,000 construction loan 
that was approved in April of this year. 
No. 
2008AP1845   
 
7 
 
Three exhibits were attached to the TCA.  Exhibit A is 
substantively blank and states that it is "Not Applicable."  
Exhibit B provides a list of "Security Documents," including a 
Chattel Security Agreement, a Mortgage on the building, and an 
Assignment of Leases and Rents on the building.  Exhibit C lists 
several "Additional Covenants," none of which are material to 
this case. 
¶15 It is undisputed that the TCA does not expressly 
mention the commitment letter. 
¶16 On July 16, 2004, City Real Estate closed on the 
purchase of the Wisconsin Tower for $2,500,000.  Thereafter, 
Town Bank continued to monitor City Real Estate's progress on 
the building.  On August 26, 2004, Zirbes prepared an internal 
memorandum for Town Bank's credit file, in which he recognized 
that "[t]he marketing of the building has started off slower 
than originally anticipated."  Zirbes further noted:  
Last month we decided to close this loan in two 
phases allowing [City Real Estate] to purchase the 
building and begin negotiations with Ruth's Chris, 
with the understanding that phase II (the construction 
loan) would begin when they sta[r]ted to get some pre-
sold condo units.  Because of the fact that they are 
behind schedule with their marketing, we are looking 
to extend the interest only period on the building for 
an additional 3 month period to allow for some pre-
solds. 
In a loan write-up dated October 14, 2004, Zirbes recommended a 
three-month extension on the interest period of the $2,500,000 
loan "before starting the construction phase of the loan." 
No. 
2008AP1845   
 
8 
 
¶17 On October 19, 2004, a meeting was held between 
Leszczynski, Zirbes, Mack, and loan officer Terry O'Connor to 
discuss the progress of the Wisconsin Tower.  At that time, 
according to Zirbes, Town Bank learned that Ruth's Chris Steak 
House was no longer a prospective tenant and that City Real 
Estate had no condominium pre-sales.  Furthermore, City Real 
Estate had not infused its $900,000 in equity into the project, 
as required by the commitment letter.  According to Zirbes, Town 
Bank then informed Leszczynski that any construction financing 
would have to be reapproved. 
¶18 On November 19, 2004, Zirbes memorialized the meeting 
in a letter to Leszczynski:  
As we discussed at our meeting on Tuesday, 
October 19, 2004, Town Bank's April 13 commitment to 
provide construction financing to City Real Estate 
Development LLC is no longer effective and in order 
for the Bank to finance the construction of your 
condominium project, the loan must be re-approved by 
the Bank's loan committee.   
As Zirbes noted, by that time, the loan committee had changed as 
a result of WinTrust Financial's October 2004 purchase of Town 
Bank. 
¶19 On December 28, 2004, Zirbes sent another letter to 
Leszczynski, reiterating that "the loan commitment dated April 
13 is no longer effective" and that a construction loan would 
require the loan committee's approval.  Zirbes explained, 
however, that the loan committee had reservations about City 
Real Estate's project:  
No. 
2008AP1845   
 
9 
 
Since the Bank originally approved the loan to 
City Real Estate Development LLC, you requested the 
Bank to change the loan structure in order to 
accommodate your need to close on the purchase of the 
property.  The Bank agreed to make the acquisition 
loan with the understanding that a lease from Ruth's 
Chris would be signed and condominium units would be 
sold prior to entering into a construction loan.  
Instead, your prospects for obtaining Ruth's Chris as 
a tenant have faded and you have not obtained enough 
unit presales to fund construction without additional 
equity. 
While Town Bank agreed to extend City Real Estate's $2,500,000 
loan to February 15, 2005, Zirbes advised Leszczynski that a 
construction loan would not be approved based upon the current 
circumstances and that Leszczynski "should seek construction 
lending from other lenders." 
¶20 In 
September 
2005, 
City 
Real 
Estate 
secured 
alternative construction financing through M&I Bank and Horicon 
State Bank, and upon closing those loan transactions, repaid 
Town Bank in full for the $2,500,000 loan. 
II. PROCEDURAL POSTURE 
¶21 On January 6, 2006, Town Bank filed a complaint 
against City Real Estate, seeking a declaratory judgment that 
City Real Estate failed to satisfy its obligations under the 
commitment letter and that Town Bank was not obligated to 
provide additional financing. 
¶22 In its answer, City Real Estate affirmatively alleged 
that it satisfied all contingencies set forth in the commitment 
letter and requested that the court dismiss Town Bank's 
complaint.  In addition, City Real Estate counterclaimed for 
damages arising out of Town Bank's alleged breach of the 
No. 
2008AP1845   
 
10 
 
commitment letter for failing to advance to City Real Estate the 
$6,500,000 of additional financing. 
¶23 On October 16, 2006, Town Bank filed its first of two 
motions for summary judgment.  Town Bank argued that its 
obligations to City Real Estate were governed entirely by the 
TCA and that Town Bank fulfilled those obligations when it 
funded $2,500,000 to City Real Estate on July 15, 2004.  Town 
Bank contended that the TCA contained an unambiguous merger 
clause which prevented City Real Estate from introducing any 
evidence of prior understandings or agreements that may have 
existed between the parties, including the commitment letter. 
¶24 The circuit court denied Town Bank's first motion for 
summary judgment in an order dated January 24, 2007.  The 
circuit court determined that the case was not ripe for summary 
judgment, namely on the grounds that the TCA was ambiguous. 
¶25 On October 19, 2007, Town Bank filed its second motion 
for summary judgment, again arguing that the TCA was an 
unambiguous stand-alone agreement with which Town Bank fully 
complied.  In the alternative, assuming that the commitment 
letter was enforceable, Town Bank argued that City Real Estate 
failed 
to 
satisfy 
several 
of 
its 
underlying 
conditions, 
including the requirement that a credit agreement be executed by 
June 25, 2004, and the obligation to contribute $900,000 in up-
front equity.   
¶26 On January 3, 2008, the circuit court denied Town 
Bank's second motion for summary judgment and set the case for a 
jury trial.  The circuit court determined that genuine issues of 
No. 
2008AP1845   
 
