Opinion ID: 2633455
Heading Depth: 2
Heading Rank: 2

Heading: Stock Purchase Agreement

Text: [¶ 15] In resolving whether the remedies provided by the Stock Purchase Agreement in the event of default by the buyers included a deficiency judgment, we must apply our established rules of contract interpretation. The primary purpose in interpreting or construing a contract is to determine the intent and understanding of the parties, and our initial inquiry centers on whether the language of the contract is clear and unambiguous. Reed v. Miles Land and Livestock Co., 2001 WY 16, ¶ 10, 18 P.3d 1161, ¶ 10 (Wyo.2001). The interpretation and construction of a contract are done by the court as a matter of law. Id. Where an agreement is in writing and the language is clear and unambiguous, the parties' intent is to be secured from the four corners of the contract. Cliff & Co., Ltd. v. Anderson, 777 P.2d 595, 598 (Wyo.1989). We consider the contract as a whole, taking into consideration the relationship between the various parts. Id. We turn to extrinsic evidence and rules of contract construction only when the contract language is ambiguous and its meaning is doubtful or uncertain. Wolter v. Equitable Resources Energy Company, Western Region, 979 P.2d 948, 951 (Wyo.1999). Whether or not a contract is ambiguous is a question of law for the court. Corpening v. Corpening, 2001 WY 18, ¶ 8, 19 P.3d 514, ¶ 8 (Wyo.2001). [¶ 16] The pertinent language of the Stock Purchase Agreement which shall be reviewed for ambiguity is as follows: IV. DELIVERY IN ESCROW: Seller shall deliver in escrow, to BERT T. AHLSTROM, JR., as escrow agent, certificate for the shares of stock sold pursuant to this Agreement, duly endorsed in blank for transfer, and accompanied by all other documents necessary for an effective transfer. Upon payment of the total purchase price as set forth hereinabove, on the due dates specified, the escrow agent shall deliver the shares of stock being sold hereunder, and all other documents delivered to the escrow agent, to Buyer. The fees and expenses of the escrow agent, if any, shall be paid by Buyer. Should Buyer default hereunder, said escrow agent shall redeliver the shares/certificates and all other escrowed documents to Seller..... VI. DEFAULT BY BUYER: In the event Buyer defaults hereunder, by non-payment of the sums of money set forth hereinabove or otherwise, this Agreement shall become automatically and immediately null and void and of no force and effect as to transfer of stock certificate and sale of the same; and Seller shall be allowed to retain all monies paid by Buyer hereunder to that point in time. This delineation does not exclude Seller's additional rights at law or equity. [¶ 17] The buyers argue the language of the Stock Purchase Agreement is unambiguous and the only remedy specified in the contract is termination of the contract and retention by the sellers of the amount already paid. They contend the contract language, which provides that the sellers' additional rights at law or equity are not excluded, can only be construed to be applicable to those remedies available to a null and void contract. Therefore, the trial court's decision that the parties shall remain bound by the agreement is contrary to the clear language of the contract. The buyers additionally argue the agreement is in the nature of an installment land contract and therefore the exclusive remedy is forfeiture, not a deficiency judgment. [¶ 18] In contrast, the sellers contend there is at least a modicum of ambiguity in the contract language. According to the sellers, the contract only specifically provides the agreement is automatically and immediately null and void and of no force and effect as to the transfer and sale of the stock certificates. However, the contract language does not preclude the availability of additional remedies upon default with regard to the remaining amount owed under the contract. Moreover, the sellers argue the contract states that the remedies provided do not exclude their additional rights at law or equity. They claim the reliance on installment land contract cases, which involve the sale of real estate, is inapplicable to the facts of the instant case which involves the sale of stock escrowed as security. As a result of this distinction and the ambiguous contract language, the sellers claim the deficiency judgment was appropriately ordered. [¶ 19] Upon an examination of the Stock Purchase Agreement as a whole, we conclude the contract language was unambiguous. The express terms of the contract provide that upon default the Stock Purchase Agreement shall become automatically null and void as to the transfer and sale of the stock. The only remedy provided by the contract was for the sellers to retain all previously made payments and to have the escrow agent return possession of the stock certificates. There are no enforceable contract rights where a contract is null and void. Police Protective Association of Casper v. City of Casper, 575 P.2d 1146, 1150 (Wyo. 1978). If an agreement is void, it cannot be a contract because the law will neither give a remedy for its breach nor recognize its performance as a duty. 1 Richard A. Lord, Williston on Contracts, § 1:20 (4th ed.1990); see also Restatement (Second) of Contracts § 7 cmt. a (1981). We will not require parties to remain bound under an agreement which clearly states that it shall become automatically null and void upon the occurrence of a specified event. When parties make a contract and reduce it to writing, they must abide by its plainly stated terms. Colorado Interstate Gas Company, 842 P.2d at 1070. Even if we were to have found ambiguity in the contract as urged by the sellers, we note that the sellers' attorney drafted the Stock Purchase Agreement and any ambiguity in the contract is construed against the drafter of the agreement. Prudential Preferred Properties v. Underwood Ranch Company, 873 P.2d 598, 600 (Wyo.1994). [¶ 20] The sellers argue the contract language preserves their additional rights at law or equity. We agree, but only those available rights at law or equity which arise in the face of this null and void contract are preserved. For example, the sellers' brief tenuously suggests there was a diminution in value of the corporation while it was in the buyers' control. If the suggestion is accurate, a derivative action brought by the sellers, now the stockholders, could provide an alternative remedy for the loss in value of the business. W.R.C.P. 23.1; Wyo. Stat. Ann. §§ 17-16-740 to 747 (LexisNexis 2001). However, we make no determination concerning whether a derivative action is warranted in this case. We mention this possibility only as an example of possible additional rights at law or equity which might exist and to illustrate the provision has significance and does not create ambiguity. [¶ 21] Having determined there is no ambiguity in the contract, we have no reason to examine the parties' intent or the distinction between the effect of an installment land contract and a mortgage/security agreement. However, we do note this agreement involved the escrow of stock certificates rather than the sale of real estate. As the sellers point out, the difference lies in the potential for retaining the value of the asset sold. As written, this contract contemplated the stock certificates would be held in escrow. Upon default, the escrow agent was instructed to return the stock certificates to the sellers. The contract clearly intended the sellers would have no control over the operation of the business during the term of the escrow, exemplified by the sellers' release of voting rights. While it may have been imprudent for the sellers to enter into such a business transaction, we have often stated we will not rewrite contracts under the guise of interpretation and, so long as there is no ambiguity, we are bound to apply contracts as they have been written. Amoco Production Company v. EM Nominee Partnership Company, 2 P.3d 534, 540 (Wyo. 2000). We note that the amount at issue in the Stock Purchase Agreement comprised only a small portion of the entire business transaction. Furthermore, the parties selected a remedy upon default which was the return of the stock certificates and the recovery of the sellers' rights as stockholders rather than opting for a deficiency judgment. It is not the court's duty to make a contract for the parties. Flora Construction Company v. Bridger Valley Electric Association, Inc., 355 P.2d 884, 886 (Wyo.1960). We reverse that portion of the trial court's order which granted $20,340.16 to the sellers as a result of the buyers' breach of the Stock Purchase Agreement. [¶ 22] Affirmed in part and reversed in part.