Opinion ID: 2226962
Heading Depth: 2
Heading Rank: 1

Heading: Ambiguous Contract

Text: The Hlebechuks assert that the written agreement of the parties concerning the real estate commission is ambiguous and that parol evidence is admissible to explain the true meaning of the terms of the agreement. The promissory note falls under the commercial paper chapter of North Dakota's Uniform Commercial Code as it is a negotiable instrument. § 41-03-04, N.D.C.C. As required by Section 41-03-04, the note (a) was signed by the makers, the Hlebechuks; (b) contained an unconditional promise to pay a sum certain, $12,500 at 9¾% interest; (c) is payable at a definite time; and (d) is payable to the order of William Evenson. § 41-03-04, N.D.C.C. Thus, the note is governed by the Uniform Commercial Code. The parol evidence rule of Section 9-06-07, N.D.C.C., also is applicable as a general principle of law to supplement the U.C.C. § 41-01-03, N.D.C.C.; Peoples Bank & Trust v. Reiff, 256 N.W.2d 336, 340 (N.D.1977). Section 9-06-07, N.D.C.C., provides: 9-06-07. Written contract supersedes oral negotiations. 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. We have previously held that [t]his is a legislative enactment, in part, of the parol evidence rule.    This is not an evidentiary or interpretive rule, but rather one of substantive law. Gajewski v. Bratcher, 221 N.W.2d 614, 626 (N.D.1974). Parol evidence is admissible, however, when the writing is ambiguous. Johnson v. Auran, 214 N.W.2d 641, 652 (N.D.1974). Whether or not the writing is ambiguous is a question of law for the court to determine. Id. at 653. The district court considered the earnest money receipt and agreement between Jacobson and the Hlebechuks in reaching its determination that the writing was not ambiguous. At the bottom of this writing there is a handwritten note after the printed statement OWNER'S CLOSING INSTRUCTIONS AND AGREEMENT TO PAY COMMISSION which simply states Deferred with Balloon. This portion of the earnest money receipt and agreement is not signed by any of the parties. The Hlebechuks contend that when this writing is interpreted and construed together with the promissory note it raises an ambiguity. We disagree. The district court properly construed the promissory note and the earnest money receipt and agreement together as they were both executed as part of the same transaction and contained terms relating to the commission to be paid. § 41-03-19, N.D.C.C.; see also Sanden v. Hanson, 201 N.W.2d 404, 408 (N.D.1972). Even when the writings are construed together, however, they are not ambiguous. The promissory note provides that the commission may be deferred if Jacobson exercised his option to extend payment of the balloon two years. The earnest money receipt and agreement states the same thing in a short-hand manner. As there is no ambiguity in these writings, that exception to the parol evidence rule does not apply.