Opinion ID: 281741
Heading Depth: 1
Heading Rank: 2

Heading: interest issue

Text: 23 The district court ruled that the escrow agreement was not ambiguous, by its terms Thompson assumed payments of interest on the $175,000 mortgage from the date of its execution, and therefore no issue of fact remained for the jury's determination. We believe the court erred in its interpretation of the contract, that it is ambiguous, and the parties should have been permitted to introduce parol evidence relevant to their intention. 24 Ordinarily, the court should construe a written contract and declare its meaning to a jury, but where there is an ambiguity parol evidence is admissible to explain the intent of the parties, and it then becomes a question for the jury, under proper instructions, to resolve. Rogers v. American Insurance Co., 338 F.2d 240 (8th Cir. 1964); Minnesota Mutual Life Insurance Company v. Wright, 312 F.2d 655 (8th Cir. 1963); Fort Smith Appliance & Service Co. v. Smith, 218 Ark. 411, 236 S.W.2d 583 (1951); Wisconsin & Arkansas Lumber Co. v. Fitzhugh, 151 Ark. 81, 235 S.W. 1001 (1921). 25 We turn then to the escrow agreement. It obligated Thompson to pay 'the sum of $280,000 for the land above described,' $25,000 of which was paid 'cash in hand.' That amount was deposited with the escrow agent to be delivered by it to McClung upon notice that he had consummated a 'realty loan in the principal amount of $175,00 from Northwestern Mutual Life Insurance Company   , which loan the buyer hereby agrees to assume as part of the above recited total consideration and the remaining sum of $80,000 to be paid by the buyer to the escrow agent.' The agreement provided that seller would retain possession of the land for the crop year 1965 and would satisfy all taxes for the tax year 1964. It recited that the seller had executed and delivered to the escrow agent a warranty deed 'subject only to the mortgage to the Northwestern Mutual Life Insurance Company in the principal sum of $175,000.' 26 It is apparent from the trial judge's comments in rejecting Thompson's offer to explain the true intention of the parties that he believed the assumption of the principal amount of the loan automatically imposed an obligation on Thompson to pay all interest. In reaching that conclusion the court overlooked or failed to accord due consideration to several factors which persuade us to adopt a different view. (1) The loan was consummated within a relatively short time after March 18, 1965. 3 So far as we can discern from this record McClung received and benefited from the proceeds of the loan prior to date of consummation of the Thompson transaction. (2) McClung retained possession of the land for the crop year 1965. (3) Thompson was obligated to pay the taxes for 1965. (4) The agreement does not explicitly obligate Thompson to pay the interest. It is silent in this regard. But there is language lending itself to the interpretation that the total amount to be paid was $280,000. 27 We have studied Sheffield v. Maxwell, 163 Ark. 448, 260 S.W. 399 (1924); Kirby v. Young, 145 Ark. 507, 224 S.W. 970, 228 S.W. 53 (1920); Nakdimen v. Brazil, 131 Ark. 144, 198 S.W. 524 (1917), cited in support of the court's action. They do not compel affirmance. Unlike our situation, in each of those cases the grantee, by unambiguous language in the deed, assumed payment of the existing mortgage. On the facts presented the Arkansas Supreme Court held assumption of the mortgage included the interest. 28 We believe it is self evident that whether the assumption of a mortgage encompasses interest depends in the first instance upon the nature and language of the assumption agreement. If, as here, it is indefinite, all of the attendant circumstances should be developed, by parol evidence if necessary, to the end that the intent of the parties may be ascertained. 29 The judgment is vacated and the cause is remanded with directions (1) to enter judgment for McClung on the conversion issue; (2) to retry the interest issue. No costs shall be taxed for either party.