Opinion ID: 458929
Heading Depth: 2
Heading Rank: 1

Heading: Lost Profits on Feeder Cattle.

Text: 22 Bone's claim for lost profits on feeder cattle, like his claim for interest on commissions, arises under the 1977 letter agreement which provided, in pertinent part: 23 In addition Red, we have agreed to use our best effort to buy for your account up to 2,500 head of feeder cattle at a price which will provide an approximate spread of 5.50/CWT between the feeder cattle and the delivery option of the live cattle futures price at time of purchase. Once we reach the 2,500 head level we will continue on a best effort basis to keep the number of head on feed for your account at this level on a continuous basis. 24 In order to make out a prima facie case on his claim that Refco breached its obligation under this paragraph, Bone had to establish that cattle were available at the terms specified in the agreement and that Refco failed to use its best efforts to obtain for Bone up to 2,500 head of feeder cattle and maintain that level on a continuous basis. 25 The magistrate determined that this contractual language was ambiguous and allowed parol evidence in the form of testimony concerning the parties' understanding of this provision. Bone testified that the parties understood this provision to mean that Refco would use its best efforts to supply Bone with 2,500 head of hedgeable feeder cattle on each turn. 5 Bone further testified that the reference in the contract to a spread of approximately $5.50/CWT between the price of feeder cattle and the live cattle futures price related only to that specific point in time and that the parties intended simply that Bone be supplied with feeder cattle that could be hedged. 26 Refco contends that the magistrate committed reversible error by allowing Bone to testify to his understanding of the meaning of the terms in the 1977 agreement relating to Refco's obligations to supply Bone with feeder cattle. 27 We agree. Certainly, the terms of the agreement relating to the feeder cattle--stating that Refco would use its best effort to provide Bone on a continuous basis with 2,500 head of feeder cattle with an approximate spread of $5.50/CWT between the purchase and selling price--were unprecise and created patent ambiguities. Where a patent ambiguity exists in the language of a contract, extrinsic evidence in the form of oral testimony is admissible to assist the jury in determining the intent of the parties. See Saltzman-Guenthner Clinic, Ltd. v. Burnett, 5 Ark.App. 56, 632 S.W.2d 441, 443 (1982). The Arkansas parol evidence rule does not bar the admission of oral testimony offered to explain the ambiguity and show the parties' intent, Ark.Stat.Ann. Sec. 85-2-202 (1979); Peevy v. Bell, 255 Ark. 663, 501 S.W.2d 767, 768 (1973), but it does bar the admission of oral testimony that contradicts or varies the written terms. Id. Farmers Cooperative Association v. Garrison, 248 Ark. 948, 454 S.W.2d 644, 646 (1970). 28 Although the ambiguity in the provision calling for an approximate spread of 5.50/CWT would permit testimony of the parties explaining what they intended the parameters of the spread to be, Bone's testimony that the figure was irrelevant and that the parties intended simply that he would be provided cattle that could be hedged contradicted an express, albeit somewhat loose, term of the agreement that set forth a target hedge margin. Thus, it was a violation of the parol evidence rule for the magistrate to admit that testimony to alter the terms of the written contract. 6 29 All of the evidence Bone introduced at trial to establish the availability of feeder cattle to Refco through Dittmer's feedlot operations, and his lost profits attributable to Refco's alleged breach of contract 7 related to Bone's contention that the agreement merely required Refco to provide him with feeder cattle that could be hedged, regardless of the margin of the hedge, a contention which we reject. None of the testimony indicated that feeder cattle were available that could be hedged at an approximate $5.50/CWT spread, nor is there any other evidence in the record which indicates that such cattle were available. Thus, the erroneous admission of this parol evidence resulted in Bone's claim for lost profits being improperly submitted to the jury. The admission of this parol evidence therefore constitutes reversible error. Thus, we vacate the judgment in Bone's favor on his claim for lost profits. 8 30 The magistrate submitted all three of Bone's claims to the jury with a general verdict form. The jury returned a general verdict for Bone in the amount of $909,482.96. That the jury awarded Bone some damages on the lost profits claim is clear; the damages sought by Bone on his other two claims totalled only $797,121.35. Because the jury returned a general verdict, however, we cannot determine how much of the award was predicated on the lost profits claim which should not have been submitted to the jury. Had Bone's claims been submitted on special verdicts, we could simply have stricken the award on the lost profits claim and affirmed the judgment on the other claims. 9 Jones v. Miles, 656 F.2d 103, 108 (5th Cir.1981). The rule is that when one of several claims has erroneously been submitted to the jury, a general verdict cannot stand. Doherty v. American Motors Corp., 728 F.2d 334, 344 (6th Cir.1984); Mueller v. Hubbard Milling Co., 573 F.2d 1029, 1038-39 (8th Cir.) (quoting Morrissey v. National Maritime Union, 544 F.2d 19, 26-27 (2d Cir.1976) ), cert. denied, 439 U.S. 865, 99 S.Ct. 189, 58 L.Ed.2d 174 (1978). Accordingly, in light of the general verdict made in this case, and our holding that Bone's claim for lost profits was improperly submitted to the jury, we must vacate the judgment on Bone's claims, set aside the general verdict award to Bone, and remand all these claims for a new trial. 10 See Jones v. Miles, 656 F.2d at 108; Mueller, 573 F.2d at 1039-40. 31 Because we remand this case for a new trial on Bone's claims, we think it incumbent upon us to address Refco's various contentions that it is entitled to judgment as a matter of law on each of Bone's claims in order to assist the parties and the trial court in framing the case for a new trial. 32