NO. 88-46

IN THE SUPREME COURTOF THE STATE OF MONTANA
1988

PIPE INDUSTRY INSURANCE FUND TRUST OF LOCAL 41, Plaintiffand Respondent,-vsCONSOLIDATED PIPE TRADES TRUST OF MONTANA,
Defendant andAppellant.

APPEAL FROM: District Court of the Second JudicialDistrict, In and for the County of SilverBow, TheHonorableArnold Olsen, Judgepresiding.
COUNSEL OF RECORD:
ForAppellant: Anderson, Brown,Gerbase, Cebull,Fulton,Harman and Ross;Michael P. Heringer, Billings, Montana

For Respondent: Burgess, Joyce & Whelan; Thomas F. Joyce, Butte, Montana

Submitted on Briefs: May 19, 1988 Decided: August 8,1988
Filed: 

## RUG8 1988'

ClerkMr. Justice R. C. McDonough delivered the Opinion of the Court.

Consolidated Pipe Trades Trust of Montana (Consolidated) 

### , appeals the Second JudicialDistrict Court's decision in favor of Pipe Industry Insurance Fund Trust of Local 41, (PipeIndustry). We affirm. Consolidated presents the following issues for review:

(1) Whether the Court erredwhen it instructed the jury that it could not consider any evidence outside the terms of the agreement?

(2) Whether the Court erred when it refused testimony concerning the negotiations of the reciprocity agreement?

(3) Whether the Court erredwhen it instructed the jury

on the legalprincipal ofwaiver?

(4) Whether the verdict is supported by substantial evidence?

(5) Whether the Court erredwhen it awarded prejudgment interest?

(6) Whether the prejudgment interest was calculated properly?

The relevant facts are as follows: Both parties collect funds from employers of union members under the jurisdiction of their respective locals. The funds finance trustsused to provide insurance plans for union members.In 1980,members of the Butte local working under the jurisdiction of the Billings local faced ineligibility under both the Butte local's insurance and the Billings local's insurance. To solve this problem, Consolidated,representing the Billings local, agreed to collect funds for members of the Butte local working under the Billings local's jurisdiction. The funds collectedby Consolidatedwere tobe remitted to Pipe Industry for the trust fund.administeredby Pipe Industry. Pipe Industry agreed to do the same for members of the Billings local working under the jurisdiction of the Butte local. To effectuate this agreement, the parties executed a written document. The pertinent parts of this document read

as follows:

2. Each TrustFund party hereto shall collect and receive the Employer contributionsdue for the work of each Temporary Members who has signed and deposited a transfer authorization card with the transferring fund,and shallkeep separateaccounts of these collections.
3. No party shall be liable to any other party for any sums whatsoever except to the extent of contributions made onTemporaryMembers that are in fact received. Each party shall bear all expenses of collection, administration or accounting which it shall incur hereunder, and shall charge no part thereof to any other party. 