11 
 
material fact precluded summary judgment, including whether the 
TCA was a stand-alone agreement and if not, whether City Real 
Estate breached the commitment letter. 
¶27 Because the circuit court denied Town Bank's motions 
for summary judgment, the case proceeded to a six-day jury 
trial.  On May 6, 2008, the jury returned a verdict in favor of 
City Real Estate.  The special verdict form consisted of three 
questions.  First, the jury was asked if Town Bank and City Real 
Estate entered into a contract as set forth in the commitment 
letter.  The jury answered, "Yes."  Second, the jury was asked 
if Town Bank breached that contract.  The jury answered, "Yes."  
Third, the jury was asked to determine the sum of money that 
would fairly and reasonably compensate City Real Estate for its 
damages.  The jury awarded $600,000 to City Real Estate. 
¶28 On June 26, 2008, the circuit court entered judgment 
on the jury verdict and ordered Town Bank to pay $600,000, plus 
fees and costs, to City Real Estate.  
¶29 Town Bank appealed.  The court of appeals reversed and 
remanded, instructing the circuit court to enter judgment for 
Town Bank.  Town Bank, 322 Wis. 2d 206.  The court of appeals 
held that the TCA was unambiguous and constituted the only 
agreement under which Town Bank had loan obligations to City 
Real Estate.  Id., ¶2.  First, the court of appeals concluded 
that 
the 
TCA's 
integration 
clause, 
which 
neither 
party 
challenged as ambiguous, barred the introduction into evidence 
of any prior agreement to vary the terms of the TCA.  Id., ¶¶11-
12.  Next, the court of appeals turned to the commitment letter 
No. 
2008AP1845   
 
12 
 
and concluded that Town Bank had no additional loan obligations 
thereunder because City Real Estate failed to meet its terms and 
conditions.  Id., ¶¶14-17.  In particular, the court of appeals 
found no evidence that Town Bank received a mortgage on the 
Wisconsin Tower as collateral, no evidence that a credit 
agreement was executed by June 25, 2004, id., ¶15, and finally, 
no evidence that City Real Estate contributed $900,000 in up-
front equity, id., ¶16.  As such, the court of appeals deemed 
the commitment letter repudiated and held that the circuit court 
erred in denying Town Bank's motion for summary judgment.  Id., 
¶18. 
¶30 City Real Estate petitioned this court for review, 
which we granted on March 9, 2010.  We now affirm. 
III. STANDARD OF REVIEW 
¶31 Our review of this case implicates several standards 
of review.  As a general matter, we are reviewing the circuit 
court's denial of Town Bank's two motions for summary judgment.  
Whether the circuit court properly denied summary judgment is a 
question of law that we review de novo, applying the well-
recognized standards used by the circuit court and set forth in 
Wis. Stat. § 802.08 (2007-08).  Tatera v. FMC Corp., 2010 WI 90, 
¶15, __ Wis. 2d __, 786 N.W.2d 810; Racine Cnty. v. Oracular 
Milwaukee, 
Inc., 
2010 
WI 
25, 
¶24, 
323 
Wis. 2d 682, 
781 
N.W.2d 88.  While summary judgment is considered a drastic 
remedy which should not be granted when material facts are in 
dispute, this court has recognized that "without doubt a trial 
court can and should grant a motion for summary judgment in 
No. 
2008AP1845   
 
13 
 
those instances where the controlling material facts are not in 
dispute and the application of the law to those facts is not 
doubtful."  Matthew v. Am. Family Mut. Ins. Co., 54 Wis. 2d 336, 
339, 195 N.W.2d 611 (1972). 
¶32 In this case, we are called upon to interpret the TCA.  
The interpretation of an unambiguous contract presents a 
question of law for this court's independent review.  Admanco, 
Inc. v. 700 Stanton Drive, LLC, 2010 WI 76, ¶15, 326 
Wis. 2d 586, 786 N.W.2d 759.  Conversely, when a contract is 
ambiguous and consequently is properly construed by use of 
extrinsic evidence, the contract's interpretation presents a 
question of fact for the jury.  Mgmt. Computer Servs., Inc. v. 
Hawkins, Ash, Baptie & Co., 206 Wis. 2d 158, 177, 557 N.W.2d 67 
(1996). 
IV. ANALYSIS 
¶33 This court has long recognized the importance of 
protecting parties' freedom to contract.  See, e.g., Solowicz v. 
Forward 
Geneva 
Nat'l, 
LLC, 
2010 
WI 
20, 
¶¶34, 
41, 
323 
Wis. 2d 556, 780 N.W.2d 111; Whirlpool Corp. v. Ziebert, 197 
Wis. 2d 144, 148, 539 N.W.2d 883 (1995); Watts v. Watts, 137 
Wis. 2d 506, 521, 405 N.W.2d 303 (1987); Kuhl Motor Co. v. Ford 
Motor Co., 270 Wis. 488, 493, 71 N.W.2d 420 (1955).  When 
construing contracts that were freely entered into, our goal is 
"is to ascertain the true intentions of the parties as expressed 
by the contractual language."  State ex rel. Journal/Sentinel, 
Inc. v. Pleva, 155 Wis. 2d 704, 711, 456 N.W.2d 359 (1990); see 
also Solowicz, 323 Wis. 2d 556, ¶34.  Stated another way, the 
No. 
2008AP1845   
 
