No. 80-207 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1981 

HUGH A. SPRAGGINS, 

Plaintiff and Respondent, 

-vsGARY L. ELVIDGE, 

Defendant and Appellant. 

Appeal from: District Court of the Sixth Judicial District, 

In and for the County of Park, The Honorable 

Jack D. Shanstrom, Judge presiding. 

Counsel of Record: 

For Appellant: 

Berger, Anderson, Sinclair, Murphy, Nelson, 

Edwards, McGimpsey an Molloy, Billings, Montana 

For Respondent : 

Yardley and Yardley, Livingston, Montana 

Submitted on Briefs: October 23, 1980 

Decided : 

Filed: PPR ! 4g87' 

Clerk 
Mr. Justice John Conway Harrison delivered the Opinion of 

the Court. 

Appellant-defendant, Gary Elvidge, and respondentplaintiff, Hugh Spraggins, were engaged in a business called 

Diablo Mobile Repair in California. As partners, they sold 

and transferred the business to a third party in 1978. 

In September 1977 appellant and respondent contracted 

to purchase equally stock shares of the Mint Bar of 

Livingston, Inc., from George A. and Donna F. Moore. Each 

partner was to participate and share in the new business. 

The California business was sold. From the total 

purchase price, $12,500 was invested in the Mint Bar. 

Later, appellant agreed to buy, and respondent agreed 

to sell, respondent's interest in the 1501 shares of stock 

of the Mint Bar. The parties entered into a contract 

(assignment of agreement and a release) on August 31, 1978. 

Prior to this time appellant and respondent discussed the 

sale and purchase of the stock of the Mint Bar. These 

discussions covered all business interests of the partners 

including the California business. 

Respondent and his wife testified that appellant was 

entitled to one half of the proceeds from the sale of Diablo 

Mobile Repair and one half of the cash on hand. Respondent 

claims, and the District Court found, that appellant and 

respondent mutually agreed, prior to the signing and 

execution of the assignment of agreement, that the sum of 

$25,000 would be paid by appellant to respondent. 

Respondent contends the amount was in full settlement of all 

transactions between respondent and appellant. Any interest 

appellant had in the Diablo Mobile Repair was completely 
settled and resolved and any interest respondent had in the 

shares of stock of the Mint Bar was completely settled. 

Appellant paid respondent $15,000 on September 5, 

1978, and executed a promissory note for $10,000 payable to 

respondent for the remaining amount. 

Appellant failed to pay the $10,000 promissory note 

when due, and respondent commenced this action. Appellant 

counterclaimed for monies due and owing him from the sale of 

the California business as a setoff for the amount due to 

respondent on the promissory note. 

The District Court found in favor of respondent's 

claim for collection of the promissory note and against 

appellant on his claim of setoff as a result of the sale of 

the California business. 

Appellant contends that the only written agreement 

between the parties pertains to the termination of 

respondent's interest in the Mint Bar. The assignment of 

agreement and the release executed by the parties both 

provide that the consideration to be given by appellant to 

respondent is $25,000. Nowhere in either of these documents 

is there any mention of the Diablo Mobile Repair or the sums 

due and owing from respondent to appellant as a consequence 

of the sale thereof. Appellant argues the District Court 

allowed respondent to alter the terms of the written 

contract by adding approximately $15,000 as the total 

consideration paid (appellant's alleged one half of the 

proceeds from the sale of Diablo Mobile Repair). 

The District Court made the following finding: 

"That Rule 106 of the Montana Rules of 

Evidence applies as to the admission of 

evidence by Plaintiff to Defendant's 

counterclaim and affirmative defense and that 
the Montana completeness doctrine rule allows 

evidence by Plaintiff that all business 

transactions were resolved between Plaintiff 

and Defendant, specifically including Diablo 

Mobile Repair." 

This finding permitted the District Court to modify 

the written agreement. 

The sole issue in this appeal is whether Rule 106, 

Mont.R.Evid., allows parol evidence under the facts of this 

case. 

We find the District Court erred in allowing parol 

evidence to alter and vary the terms of this written 

agreement under the theory of the completeness doctrine. 

Respondent does not argue that this case represents 

one where testimony was offered and properly admitted as 

part of one of the exceptions of the parol evidence rule. 

Instead, Rule 106, Mont.R.Evid., was used to modify the 

written contract. 

The relevant statutes which address parol evidence 

are set forth below. 

Section 28-2-904, MCA: 

"The execution of a contract in writing, 

whether the law requires it to be written or 

not, supersedes all the oral negotiations or 

stipulations concerning its matter which 

preceded or accompanied the execution of the 

instrument." 

Section 72-11-304, MCA: 

"(1) When the terms of an agreement have been 

reduced to writing by the parties, it is to 

be considered as containing all those terms, 

and therefore there can be between the 

parties and their representatives or 

successors in interest no evidence of the 

terms of the agreement other than the 

contents of the writing, except in the 

following cases: 

"(a) where a mistake or imperfection of the 

writing is put in issue by the pleadings; 
"(b) where the validity of the agreement is 

the fact in dispute. 

"(2) But this section does not exclude other 

evidence of the circumstances under which the 

agreement was made or to which it relates, as 

defined in 1-4-102, or to explain an extr insic ambiguity or to establish illegality 

or fraud. 

"(3) The term agreement includes deeds and 

wills, as well as contracts between parties." 