### 4. Each TrustFundparty hereto shallmake an accounting monthly of the monies received by it during the period just ended on behalf of any Temporary Members and shall remit to the Temporary Members' Home Fund all Employer contributions received by it on behalf of its TemporaryMembers. Said remittance must be made within thirty (30) days after the close of the calendar month and within thirty (30) days of termination of this Agreement asprovided in Sections 11 and 12hereof. However, any Temporary Member may direct theTransferring Fund in writing, with 30 days notice, that contributions onhisbehalf notbe returned to hisHome Fund.
10. ThisAgreement may be modified or amended at any timeby an instrument inwriting executed by the parties hereto. Any party hereto may at any time withdraw from this Agreement by serving by Certified Mail on the other party hereto (at the address listed on the last page hereof) anotice of its intention towithdraw, not less than sixty (60) days prior to such date of withdrawal. Upon the effective date of withdrawal by any party hereto, this Agreement shall be terminated.
In 1981, the parties began performance under the agreement. Consolidated collected funds from employers of Butte workers at the rate of $1 per hour of work. This rate equaled the rate Consolidated collected for the Billings local's members. However,Consolidated remitted only 85e of each dollar collected for Butte workers to Pipe Industry because thiswas the amountneeded tomaintain coverage under the trust administered by Pipe Industry. Clause four of the written contract, however,provides that all funds collected shallbe remitted. On September 1, 1982, the amount needed to maintain coverage under Pipe Industry's trust increased to $1per wage hour. Consolidated continued to collect $1, and increased the amount remitted to Pipe Industry from 85C to $1. Thus, during this period,Consolidated compliedwith clause four of the contract. On September 1,1983,Consolidated's rate rose to $1.45, and employers of Butte workers under Consolidated's jurisdiction began to pay this rate. However, Consolidated continued to remit only $1 to Pipe Industry. On August 1, 1984, Pipe Industry's rate increased to $1.15, and Consolidated began to remit that amount from the $1.45 it continued to collect for Butte workers. AfterSeptember 30, 1984, no members of the Butte local worked under the jurisdictionof the Billings local. Thus,no funds
are disputed after that time. On March 28, 1986, Pipe Industry filed suit against Consolidated claiming that Consolidatedbreached theparties' agreement by not remitting the full amount it collected for Butte workers. The claim went to trial before a jury in Butte, and the jury verdict held Consolidated liable for the difference between the amounts collected and the amounts remitted. Consolidated unsuccessfully claimed that Pipe Industry had waived its right to the funds awarded by the jury. Consolidated also unsuccessfully claimed that an addendum to the agreementmodified the contract to allow its collection procedures. An award of interest accompanied the judgment for Pipe Industry.

I. Consolidated claims that the lower court erred by giving the following instruction:

Whenever the terms of an agreement have been reduced to writing by the parties, it is to be considered as containing all those terms. Therefore there can be between the parties no evidence 

### -- of the terms of the agreement other than 

## -- the contents of the writing except that other evidence may be offered to explain an extrinsic ambiguity in the written agreement. It is for the judge to construe awritten agreement giving effect to all of its terms and to determine if an extrinsic ambiguity exists. I have concluded that there is no extrinsic ambiguity in Exhibit 3, the original reciprocity agreementmade by theparties, and that agreement required that all monies received from employersby the defendant trustwere to be remitted within 30 calendar days after the close of each calendar month to the plaintiff trust. (Emphasisadded.)Consolidated argues that this instruction erroneously precluded the iury from considering extrinsic evidence regardless of its source. More specifically, Consolidated claims prejudice because the instruction prohibited the jury from considering extrinsic evidence of its waiver theory. Thus, according to Consolidated, the above instruction mislead the jury and prejudiced its case. Pipe Industry responds that evidence offered in the lower court on waiver
was properly admitted to show waiver, and properly excluded to showvariationof the contract terms. We agree. The instruction set out above paraphrases parts of S 28-2-905, MCA. This Court's decisions interpreting § 28-2-905, MCA, and the language of the statute itself, demonstrate that par01 evidence may be admitted for one purpose, but not for another. See, e.g., Martin v. Laurel Cable T.V., Inc. (Mont. 1985), 696 P.2d 454, 42 St.Rep. 314; Rase v. Castle Mountain Ranch, Inc. (Mont. 1981), 631 P.2d 680, 38 St.Rep. 992. In this case, despite ~onsolidated's contentions to the contrary,extrinsic evidencewas taken and argued at trial. During defendant's closing, Consolidated's counsel summarized this evidence: Billings has submitted evidence that shortly after the reciprocity began between these two people 