14 
 
best indication of the parties' intent is the language of the 
contract itself, Levy v. Levy, 130 Wis. 2d 523, 535, 388 
N.W.2d 170 (1986), for that is the language the parties "saw fit 
to use," Journal/Sentinel, 155 Wis. 2d at 711.  We construe the 
contract language according to its plain or ordinary meaning.  
Huml 
v. 
Vlazny, 2006 WI 87, ¶52, 293 Wis. 2d 169, 716 
N.W.2d 807.  "If the contract is unambiguous, our attempt to 
determine the parties' intent ends with the four corners of the 
contract, without consideration of extrinsic evidence."  Id.  
Only when the contract is ambiguous, meaning it is susceptible 
to more than one reasonable interpretation, may the court look 
beyond the face of the contract and consider extrinsic evidence 
to resolve the parties' intent.  Capital Invs., Inc. v. 
Whitehall Packing Co., 91 Wis. 2d 178, 190, 280 N.W.2d 254 
(1979). 
¶34 In this case, City Real Estate argues that the TCA is 
ambiguous, and as such, the circuit court properly denied 
summary judgment and directed the case to trial.  In particular, 
according to City Real Estate, it is not clear whether the 
parties intended the TCA to be the final expression of only the 
$2,500,000 acquisition financing with which the TCA dealt (and 
the first of two financing phases), or whether the parties 
intended the TCA to be the final expression of the parties' 
financing agreement altogether.  As evidence of the former, City 
Real Estate points to the commitment letter and various credit 
memoranda prepared by Town Bank, all of which reference a two-
phase financing arrangement.   
No. 
2008AP1845   
 
15 
 
¶35 In response, Town Bank argues that the TCA is an 
unambiguous stand-alone agreement with which it fully complied 
when it funded $2,500,000 to City Real Estate.  Town Bank relies 
on section 14 of the TCA, contending that it constitutes an 
unambiguous merger clause which should have precluded City Real 
Estate from introducing evidence of any prior understandings or 
agreements that may have existed between the parties, including 
the commitment letter. 
¶36 The parties' arguments implicate the parol evidence 
rule.  Despite its name, the parol evidence rule is not a rule 
of evidence; it is a rule of substantive contract law.  
Dairyland Equip. Leasing, Inc. v. Bohen, 94 Wis. 2d 600, 607, 
288 N.W.2d 852 (1980); Fed. Deposit Ins. Corp. v. First Mortg. 
Investors, 76 Wis. 2d 151, 156, 250 N.W.2d 362 (1977); Conrad 
Milwaukee 
Corp. 
v. 
Wasilewski, 
30 
Wis. 2d 481, 
488, 
141 
N.W.2d 240 (1966); 6 Arthur Linton Corbin, Corbin on Contracts 
§ 573, at 72-73 (interim ed. 2002).  This court has stated the 
parol evidence rule as follows:  
When the parties to a contract embody their 
agreement in writing and intend the writing to be the 
final expression of their agreement, the terms of the 
writing may not be varied or contradicted by evidence 
of any prior written or oral agreement in the absence 
of fraud, duress, or mutual mistake.   
Dairyland Equip. Leasing, 94 Wis. 2d at 607 (quoting Fed. 
Deposit Ins. Corp., 76 Wis. 2d at 156).  Despite the rule's 
complexity and criticisms, see, e.g., Fed. Deposit Ins. Corp., 
76 Wis. 2d at 156, its purpose remains sound: to promote the 
integrity, reliability, and predictability of written contracts 
No. 
2008AP1845   
 
16 
 
and to reduce the threat of juries being misled or confused by 
statements or negotiations that may have taken place before a 
contract was entered into.   
¶37 As our definition makes apparent, "[t]he real question 
when a party invokes the parol evidence rule" is whether the 
parties intended the written contract to be the final and 
complete expression of their agreement.  Id. at 157.  A contract 
that represents the final and complete expression of the 
parties' agreement is considered fully "integrated."  If the 
contract is integrated, absent the existence of fraud, duress, 
or mutual mistake, the court construing the contract may not 
consider evidence of any prior or contemporaneous oral or 
written agreement between the parties.3  If the contract is not 
integrated, then the parol evidence rule is inapplicable. 
¶38 Relevant to this case, the parol evidence rule does 
not preclude the court from considering evidence of any prior or 
contemporaneous understandings or agreements between the parties 
for the purpose of determining whether the parties intended the 
contract to be integrated.  Our courts often refer to this rule 
                                                 
3 We recognize a limited exception to the parol evidence 
rule for contemporaneous or prior agreements that supplement, 
but do not conflict with, the contract.  See Dairyland Equip. 
Leasing, Inc. v. Bohen, 94 Wis. 2d 600, 607-08, 288 N.W.2d 852 
(1980).  In such cases, the contract is considered "partially 
integrated."  Id. at 607.  If the contract is shown to be only a 
partial integration of the parties' overall agreement, the court 
may properly consider parol evidence to establish the parties' 
full agreement, so long as the parol evidence does not conflict 
with the part of the contract that has been integrated.  Id. at 
607-08. 
No. 
2008AP1845   
 
17 
 
by stating that "'[p]arol evidence is always admissible with 
respect to the issue of integration.'"  See, e.g., Dairyland 
Equip. Leasing, 94 Wis. 2d at 608 (quoting Fed. Deposit Ins. 
Corp., 76 Wis. 2d at 158).  However, to be precise, such 
evidence is not "parol evidence" at all.4  Rather, we are merely 
invoking an already recognized and well-defined rule of contract 
law: when a contract is ambiguous, a court may consider 
extrinsic evidence to resolve the parties' intent.  See Stevens 
Constr. Corp. v. Carolina Corp., 63 Wis. 2d 342, 354, 217 
N.W.2d 291 (1974) ("While 'parol evidence'——the circumstances 
surrounding the execution of the contract and the practical 
construction of the parties——may not be introduced to vary the 
terms of a written contract, it may be introduced to explain 
ambiguous terms of the written instrument."); Chmill v. Friendly 
Ford-Mercury of Janesville, Inc., 154 Wis. 2d 407, 416, 453 
                                                 
4 See 6 Arthur Linton Corbin, Corbin on Contracts § 573, at 
73-75 (interim ed. 2002): 
The use of such a name for this [parol evidence] rule 
has 
had 
unfortunate 
consequences, 
principally 
by 
distracting the attention from the real issues that 
are involved.  These issues may be any one or more of 
the following: (1) Have the parties made a contract? 
(2) Is that contract void or voidable because of 
illegality, fraud, mistake, or any other reason? (3) 
Did the parties assent to a particular writing as the 
complete and accurate 'integration' of that contract?  
In determining these issues, or any one of them, 
there is no 'parol evidence rule' to be applied.  On 
these issues, no relevant evidence, whether parol or 
otherwise, is excluded. 
(Footnotes omitted.) 
No. 
2008AP1845   
 