Section 1-4-102, MCA: 

"For the proper construction of an 

instrument, the circumstances under which it 

was made, including the situation of the 

subject of the instrument and of the parties 

to it, may also be shown so that the judge be 

placed in the position of those whose 

language he is to interpret." 

None of the parol evidence exceptions contained in 

section 72-11-304, MCA, apply here. Respondent never 

claimed in his pleadings that the writings were imperfect. 

No one assailed the validity of the contract. Section 

28-2-904, MCA, is controlling. When the contract is clear 

and unequivocal on its face, section 1-4-102, MCA, does not 

apply. Ryan v. Ald, Inc. (1965), 146 Mont. 299, 406 P.2d 

373. We have here a written contract. The contract is 

signed by appellant and respondent. The written contract is 

clear on its face. It speaks directly and exclusively of 

the Mint Bar. The "oral" agreement which preceded the 

written agreement does not control, nor can it be allowed to 

alter the terms of the written contract. 

"The principle is well-established and of 

general application, subject to certain 

exceptions, that -- when a contract ----- has been 

----------------- reduced to writinq ------------------- the contents of such 

-- writing cannot be ---------------- added to, contradicted, 

.................... 

altered, or varied by parol --- or extrinsic 

evidence, and that such writing supersedes 

all oral negotiations concerning its matter 

which preceded, accompanied, or led up to its 

execution. This was the rule at common law, 
and has been embodied in the statute law of 

this state." Leigland v. McGaff ick (1959), 

135 Mont. 188, 338 P.2d 1037. 

Rule 106, Mont.R.Evid., provides in pertinent part: 

"(a) When part of an act, declaration, 

conversation, writing or recorded statement 

or series thereof is introduced by a party: 

(1) an adverse party may require him at that 

time to introduce any other part of such item 

or series thereof which ought in fairness to 

be considered at that time; . . ." (Emphasis 

supplied . ) 

Without even discussing the par01 evidence rule the 

District Court relied on Rule 106 in modifying and varying 

the terms of a written agreement. Such was never the intent 

of Rule 106. Rule 106 of the Federal Rules of Procedure is 

the counterpart to Montana's Rule 106, and, according to the 

advisory committee's note, the federal rule is based on two 

considerations: (1) the danger of taking matters out of 

context, and (2) the inadequacy of delayed completeness as a 

remedy. See 21 Wright and Graham, Federal Practice and 

Procedure: Evidence, S 5007 at 367. 

No one introduced part of an act or writing in this 

case. Respondent introduced all of the writings governing 

the buy out of the Mint Bar operation. All of the terms 

surrounding the consideration to be paid to respondent for 

the surrendering of his interest in the Mint Bar were 

offered and received in evidence. 

We addressed a similar issue in State Highway 

Commission v. Churchwell (1965), 146 Mont. 52, 403 P.2d 

751, where the parties were contesting a jury award of the 

taking of land by condemnation. The parties were arguing 

about the fair market value of the land that was taken. At 

the trial, to establish the value of the property, the 

landowners offered final agreements of sale for land in the 
vicinity of the land in question to demonstrate the value of 

their land. The State then, over objection, was allowed to 

introduce all documents regarding the negotiations that led 

to each of the various sales. The State argued that the 

entire files were admissible under section 93-401-11, R.C.M. 

1947. That section was the predecessor and forerunner to 

Rule 106, Mont .R. Evid., and read: 

"When part of an act, declaration, 

conversation, or writing is given in evidence 

by one party, the whole on the same subject 

may be inquired into by the other; when a 

letter is read, the answer may be given; and 

when a detached act, declaration, 

conversation, or writing is given in 

evidence, any other act, declaration, 

conversation or writing, which is necessary 

to make it understood, may also be given in 

evidence . " 

We rejected the State's argument in Churchwell, 

stating: 

"'When a contract is reduced to writing, the 

intention of the parties is to be ascertained 

from the writing alone, if possible; subject, 

however, to the other provisions of this 

chapter.' (Section 13-705.) 

"'When the terms of an agreement have been 

reduced to writing by the parties, it is to 

be considered as containing all those terms, 

and therefore there can be between the 

parties and their representatives, or 

successors in interest, no evidence of the 

terms of the agreement other than the 

contents of the writing, except in the 

following cases: 

1 Where a mistake or imperfection of the 

writing is put in issue by the pleadings. 

"'2. Where the validity of the agreement is 

the fact in dispute. 

"'But this section does not exclude other 

evidence of the circumstances under which the 

agreement was made, or to which it relates, 

as defined in section 93-401-17, or to 

explain an extrinsic ambiguity, or to 

establish illegality or fraud. The term 

agreement includes deeds and wills, as well 

as contracts between parties.' (Section 
"A careful study of the negotiation agreements in the Negotiation File shows that the 

agreement speaks for itself and that section 

93-401-11, R.C.M. 1947, has no application." 

403 P.2d at 754-55. 

In the instant case respondent offered the parol 

testimony to vary and alter the terms of a written 

instrument. This cannot be done. For this Court to hold 

otherwise would, in effect, rob the parol evidence rule and 

the corresponding Montana statutes of any vitality at all. 

Rule 106 is a procedural rule and does not affect the 

substance of the existing law of parol evidence. 

We affirm in part the District Court's finding that 

appellant is liable for the $10,000 promissory note. We 

reverse the finding that all business transactions, 

including the Diablo Mobile Repair business, were settled by 

the agreement. We remand to the District Court to conduct 

further proceedings to determine the validity of appellant's 

counterclaim. 

We concur: /