## -- two trusts in 1981, it sent an addendum to the reciprocity agreement. And Butte maintains that out of the large volume of mail that it receives, including correspondence and numerous checks,that itdid not receive this addendum. The evidence shows that Billings Trust sent this addendum, at the same time it sent it to 15 other Trusts who it had reciprocity agreements with at the same time. This is the onlypiece of mail that has been claimed to have never been received. The addendum clearly showed how much Billings planned to transfer to Butte. But even without the addendum, Billing's conduct showed that it was always going to pay the lower amount which Buttewas fully aware and forwhich they accepted without complaint. Therefore, by its conduct, Butte assented to the change of the terms of the reciprocity agreement,and agreed to accept those terms. In summary, from day one, the Billings Trust paid the Butte Trust sufficient funds to provide insurance coverage for its members of local 41 in Butte when they worked within the jurisdiction of Local 30 in Billings. These payments almost amounted to $91,000 over a three-yearperiod. And because the Plaintiff continued to accept these numerous payments without protest, they either waived their right to claim a higher contribution rate at the time, or they agreed to accept the change in the reciprocityagreementand, therefore, Billings was only required to remit the amount that itdid. For these reasons, the Defendant,Consoldiated Pipe Trades Trust respectfully requests that you return averdict in its favor and award nomoney to the Plaintiff.
The foregoing shows that the disputehinged not onparol evidence going to prove the effect of the agreement's terms. Rather, the dispute concerned whether the parol evidence, which was 

### -admitted, showed eitherwaiver on the part of Pipe Industry in enforcing the undisputed terms of the contract, or subsequentamendment of clause fourby the addendum. This Court must review jury instructionskeeping inmind the evidence offered. Baker National Bank v. Lestar (1969)

### , 153 Mont. 45, 52, 453 P.2d 774, 777. Our review must also insure that the lower court provided instructions adaptable to the objecting party's theory on the case when credible evidence supports the theory. Rix v. General Motors Corp.

(Mont. 1986), 723 P.2d 195, 198, 43 St.Rep. 1296, 1298. Jury instructions on appeal are to viewed in their entirety,and in light of the evidence in the case. Rushnell

v. Cook (Mont. 1986), 718 P.2d 665, 669, 43 St.Rep. 825, 830. Viewing the instructions in this case in their entirety, wehold that: the lower court's instructionwas compatible with the evidence in the case; that the arguments of counsel and the addition of instructions on waiver consistently presented the waiver issue apart from the prohibition on altering the terms of the contract by parol evidence; and that allowance of an instruction on waiver, and allowance of evidence on waiver, provided Consolidated with an adequate means to present its theory on waiver. More succinctly, our conclusion on this issue is that an instructionprohibiting considerationofparol evidence on what the contract language required for performance may coexistwith an instructionand evidence on waiver. The closing argument of defense counsel demonstrates that this factwas not lost to appellant,andwe must presume it was also not lost to the jury. See, e.g., Bass v. Barksdale (Tenn. App. 1984), 671 S.W.2d 476, 489

(reviewing court presumes jury understood instructions). Thus,we affirm on this issue.

Consolidated's argument on issue two is largely settled by issue one. The argument assigned by appellant as issue two is that the lower court erred innot allowing evidence on negotiations of the contract. Consolidated argues that the testimonyofwitness Cliff Powell should have been allowed as relevant towaiver. Consolidated's faulty logic fails to support this argument. Section 28-2-905,MCA,prohibits evidence of the terms of an agreement: except in the following cases: (a) when a mistake or imperfection of the writing is put in issueby thepleadings; (b) when thevalidity of the agreement is the fact indispute.(2) This section does not exclude other evidence of the circumstances under which the agreement was made or to which it relates, as described in 1-4-102, or other evidence to explain an extrinsic ambiguity or to establish illegality or fraud.

The objection in the lower court concerned a question solicitting information on contract negotiations. Defense counsel stated in thedefense's offer ofproof that:
MR. HERINGER: Your Honor, in pre-trial agreement I provided the Court with the case law that parole evidence is admissiblewhen there is a question ofwaiverbefore theCourt. And this goes to the fact of what was waived and why it was possiblywaivedby them. That question simply asks what were the terms of the agreement as to what Mr. Powell understood of them.