18 
 
N.W.2d 197 (Ct. App. 1990) ("A court may look to extrinsic 
evidence to determine whether a document was intended to 
incorporate the entire understanding between the parties to 
it . . . .").  If and once it is determined that the parties 
intended the contract to be integrated, only then does the parol 
evidence rule go into effect.  See Dairyland Equip. Leasing, 94 
Wis. 2d at 607 ("'[E]ven if, without objection, parol evidence 
of the intention of the parties to a written contract, which 
conflicts with the express provisions of such contract, gets 
into the record, the court must disregard it." (quoting Morn v. 
Schalk, 14 Wis. 2d 307, 315, 111 N.W.2d 80 (1961))). 
¶39 However, as Town Bank accurately points out, when the 
contract contains an unambiguous merger or integration clause, 
the court is barred from considering evidence of any prior or 
contemporaneous 
understandings 
or 
agreements 
between 
the 
parties, even as to the issue of integration.  See Dairyland 
Equip. Leasing, 94 Wis. 2d at 608; Matthew, 54 Wis. 2d at 341-
42.  Again, this principle stems from basic contract law: if the 
contract is unambiguous, the court's attempt to determine the 
parties' intent ends with the language of the contract, without 
resort to extrinsic evidence.  See Huml, 293 Wis. 2d 169, ¶52.  
In Dairyland Equipment Leasing, this court defined a merger 
clause as a "written provision which expressly negatives 
collateral or antecedent understandings."  94 Wis. 2d at 608.  
Thus, by definition, an unambiguous merger or integration clause 
demonstrates that the parties intended the contract to be a 
final and complete expression of their agreement.  See id.; 
No. 
2008AP1845   
 
19 
 
Matthew, 54 Wis. 2d at 341-42.  The contract is therefore fully 
integrated, and the parol evidence rule goes into effect. 
¶40 We now turn to the facts of this case.  We conclude 
that the TCA is an unambiguous, fully integrated agreement with 
which Town Bank fully complied.  Accordingly, Town Bank should 
have been granted summary judgment, and the case should not have 
proceeded to a jury trial. 
¶41 We agree with Town Bank that section 14 of the TCA 
constitutes an unambiguous merger clause which should have 
precluded City Real Estate from introducing any evidence of 
prior understandings or agreements that may have existed between 
the parties, including the commitment letter. 
¶42 Section 14 provides:  
This Agreement, including the Exhibits attached or 
referring to it, the Note and the Security Documents, 
are intended by Customer and Lender as a final 
expression of their agreement and as a complete and 
exclusive statement of its terms, there being no 
conditions 
to 
the 
full 
effectiveness 
of 
their 
agreement except as set forth in this Agreement, the 
Note and the Security Documents. 
¶43 We conclude that section 14 unambiguously demonstrates 
the parties' intent to exclude additional understandings or 
agreements not contained in the TCA.  See Dairyland Equip. 
Leasing, 94 Wis. 2d at 608.  Section 14 "expressly negatives 
collateral 
or 
antecedent 
understandings," 
see 
id., 
by 
delineating an exhaustive list of the documents that are 
included in the parties' agreement: "This Agreement" (meaning 
the TCA), "the Exhibits" to the TCA, "the Note," and "the 
No. 
2008AP1845   
 
20 
 
Security Documents."  Pursuant to the plain language of section 
14, Town Bank and City Real Estate intended that list of 
documents to comprise the "final expression of their agreement" 
and the "complete and exclusive statement of its terms."  Hence, 
the parties intended to exclude from their final agreement any 
understanding or agreement not contained within the TCA, the 
exhibits, the Business Note, and the security documents. 
¶44 Significantly, the language of section 14 exhibits 
different capitalization to denote "this Agreement," meaning the 
TCA 
itself, 
and 
"their 
agreement," 
meaning 
the 
parties' 
agreement altogether.  (Emphasis added.)  When referring to the 
parties' "final expression of their agreement and [] a complete 
and exclusive statement of its terms," the parties carefully 
utilized a lowercase "a" so as not to confuse their overall 
agreement with the TCA itself.  (Emphasis added.)  We therefore 
disagree with City Real Estate that it is not clear whether the 
parties intended the TCA to be the final expression of only the 
TCA itself, or whether the parties intended the TCA to be the 
final expression of the parties' financing agreement altogether.   
¶45 Neither the TCA, nor the exhibits to the TCA, nor the 
Business Note, nor the security documents mention the commitment 
letter or reference financing in two phases.  To the contrary, 
the Business Note provides for a single sum of $2,500,000, the 
very amount that Town Bank loaned to City Real Estate on July 
15, 2004.  If City Real Estate wanted the terms of the 
commitment letter, or a second phase of financing, to be 
included in the TCA, City Real Estate was free to so negotiate. 
No. 
2008AP1845   
 
21 
 
¶46 Citing our decision in Dairyland Equipment Leasing, 
City Real Estate argues that in order for the TCA to have 
unambiguously excluded the terms of the commitment letter, the 
TCA had to "expressly negative[]" the commitment letter or the 
two-phase nature of the financing.  See 94 Wis. 2d at 608.  City 
Real Estate's interpretation of our case law necessarily implies 
that hereinafter, lenders——or all contract drafters, for that 
matter——would be obligated to expressly identify and exclude in 
their contracts any prior oral or written communication between 
the parties that may rise to the level of an agreement, lest 
risk its inclusion within the contract.  We refuse to impose 
such an unnecessary and cumbersome burden on contract drafters. 
¶47 We further reject City Real Estate's arguments that 
the TCA is otherwise ambiguous.  First, City Real Estate argues 
that an ambiguity arises out of the fact that the parties 
checked the box for "Multiple Notes; Multiple Advances."  The 
argument is difficult to follow.  According to City Real Estate, 
the checking of that box created an obligation for multiple 
notes.  Because the section on "Multiple Notes; Multiple 
Advances" also states that the TCA "does not constitute a 
commitment by Lender to make such extensions of credit," City 
Real Estate contends that the TCA implies that some other 
document created the obligation for multiple notes.  Therefore, 
City Real Estate argues, a genuine issue of material fact 
existed as to whether the commitment letter created the 
obligation for multiple notes. 
No. 
2008AP1845   
 
