Opinion ID: 2608815
Heading Depth: 1
Heading Rank: 8

Heading: ambiguity of the agreement

Text: The next issue with respect to the settlement agreement is the meaning of the clause that states: Fitzgerald's [sic] agree to honor all Corbett and Gurr's previous sales. Fitzgeralds claim that the trial court relied upon certain extrinsic evidence with regard to the intent of the parties concerning the honor past sales clause of the settlement agreement without first determining, as a matter of law, that the settlement agreement was ambiguous. The trial court found that certain open court statements made by Fitzgeralds' trial counsel in the first trial indicated the intent of the parties with regard to the settlement agreement's honor past sales clause. Fitzgeralds' trial counsel stated: We, Mr. and Mrs. Fitzgerald, do not want the persons who have bought from Corbett and Gurr to be hurt. And so we are suggesting to the Court that an equitable verdict on termination would be if the Court would terminate Corbett and Gurr out and enter as a part of that termination order that Lee and Helen Fitzgerald honor all of the contracts that Corbett and Gurr have entered into with innocent bona fide purchasers of property under that contract. And they will do so and they are willing to do it for the remaining unpaid balance. If the persons have paid it all and not got their title, he'll just give them their title for nothing. If they've paid all but the last payment, he will take the last payment and give them their title. So that no persons will be hurt as a result of the terminating of the Corbett and Gurr contract [sic]. They will all be honored if they are bona fide purchasers. (Emphasis added.) At first blush, it may appear that the trial court erred in considering the foregoing extrinsic evidence to ascertain the intent of the parties without first concluding, as a matter of law, that the agreement was ambiguous. [21] However, notwithstanding the lack of a specific finding of ambiguity, it is implicit in the record before us that the trial court viewed the settlement agreement as ambiguous. In addition, it is apparent that the parties themselves accepted as a foregone conclusion the ambiguity of the settlement agreement. This is to be seen in that although Fitzgeralds objected to the sufficiency of the evidence recited in the findings of fact, they did not object in any manner to the failure of the trial court to conclude that the settlement agreement was ambiguous. [22] Pursuant to Fitzgeralds' objection to the findings of fact, a hearing was held on September 18, 1987, for the sole purpose of hearing arguments on objections to the findings of fact and conclusions of law. No objection was made to the omission of a conclusion of law that the honor past sales clause was ambiguous, nor was an objection made to the fact that extrinsic evidence was received. The only objection went to the sufficiency of the evidence. The only objection to the extrinsic evidence of counsel's open court statement was that it was too remote to be probative of the parties intent at the time the settlement agreement was signed, an argument we find to be without merit. It is also of note that Fitzgeralds asserted in their brief that the honor past sales clause was indeed ambiguous. When viewed in the context of the record before us, we find Fitzgeralds' contention that the trial court erred by failing to determine as a matter of law that the honor past sales clause was ambiguous to be without merit. While the trial court properly construed the ambiguous honor past sales provision in the settlement agreement as between the parties to the instant litigation, it erred insofar as it sought to adjudicate the extent of Fitzgeralds' obligations to others in view of that provision and insofar as its judgment directed Fitzgeralds to convey property to various alleged purchasers pursuant to contracts such purchasers entered into with Corbett and Gurr. Integral to the honor past sales proviso as construed by the trial court was the notion that Fitzgeralds would honor contracts that Corbett and Gurr have entered into with innocent bona fide purchasers. Those purchasers, however, were not parties in this action. Much of the evidence before the court concerning the nature of those alleged contracts can only be regarded as troubling. For example, one contract introduced by Corbett and Gurr was for the sale of 80 acres but only required the payment of $1 down and installments totaling $9. It was not signed by the putative buyer. It is doubtful that a contract for the sale of real property at 80 cents per acre represents a bona fide purchase. In litigation between Fitzgeralds and Corbett and Gurr over the meaning and effect of a settlement agreement entered into between them, the trial court was free to definitively construe a key provision in their agreement. But having done that, the trial court should not have set about to enforce Fitzgeralds' adherence to that provision for the benefit of third parties not joined in the action before the court. Those matters should have been left for resolution in the future. Now cognizant of their obligations under the honor past sales provision, Fitzgeralds should have been left to deal with the alleged purchasers appropriately. Legitimate contracts would presumably be honored, i.e., full credit given for amounts paid prior to the settlement agreement, with delivery of a deed upon the payment of the balance owing. Those contracts which did not represent bona fide purchases would presumably be ignored. Purchasers unhappy with their treatment by Fitzgeralds could of course seek relief in one or more actions brought by them to secure Fitzgeralds' compliance with their obligation under the settlement agreement. And under the principle of collateral estoppel, Fitzgeralds would be precluded in such actions from relitigating the nature and extent of their obligation to the contract purchasers under the honor past sales provision. In such actions, the purchasers' innocence could be examined, the bona fide nature of their purchase explored, and the amount actually paid toward their purchase obligations established with some precision. In sum, it was not proper to endeavor to resolve these separate matters in the context of a much narrower action pending between Fitzgeralds and Corbett and Gurr. The judgment is vacated insofar as it purports to determine the obligations owing by Fitzgeralds to the alleged contract purchasers not parties to this action.