Opinion ID: 2077888
Heading Depth: 2
Heading Rank: 1

Heading: The terms of the contract

Text: Trilon asserts that the documents subsequent to the Commitment Letter deliberately omitted any limitations on partial prepayment and, therefore, that it had a right to make partial prepayments on the Note. The Comptroller argues, to the contrary, that the different documents incorporate one another and that the separate documents should be read together as one contract. See, e.g., Vicki Bagley Realty, Inc. v. Laufer, 482 A.2d 359, 366 (D.C. 1984) (citing cases). We think the Comptroller has the better argument. Trilon contends, first, that the May 24 letter does not incorporate the language prohibiting partial prepayment that was used in the Commitment Letter. Trilon states, and the Comptroller agrees, that the raison d'être of the May 24 letter was to coordinate [the] financing arrangements, subject, however, to compliance with all the terms and conditions of the Commitment [Letter], so that the Phases of the Permanent Loan [could] be consummated.... From this statement Trilon concludes that one purpose of the May 24 letter was to revise the unsigned Commitment Letter so as to remove the prohibition on partial prepayment. This argument is weak. The Commitment Letter of May 5 expressly required additional agreements for the refinancing of the contract so that the original construction loans made by the bank could be transformed into permanent loans made by the Comptroller. Indeed, as the Comptroller notes, the Commitment Letter calls for a further agreement providing for the sale to us [the Comptroller] of the construction note and mortgage. Accordingly, when the May 24 letter states that [t]his agreement does not modify the Commitment [Letter] except to the extent that it revises the procedure by which the Permanent Loan contemplated by the Commitment [Letter] shall be consummated, it is referring to the procedure for the refinancing of the contract by the Comptroller, not to any (unexpressed) intent to remove the prepayment restrictions contained in the Commitment Letter. Second, Trilon claims that any reference to the Commitment Letter in the whereas recitals of the deed of trust should be ignored as a mere historical reference. It relies on Perry v. Perry, 88 U.S.App. D.C. 337, 190 F.2d 601 (1951), [5] to argue that a recital clause cannot be treated as an operative part of the contract. In Perry the appellant challenged the trial court's denial of his motion for a preliminary injunction. He claimed that he was entitled to injunctive relief based on a prior settlement agreement, which said in the recital at the outset that it [was] designed to settle `all property rights and differences existing between [the parties].' Id. at 339, 190 F.2d at 603. The court held that [i]f both the recitals and the operative part of a contract are clear, but they are inconsistent with each other, the operative part is to be preferred. Id. (citation and internal punctuation omitted). However, Perry does not stand for the proposition that a recital clause can never be treated as an operative part of a contract. On the contrary, Perry at least implies that when the recital and the rest of the contract are consistent, the recital can indeed be considered as evidence of the parties' intent. See American Nat'l Bank of Jacksonville v. Federal Deposit Insurance Corp., 710 F.2d 1528, 1534 (11th Cir.1983) (holding that `whereas clauses' may provide definitive evidence of the intent of the parties, particularly where there is no language in the operative portion of the contract which conflicts with the intent expressed in the recitals). In this case the deed of trust states in a whereas clause that it is subject to certain optional prepayments, all as specified in the [Commitment Letter]. This incorporation of the May 5 Commitment Letter in the recital clause of the deed of trust is consistent with the same incorporation in the May 24 letter. We conclude, accordingly, that Perry does not help Trilon's cause. Trilon's final argument is that the Note does not limit partial prepayment. While the Note does place restrictions on prepayment of the entire loan, it does not limit prepayment of part of the loan. Trilon thus asserts that the absence of any limitation on partial prepayment in the Note is consistent with its view that the post-May 5 documents removed such restrictions. Again this argument is unconvincing. The Note does not refer to the Commitment Letter, but it does refer to the deed of trust, which in turn incorporates the terms of the Commitment Letter. The Commitment Letter says explicitly that the loan may be prepaid in whole, but not in part, if certain conditions are met. We hold, therefore, that the four documents  the May 5 Commitment Letter, the May 24 letter, the deed of trust, and the Note  must be read together as one contract. See Vicki Bagley, 482 A.2d at 366.