22 
 
¶48 We disagree.  The section on "Multiple Notes; Multiple 
Advances" is clear.  It plainly recognizes that Town Bank may 
make additional extensions of credit to City Real Estate "from 
time to time," and if such loans occur, the parties "agree that 
sections 4 through 19 of [the TCA] shall apply to each such 
extension of credit."  Significantly, the provision then 
expressly states that the TCA "does not constitute a commitment 
by [Town Bank] to make such extensions of credit to [City Real 
Estate]."  Hence, while Town Bank has the option, the TCA does 
not obligate Town Bank to make any additional extensions of 
credit to City Real Estate. 
¶49 Second, relying on Stevens Construction Corp., City 
Real Estate argues that the TCA is latently ambiguous, and 
therefore, the circuit court properly considered parol evidence 
to clarify the ambiguity.  See 63 Wis. 2d at 354-55.  A 
contract, though clear on its face, may be considered latently 
ambiguous if its application produces absurd or unreasonable 
results that the parties could not have intended.  See id. at 
354.  City Real Estate contends that the TCA is latently 
ambiguous when applied to the context of the Wisconsin Tower 
project.  According to City Real Estate, while an "uninformed 
observer" could view the TCA as a final expression of the 
parties' universal agreement, a latent ambiguity arises "as soon 
as the observer learns that the parties had in place a 
[c]ommitment [letter] providing for two phases of financing 
necessary for the project, and that the TCA only provides for 
one of those phases . . . ." 
No. 
2008AP1845   
 
23 
 
¶50 City Real Estate's argument ignores the presence of 
the TCA's unambiguous merger clause.  As previously explained, 
because section 14 of the TCA constitutes an unambiguous merger 
clause, the court is precluded from considering any prior 
understanding or agreement that may have existed between Town 
Bank and City Real Estate, including the commitment letter.  
Thus, by its very nature, the unambiguous merger clause bars the 
court from considering the TCA within the context of the 
commitment letter. 
¶51 Because we conclude that the TCA constitutes an 
unambiguous, 
fully 
integrated 
agreement, 
our 
attempt 
to 
determine the parties' intent ends with the four corners of the 
TCA, without resort to extrinsic evidence.  See Huml, 293 
Wis. 2d 169, ¶52.  Such extrinsic evidence includes, but is not 
limited to, the commitment letter and various credit memoranda 
prepared by Town Bank that referenced a two-phase financing 
arrangement.  Pursuant to the TCA, Town Bank was obligated to 
loan $2,500,000 to City Real Estate.  Town Bank fully complied.  
Therefore, Town Bank should have been granted summary judgment, 
and the case should not have proceeded to a jury trial.  
¶52 Even assuming, without deciding, that the commitment 
letter constitutes a separate and enforceable contract for 
No. 
2008AP1845   
 
24 
 
financing,5 Town Bank was within its rights to terminate the 
agreement and therefore was still entitled to summary judgment.  
It is undisputed that City Real Estate did not fulfill at least 
two of the conditions set forth in the commitment letter: the 
requirement that a credit agreement be executed by June 25, 
2004, and the obligation to contribute $900,000 in up-front 
equity. 
¶53 First, it is undisputed that a credit agreement 
between Town Bank and City Real Estate was not executed by June 
25, 2004, as required by the commitment letter.  The commitment 
letter expressly provides that "[t]his commitment may be 
terminated at the sole option of Town Bank if the credit 
agreement is not executed by June 25, 2004."  There is no 
question that the TCA, the only credit agreement between Town 
Bank and City Real Estate, was not executed until July 15, 2004.  
Because the credit agreement was not timely executed, Town Bank 
was well within its rights to terminate the commitment letter. 
¶54 Second, it is undisputed that City Real Estate did not 
fulfill its obligation to contribute $900,000 in up-front 
                                                 
5 Deciding 
that 
the 
commitment 
letter 
constitutes 
an 
enforceable contract could result in unforeseen consequences.  
Assuming that the commitment letter constitutes an enforceable 
contract, the contract binds and is enforceable against both 
parties: the lender and the borrower.  See Levin v. Perkins, 12 
Wis. 2d 398, 403, 107 N.W.2d 492 (1961).  Suppose that after a 
commitment letter has been executed, the borrower secures a 
better financing arrangement with a different lender.  If the 
commitment letter constitutes an enforceable contract, the 
original lender could enforce the commitment letter against the 
borrower and seek damages for, inter alia, lost interest. 
No. 
2008AP1845   
 
25 
 
equity.  The commitment letter provides that the "[c]losing of 
[the] loan is contingent upon but not limited to the following: 
 . . . B. Borrower agrees to contribute $900,000 in up front 
equity capital prior to closing."  City Real Estate does not 
dispute that it never infused $900,000 of equity into the 
Wisconsin Tower project.  Instead, City Real Estate complains 
that Town Bank never demanded the money: "[City Real Estate] 
w[as] ready, willing, and able to [satisfy the up-front equity 
condition] upon demand once the project progressed to the point 
of requiring draws upon the Phase II construction financing to 
build pre-sold condominiums."  City Real Estate's defense falls 
short in two respects.  First, Town Bank did not have to demand 
the $900,000 from City Real Estate; the contingency outlined in 
the commitment letter functioned as the demand.  Second, the 
commitment letter required City Real Estate to contribute 
$900,000 in equity "prior to closing," well before the project 
progressed to the construction phase. 
¶55 Because it is undisputed that City Real Estate failed 
to comply with at least two of the conditions set forth in the 
commitment letter, Town Bank was under no obligation to provide 
financing thereunder.  
V. CONCLUSION 
¶56 We conclude that the TCA is an unambiguous, fully 
integrated agreement with which Town Bank fully complied.  
Accordingly, 
Town 
Bank 
should 
have 
been 
granted 
summary 
judgment, and the case should not have proceeded to a jury 
trial.  We agree with Town Bank that the TCA contains an 
No. 
2008AP1845   
 
26 
 
unambiguous merger clause which precluded City Real Estate from 
introducing any evidence of prior understandings or agreements 
that may have existed between the parties, including the 
commitment letter.  Even assuming, without deciding, that the 
commitment 
letter 
constitutes 
a 
separate 
and 
enforceable 
contract for financing, we conclude that Town Bank was within 
its rights to terminate the agreement.  It is undisputed that 
City Real Estate did not fulfill at least two of the conditions 
set forth in the commitment letter. 
By the Court.—The decision of the court of appeals is 
affirmed. 
 
