Opinion ID: 887986
Heading Depth: 2
Heading Rank: 2

Heading: Spraggins, Payne, Yellowstone II, and Tester

Text: ¶ 57 In Spraggins, the written contract in question was clear on its face. Spraggins, 192 Mont. at 12, 625 P.2d at 1153. It spoke exclusively of the parties' agreement concerning the Mint Bar and made no mention of the Diablo Mobile Repair business. Nevertheless, the district court allowed parol evidence of an earlier agreement between the parties concerning the Diablo Mobile Repair business to alter and vary the terms of the written contract concerning the Mint Bar. We held this was error, noting that none of the exceptions to the parol evidence rule applied. With respect to § 1-4-102, we stated that [w]hen the contract is clear and unequivocal on its face, section 1-4-102, MCA, does not apply. Spraggins, 192 Mont. at 12, 625 P.2d at 1153 (citing Ryan v. Ald, Inc., 146 Mont. 299, 406 P.2d 373 (1965)). This statement is consistent with the principle that surrounding circumstances may not be considered once the court has determined that the instrument is unambiguous. Thus, Spraggins comports with our clarifications of § 1-4-102 above. ¶ 58 The written contract at issue in Payne gave Payne the exclusive right to sell property owned by Buechler. It also provided that Buechler would pay Payne the 10% commission if Buechler sold the property herself or withdrew Payne's authority under the contract prior to the stated expiration date. Payne, 192 Mont. at 312-13, 628 P.2d at 647. Following a bench trial, the district court found that Buechler had not intended to grant Payne the exclusive right to sell the property. This finding was based on testimony by Buechler that she did not intend to give Payne an exclusive listing and that she had previously given listings to other agencies which were still in effect at the time she entered into the contract with Payne. On appeal, Buechler argued that the district court had properly admitted this testimony pursuant to § 1-4-102. We disagreed, observing that the language of the parties' contract was plain and unambiguous and that, under such circumstances, the language alone controls and there is nothing for the Court to interpret or construe. Payne, 192 Mont. at 317, 628 P.2d at 650. ¶ 59 As in Spraggins, this statement is consistent with the principle that surrounding circumstances may not be considered once the court has determined that the instrument is unambiguous. However, our subsequent statement that § 1-4-102 only applies where an ambiguity exists in the language of the contract, Payne, 192 Mont. at 317, 628 P.2d at 650, was overbroad. As explained above, § 1-4-102 also applies to aid the court in determining whether an ambiguity exists in the first place, and our statement in Payne that the statute only applies where an ambiguity exists in the language of the contract, which was correct on the facts of that case, should not be read as precluding this additional purpose of § 1-4-102. [6] ¶ 60 Next, parol evidence abounded in the briefs and in the record before this Court in Yellowstone II due to the inherent complications of the case. See Yellowstone II, ¶ 36. Yet, the documents at issue in the case were not ambiguous. Yellowstone II, ¶ 35. Thus, we clarified that we would disregard the parol evidence in the briefs and the record: While we may properly consider evidence of the circumstances under which the agreement was made, see, e.g., Weinberg v. Farmers State Bank of Worden (1988), 231 Mont. 10, 24, 752 P.2d 719, 728; § 28-2-905, MCA, we will not consider evidence presented for the singular purpose of establishing that a contract includes supplemental promises or mutual understandings or conditions of performance that were never incorporated into a written agreement that by its own terms purports to represent the entire agreement between the parties. [Citations to §§ 28-2-904 and 70-20-202, MCA.] Suffice to say, this Court must therefore disregard all attempts by Yellowstone II to establish that, in addition to the express, unambiguous terms of the written agreement, the contract should include additional parol promises or representations or mutual understandings allegedly made by the parties prior to and at the time of formation. . . . Yellowstone II, ¶¶ 36-37 (emphasis added). These statements are merely applications of the parol evidence rule, §§ 28-2-904 and -905(1), MCA. ¶ 61 Cenex points out that we also stated: Determining whether a term in a contract is ambiguous . . . is not a question involving parol evidence, but merely one of law concerning interpretation and potential use of extrinsic evidence. Yellowstone II, ¶ 35 (citing In re Marriage of Holloway, 2000 MT 104, ¶ 5, 299 Mont. 291, ¶ 5, 999 P.2d 980, ¶ 5, and § 1-4-102, MCA). Our use of the term parol evidence in this sentence, however, must be understood in the context of the discussion in ¶¶ 35-37 of Yellowstone II. The documents at issue were unambiguous; and the point of the discussion in ¶¶ 35-37, therefore, was to clarify that we would not consider evidence presented by Yellowstone II of