As shown by resolution of issue one, the distinction between waiver and par01 evidence allowed to establish a variance from the contract's terms explains and justifiesthe lower court's decision to sustain the objection to Mr. Powell's testimony on the contract negotiations. Thus, we affirm on issue two.

Consolidated contends that the lower court erred by refusing to give one of the instructions onwaiver offered by Consolidated, and by giving an instruction offered by Pipe Industry on waiver. The specific contention is that the two waiver instructionsconfused andmislead the jury. Pipe Industry's instruction on waiver reads as follows:

You are instructed a party may waive a right afforded to him by contract. Theparty asserting awaiver, the defendant in this case, has the burden ofproving waiver.

A waiver is defined by law as a voluntary and intentional relinquishment of a known right. Waivermust be based on thewords or conductof the party against whom waiver is claimed, in this case, the plaintiff. The defendant must prove language or conduct by the plaintiff showing in an unequivocal manner that the plaintiff voluntarily and intentionallyrelinquished its right to receive the full payments as provided by the contract. Mere failure to take steps to enforcea legal right under a contract in a timely manner is not, by itself, sufficient to constitute proof of waiver. Consolidated objected to the above instruction contending that the last sentence inaccurately stated the law and effectively negated its waiver theory. The same assertions are made on appeal. Pipe Industry answers that the last sentence served the purpose of distinguishing between waiver and other defenses which preclude suitsbased

on failure tobring them in a timelymanner, i.e., laches or statuteof limitations. The last sentence constitutesa correct statement on the lawofwaiver. See,e.g., Bolesv. Ler (Mont. 1986), 719 P.2d 793, 43 St.Rep. 1035 (vendor's mere failure to return late payments did not preclude vendor from enforcing foreclosure rights). Pipe Industry, as well as Consolidated, has the right to instructions supporting its theory of the case. Pipe Industry'stheory was that Consolidated failed to prove waiver. Evidence supported this contention, and distinguishing waiver from other prohibitions on bringing
causes of action furthered understanding of this theory. Thus, under the circumstances of this case, the lower court actedwithin its discretion ingiving the instruction. Consolidated argues that the lower court erred by failing to give the instruction on waiver it offered. Theoffered instruction was set out in Thiel v. Johnson (Mont.
Industry responds that the instruction in Thiel was not approved by this Court because the issue in Thiel on this instruction was settled by the appellant's failure in Thiel to object to the instruction in the lower court. See Thiel. 711 P.2d at 832. We agree that a variation from the instruction set out in Thiel is not a violation of any rule from Thiel. This Court in Thiel specifically refused to review the validity of part of the instruction. Thus,Thiel does not control. The refused instructionreads as follows:

You are instructed that when a payment for a sum certain isduepursuant to a contract, that payment may be waived by onewho is to receive thepayment. Thewaivermay be either express or implied.

An impliedwaiver occurs when a contractpayment is received and the amount paid is less than contract terms call for and thepersonwho is to receive the paymentmakes no attempt to collect the full amount within the [sic] reasonable time. A reasonable time is presumable a short time after payment is due,and before the nextpayment isdue.
An express waiver occurs when onewho is to receive payment tells the one who is to make the payment either orally or in writing, that the full amount of thepayment need notbe made. An express waiver must continue for the period of time specified by the one who is to receive thepayment.

TheDistrictCourt gave two instructionsonwaiver which adequately covered the applicable law. The District Court refused the instruction offered by appellant holding it inapplicableto the case. No error may be predicated on the trial court's failure to give an instruction when other instructions adequatelycover the applicable law,orwhere thepleadings and evidence show that the offered instruction is inapplicable. Doble v. Lincoln County Title Co. (Mont. 1985), 692 P.2d 1267, 1271, 42 St.Rep. 128, 132. We refuse topass on the sufficiencyof the Thiel instruction offered in this case because the two waiver instructions givenby the Court adequately address the law on waiver in light of the evidence presented at trial. A further contention on this issue concerns the giving of two waiver instructions. Consolidated claims that the lower court erred because the two instructions conflict and confuse on a material issue. Consolidated also claims they are repetitive. These two contentions by Consolidated appear to be mutually exclusive, i.e., the presence of facts supporting the one appears to exclude facts supporting the other. We have reviewed both contentions and find merit in neither. We have already set out the instruction on waiver offered by Pipe Industry,and given by the trial court. The second instruction on waiver, offered by Consolidated, and givenby the lower court,readsas follows:

A party may waive the benefit of a contract. Waiver means that a person is precluded from asserting a right, a claim or privilege because he has previously knowingly, voluntarily and intentionally given up that right, claim or privilege. Waiver must be a voluntary act and implies a knowing choice by a person to give up something of value or foregoa right or advantagewhich hemight have demanded and insisted upon. Itonly involves the conductof the party againstwhom thewaiver is asserted and consideration is not necessary for the doctrine to apply,nor need therebe adetriment or harm to the party claiming thewaiver.
A personmay waive a right,claim orprivilege only ifhe has knowledgeof the factswhich are materialor important to his decision. This knowledge may either be actual or constructive. Constructive knowledge is knowledge which one has the opportunity to acquire by the exercise of ordinary care and diligence, whether or not such knowledge is, in fact,acquired. If a person is ignorant of amaterial or important fact, that is, ifhe lacks actual or constructive knowledge, a waiver is not possible. This instruction properly covers areas left out of the instruction offered by Pipe Industry. Conversely, the instructionoffered by Pipe Industry covers areas leftout of this instruction. As pointed out by Consolidated, other portions are simply repetitive, not conflicting. See,e.g., Pizza v. Wolf Creek Ski Development Corp. (Colo. 1986), 711 P.2d 671, 681 (instructionsnot essentially identical are not unduly repetitive). Thus, this contention fails, and we affirmon this issue.

IV. Consolidated contends that substantial evidence does not support the jury's verdict. In particular, Consolidated contends that evidence itpresented conclusivelydemonstrates that Pipe Industry waived its rights under the contract. We disagree. To counter Consolidated's argument that Pipe Industry knowingly and intentionally relinquished the right to aportion ofpaymentsguaranteed under the contract, Pipe Industry presented evidence showing that other considerations influenced its decision to forestall prosecution for payment. The verdict demonstrates that the jury rejected Consolidated's argument on the basis of this evidence. Inasmuchas substantial credibleevidence supports the verdict, we must affirm on this issue. Clark v. Norris

(Mont. 1987), 734 P.2d 182, 184-85, 44 St.Rep. 444, 445.

### v. Consolidated claims that the lower court erred by awarding prejudgment interest. To support this contention, Consolidated citesportions of § 28-1-1202(2),MCA, and § 27-1-114,MCA. Section 28-1-1202(2), MCA, reads as follows:

An offer ofpayment or other performance dulymade stops the running of interest on the obligationand has the same effect upon all incidents of the obligationas aperformance thereof, whether ornot the title to anything offered is transferred to the creditor.

Consolidated contends this statute avails it of a defense to interest on the difference between the amount due under the contract, and the amount actually paid under the contract. The specific contention is that:

Consolidated offered and Pipe Industry accepted thesepayments aspayments in full.
This thinly disguised repetition of Consolidated's faulty waiver argument fails to persuade this Court to reverse on this issue. Consolidated makes the same argument in regard to 5 27-1-214,MCA,which reads: Accepting payment of thewhole principal,as such, waives all claim to interest.
This assertion also fails because the jurvverdict found that Consolidateddid notpay the whole principal. We hold interestwas properly awarded under § 27-1-211, MCA

# . See Price Building Services, Inc. v. Holms (Mont. 1985), 693 P.2d 553, 42 St.Rep. 84. Thus,we affirm on this issue.VI

# . Consolidated contends that the lower court improperly calculated the interest, and Pipe Industry concedes the point. Thus, we remand only for the purpose of a proper calculation as agreed by the parties.

Justice