No.  2008AP1845.awb 
 
1 
 
¶57 ANN WALSH BRADLEY, J.   (dissenting).  I agree with 
the Wisconsin Bankers Association and the court of appeals that 
"this case does not involve one agreement superseding another.  
It involves two separate, independent agreements that do not in 
any way involve each other."   
¶58 I also agree with the Wisconsin Bankers Association 
and the court of appeals that "the TCA is a stand-alone 
agreement . . . [that] must be interpreted on its terms with 
respect to the [$2.5 million loan], and the Commitment must be 
interpreted separately on its terms with respect to the proposed 
financing addressed in the Commitment."  
¶59 The 
majority, 
however, 
disagrees. 
 
Rather 
than 
treating the TCA and the Commitment as two separate contracts 
which must be interpreted independently, it interprets the TCA 
as the final agreement with an integration clause that replaces 
the separate Commitment agreement.  In fact, the majority warns 
that treating the two agreements as separate could have 
"unforeseen consequences."  Majority op., ¶52 n.5.  
¶60 In this regard, I conclude that the analysis of the 
Wisconsin Bankers Association and the court of appeals is more 
persuasive and should be controlling.  It is, I fear, the 
approach of the majority that has the potential to yield 
"unforeseen consequences" for the day-to-day practices of the 
banking industry.  Because the majority's analysis introduces 
uncertainty in the lending process and creates uncertainty in 
well-established law, I respectfully dissent.     
I 
No.  2008AP1845.awb 
 
2 
 
¶61 The majority accurately sets forth the question before 
the court: whether Town Bank has a obligation to lend $6.5 
million in Phase II financing under the terms of the Commitment.  
See majority op., ¶¶21-22.1  In answering this question, however, 
the majority does not focus on the terms of the Commitment.  
Rather, its focus shifts to the terms of the Term Credit 
Agreement 
(TCA), 
and 
specifically, 
to 
the 
TCA's 
"Entire 
Agreement" clause.  See id., ¶40 ("[T]he TCA is an unambiguous, 
fully 
integrated 
agreement 
with 
which 
Town 
Bank 
fully 
complied.").   
¶62 The 
majority 
concludes 
that 
the 
TCA's 
"Entire 
Agreement" clause evinces the parties' intent to "exclude from 
their final agreement any understanding or agreement not 
contained within the TCA, the exhibits, the Business Note, and 
the security documents."  Id., ¶43.  It determines that whenever 
a contract "contains an unambiguous merger or integration 
clause, the court is barred from considering evidence of any 
prior or contemporaneous understandings or agreements between 
the parties, even as to the issue of integration."  Id., ¶39. 
¶63 Thus, although City Real Estate seeks to enforce the 
Commitment, the majority determines that the Commitment may not 
be considered by a court due to the terms of the TCA.  The 
implication of this analysis is that any written contract with 
                                                 
1 The majority explains that Town Bank sought "a declaratory 
judgment that City Real Estate failed to satisfy its obligations 
under the commitment letter" and that "City Real Estate 
counterclaimed for damages arising out of Town Bank's alleged 
breach of the commitment letter."  Majority op., ¶¶21-22.   
No.  2008AP1845.awb 
 
3 
 
an unambiguous integration clause necessarily supersedes all 
existing agreements between the parties, unless the integration 
clause specifically references an existing agreement.  Under the 
majority's analysis, the TCA and the Commitment are intertwined—
—the parties do not have any obligations under the Commitment 
because the Commitment was superseded by the TCA, as evinced by 
the TCA's integration clause.   
II 
¶64 The 
majority's 
conclusion 
that 
an 
unambiguous 
integration 
clause 
replaces 
any 
existing 
agreement 
not 
specifically referenced is directly contrary to the position 
advocated by the Wisconsin Bankers Association.2  The Wisconsin 
Bankers Association contends that "this case does not involve 
one agreement superseding another," and that the TCA and the 
Commitment are "separate, independent agreements that do not in 
any way involve each other."3  
¶65 The Wisconsin Bankers Association repeatedly argues 
that the TCA and the Commitment are independent agreements that 
                                                 
2 When we accepted review of this case, the Wisconsin 
Bankers Association requested permission to file an amicus 
brief.  It explained that the appeal presented issues "of 
particular 
interest 
to the" Wisconsin Bankers Association 
because "[t]he Term Credit Agreement utilized by the parties is 
a form sold by a [Wisconsin Bankers Association] subsidiary to 
lenders in the state" and "[h]undreds of lenders and thousands 
of term credit lending arrangements are entered into using this 
form."  Motion of Wisconsin Bankers Association for Leave to 
File Brief as Amicus Curiae ¶¶2-3. 
3 Brief of the Wisconsin Bankers Association as Amicus 
Curiae at 8. 
No.  2008AP1845.awb 
 
4 
 
must be interpreted separately.4  Its concern is that City Real 
Estate attempts to read the terms of the Commitment into the 
TCA: "[Our] only concern is that the borrower should not be able 
to find support for its argument that Town Bank breached its 
obligations under the Commitment by somehow reading the terms of 
the Commitment into the completely independent Term Credit 
Agreement."5  It argues that the effect of the TCA's unambiguous 
integration clause is to put both parties on notice "that any 
other agreement that might be out there, whatever it may be, is 
not part of" the TCA.6       
¶66 To 
this 
end, 
the 
Wisconsin 
Bankers 
Association 
contends: "The Term Credit Agreement stands on its own.  The 
Commitment stands on its own."7  It asserts that "[t]he TCA must 
be interpreted on its terms with respect to the [$2.5 million 
loan], and the Commitment must be interpreted separately on its 
terms with respect to the proposed financing addressed in the 
                                                 