additional parol promises or representations or mutual understandings allegedly made by the parties prior to and at the time the documents were executed. Thus, our statement that [d]etermining whether a term in a contract is ambiguous . . . is not a question involving parol evidence, Yellowstone II, ¶ 35, stands for the unremarkable proposition that subjective evidence of prior or contemporaneous oral promises may not be considered for the purpose of determining whether the contract contains an ambiguity. Nevertheless, to the extent that this statement might be understood to conflict with our clarifications above concerning the applicability of § 1-4-102, MCA, it is overruled. ¶ 62 Lastly, Tester concerned a boundary dispute in Bridger Canyon, just north of Bozeman, Montana (hereinafter, Section 17). Two roads of public record ran through Section 17 in a north-south direction: the 1891 County Road and the 1948 State Highway. Tester, ¶ 3. Throughout the plaintiffs' chain of title, there were many inconsistencies, including the unclear use of the terms public road and country road in reference to the boundary between plaintiffs' and defendants' respective properties in Section 17. Tester, ¶ 16. The key point of confusion, however, regarded language in a 1951 deed by which James Funk conveyed all that part of Section 17 `lying East of the old County Road as existing over and across said Section prior to the year 1950.' Tester, ¶¶ 16, 17. The plaintiffs claimed that the terms public road and country road in the deeds in their chain of title were references to the traveled way, which became the State Highway, and that Funk, therefore, had intended the State Highway, and not the Country Road, to be the boundary. The defendants, however, contended that if Funk had intended to transfer all land east of the State Highway, he would have used the words `all land lying East of the State Highway.' Tester, ¶¶ 13, 22. ¶ 63 Applying § 1-4-102, we concluded that the defendants were correct: The plain language of the Funk deed is unambiguous. An unambiguous deed must be interpreted according to its language as written, without resort to extrinsic evidence of the grantor's intent. For proper construction of an instrument § 1-4-102, MCA, allows us to examine the circumstances under which it was made, including the situation of the subject of the instrument and of the parties to it. The record indicates that the County Road was the only official road in the Section from 1891 to 1948 and was recorded as being in its original location until the State Highway was constructed in 1948. . . . . If Funk intended to convey east of the State Highway which was constructed only three years earlier, he certainly could have done so. Instead, he explicitly conveyed east of the old County Road. To conclude that Funk's language is ambiguous and that he really meant to convey east of the State Highway would be to read an intent into his language which is simply not justified. We conclude that based on the unambiguous language of the deed, and the circumstances under which it was made, including the plats of Section 17, and the State Highway records, the District Court's conclusion that the State Highway is the legal boundary between the properties was incorrect. Tester, ¶¶ 25-28 (citation omitted). ¶ 64 This application of § 1-4-102 illustrates the use of extrinsic evidence for the purpose of determining, as a preliminary matter, whether the language in question is ambiguous. The crucial question was whether the old County Road as existing over and across said Section prior to the year 1950 was susceptible to at least two reasonable but conflicting meanings. We considered the objective surrounding circumstances  namely, the plats of Section 17, the State Highway records, and the fact that at the time Funk executed the deed (in 1951), the County Road had existed since 1891 and the State Highway had existed since 1948  and we decided that the language was unambiguous. [7] ¶ 65 Our analysis in Tester also illustrates the important distinction between Donnell and Taylor, supra . Instruments are to be interpreted according to their subject-matter, and parol evidence may be resorted to in order to ascertain the nature and qualities of the subject to which the instrument refers. Donnell, 1 Mont. at 526. Thus, it was appropriate in Tester to consider parol evidence in order to ascertain the subject to which the old County Road as existing over and across said Section prior to the year 1950 referred. But while circumstances and surroundings may aid the language, they may not destroy it. They can apply the deed to its proper subject, and when thus applied, the language must describe such subject, and be entirely consistent with it. Taylor, 1 Mont. at 699. The plaintiffs' evidence of Funk's intent to convey the State Highway was entirely inconsistent with the language old County Road in the deed. Thus, such evidence should not have been considered by the district court. ¶ 66 We conclude, therefore, that Tester also comports with our clarifications of § 1-4-102 herein.