Opinion ID: 1604971
Heading Depth: 1
Heading Rank: 2

Heading: Reversal of the Judgment in Favor of the IDB and Against the McLemore Group

Text: A written contract may be of such a nature as to require reference to parol evidence or facts in order to determine its legal operation and effect for at least two different reasons. First, the meaning and construction of its words might be ambiguous; that is, the words may be susceptible to more than one reasonable interpretation. Second, even if the meaning of the words used in a contract is not ambiguous, the legal operation and effect of those words may depend upon collateral facts in pais.  Boykin v. Bank of Mobile, 72 Ala. 262, 269 (1882). As this Court stated in Boykin: [W]hen the legal operation and effect of an instrument depends, not only on the meaning and construction of its words, but upon collateral facts in pais [outside the contract] and extrinsic evidence, the inference from the facts to be drawn from the evidence should be submitted to the jury. 72 Ala. at 269. In this case, I believe we are in error to say that the term project, as used in the option agreements, and the concept of property included in the project are ambiguous. Neither that term nor that concept is susceptible to more than one reasonable meaning. It is true that, in order ultimately to determine the legal operation and effect of the option agreement's reference to land included in the project, it is necessary to consult facts not found within the four corners of the instrument, i.e., facts in pais.  But this is no different than the manner in which unambiguous contractual provisions often depend upon some reference to external facts in order to establish their operation. For example, in this very case, the legal operation and effect of the pricing mechanism in the most-favored-nation clause is not discernible solely from the four corners of the option agreement in which it is found. Instead, it requires a consideration of the price at which other parcels in the project ultimately are purchased. Yet, we would not say that the pricing mechanism is ambiguous. Its meaning is clear; it simply depends upon collateral facts in pais for its operation and effect. In the same way, the meaning of the reference in the option agreements to land included in the project is clear. That we must examine collateral facts in pais  in order to determine which parcels of land ultimately were included in the project does not make the use of that term in the agreement ambiguous. That said, and upon consideration of the parol evidence with which we are presented in this case, I do not find there to be a genuine issue of material fact as to whether the Shelton property was included in the project. Nor do I find there to be any doubt as to the manner in which the option agreement was intended to operate in regard to the issue of who the purchaser must be in order to trigger the most-favored-nation clause, at least not as applied to the facts with which we are presented. The purchase of the Shelton property in the manner arranged and orchestrated by the governmental entities that engaged in a joint venture to purchase land for use by Hyundai clearly constituted a purchase of property included in the project for purposes of the most-favored-nation clause. I therefore would instruct the trial court on remand to enter a judgment for the McLemore group.