4 The Wisconsin Bankers Association explains that Town Bank 
entered into a separate TCA with City Real Estate to make the 
$2.5 million loan.  "Whether or not City fulfilled [the 
conditions set forth in the Commitment] and is entitled to 
damages 
for 
Bank's 
failure 
to 
lend 
is 
a 
question 
of 
interpretation of the Commitment."  Id. at 4.    
5 Motion of Wisconsin Bankers Association for Leave to File 
Brief as Amicus Curiae ¶5.  At various times throughout this 
litigation, City Real Estate appeared to argue that the TCA's 
"multiple notes" clause supported its contention that the 
Commitment was a binding contract.  The Bankers Association 
objected to City Real Estate's attempt to bootstrap its claim 
for damages under the Commitment to the "multiple notes" clause 
in the TCA.   
6 Id., ¶6. 
7 Id., ¶5.   
No.  2008AP1845.awb 
 
5 
 
Commitment."8  According to the Wisconsin Bankers Association, 
the terms of the TCA are not relevant when interpreting the 
Commitment: "Whether or not City fulfilled [the Commitment's] 
conditions and is entitled to damages for the Bank's failure to 
lend is a question of interpretation of the Commitment."9   
¶67 The majority's conclusion that the court is barred 
from considering the Commitment due to the TCA's integration 
clause is incompatible with the Wisconsin Bankers Association's 
assertion that the TCA and the Commitment are "separate, 
independent agreements that do not in any way involve each 
other."  This conclusion introduces uncertainty in contractual 
relationships far beyond the contours of this case.   
¶68 As explained by the Wisconsin Bankers Association, the 
situation presented in this case is "quite common throughout the 
state."10  At any given time, there may exist a number of 
separate, independent agreements between a borrower and a bank:  
Banks often have a variety of outstanding loans to 
individuals and their related interests, as well as 
agreements for other banking services with those 
parties.   A bank could have several loans to a 
borrower, could be negotiating the refinancing of some 
                                                 
8 Brief of the Wisconsin Bankers Association as Amicus 
Curiae at 8.   
9 Id. at 4.  When it filed its motion for leave to file an 
amicus brief, the Wisconsin Bankers Association asserted that it 
had "no opinion on whether or not the Commitment was repudiated 
by the borrower's failure to fulfill conditions precedent to the 
construction loan."  Motion of Wisconsin Bankers Association for 
Leave to File Brief as Amicus Curiae ¶5.   
10 Motion of Wisconsin Bankers Association for Leave to File 
Brief as Amicus Curiae ¶3; see also Brief of the Wisconsin 
Bankers Association as Amicus Curiae at 1. 
No.  2008AP1845.awb 
 
6 
 
of those loans, and at the same time could be 
negotiating 
different 
commitments 
for 
upcoming 
projects.11     
¶69 The majority's determination that a written contract 
containing 
an 
unambiguous integration clause replaces all 
existing agreements between the parties may yield undesirable 
and unforeseen consequences.  Parties may find that by signing a 
form agreement, they have put into question the enforceability 
of any other outstanding agreements between them——without having 
intended to do so.12  Before drafting a new contract, must a loan 
                                                 
11 Brief of the Wisconsin Bankers Association as Amicus 
Curiae at 9. 
12 Imagine the following hypothetical, based on the facts of 
this case.  Town Bank and City Real Estate execute a term credit 
agreement ("TCA I") for $2.5 million in Phase I financing.  
Several months later, Town Bank agrees to go ahead with Phase II 
financing.  Town Bank and City Real Estate execute a second term 
credit agreement ("TCA II") for a $6.5 million loan. 
TCA II contains an "Entire Agreement" clause which provides 
as follows:  
This Agreement, including the Exhibits attached or 
referring to it, the Note [for $6.5 million] and the 
Security Documents, are intended by Customer and 
Lender as a final expression of their agreement and as 
a complete and exclusive statement of its terms, there 
being no conditions to the full effectiveness of their 
agreement except as set forth in this Agreement, the 
Note and the Security Documents. 
TCA II, the Note, and the Security Documents make no reference 
to TCA I or the terms of the $2.5 million Phase I loan.   
No.  2008AP1845.awb 
 
7 
 
officer now review all other existing agreements and enumerate 
them in the new contract to ensure that the new contract does 
not inadvertently supersede those existing agreements?    
¶70 The Wisconsin Bankers Association called City Real 
Estate's interpretation of the integration clause "radical," 
"absurd," and "impractical" because it would require the parties 
to "expressly negative" any other existing agreements:  "City is 
requesting a radical new interpretation of integration clauses.  
It wants this Court to require the integration clause to 
'expressly negative' the Commitment in order to have the terms 
of 
the 
Commitment 
excluded 
from 
the 
terms 
of 
the 
[TCA]. . . . This is an absurd and very impractical request."13   
¶71 Yet, the majority's conclusion is the mirror image of 
City Real Estate's request, and it leads to the same absurd and 
impractical 
result. 
 
