Opinion ID: 406732
Heading Depth: 1
Heading Rank: 3

Heading: whether future advances clause is part of the agreement

Text: BETWEEN BARNARD AND FIRST FEDERAL 14 The second argument raised by appellant is that the district court erred in excluding parol evidence of the parties intent in entering into the mortgage modification agreement. Specifically, the appellant argues that the bankruptcy court properly considered evidence that Barnard and First Federal engaged in no negotiations concerning future advances and properly concluded that Barnard did not intend to request or obtain future advances pursuant to the Brown mortgage. We agree with the district court that the mortgage and mortgage modification agreement clearly and unambiguously provide that future advances to Barnard by First Federal under the Barnard mortgage would be secured by that mortgage, and that parol evidence to contradict the express terms of those agreements is inadmissible. 15 It is fundamental that parol evidence is inadmissible to vary or contradict the clear and unambiguous language of a contract. J. M. Montgomery Roofing Co. v. Fred Howland, Inc., 98 So.2d 484, 485-86 (Fla.1957). As stated in J. C. Penney Co. v. Koff, 345 So.2d 732 (Fla.Dist.Ct.App.1975), 16 (C)ourts are allowed to consider extrinsic evidence only when confronting an ambiguous contract provision, and they are barred from using evidence to create an ambiguity to rewrite a contractual provision, or to vary a party's obligation under a contract. 17 Id. at 735. Under Florida law, the parol evidence rule applies to mortgage contracts. Jackson v. Parker, 153 Fla. 622, 15 So.2d 451, 459 (1943); Marion Mortgage Co. v. Howard, 100 Fla. 1418, 131 So. 529, 531 (1930); 330 Michigan Avenue, Inc. v. Cambridge Hotel, Inc., 183 So.2d 725, 727 (Fla.Dist.Ct.App.1966); 22 Fla.Jur. § 71 (1958). 18 In this case, appellant argues that parol evidence would demonstrate future advances were not contemplated by Barnard at the time the mortgage modification agreement was entered, and hence the future advances clause in the mortgage has absolutely no binding effect with respect to any transaction between the parties. However, in order for us to accept such an argument, we must reject the clear and unambiguous terms of the contracts themselves. The mortgage explicitly states that the mortgage secures any and all future advances made by the mortgagee to the mortgagor within 20 years of the date of the mortgage, so long as the total principal outstanding at any one time does not exceed $350,000. The mortgage modification agreement clearly indicated that the entire mortgage modification agreement would be binding on Barnard, except as modified by the mortgage modification agreement itself. That document stated, purchaser further assumes and agrees to perform all of the mortgagor's covenants and obligations and abide by all terms and conditions of the aforesaid note, mortgage and loan agreement. Record, p. 10. Read together, these two documents leave absolutely no doubt that Barnard agreed to be bound by each and every term of the Brown mortgage as modified. This language leaves no room to question whether a future advances clause is part of the agreement between Barnard and First Federal; the binding contract between those two parties clearly contains a future advances clause. Because the agreement between the parties is clear on the face of the mortgage and subsequent modification agreement, parol evidence to vary or contradict the clear terms of that agreement is inadmissible. 3 19 We find support for our conclusion that parol evidence is inadmissible to show that the future advances clause in the mortgage was not part of the agreement between Barnard and First Federal in the case of Atwell v. Western Fire Insurance Co., 120 Fla. 694, 163 So. 27 (Fla.1935). In that case, there was some dispute regarding the nature and extent of the mortgagor's obligation, under the mortgage, to obtain insurance on the mortgaged property. The Florida Supreme Court held that parol evidence was not admissible to show that there was no binding insurance clause in the mortgage, since the clause was specifically incorporated into the mortgage. However, the court indicated that parol evidence would be admissible to show the amount of insurance required to be obtained by the mortgage, since the mortgage did not contain an express term indicating the amount to be obtained. Likewise, in this case, parol evidence would not be admissible to indicate that the future advances clause specifically encorporated in the mortgage was not binding upon the parties absent some ambiguity in that clause. 20 Based on facts similar to the case at bar, the former Fifth Circuit in Kimball Foods, Inc. v. Republic National Bank, 557 F.2d 491 (5th Cir. 1977), aff'd sub nom United States v. Kimball Foods, Inc., 440 U.S. 715, 99 S.Ct. 1448, 59 L.Ed.2d 711 (1979), concluded that, under analogous Texas law, parol evidence was inadmissible to vary the clear and unambiguous wording of a future advances clause. Absent some ambiguity in the language of the contract, the court held that introduction of testimony as to (one party's) subjective intent in receiving the future advances clause was a classic violation of the parol evidence rule and clearly inadmissible. 557 F.2d at 496. Applying the analogous Florida parol evidence rule to the facts of this case, we also find a clear violation of the parol evidence rule here. 21