Rather 
than 
requiring 
drafters 
to 
"expressly negative" any existing agreements, the majority 
requires 
drafters 
to 
"expressly 
affirm" 
their 
existing 
agreements if they wish to prevent those agreements from being 
superseded.      
                                                                                                                                                             
Imagine that City Real Estate defaults on its obligations 
under TCA I, and Town Bank files suit to enforce its terms.  
Could City Real Estate argue that that TCA I was no longer 
enforceable because it had been superseded by TCA II?  According 
to the majority's analysis in this case, such an argument may be 
viable——TCA II "contains an unambiguous [] integration clause, 
[therefore] the court is barred from considering evidence of 
[TCA I, which is a] prior [] agreement[] between the parties."  
See majority op., ¶39.   
13 Brief of the Wisconsin Bankers Association as Amicus 
Curiae at 7. 
No.  2008AP1845.awb 
 
8 
 
¶72 Such a requirement may create traps for the unwary.  
Signing a contract with an unambiguous integration clause does 
not necessarily evince an intent to supersede all existing 
agreements.  Parties sign contracts all the time without 
thinking it necessary to enumerate (and thereby preserve) any 
existing agreements between them.   
¶73 Nevertheless, this requirement is driven by the 
majority's analysis.  Its decision may "result in completely 
unnecessary effort on the part of parties when drafting a 
contract, and build into contracts the very ambiguity and 
uncertainty the parol evidence rule is intended to remove."14   
III 
¶74 The majority's analysis is flawed not only because it 
introduces uncertainty into the lending process, but also 
because it creates uncertainty in what has been the well-
established law.  We have repeatedly explained that "[p]arol 
evidence is always admissible with respect to the issue of 
integration[.]"15  The reason underlying this rule is that a 
court cannot determine from the four corners of a contract 
whether the parties intended it to be a complete integration, a 
partial integration, or no integration whatsoever.  "[A] writing 
                                                 
14 Id. at 2. 
15 Dairyland Equip. Leasing v. Bohen, 94 Wis. 2d 600, 608, 
288 N.W.2d 852 (1980); Fed. Deposit Ins. Corp. v. First Mortg. 
Investors, 76 Wis. 2d 151, 158, 250 N.W.2d 362 (1977); Johnson 
Hill's Press v. Nasco Indus., 33 Wis. 2d 545, 550, 148 N.W.2d 9 
(1967); Brevig v. Webster, 88 Wis. 2d 165, 173, 277 N.W.2d 321 
(Ct. App. 1979); see also Scarne's Challenge, Inc. v. M.D. Orum 
Co., 267 Wis. 134, 64 N.W.2d 836 (1954). 
No.  2008AP1845.awb 
 
9 
 
cannot of itself prove its own completeness[.]"  Restatement 
(Second) of Contracts § 210 cmt. b (1981); see also id. § 214 
cmt. a.  
¶75 On one hand, the majority embraces this time-honored 
rule, while on the other hand it embraces an opposite or a 
different rule.  Unfortunately, the majority's inconsistency is 
demonstrated not only from paragraph to paragraph, but also the 
inconsistency exists within the very same paragraph. 
¶76 Citing several cases, the majority sets forth the 
time-honored rule: "the parol evidence rule does not preclude 
the 
court 
from 
considering 
evidence 
of 
any 
prior 
or 
contemporaneous understandings or agreements between the parties 
for the purpose of determining whether the parties intended the 
contract to be integrated.  Our courts often refer to this rule 
by stating that 'parol evidence is always admissible with 
respect to the issue of integration.'"  Majority op., ¶38 
(emphasis added). 
¶77 In the very same paragraph the majority appears to 
embrace the exact opposite of the rule, i.e., that parol 
evidence is never admissible with respect to the issue of 
integration.  It appears to assert that the rule comes into play 
only after the issue of integration has already been determined: 
"If and once it is determined that the parties intended the 
contract to be integrated, only then does the parol evidence 
rule go into effect."  Id.   
¶78 The first sentence of the following paragraph sets 
forth yet a different rule.  Rather than being always admissible 
No.  2008AP1845.awb 
 
10 
 
on the issue of integration, it is only sometimes admissible, 
i.e. admissible when there is an integration clause that is 
ambiguous.  The majority states: "[W]hen the contract contains 
an unambiguous merger or integration clause, the court is barred 
from considering evidence of any prior or contemporaneous 
understandings or agreements between the parties, even as to the 
issue of integration."  Id., ¶39.   
¶79 So what is the rule?  Is it the time-honored rule that 
the majority purports to embrace——that parol evidence is always 
admissible with respect to the issue of integration?  Is it 
never admissible on the issue of integration?  Or is it only 
sometimes admissible on the issue of integration when an 
integration clause is ambiguous?  The majority gets tangled up 
in its analysis because it conflates the general rules of 
contract interpretation with the specific rule of parol evidence 
associated with the interpretation of an integration clause.16   
IV 
¶80 When I examine this case, I apply the time-honored 
rule that parol evidence is always admissible with respect to 
the 
issue 
of 
integration. 
 
Like 
the 
Wisconsin 
Bankers 
Association and the court of appeals, I conclude that the 
Commitment is a separate agreement from the TCA and it must be 
interpreted according to its terms.     
                                                 
16 For a discussion of the dangers of conflating principles 
of contract interpretation with the parol evidence rule, see 
Margaret 
N. 
Kniffin, 
Conflating 
and 
Confusing 
Contract 
Interpretation and the Parol Evidence Rule: Is the Emperor 
Wearing Someone Else's Clothes?, 62 Rutgers L. Rev 75 (2009-
2010). 
No.  2008AP1845.awb 
 
11 
 
¶81 The question of whether City Real Estate repudiated 
the Commitment by failing to satisfy its conditions precedent 
presented questions of fact which were decided by the jury.  
After hearing some evidence that City Real Estate failed to 
fulfill the Commitment's conditions, the jury nevertheless 
determined that under these circumstances, it was Town Bank that 
breached the Commitment.  An appellate court will sustain a jury 
verdict if there is any credible evidence to support it.  
Hoffman v. Wisconsin Elec. Power Co., 2003 WI 64, ¶9, 262 
Wis. 2d 264, 664 N.W.2d 55.  Here, there is credible evidence in 
the record to support the jury's verdict.   
¶82 Because the majority's analysis is incompatible with 
and less persuasive than the analysis advanced by the Wisconsin 
Bankers Association, because it may introduce uncertainty in 
contractual relationships far beyond the contours of this case, 
and because it creates uncertainty in what has been the well-
established law, I respectfully dissent.           
¶83 I am authorized to state that Chief Justice SHIRLEY S. 
ABRAHAMSON joins this dissent.    
 
  
No.  2008AP1845.awb 
 
1